Aevum Limited ACN 087 648 691 v National Exchange Pty Limited

THE PROCEEDINGS 1 These two proceedings are concerned principally with the operation of Division 5A of Part 7.9 of the Corporations Act 2001 (Cth) ('the Corporations Act') in relation to offers made by National Exchange Pty Limited ('National Exchange'), the defendant in both proceedings, to buy shares in Aevum Limited ('Aevum'), a public company. Division 5A, which deals, inter alia, with unsolicited offers to purchase shares off-market, was introduced by the Financial Services Reform Amendment Act 2003 (Cth) to ensure greater disclosure in connection with unsolicited offers to buy shares. Division 5A was introduced specifically in order to counter the activities of National Exchange. 2 The first proceeding, NSD1592 of 2004 ('the First Proceeding'), was brought by Aevum. At a very late stage in the hearing of the First Proceeding, Mr Allen Kavanagh, who is the chairman of directors of Aevum and is also a member of Aevum, was joined as a plaintiff in that proceeding because of concern as to whether Aevum has standing to claim the relief sought by its initiating process. 3 Aevum claimed relief pursuant to s 1324(1)(a) of the Corporations Act. Under that provision, where a person has engaged, is engaging or is proposing to engage, in conduct that constituted, constitutes or would constitute a contravention of the Corporations Act, the Court may, on the application of the Australian Securities and Investments Commission ('the Commission'), or on the application of a person whose interests have been, are or would be affected by the conduct, grant an injunction restraining the person from engaging in the conduct and requiring that person to do any act or thing. 4 Aevum claimed, in addition to declarations as to non-compliance with Division 5A and an injunction restraining National Exchange from sending offers to members of Aevum, an order that National Exchange cause a written notice to be sent to each member saying that if the member wished to terminate the contract resulting from an acceptance of the offer from National Exchange, the member should sign the letter and return it to National Exchange. Aevum also claimed an injunction restraining National Exchange from taking any steps to require a member of Aevum, who accepted an offer, to transfer shares to National Exchange and from lodging for registration or taking any action to have registered, any transfer of shares received from a member who accepted an offer. 5 The Commission brought the second proceeding, NSD1679 of 2004 ('the Second Proceeding'), partly because of the concern that neither of the plaintiffs in the First Proceeding had standing to claim the relief sought in that proceeding. However, the Commission's claims went beyond the relief claimed in the First Proceeding. The Commission claimed relief under s 1324 of the Corporations Act as well as under ss 12GD and 12GLA of the Australian Securities and Investments Commission Act 2001 (Cth) ('the ASIC Act'). Section 12GD provides that the Court, on the application of the Commission, may grant injunctions if it is satisfied that a person has engaged, is engaging or is proposing to engage, in conduct that constitutes or would constitute a contravention of Division 2 of Part 2 of the ASIC Act. Section 12GLA provides that the Court may, on application by the Commission, make non-punitive orders in relation to a person who has engaged in conduct that contravened the provisions of the ASIC Act that deal with unconscionable conduct and consumer protection.

UNSOLICITED OFFERS 6 Division 5A of the Corporations Act, which includes ss 1019C to 1019K, applies, relevantly for present purposes, to an unsolicited offer to purchase a share made by a person to another person. There are other prerequisites for the application of Division 5A. For example, Division 5A does not apply if the offeror was in a personal or business relationship with the offeree before the making of the offer. Nor does it apply if the offer is not made in the course of the business of purchasing financial products. It is common ground that all of the other prerequisites are satisfied in the present case. 7 Section 1019E provides for how such offers are to be made. Under s 1019E(1), an offer must not be made otherwise than by sending an offer document in printed or electronic form to the offeree. The document must be sent to an address of the offeree and either the envelope or the container in which it is sent, or the message that accompanies it, must be addressed to the offeree. That is to say, the offeror must make an offer to a specific person and not simply an offer to a class of persons, such as all shareholders in a particular company. 8 Under s 1019I(1), the offer document by which an offer is made must be dated, and for the purposes of Division 5A, the expression 'date of offer' means that date. Under s 1019E(2), the offer document must be sent to the offeree as soon as practicable after the date of offer. 9 Section 1019G deals with the duration and withdrawal of offers. Under s 1019G(1), an offer cannot remain open more than 12 months after the date of offer. However, no express reference is made to any minimum period during which an offer must remain open. Indeed, under s 1019G(2), the offer may be withdrawn by the offeror at any time, but not within one month of the date of offer. Section 1019G(3) provides that the offer may only be withdrawn by the offeror by sending a withdrawal document to the offeree. The withdrawal document must be sent to an address of the offeree and either the envelope or the container in which it is sent, or the message that accompanies it, must be addressed to the offeree. Thus, again, the communication must be with a specific person and not merely by a general announcement. The withdrawal document must identify the offeror and be dated. Under s 1019G(4) a purported withdrawal of an offer otherwise than in accordance with ss 1019G(2) and 1019G(3) is ineffective. 10 Section 1019I deals with the contents of an offer document. Under s 1019I(1), the offer document by which an offer is made must, in addition to being dated, identify the offeror. Under s 1019I(2) the offer document must, relevantly for present purposes, also contain the following:

• the price at which the offeror wishes to purchase the shares;
• a fair estimate of the value of the shares as at the date of offer, and an explanation of the basis on which that estimate was made;
• the period during which the offer remains open, which must be consistent with s 1019G(1); · a statement to the effect that the offer may be withdrawn by sending a withdrawal document to the offeree, but generally not within one month of the date of offer.

Under s 1019I(4) the offer document must be worded and presented in a clear, concise and effective manner. 11 Section 1019H provides that the terms of an offer, as set out in the offer document, cannot be varied and under s 1019H(2) a purported variation of the terms of an offer is ineffective. An exception is provided by s 1019H(3), for withdrawal in accordance with the other provisions of Division 5A. For example, s 1019J provides for withdrawal where there is an increase or decrease in the market value of the share. 12 Section 1019K confers rights on a seller to refuse to transfer, or to seek the return of a share, in certain situations. The relevant situations for present purposes are where the offeree (the seller) accepts the offer and enters into a contract for the sale of the share to the offeror (the buyer) and one or more of the following applies: (a) section 1019E was not complied with in relation to the offer; (b) the offeror gave the offeree an offer document that did not comply with s 1019I; or (c) the offeror gave the offeree an offer document in which there was a misleading or deceptive statement. 13 Under s 1019K(3) the seller in any of those situations has:

• the right to refuse to transfer the share; or · if the seller has already transferred the share to the buyer, the right to have the share returned to the seller, if the buyer still holds the share.

The seller's right is conditional on the seller repaying any money that has been paid to the seller for the purchase of the share. 14 The seller's right under s 1019K(3) must be exercised by notifying the buyer in one of the ways specified in s 1019K(4) and, under s 1019K(5), the seller's right can only be exercised during the period of 30 days starting on the day the contract was entered into. Under s 1019K(6), on the exercise of the seller's right under s 1019K(3), the contract is, by force of the section itself, terminated from that time without penalty to the seller.

MARKET MISCONDUCT 15 Under s 1041E(1) of the Corporations Act, a person must not make a statement, or disseminate information, if: (a) the statement or information is false in a material particular or is materially misleading; and (b) the statement or information is likely to induce persons to dispose of shares; and (c) when the person makes the statement, or disseminates the information: (i) the person does not care whether the statement or information is true or false; or (ii) the person knows, or ought reasonably to have known, that the statement or information is false in a material particular or is materially misleading.

