(d) the Buyer of the shares was nominated as APT Pipelines Limited.
19 Subsequent correspondence. At approximately 1622 on 22 September 2010, APT emailed and faxed a further letter to the Chair of the Partnership Committee, relevantly as follows:
We confirm that our acceptance of the ANP Holdco's Offer in respect of 50% of the Sale Interest is unconditional.
We had sought to identify in the Annexures to our Acceptance Notice consequential changes. These proposed consequential changes incorporated amendments effectively halving warranty claim thresholds and caps. International Power has indicated that this is unacceptable. We accept that position and we will provide you with an amended table shortly.
20 And at approximately 1716 on 22 September 2010, APT emailed and faxed yet a further letter to the Chair of the Partnership Committee, as follows:
We refer to the letter from ANP SEA Gas Holdings Pty Ltd (ANP Holco) dated 25 August 2010 headed "Transfer Notice" (Transfer Notice) and our Acceptance Notice and follow-up confirmation letter of today's date. Terms used in this letter bear the same meaning as those used in the Transfer Notice or the Partnership Agreement.
Following from our confirmation letter, we now attach an amended Annexure 1 to the Acceptance Notice removing the proposed consequential changes to the SSA relating to warranty claim thresholds and caps.
21 Unconditional acceptance. The requirement in clause 22.3(e) of the Partnership Agreement that acceptance of an Offer must be unconditional reflects the position that obtains at genera1 law. An acceptance will not be unconditional if it is hedged with conditions (for example, it is expressed to be subject to finance, or to a third party's consent, or to some amendment of the terms of the offer). A purported acceptance will be construed objectively, by reference to what a reasonable recipient would have understood the document to mean, and the subjective intentions of the purported 'acceptor' are irrelevant. As Tobias JA said in Redowood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 (at [76]):
In Carter [v Hyde (1923) 33 CLR 115] the High Court stated that what must be determined is whether a reasonable recipient of the acceptance would have regarded it as corresponding to the offer or whether they would have taken the acceptance to be qualifying the original offer such that it would amount to a counter-offer or, at any rate, not an unconditional acceptance of what was originally offered. Thus Isaacs J (at 126), referring to the circumstance where the offeror had not objected to the offeree's purported acceptance (bearing in mind that in Carter the acceptance was personally delivered), observed :
In those circumstances the appropriate question is that of Romer J in Jones v Daniel, namely 'Now what would anybody when he received that letter fairly understand to be the meaning of it?' and I add, of course, 'in the circumstances of its receipt' ...
22 The context in which the APT Acceptance Letter was sent and received is of importance. First, clause 22.1(e) of the Partnership Agreement required that an acceptance be unconditional; a requirement that was repeated in the Transfer Notice itself. That makes it improbable that a purported acceptance would be intended to be other than unconditional. Secondly, ANP had stipulated for a concurrent response to its request for Change of Control Consent, so it would have been contemplated that, with APT's response to the Transfer Notice, there would be a concurrent response to the alternative proposal involved in the Change of Control Consent. Thirdly, rightly or wrongly, the parties were apparently operating on the basis that the closing time for acceptance was, or at least might be, 1600 on 22 September, as asserted by ANP in its letter of 2 September 2010. Fourthly, as required by the Partnership Agreement in respect of an acceptance, it was sent not to ANP (which might have been appropriate for a counter-offer), but to the chair of the Partnership Committee.
23 So too is the content of the Acceptance Letter. It was entitled, "Transfer Notice Letter Acceptance Notice". The first three paragraphs, had they stood on their own, would have been unambiguously an acceptance of the Transfer Notice offer. In that respect, they are reinforced by the last paragraph. There is nothing in the letter that explicitly states that the acceptance expressed in those paragraphs is other than unconditional. The remaining paragraphs, which are said to amount to the implicit imposition of conditions on the acceptance, in my opinion do not have that effect. As is indicated in the opening words of the fourth paragraph ("We note from the premises of ANP Holdco's Change of Control Consent Letter …"), the subject matter switches at that point from the response to the Transfer Notice, to a response to the Change of Control Consent Request. In that respect, the response notes ANP's preference, and states that, subject to various matters, APT is willing to accede to your preference and instead acquire 50% of the issued share capital in ANP - that is, instead of the consequences of acceptance of the Transfer Notice. That amounts to no more than an expression of a willingness to accede to a request to substitute a different arrangement, and not the attempted imposition of a condition upon what had already been accepted. The substitution of APT Pipelines as buyer is proposed in that light - in the event that the alternative arrangement is to proceed, not imposed as a condition of acceptance of the Transfer Notice. The various proposed alterations to the Share Sale Agreement are what APT perceives to be the "mechanical consequences" of "your preference" - namely to proceed by way of "upstream" sale.