UNCONSCIONABLE CONDUCT AND CONSUMER PROTECTION UNDER THE ASIC ACT 16 Under s 12BAB(1)(h) of the ASIC Act, a person provides a financial service if that person engages in conduct of a kind prescribed in regulations made for the purposes of that provision. Section 12BAB(2)(b) provides that the regulations may set out the circumstances in which persons are taken to provide, or are taken not to provide, a financial service. The Australian Securities and Investments Commission Regulations 2001 have been made under the ASIC Act ('the ASIC Regulations'). Regulation 2C(1) of the ASIC Regulations relevantly provides that a person (Person 2) provides a financial service if Person 1 makes an unsolicited offer to purchase shares from another person (Person 1), other than through a licensed financial market, and Person 2 acquired the shares as a retail client. Under reg 2C(2) of the ASIC Regulations a person to whom reg 2C(1) applies (as Person 1) is taken not to provide a financial service if Person 1 tells Person 2 in a clear and concise written statement that is part of the offer that the offer remains open for a period that is at least one month and not more than 12 months, unless the offer is withdrawn in writing before the end of that period. 17 Section 12CA(1) of the ASIC Act provides that a person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. However, s 12CA(1) does not apply to conduct prohibited by s 12CB. 18 Section 12CB(1) of the ASIC Act provides that a person must not, in trade or commerce, in connection with the supply or possible supply of financial services to a person, engage in conduct that is, in all the circumstances, unconscionable. However, under s 12CB(5), a reference in s 12CB to financial services is a reference to financial services of a kind normally acquired for personal, domestic or household use. The Commission accepted that, by reason of s 12CB(5), s 12CB has no application in the present circumstances. 19 Section 12CC(1)(a) provides that a person must not, in trade or commerce, in connection with the supply or possible supply of financial services to another person engage in conduct that is, in all the circumstances, unconscionable. Section 12CC(2) sets out a number of matters to which the Court may have regard for the purpose of determining whether a person has contravened s 12CC(1) in connection with the supply or possible supply of financial services to another person. Section 12CC(6) provides that a reference in s 12CC to the supply or possible supply of financial services is a reference to the supply or possible supply of financial services to a person whose acquisition or possible acquisition of the financial services is, or would be for the purpose of trade or commerce. 20 Section 12DF(1) of the ASIC Act provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any financial services.

AEVUM AND ITS BACKGROUND 21 The origins of Aevum were in Ballarat, Victoria, in the 19th Century, when a friendly society was formed to assist Irish Catholics in providing for sickness and funeral costs. Until 2002 Aevum was a friendly society and the liability of its members was limited by guarantee. People became members through ownership of benefit fund policies issued by Aevum. Aevum operated four benefit funds, as follows:

• an Assurance Fund, made up of four benefit products, each of which is now closed to new members;
• a Funeral and Mortality Fund, consisting of six benefit products, two of which are closed to new members;
• a Sickness and Accident Fund, consisting of three benefit products, one of which is closed to new members;
• a Blue Chip Endowment Assurance Fund. 22 In 2002, Aevum 'demutualised' and its status was changed to that of a public company limited by shares. As a result of a scheme of arrangement, members' rights and obligations were extinguished and members were allocated shares in the capital of Aevum in its new guise. Thus, as at the date of the demutualisation, the members of Aevum were persons who had been members of a friendly society and who then acquired shares upon the demutualisation of Aevum in 2002. While there is evidence that, at the time of demutualisation, 45 per cent of the members of Aevum were over 70 years of age, there is no specific evidence as to the character of members generally. There is, however, some evidence of the character of a small number of members. That evidence is in the form of affidavits sworn by members and filed by the Commission. 23 The deponents of the affidavits represent no more than a selection of people from a limited class of members, being those who accepted or purported to accept offers made by National Exchange to buy shares in Aevum. Five of the 24 deponents are under the age of 70 years. The affidavits do not demonstrate that the members generally are without access to advice. Eight of the deponents indicated that he or she discussed the offer received by that deponent with someone else. Some discussed the offer with one of their children, while others discussed the offer with financial advisers and accountants, from whom advice was obtained. The deponents displayed a reasonably wide range of employment experience and qualifications including an accountant, a headmaster, a salesman, a registered medical practitioner, a bookkeeper with accountancy training, an administration manager, a priest and a university educated electrical engineer. 24 On 29 September 2004, Aevum published a prospectus ('the Prospectus') offering 11.1 million new shares for subscription at 90 cents each, to raise approximately $10 million. At that time, Aevum had 6,255 shareholders holding 71,124,000 shares. Thus, if the offer made by the Prospectus were to be fully subscribed, the total number of shares on issue following the offer would be 82,235,111 shares. The market capitalisation of the shares, based on the total number of shares on issue at the issue price, was expected to be $74 million. Those figures exclude new shares to be offered to employees under a special bonus scheme, shares to be issued on exercise of options to be issued to senior executives and shares to be issued to employees under a staff share plan. 25 The Prospectus indicated that, within seven days after its date, Aevum would apply to Australian Stock Exchange Limited ('ASX') to be admitted to the official list of ASX and for official quotation on ASX of its shares. On 29 September 2004 Mr Allen Kavanagh, as chairman of Aevum, wrote to members of Aevum inviting them to attend the 2004 annual general meeting. The letter also referred to the Prospectus and indicated that it was proposed that the offer under the Prospectus would open on 18 October 2004 and close on 12 November 2004, with ASX listing expected to occur on 25 November 2004. The letter said that a full update on the proposed listing on ASX would be provided at the annual general meeting. 26 On 27 October 2004, Mr Kavanagh wrote again to all members of Aevum to inform them that the offer under the Prospectus was open. That letter also said that the offer was due to close on or before 12 November 2004 and that Aevum had applied to ASX to be admitted to the official list and to have all of its shares quoted on ASX. The letter went on to say that, to assist existing shareholders who wished to sell their shares, Aevum had:
• organised a special retail share facility with two named member organisations of ASX; and
• agreed to pay, for a four month period ending 25 March 2005, all brokerage costs incurred by existing shareholders who sell in a single trade all of their shares 'at market', through the facility. 27 On 12 November 2004, Mr Kavanagh wrote once more to each member of Aevum enclosing a statement from the share registrar of Aevum setting out the number of shares held by the relevant member. The letter of 12 November 2004 also announced that the offer of shares made by the Prospectus was oversubscribed and that it was expected that Aevum would be listed on ASX on 19 November 2004. The letter also contained a caution about selling shares off-market and referred to an offer to buy shares for 35 cents each that was 'manifestly underpriced and is not supported by your Board'. That was clearly a reference to offers made by National Exchange to which I shall refer below. The letter also said that Aevum could assist any member who wished to sell shares. 28 On 18 November 2004, Aevum made an announcement to ASX and the media that trading in Aevum shares had begun on ASX on 18 November 2004, with shares opening at $1.52, a premium of 62 cents. The announcement said that Aevum would pay its first dividend of 3 cents per share on 10 December 2004.

THE OFFERS MADE BY NATIONAL EXCHANGE 29 Mr Justin Kavanagh, Mr Allen Kavanagh's son, is a member of Aevum. On 1 November 2004 he received a window envelope at his post office box in Sydney. The envelope was marked with the name of National Exchange. On 2 November 2004, Mr Allen Kavanagh, the chairman of directors of Aevum, received a similar envelope, addressed to him at his residential address. It is common ground that all members of Aevum received similar communications at about the same time. 30 Each such envelope had the name of National Exchange on its outside. Inside each envelope were three documents, being:

• a written offer by National Exchange to buy the shares in Aevum held by the recipient ('the offer document');
• an acceptance form; and
• a reply paid envelope addressed to National Exchange. 31 The offer document is a single sheet, with printing on each side. The form of the offer document is as set out in Schedule 1 to these Reasons. The acceptance form is as set out in Schedule 2. The acceptance form was folded such that the name and address of the recipient was visible through the window envelope. The acceptance form contained a space in which the full name and address of the recipient, the number of shares in Aevum held by the recipient and a sum of money were printed, as shown in Schedule 2. Neither the number of shares nor the sum of money was visible through the window. The name of the member did not appear in the offer document. 32 The consideration offered by National Exchange was 35 cents per share. However, the offer document also contains an estimate by National Exchange of the value of the shares as being within the range $0.90 to $1.29 per share. That estimate is followed by a statement that the estimate was given to satisfy a legal requirement and should not be considered to be a valuation. 33 The offer document is dated 22 October 2004. However, as will appear below, it was not sent to members of Aevum until 28 October 2004. Significantly, it provides that the offer will remain open until the earlier of:
• 5 pm on 10 November 2004; or
• the time when acceptances have been received in excess of 3,350,000 shares.

THE COMPLAINTS ABOUT THE OFFERS 34 Aevum alleged contraventions of ss 1019E(2), 1019G(2), 1019G(3) and 1019I(4) of the Corporations Act in the following respects: (1) National Exchange contravened s 1019E(2) in that the offers were not sent to the members of Aevum as soon as practicable after 22 October 2004, being the date of the offers. (2) National Exchange contravened s 1019G(2) by representing that the offers would be withdrawn on the earlier of the following two times: (a) 5 pm Australian Eastern Standard Time on 10 November 2004; or (b) the time when the total number of shares in Aevum in respect of which National Exchange had received acceptances under the offer first exceeds 3,350,000. (3) National Exchange contravened s 1019G(3) by representing in the offers that they could be withdrawn by National Exchange publishing a notice in The Australian newspaper. (4) National Exchange contravened s 1019I(4) in that the offer document was not worded and presented in a clear and effective manner. 35 The Commission repeated, in substance, the complaints made by Aevum. However, the Commission's formulation of the complaint in relation to s 1019G was as follows: · National Exchange contravened s 1019G(2) by providing that each offer would automatically close at a time that was less than one month from the date of the offer document. · National Exchange contravened s 1019G(3) in that the offer document failed to provide that the offer could only close, expire or be withdrawn by sending a withdrawal document to the offeree in accordance with s 1019E(1).

• National Exchange contravened s 1019I(2)(e) of the Corporations Act by stating in the offer document that the offer remain open only for the period specified in the offer, being a period that is less than one month from the date of the offer. 36 In addition, the Commission contended that:
• There was in the offer documents a misleading or deceptive statement within the meaning of s 1019K.
• National Exchange made a statement, or disseminated information, that was false in a material particular or was materially misleading, when National Exchange either did not care whether the statement or information was true or false or knew or ought reasonably to have known that the statement or information was false in a material particular or was materially misleading, in contravention of s 1041E(1).
• The conduct of Aevum in sending the offer documents to members of Aevum was unconscionable, in contravention of ss 12CA, 12 CB or 12CC of the ASIC Act.
• National Exchange engaged in conduct that was liable to mislead the public as to the nature or characteristics of the offers made by the offer documents, in contravention of s 12DF of the ASIC Act. 37 I shall deal with each of the complaints separately, although, to some extent, several of them are inter-related and overlap.

SECTION 1019E(2) 38 The requirement of s 1019E(2) in the present case is that the offer documents should have been sent to members of Aevum as soon as practicable after the date of offer, being 22 October 2004. After the completion of the hearing in the First Proceeding, but prior to the commencement of the Second Proceeding, I indicated to the parties to the First Proceeding that I had formed the view that there had been a failure to comply with s 1019E. Prior to my giving reasons for reaching that conclusion, the Commission commenced the Second Proceeding. Aevum then requested that I defer deciding and publishing my reasons in the First Proceeding until I had heard the Commission's submissions in the Second Proceeding, in so far as the same issues were to be raised. 39 At that time, in the light of the conclusion that I had reached concerning s 1019E, the members of Aevum who had accepted offers by National Exchange had the right to refuse to transfer their shares to National Exchange or to have their shares returned, if National Exchange held any such shares. However, the 30 day period provided for in s 1019K(5), allowing the seller to refuse to transfer shares, had started to run. 40 Accordingly, upon the commencement of the Second Proceeding, the Commission invited me to make an order requiring National Exchange to inform those members of Aevum who had purported to accept offers from National Exchange, of their rights under s 1019K(3). In the light of the conclusion that I had reached concerning s 1019E, National Exchange did not oppose the making of an appropriate order that would give members of Aevum the right to avoid any contract that had been made to sell shares to National Exchange within 30 days from receipt of the letter. On 26 November 2004 I made an order in the Second Proceeding that National Exchange send, to those members of Aevum who had purported to accept an offer from National Exchange, a letter in the form set out in Schedule 3 to these reasons. National Exchange has complied with that order and some members of Aevum have exercised the rights that arose under s 1019K(3). I shall refer to that matter below. 41 National Exchange adduced evidence in the First Proceeding from Mr David Tweed, to indicate the circumstances that led to the offer documents not being sent to members of Aevum prior to 6 pm on 28 October 2004, with the consequence that they were not received by members until 1 November 2004 or 2 November 2004. Notwithstanding that evidence, I concluded that the offer documents had not been sent as soon as practicable after 22 October 2004, the date of the offer documents. 42 National Exchange did not rely on Mr Tweed's evidence in the Second Proceeding. In the absence of any evidence as to why the offer documents, being dated 22 October 2004, were not despatched until the evening of 28 October 2004, I would conclude, for the purposes of the Second Proceeding, that they were not sent as soon as practicable after 22 October 2004.

MR TWEED'S EXPLANATION FOR THE DELAY IN SENDING THE OFFER DOCUMENTS 43 Mr David Tweed is a director of National Exchange. On or about 22 October 2004 he had substantially finalised the pro forma offer document intended to be sent to members of Aevum. During the weekend of 23 and 24 October 2004, Mr Tweed made some revisions to that form. On 24 October 2004 he conducted what he described as 'a final review' of the form of the offer document and sent the offer document and the acceptance form, in Microsoft Word format, to Oceanic IT Services Pty Limited ('Oceanic') by email. Oceanic is a data and word processing consultant. 44 On 24 October 2004, Mr Tweed instructed Mr Gregory Hancock, a director of Oceanic, that the forms were to be prepared for Hermes Precisa Pty Limited ('Hermes') as soon as possible and that Oceanic was to procure that Hermes complete the printing of the offer document and acceptance form, and placing them in envelopes and then deliver the sealed envelopes to Australia Post as soon as possible so that offers could be sent to every member of Aevum. 45 Upon receipt of the offer document and acceptance form in Microsoft Word format, Mr Hancock reconfigured the forms to an electronic format that can be used by a laser printer to insert variable information obtained from Aevum's register of members as well as Australia Post barcodes for mailing purposes. By emails sent prior to 9 am on 25 October 2004, Mr Hancock sent the offer document and the acceptance form, together with the variable information from Aevum's register of members, to Hermes. Mr Hancock also provided Hermes with an estimate of the fee to be charged by Hermes for the work and asked Hermes to confirm that they agreed with the estimate. 46 On 25 October 2004, Mr Hancock was informed by an employee of Hermes that Hermes would not confirm Mr Hancock's estimate of fees. On 26 October 2004, Mr Hancock was informed by an employee of Hermes that Hermes' fee would exceed Mr Hancock's estimate and informed him of the amount of the fee. Mr Hancock then approved that fee. Mr Hancock was informed that the printing would not start until the fee had been paid. Mr Hancock then transferred the amount of the fee to Hermes by the internet on 26 October 2004. 47 On 27 October 2004, Mr Hancock was informed by an employee of Hermes that Hermes had not yet commenced printing because Hermes did not have a record of having received funds into its account. On the same day, Mr Hancock was also informed by an employee of Hermes, that Hermes required payment in advance for postage and was informed of the amount required. On the same day, Mr Hancock informed Mr Tweed of that requirement and Mr Tweed, on the same day, transferred the amount required for postage to Hermes via the internet and sent to Hermes a record of the money transfer by facsimile communication. 48 At approximately 4 pm on 27 October 2004, Mr Tweed received from Hermes a printer's proof of the offer document and acceptance form. Later on the same day, Mr Tweed signed and sent to Hermes a copy of the printer's proof. Between that time and 6 pm on 28 October 2004, the printing of the offer document and acceptance form and the insertion of them into sealed envelopes was completed. Australia Post picked up the sealed envelopes at that time. 49 Mr Tweed and Mr Hancock explained why they had not taken the trouble to make appropriate arrangements in advance to ensure that the offer documents could be despatched promptly after 22 October 2004. Be that as it may, the evidence demonstrates that Mr Hancock and Mr Tweed adopted a somewhat leisurely attitude towards the despatch of the offer documents to the members of Aevum. Mr Tweed had not even finalised the form of the offer document before 25 October 2004. Several days then elapsed before printing began. 50 The evidence demonstrates that the printing and despatch of the offer documents could have been effected within 24 hours of the final form of the offer document and acceptance form being provided to Hermes, if Mr Tweed and Mr Hancock had made appropriate enquiries and arrangements in advance of sending the documents to Hermes.

NATIONAL EXCHANGE DID NOT COMPLY WITH S 1019E 51 I do not consider that the offer document was sent to the members of Aevum as soon as practicable after 22 October 2004. Accordingly, there was a contravention of s 1019E(2). It followed, therefore, that any member of Aevum who had accepted an offer made by National Exchange had the right conferred by s 1019K to refuse to transfer shares to National Exchange or, if shares had already been transferred, to have the shares returned to the member. The orders of 26 November 2004 confirmed that right.

SECTION 1019G 52 There are several ways in which an offer may be terminated, including withdrawal, lapse of time, rejection, occurrence of a condition, death and supervening incapacity. Two of those ways seem to be contemplated by s 1019G. An offer terminates by lapse of time when the period during which it remains open comes to an end. Thus, s 1019G(1) contemplates lapse of time in providing that the period during which an offer remains open must not exceed 12 months from the date of the offer. Section 1019G(2), on the other hand, refers expressly to an offer being withdrawn. However, s 1019G(2) does not refer to the time during which an offer must remain open but, in its terms, merely restricts the freedom of an offeror to withdraw an offer. Thus, an offer cannot be withdrawn within one month of the date of the offer. However, the offer can be withdrawn at any time thereafter. 53 As I have said, it was a term of each offer made by National Exchange to members of Aevum that the offer terminates at the earlier of the following times:

• 5 pm on 10 November 2004; or · the time when the total number of shares in respect of which National Exchange has received acceptances first exceeds 3,350,000.

Putting it another way, it is a term of each offer that it does not remain open after the first to occur of those times. According to ordinary usage, that is not a withdrawal of the offer. Rather, it is a termination of the offer by lapse of time, in the first case, and by the occurrence of a condition, in the second case. 54 However, Aevum and the Commission contended, in effect, that s 1019G(2) should be construed so as to require that an offer to which Division 5A applies must remain open for at least one month. They say that s 1019G(2) is ambiguous, in so far as it does not clearly state that effect and, accordingly, resort may be had to extrinsic materials to resolve the ambiguity. In particular, they draw attention to the Explanatory Memorandum circulated in connection with the Financial Services Reform Amendment Bill 2003, pursuant to which Division 5A was inserted in the Act. That Explanatory Memorandum relevantly said the following in relation to Division 5A: 'Section 1019G introduces a timeframe for which offers are to remain open (at least one month but not more than 12 months). In addition, this provision specifies the way in which an offer can be withdrawn.' 55 It is important to bear in mind, when construing a statute, that the task of the Court is to determine what is meant by the words used by Parliament, not what Parliament intended to say. Even an explicit statement of intention by the Minister in the speech on the second reading of the bill for an enactment cannot prevail over the words actually used in the statute subsequently enacted. It may be that, through oversight or inadvertence, the intention of Parliament fails to be translated into the text of a statute. However unfortunate that may be when it happens, the task of the Court remains to give effect to the statute according to its ordinary meaning. Extrinsic material cannot be used to construe a statute unless the construction of the provision suggested by that material is reasonably open: Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518. 56 On the other hand, the propriety of departing from the literal interpretation of a statute is not confined to situations where literal interpretation leads to an extraordinary, capricious, irrational or obscure result. It extends to any situation in which, for good reason, the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy that may be discerned from those provisions. Once a Court concludes that the literal or grammatical meaning of a provision does not conform to the legislative purpose, as ascertained from the statute as a whole, including the policy that may be discerned from its provisions, the Court is entitled to give effect to that purpose by addition to, omission from or clarification of, the particular provision: Saraswati v The Queen (1991) 172 CLR 1 at 22. 57 The question is whether s 1019G(2) prohibits an offer from containing a term that the offer will lapse after a specified period of time of less that one month or upon the occurrence, within one month, of a particular condition, if not accepted before that time. There is nothing in s 1019G(2) that says, in express terms, that an offer may not terminate for one of the other reasons indicated above, such as rejection, supervening incapacity or death. Nor is there anything in s 1019G(2) that, in terms, restricts the right of an offeror to specify a time within which an offer must be accepted, other than the provision of s 1019G(1). In particular, there is nothing that says expressly that an offer must remain open for any minimum period of time, such as one month. 58 However, there are indicators in the Corporations Act that suggest that, when s 1019G(2) refers to an offer being withdrawn, the intention is to refer to an offer ceasing to remain open. That is to say, the underlying assumption of s 1019G(2), in the light of the other provisions to which I shall refer, may be that an offer must remain open for at least one month. 59 For example, Chapter 6 of the Corporations Act deals with takeovers. Part 6.4 deals with the formulation of takeover offers and Division 3 of Part 6.4 deals with the offer period. Under s 624(1) the offers under a takeover bid must remain open for the period stated in the offer. That period must last for at least one month and not more than 12 months. That provision recognises the importance of an offeree having a reasonable opportunity to consider an offer before deciding whether or not to accept the offer. It assumes that a period of at least one month is necessary for that purpose. 60 The same assumption is made in s 766A of the Corporations Act, which corresponds with s 12BAB of the ASIC Act. Thus, s 766A(1)(f) provides that, for the purposes of Chapter 7 of the Corporations Act, a person provides a financial service if the person engages in conduct of a kind prescribed by regulations made for the purposes of that provision. Under s 766A(2)(b), the regulations may set out the circumstances in which persons are taken to provide, or are taken not to provide, a financial service. Regulation 7.1.33C, made under the Corporations Act, came into force on 8 April 2003. It was repealed with effect from 14 January 2004, the day on which Division 5A came into force. Regulation 7.1.33C was relevantly identical to reg 2C made under the ASIC Act. It is clear that the legislature contemplated that, when Division 5A commenced, there would be no need to provide any further for the regulation of the deemed provision of a financial service by reason of making an unsolicited offer that does not remain open for a period of at least one month. 61 Thus, the policy that underlies s 624 of the Corporations Act is to be gleaned from the scheme of the definition of financial service for the purposes of s 766A(1) of the Corporations Act. That policy is that offers to buy shares are to remain open for at least one month. It is possible to see good reason why such a policy should be applied to an offer to which Division 5A applies. Such offers should be required to remain open for a minimum period of one month in order to afford the offeree an adequate opportunity to consider the merits of an offer and to obtain advice in relation to the offer. 62 There is good reason why s 1019G(2) should be construed in accordance with that policy of the Corporations Act, and the same policy in the ASIC Act, so as to provide that an offer to which Division 5A applies must remain open for at least one month. That is to say, s 1019G(2) is to be construed as requiring that an offer may not close within one month of the date of offer. The effect of s 1019G(4) is that a purported earlier termination of an offer would be ineffective. It would follow that the provision in the offer document purporting to provide for close of the offer, at the earlier of the two times specified, is ineffective. 63 The claim by Aevum was that National Exchange contravened s 1019G(2) by representing that the offer would be withdrawn upon the earlier of the two times specified. Even if there were such a representation as alleged, that would not be a contravention of s 1019G(2). Any prohibition in the section is against withdrawal, not against making representations. Of course, making a false or misleading representation may attract some other remedy, but it would not attract the remedy of s 1019G(4), which provides that a purported withdrawal contrary to s 1019G(2) is ineffective. 64 Aevum also contended that the provision in the offer document that, if the offer closes earlier than 10 November 2004, National Exchange will place a notice in The Australian newspaper as soon as practical, contemplates a withdrawal otherwise than by sending a withdrawal document as provided in s 1019G(3). However, termination of an offer by lapse of time or occurrence of a condition is not a withdrawal of the offer. The placing of a notice in The Australian newspaper would not be a withdrawal. It is simply a method whereby National Exchange will notify offerees that the offers have terminated, by lapse of time or occurrence of a condition, according to the terms of the offers themselves. 65 There was no representation in the offer document that the offer could be withdrawn in a particular way. Even if there were a representation to that effect, that would not be a contravention of s 1019G(3). Further, any prohibition in s 1019G(3) is against withdrawal except in the way prescribed in the section. Section 1019G(4) provides that a purported withdrawal contrary to the section is ineffective. 66 The Commission also complained that the offer document did not contain a statement to the effect that, the offer would be withdrawn by sending a withdrawal document to the offeree, and that such withdrawal would generally not be within one month of the date of offer. In fact, as can be seen in Schedule 1, the offer document contained a statement almost precisely in those terms. The substance of the Commission's complaint is similar to that made by Aevum. The Commission contended that, by providing that the offer would remain open only until the earlier of the two times specified, there was a failure to comply with s 1019I(2)(e). Whatever might be the effect of s 1019G(2), there was no failure by the offer document to comply with s 1019I(2)(e). 67 Since I have concluded that there has been a contravention of s 1019E, it is not strictly necessary to form a final view concerning the operation of s 1019G(2). However, I consider, on balance, that the construction of s 1019G(2) contended for by Aevum and the Commission is to be preferred. Nevertheless, it would clearly be desirable for the legislation to be amended to provide, in express terms, that an offer must remain open for at least one month, if that is the intention.

SECTION 1019I(4) AND SECTION 1019K(1) 68 Aevum and the Commission complained that there was a contravention of s 1019I(4) by reason of several matters. First, it was said that the references to 'close of offer' and 'withdraw' are not clear, concise and effective in their wording, because the offer document contained provisions dealing with close of offer and withdrawal contrary to the requirement of s 1019G(2) that the offers must remain open for at least one month. 69 However, the offer document is explicit and unequivocal in stating that the offer will only remain open until the earlier of the two times specified, which will be a period of less than one month after the date of the offer. That has the consequence that the remedy under s 1019K(3) applies. Section 1019G(3) is concerned with an offer being withdrawn. Even if s 1019G(2) is to be construed as requiring that an offer must remain open for at least one month after the date of offer, that is a different question altogether from the manner in which the offer may be withdrawn. The consequence of failure to comply with s 1019G(2) is simply that the remedy under s 1019K(3) is attracted. There is no failure to comply with s 1019I(4). 70 Secondly, it was said that the name of National Exchange appeared only once in the offer document, which contained no statement describing National Exchange and informing offerees that National Exchange was not connected with Aevum and was not acting on behalf of Aevum. Thirdly, it was said that the offer document implied that National Exchange is, or is associated with, a stock exchange. Finally, it was said that the fair estimate of value was not given sufficient prominence in the offer document, such that the offer document implied that the consideration of 35 cents per share represented the fair value of the shares. Each of those contentions is dealt with below, in connection with the complaint that the offer document is misleading. 71 Even if there was a failure to comply with s 1019I(4), the remedy in s 1019K(3) would be attracted. Similarly, if there were a misleading or deceptive statement in the offer documents, the remedy in s 1019K(3) would be attracted. That is to say, the same remedy is available as is available by reason of the fact that s 1019E was not complied with in relation to the offers. That remedy is that a member would have the right conferred by s 1019K(3) to refuse to transfer shares to National Exchange or, if shares have already been transferred, to have the shares returned to the member. For the reasons given above, that remedy has already been accorded to the members of Aevum who purported to accept the offers, by the orders of 26 November 2004.

MISLEADING AND DECEPTIVE STATEMENTS 72 The Commission contended that the offer document conveyed a message that was misleading or deceptive within the meaning of s 1019K(1) of the Corporations Act, was materially misleading within the meaning of s 1041E(1) of the Corporations Act or was liable to mislead the public within the meaning of s 12DF(1) of the ASIC Act. The Commission relied upon the same facts and circumstances in support of each of those contentions. 73 It was suggested by the Commission that an inference should be drawn, from the fact that 45 per cent of the members of Aevum are over the age of 70 years, that a substantial proportion of members may not have properly understood the offer document. However, age is not of itself an indication of any disability. Further, the evidence to which I have referred above indicates some degree of sophistication on the part of some members. 74 Certainly, an inference can be drawn that many members of Aevum are persons who would be inexperienced in acquiring shares in companies and who are members of Aevum simply because they were members of a friendly society prior to its demutualisation. Nevertheless, there is nothing in the language of the offer document that, in its terms, is complex or difficult to understand. Indeed, the offer document is far less complicated and more intelligible than the documentation that the Corporations Act would require to be sent to the members of Aevum if a takeover offer were being made. 75 Thus, it is somewhat surprising that some 257 members appear to have accepted, or tried to accept, the offers made to them by National Exchange. Of those 257 members, 22 sent acceptance forms to Aevum, rather than to National Exchange. That suggests that they may have perceived some connection between the two. 76 Those members who accepted did so when the offer document offered a consideration of 35 cents per share but also informed the offeree in unequivocal terms that the offeror's estimate of the value of the shares was between 90 cents and $1.29 per share. The fact that 158 of the 165 members who responded to the letter sent out as a result of the orders made on 26 November 2004, have elected not to proceed with the sale suggests that many of the members who accepted failed to comprehend fully the statements concerning estimated value of the shares. 77 At the time of receipt of the offers from National Exchange, there was no market in shares in Aevum although, by the Prospectus, shares were being offered to the public for 90 cents each. While the estimate of value in the offer document indicates that the consideration being offered might be a substantial undervalue, it is possible that members were prepared to accept a bird in the hand; they were being offered cash immediately for shares that might in the future have a higher value. The offer document, as I have said, warned that the estimate was not a valuation. On the other hand, the letter despatched pursuant to the orders of 26 November 2004 disclosed that, by then, shares in Aevum were being sold on ASX for $1.57 and that ASX has no connection with National Exchange. That could explain a change of attitude. 78 It is fair to conclude that a substantial number of the 257 shareholders who purported to accept the offers were confused and misapprehended the value of their shares. However, it does not follow that any such confusion or misapprehension was in any way connected with the form of the offer document sent by National Exchange. The fact that confusion may have arisen as the result of members receiving two communications at about the same time dealing with much the same subject matter does not mean that the offer document itself was misleading or deceptive or was materially misleading or was liable to mislead. 79 Within a day or so of receipt of the offer documents from National Exchange, members of Aevum received the letter from Aevum of 27 October 2004, referring to the Prospectus and stating that Aevum had organised a facility to assist existing shareholders who wished to sell their shares. In addition, the acceptance form, which was enclosed with National Exchange's offer document, states the full name and address of, and number of shares held by, the offeree. The Commission contends that those circumstances would together suggest to members of Aevum that there was a connection between National Exchange and Aevum. However, that does not of itself mean that any statement in the offer document was misleading or deceptive or that any statement in it was materially misleading or that any conduct of National Exchange was liable to mislead. 80 As I have said, evidence was adduced concerning a number of telephone calls received by Aevum from members enquiring about the offer received from National Exchange. That evidence was admitted on the basis that statements made by members may be evidence of the state of mind of the members, indicating that members were in fact misled. There was also affidavit evidence from a number of members who purported to accept the offers made to them from National Exchange. 81 It is quite possible that some members of Aevum who received both the letter of 27 October 2004 from Aevum and an offer document from National Exchange may have been confused. Nevertheless, the majority of those who telephoned Aevum clearly understood that National Exchange was a different entity from Aevum. So did those who gave evidence by affidavit. If there was confusion because members of Aevum received, within days of each other, what in substance amounted to two different invitations to dispose of shares, that confusion did not arise from the wording of the offer document or the conduct of National Exchange. 82 The envelopes containing the offer document acceptance form sent to members of Aevum had the name of National Exchange in clear type on the outside. Under the heading 'Offeror', the offer document itself, says: 'This offer is made by National Exchange Proprietary Ltd'. The form of acceptance is headed as follows: 'Use this form to accept National Exchange's (Offeror's) offer to buy Your Shares in Aevum Limited' The reply paid envelope was addressed to 'National Exchange'. 83 There is no requirement of Division 5A that an offer contain any particulars about an offeror. The ACN of National Exchange is quoted immediately after its name and thereafter, the word 'Offeror' is used. If a recipient of an offer document wished to find out about National Exchange, there are avenues that could have been pursued. A member who read the documents could not fail to understand that the offer was not being made by Aevum but was being made by an entity called National Exchange. 84 Even a cursory examination of the offer document and the letter of 27 October 2004 from Aevum would have disabused the examiner of any suggestion that they came from the same source. The two letters have different headings and are in different format and style, bearing no physical resemblance. The name 'National Exchange' appears on the offer document, the acceptance form, the reply paid envelope and the envelope enclosing the documents. A different address is shown on the letter of 27 October 2004. The offer document showed the respective ACN's of each company. Whether or not a recipient of both communications at approximately the same time might be confused as to the message being given by each, it is difficult to see how anyone could reasonably assume that they came from the same source. 85 No particular prominence is given in the documents to the name 'National Exchange Proprietary Ltd'. However, at the top left hand corner of the reply paid envelope is the depiction of a building. The building has the appearance of an institution of some sort. The Commission says that that depiction, coupled with the name 'Exchange' as part of the name used by the offeror, would suggest to persons who are inexperienced in dealing in shares that National Exchange is a stock exchange. If anything, the building depicted on the envelope looks more like a monastery or an educational institution. There is no particular reason to connect the depiction with a place of commerce such as a stock exchange. Further, stock exchanges do not offer to buy shares. 86 The second line of the offer document says that it is important and that it should be read in its entirety. It exhorts the recipient to consult a financial or other adviser. At the foot of the front page in bold type are the words 'Please turn over'. At the top of the reverse of the offer document, with a heading and in print of the same size as all other parts of the offer document, other than the main heading, is the material referring to 'Fair estimate of value'. I do not consider that the offer document was misleading as to the estimate of the value of the shares in Aevum. Further, I do not consider that the offer document contains a representation, as contended by the Commission, that 35 cents is the fair value of shares in Aevum. 87 The Commission contends that since, in the offer document sent by National Exchang, there is no written statement that the offer is to remain open for a period that is at least one month, National Exchange is deemed by reg 2C to provide a financial service to each of the members of Aevum. However, one of the requirements for the operation of the deeming provision of reg 2C(1) is that an offer be accepted by a retail client. Even if, by the convoluted deeming provision of reg 2C, offering to buy shares can be the provision of a financial service, it is difficult to see how the acceptance of an offer made to a member of Aevum by National Exchange is acceptance by that member as a retail client of National Exchange as is required by reg 2C(1). In no way can it be said that any member of Aevum is a client of National Exchange. 88 Further, in making unsolicited offers to shareholders of Aevum, National Exchange could not be said to be engaging in conduct that is liable to mislead the public in some material particular. Even if it be assumed that National Exchange engaged in conduct that is liable to mislead members of Aevum as to, for example, the fairness of the price offered, that would not be misleading the public. 89 If National Exchange chose membership of Aevum as a criterion for the making of an offer of services unconnected with Aevum, it may be that the number of members of Aevum might be sufficiently large that the offerees constituted the public. However, it is quite clear that no conduct of National Exchange was directed to members of Aevum as members of the public. National Exchange was simply offering to buy shares from members. There was no offer to the public generally to buy shares, such that it would be open to a member of the public to acquire shares in Aevum and then accept the offer. Specific offers were made to specific individuals. An offer was made to more than 6,000 individuals to buy the specific shares held by that individual at the particular time. However, even if many of the members were liable to be misled by the offer made to that member, it cannot be said that the conduct of making over 6,000 individual offers was conduct that was liable to mislead the public. It follows that s 12DF(1) has no application. 90 I do not consider that the offer document contains a misleading or deceptive statement or a statement that is materially misleading. Nor do I consider that there is substance in the complaint that the offer document is not worded in a clear, concise and effective manner. Finally, I am not persuaded that National Exchange has engaged in conduct that is liable to mislead the public.

UNCONSCIONABLE CONDUCT 91 The Commission also asserts that the conduct of National Exchange was unconscionable. The unconscionability is said to arise from a number of factors, including all of the matters discussed above in relation to the question of whether the offer document and acceptance form contained a misleading statement or were materially misleading or were liable to mislead. 92 It is common ground that National Exchange is an experienced share investor with extensive experience in acquiring shares through the making of off-market share offers for shares in demutualised companies at substantially below the value of those shares. The governing mind of National Exchange is, relevantly, Mr Tweed. National Exchange, through Mr Tweed, believed that members of demutualised companies, not having paid for their shares, were more likely to sell them below value than were shareholders who had paid for their shares. 93 Mr Tweed knew that Aevum had been a mutual society, that it had recently demutualised and that, in September 2004, it was an unlisted public company with 6,255 shareholders. Mr Tweed knew that the Prospectus had been published on 29 September 2004 and that it was the intention of Aevum to offer in excess of 11 million new shares at 90 cents each and to apply for listing and quotation of its shares on ASX. National Exchange also knew that, at the time when the offer documents were sent, there was no current market price for shares in Aevum. 94 The offers made by the offer document were to remain open only until 10 November 2004, or earlier, if enough acceptances were received. Further, the offer documents were not sent as soon as practicable after the date of the offers. That delay, coupled with the failure to provide that the offer would remain open for at least one month, had the effect that members receiving the offer documents had no more than seven business days to consider the offer and obtain appropriate advice as to whether or not to accept it and then post the acceptance to National Exchange in time for it to be received by 10 November 2004. 95 Mr Tweed believed that, where shareholders of companies that have demutualised receive their shares without having to pay for them, they were more likely to accept an offer to buy their shares because they would be less interested in owning them. Mr Tweed believed that shareholders who had not paid for their shares and are not interested in holding them are more likely to be prepared to sell their shares for less than half their market value. 96 The fact that Aevum had demutualised in 2002 was one of the factors that led Mr Tweed to choose members of Aevum as the target for offers. Because Aevum was a demutualised company, where the members received their shares without having to pay for them, Mr Tweed believed that the shareholders were more likely to sell their shares. Mr Tweed perceived that it was an advantage to be able to make offers without disclosing the prevailing market price for the shares the subject of the offer. Mr Tweed believed that a reasonable person would be less likely to accept an offer if the person's attention was prominently drawn to the prevailing market price of the shares the subject of the offer. 97 Mr Tweed believed that a reasonable person would be less likely to accept the offer from National Exchange if that person's attention was clearly directed to the estimate of the value of the shares in Aevum. The form of the offer document was such that the critical information concerning the fair estimate of value was not disclosed in a prominent fashion on the front page in close proximity to the consideration for the offer; nor was it linked to the consideration. Rather, it was printed on the reverse of the offer document. The Commission contended that it could therefore be overlooked, and that an inference should be drawn that that was the intention of National Exchange. 98 There are several considerations that militate against the Commission's contentions concerning unconscionability as follows:

• there was no communication between National Exchange and any member of Aevum other than by the despatch of the offer documents;
• there was no fiduciary relationship between National Exchange and any member;
• there is no evidence that any member was under any special disability or that National Exchange was aware of the age or personal circumstance of any particular member, much less of any special disability;
• the offer documents contained a recommendation that the offeree consult a financial or other adviser and the offeree was exhorted to read the whole document;
• National Exchange disclosed its estimate of the value of shares in print of the same size as all other parts of the offer document, which was only two pages long and not expressed in legalistic terms. 99 Under the general law, conduct is not characterised as unconscionable except in relation to a particular person. Conduct is unconscionable qua a person because of the consequences of the conduct in relation to that person. It is not meaningful to speak of conduct as being unconscionable in the abstract. 100 No claim has been made by any member of Aevum that conduct by Aevum has been unconscionable in relation to that member. In particular, the Commission has not sought any relief in relation to any particular member on the basis that the conduct of National Exchange was unconscionable in relation to that member. 101 If a member of Aevum commenced a proceeding claiming relief against National Exchange by reason of unconscionable conduct on the part of National Exchange, it is possible that member could be successful. However, it is inappropriate to make a declaration or grant any other relief as to unconscionable conduct except at the suit of a person who seeks some relief in relation to that conduct. The same observation can be made in relation to the Commission's claim for a declaration in relation to alleged contravention of s 12CC of the ASIC Act. 102 The Commission contends that, by reason of the definition of financial services in reg 2C, National Exchange provided a financial service to each of the members of Aevum by sending the offer document to that member. Clearly, the intent of s 12CC(6) is that not every supply or possible supply of financial services is covered by s 12CC(1). It is a very forced concept to speak of the acceptance of an unsolicited offer to buy shares as being an acceptance for the purpose of trade or commerce. It may be that the acceptance is in the course of trade or commerce. However, there was no evidence that the acceptance by any member of Aevum was for the purpose of trade or commerce. Section 12CC therefore has no application in the present circumstances. 103 It may be that National Exchange has sought to take advantage of persons who are inexperienced in holding or dealing with shares in the capital of limited liability companies. However, I do not consider that the Commission has established that National Exchange has engaged in conduct that is unconscionable.

STANDING OF AEVUM 104 Aevum contends that its interests have been, or will be, affected by National Exchange's conduct that contravened the Act. It is not only personal rights of a proprietary nature or rights analogous thereto that must be affected, in order to attract the operation of s 1324(1). Further, it is not necessary to show that any special injury arises from the contravention in question. Nevertheless, there must be some interest of Aevum affected. Further, the relief that can be granted is constrained by the interest of Aevum that is affected; that is to say, there should be no grant of relief that is unconnected with the protection of the relevant interest. 105 Aevum contended that it has an interest that may be affected by the contraventions in question in the following respects:

• Aevum has received acceptance forms from members and may be in doubt as to what it should do with them;
• Aevum has received enquiries from members and may be in doubt as to what it should say to the members;
• Aevum has incurred the inconvenience of dealing with questions and enquiries from members;
• Members of Aevum have been deprived of a level playing field in so far as they have not been fully informed about National Exchange and have not had at least one month to consider the offer. 106 I do not consider that any of those matters constitutes an interest within the meaning of s 1324. In essence, each of the matters identified by Aevum is the consequence of offers having been made to acquire shares in Aevum, whether or not the offers comply with the requirements of Division 5A. Division 5A, as I have said, affords members a remedy in respect of the contraventions that I have found. It also affords a remedy to members in respect of any contravention of s 1019I. 107 Aevum may well have had an interest in restraining misleading or deceptive conduct on the part of National Exchange that might have created confusion as to the value of shares in Aevum, at a time when Aevum was offering its shares to the public by means of the Prospectus. In so far as the circulation of such offer documents affected the market for shares in Aevum generally, Aevum may have had standing to seek orders restraining that conduct. However, that was not the basis upon which Aevum put its claim. Rather, it sought to exercise a paternalistic interest on behalf of its members. 108 Mr Kavanagh has not accepted the offer made to him. Nor is it suggested that he wanted to or wants to accept the offer. It is not suggested that he has any relevant interest in whether other members wish to accept the offer. I do not consider that Mr Allen Kavanagh has an interest such as would support the relief claimed by him in the amended originating process.

CONCLUSION 109 The circumstances before me give rise to considerable disquiet. Demutualisation can have the result that persons who became members of a mutual society in order to take advantage of the benefits provided by such membership are converted into shareholders of a company limited by shares. Such persons may be quite unfamiliar with the concept of holding shares in a limited company and may be quite unsuited as the recipients of shares that are freely alienable. Demutualisation, therefore, may be imprudent in many instances. 110 The shares that are issued in a demutualisation process represent a distribution of wealth to the members of the mutual association, which the members would otherwise not have the opportunity of acquiring. However, it would be unfortunate if that wealth were to be lost to members of Aevum, as a result of the members being importuned by organisations such as National Exchange, simply because they have received property with which they are unfamiliar and with respect to which they have no experience. 111 For the reasons that I have set out above, I have concluded that there was a failure by National Exchange to comply with s 1019E(2) of the Corporations Act, in that the offer documents were not sent to the offerees as soon as practicable after 22 October 2004, the date of the offers. Further, I have concluded that s 1019G(2) should be construed as requiring that an offer to which Division 5A applies must remain open for at least one month, subject to being withdrawn in accordance with the provisions of Division 5A, such as s 1019J when there is an increase or decrease in the market value of shares. The offers made by National Exchange did not comply with that requirement of s 1019G so construed. 112 On the other hand, I have concluded that there was no misleading or deceptive statement in the offer documents, that there was no statement in the offer document that was materially misleading and that National Exchange has not engaged in conduct that is liable to mislead the public as to the characteristics of the offers made by the offer documents. 113 Those members of Aevum who have purported to accept the offers made by National Exchange have already been accorded the opportunity of withdrawing. As I have said, a substantial number of members have taken that opportunity. I do not consider that any further order is warranted by way of affording those offerees who have not withdrawn a further opportunity to withdraw. 114 I propose to direct the parties to bring in short minutes of orders to reflect the conclusions that I have reached and if any party seeks an order for costs, to make written submissions as to costs. I certify that the preceding one hundred and fourteen (114) numbered paragraphs and three (3) schedules are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

FIRST PROCEEDING Counsel for the Applicant: D Studdy

Dates of Hearing: 9, 12, 22 November 2004

SECOND PROCEEDING Counsel for Australian Securities and Investment Commission: J W Stevenson SC & SW Climpson

Counsel for the Respondent: G C Lindsay SC L V Gyles

Solicitor for the Respondent: Piper Alderman

Dates of Hearing: 13, 14 November 2004

Date of Final Submissions 16 November 2004

Date of Judgment: 23 December 2004

SCHEDULE 1 OFFER TO BUY YOUR SHARES IN AEVUM LIMITED

This is an important document. It should be read in its entirety. Please consult your financial or other adviser immediately. Offeror This offer is made by National Exchange Proprietary Ltd ACN 006 079 974 on its own behalf (Offeror). What is this Offer about?

Aevum Limited (Aevum) is the new name for Hibernian Friendly Society (NSW) Limited. If you were a member of that society, you would have been issued ordinary shares in Aevum (shares) as part of its demutualisation in 2002. Offeror is now making an offer to you to buy your shares. Your shares

According to the register of holders of shares in Aevum, you won the number of shares set out on the enclosed Acceptance Form (Your Shares). Offer

Offeror offers to buy Your Shares at a price of $0.35 per share, subject to the terms set out in this document (Offer). Offeror has made an offer, dated 22 October 204, on the same terms to all other holders of shares in Aevum (Other Offers). It is a term of this Offer and the Other Offers, which term cannot be waived, that Offeror will not, pursuant to this Offer and the Other Offers, purchase any more than 3,500,000 shares in Aevum. Date of Offer The Offer is dated 22 October 2004. How to Accept the Offer The Offer is accepted when you sign the enclosed Acceptance Form and it is received at Offeror's postal address and the envelope containing it is opened by Offeror's agent or employee before the close of the Offer. You do not need to do anything else to accept the Offer. A reply paid envelope is provided. Do you need to provide any anything else?

Yes - please provide the security holder reference number (SRN) for Your Shares. Offeror needs the SRN in order to transfer Your Shares. The SRN for Your Shares is shown on a holding statement which you should have received from Aevum. You do not need to provide the SRN to Offeror in order to accept the Offer but it is a term of the agreement formed by your acceptance that you must provide the SRN no later than 6 weeks after the date of your acceptance. This is most easily done by sending the Aevum holding statement to Offeror. Payment If you accept the Offer, you will be posted a cheque for $0.35 for each of Your Shares. The cheque will be posted within 7 days of Offeror receiving your SRN. Please turn over 00017705

Fair estimate of value Aevum has issued a prospectus dated 29 September 2004, for the issue of 11,111,111 shares at a price of $0.90. Offeror expects that in deciding to issue shares at that price, Aevum has received and relied upon expert advice as to the price investors would be willing to pay to subscribe for the shares on offer under the prospectus. Offeror has also considered the 2004 earnings per share of $0.071, the forecast 2005 earnings per share of $0.054 and the pro-forma net tangible assets per share of $1.29, each of which is stated in the prospectus. Offeror has also considered the price earnings ratio of companies listed on the Australian Stock Exchange, including, in particular, the S&P/ASX Small Ordinaries price earnings ratio series number of 14.66 on 12 October 2004 which would give a value of $1.04 using the $0.071 historical earnings per share. In accordance with Offeror's legal obligations (and for that purpose only), Offeror advises that, on the basis of the above information, a fair estimate of the value of a share in Aevum at the date of the Offer is a range of $0.90 to $1.29. Important qualification to fair estimate of value The above estimate is provided by Offeror to satisfy a legal requirement. It is provided in good faith. However, neither Offeror nor its director is qualified to provide valuations and this estimate should not be considered to be a valuation. If you wish to obtain a valuation of Your Shares, you should consult an appropriately qualified valuer. Power of Attorney If you accept the Offer, you appoint Offeror as your attorney to exercise all your powers and rights attaching to Your Shares, including, without limitation, to execute and deliver all forms, notices and instruments which relate to those shares (including, without limitation, documents to transfer those shares). The power of attorney is irrevocable and is granted to protect the proprietary interest of Offeror in Your Shares. Close of Offer The Offer remains open until the earlier of the following two times:

· 5:00pm (Australian Eastern Standard Time) on 10 November 2004; or

· the time when the total number of shares in Aevum in respect of which Offeror has received acceptances under the Offer and the Other Offers first exceeds 3,350,000,

If the Offer closes earlier than 10 November 2004, Offeror will place a notice in Aevum Notices section of The Australian newspaper as soon as practical to advise you of that fact. Acceptance received after close of Offer If Offeror receives your Acceptance Form after the Offer has closed, Offeror, acting as your bare trustee, will return your Acceptance Form and any documentation you have provided within five business days. Withdrawal The Offer may be withdrawn by sending you a withdrawal document, but generally not within 1 month of the date of the Offer (although it should be noted that the Offer only remains open until the time specified above).

SCHEDULE 2 Acceptance Form Use this form to accept National Exchange's (Offeror's) Offer to buy Your Shares in Aevum Limited

1. Your details Name and Address Your shares in Aevum Total consideration payable to you if you accept the Offer to buy Your Shares. (Your Shares) Justin Campbell Kavanagh G 32,300 $11,305.00 PO Box XXX SYDNEY NSW XXXX

2. Sign below I/we accept the Offer by Offeror to buy from me/us the above number of shares in Aevum Limited on the terms of the Offer set out in the Offer document sent to me/us by Offeror and dated 22 October 2004. Sign: Sign: Note: If your Aevum shares are registered in the name of more than one shareholder, all shareholders must sign. Date: / /2004
3. Post this Acceptance Form Return the signed Acceptance Form as soon as possible so as to reach Offeror before the end of the offer period. A reply paid envelope is provided. TERMS USED IN THIS ACCEPTANCE FORM HAVE THE SAME MEANING AS IN THE ACCOMPANYING OFFER DOCUMENT DATED 22 OCTOBER 2004.

SCHEDULE 3 Letterhead of National Exchange Pty Ltd (ACN 006 079 974) [Insert date] [Aevum Limited Shareholder] Dear Sir/Madam OPPORTUNITY TO AVOID SELLING YOUR SHARES IN AEVUM TO NATIONAL EXCHANGE FOR $0.35 This is an important document. It should be read in its entirety. If you are uncertain as to what you should do, please consult your financial adviser immediately. In late October/early November 2004, National Exchange Pty Ltd (National Exchange) offered to buy your shares in Aevum Limited (Aevum) for $0.35 each. National Exchange's records show that you accepted its offer. At the time of its offer, National Exchange advised that a fair estimate of the value of each Aevum share was in the range $0.90 to $1.29. Since that time, Aevum has listed on the Australian Stock Exchange and you can now sell your Aevum shares on the Australian Stock Exchange. On 23 November 2004, Aevum's shares were selling for around $1.51 per share. The Australian Stock Exchange has no connection with National Exchange. Because the Federal Court of Australia has concluded that National Exchange's offer failed to comply with the requirements of the Corporations Act, 2001, you now have three options as follows: OPTION 1: You may refuse to sell your shares to National Exchange for $0.35 per share. If you wish to refuse to sell, you must either write to, or sign and send the attached RED FORM called NOTICE REFUSING TO SELL, to National Exchange so that it is received no later than [insert date - 30 days from date of mail out]. If you choose this option, you can sell your Aevum shares on the Australian Stock Exchange. OPTION 2: You can still sell your shares to National Exchange. If you still want to sell your shares to National Exchange for $0.35 and receive payment now, you must send the attached GREEN FORM called NOTICE OF CONFIRMATION OF SALE, to National Exchange so that it is received no later than [insert date - 30 days from date of mail out]. If you do choose to receive payment from National Exchange, you may lose other rights that you may have in relation to National Exchange's Offer. OPTION 3: You may do nothing. If you do nothing, you may lose your right to refuse to sell your Aevum shares to National Exchange and you may also lose any other rights you may have in respect to National Exchange's $0.35 Offer. Yours faithfully,

NOTICE REFUSING TO SELL MY SHARES TO NATIONAL EXCHANGE (This is the RED FORM) I, [insert name] do not wish to sell my shares in Aevum to National Exchange for $0.35 per share. ……………………………………….. Signature of Shareholder Date: If you do not want to sell your Aevum shares to National Exchange for $0.35 each, you must sign and send this form, or write to, National Exchange so that it is received no later than [insert date - 30 days from date of mail out] 2004 withdrawing your acceptance. Please use the enclosed pre-paid, self-addressed envelope to post this form.

NOTICE OF CONFIRMATION OF SALE OF SHARES TO NATIONAL EXCHANGE FOR $0.35 EACH

(This is the GREEN FORM) I, [insert name] confirm I still wish to accept National Exchange's $0.35 Offer to purchase my shares in Aevum and receive payment from National Exchange now.

I acknowledge that by signing this form and choosing to receive payment from National Exchange now, I may lose other rights that I may have in relation to National Exchange's $0.35 Offer. ……………………………………….. Signature of Shareholder Date: If you want to sell your Aevum shares to National Exchange for $0.35 each, you must sign and send this form, or write to, National Exchange so that it is received no later than [insert date - 30 days from date of mail out] 2004 confirming your acceptance of the $0.35 Offer. Please use the enclosed pre-paid, self-addressed envelope to post this form.