24 ANP points to the paragraph:
As ANP Holdco will appreciate, certain other mechanical, consequential changes to the SSA and the Escrow Agreement flow from this to give effect to this Acceptance Notice (for the purposes of clause 22.3(a)). We have sought to identify in the Annexure to this letter those consequential changes (in a table and handwritten format) for ease of reference.
25 It argues that the only transaction provided for under clause 22.3(a) was a transfer of shares in the ANP Partners (ie the primary transaction), and that dealings in shares in ANP (ie the alternative transaction) were regulated by clause 23 of the Partnership Agreement, which contained no offer/acceptance regime and had the effect of requiring the consent of all holding to any change in ownership of ANP; the notice therefore explicitly recognised that amendments contained in the annexed table also related to the sale of shares in the ANP Partners; accordingly, the terms of the notice were contrary to the submission that the proposed changes to the SSA were limited to those flowing from ANP's preference for the alternative transaction.
26 I do not accept this. First, the words "from this" in the above excerpt relate back to "your preference" in the preceding paragraph, which ties it to the proposed alternative transaction - the "upstream" sale. Secondly, even if APT were seeking to apply some of the so-called "mechanical consequences" - such as halving various warranty thresholds - to the primary transaction (the contract arising from acceptance of the Transfer Notice simpliciter), in the context that REST had also accepted, their very description as "mechanical" or "consequential" is telling: APT was not seeking to propose substantive changes to the contract that was brought into existence by unconditional acceptance of the Transfer Notice, but merely to suggest what consequential changes to the documentation would be required, in the events that had transpired, to give effect to the contract that arose upon acceptance of the Transfer Notice. In my view, this was not an attempt to propose new or different terms, but at the highest to suggest necessary formal amendments in order to document accurately the terms of the contract that would automatically arise upon acceptance - this was seen as necessary because not all the terms of the SSA with SIH which related to 100% of the shareholding were applicable in the context of a sale of 50% of the shareholding to each of APT and REST.
27 It is useful to consider two questions.
28 First, in the context that the Acceptance Letter was sent, 90 minutes before the offer lapsed, to the person nominated for receipt of notices of acceptance (as distinct from the offeror); that any acceptance was required to be unconditional; that the Acceptance Letter expressed in terms acceptance of the offer contained in the Transfer Notice, and did not state that it was other than unconditional, nor expressly impose any condition; and that it concurrently addressed the Change of Control Request, in circumstances where a concurrent reponse to that request had been sought: could the recipient reasonably have thought that APT was really saying, not (as the letter did) "In accordance with clause 22 of the Partnership Agreement, we accept ANP Holdco's offer in respect of 50% of the Sale Imnterest", but instead "We are prepared to accept ANP Holdco's offer only if ANP agrees to substitution of a different purchaser, and the various alterations set out in the attached table"? That is not what the letter explicitly said, and in my view a reasonable recipient would in the circumstances not have regarded it as implicitly doing so.
29 Secondly, if ANP were the plaintiff, suing to enforce an agreement said to arise from the Acceptance Letter, could APT have succeeded in an argument that it had not accepted the Transfer Notice offer, but rejected it and made a counter-offer? In my view, plainly not.
30 It follows that, in my opinion, APT accepted the offer contained in the Transfer Notice by its letter of 1430 on 22 September 2010. The other issues do not therefore arise. However, lest I be incorrect on the dispositive issue, I shall briefly record my views in respect of them.
Unconditional acceptance by later correspondence?
31 Were they within time, APT's subsequent communications of 1622 and 1716 on 22 September put beyond doubt that APT's intention was unconditionally to accept the offer.
32 I do not accept that, even if the 1430 letter was not an unconditional acceptance, it had the consequence that thereafter the offer was no longer available for acceptance. A rejected offer does not always lapse, and may remain operative if in the circumstances it should be treated as remaining on foot and available for acceptance [Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, [80]]. Here, the offer was required to remain open until the stipulated closing time, and did not lapse just because there was at first, at worst, an equivocal response.
Subsequent correspondence out of time?
33 The offer was required to remain open for a period stated in the Transfer Notice, being not less than twenty Business Days from its date. A Business Day was defined as a day other than a Saturday, Sunday or public holiday; but there is nothing in the definition to limit it by hours, and in particular nothing to indicate that it ends at 1600; accordingly, for present purposes, a Business Day, like any other day, ends at 2359.
34 Clause 22.3(a) of the Partnership Agreement provides that "at any time during the Offer Period" a Remaining Holding Company may "give notice in writing to the chairperson of the Partnership Committee ... accepting the Offer". The Transfer Notice was dated 25 August, and delivered at about 1540 that day. It was uncontroversial that that 22 September was the 20th Business Day after the date of the offer. The Transfer Notice stated that it was open for a period of twenty Business Days from its date (not from its hour). In my view, that means until the close of twenty complete Business Days after the date of the offer, not only until the expiration of twenty 24-hour periods on Business Days from the moment of the offer. The Offer Period therefore expired at 2359 on 22 September.
35 Clause 31 of the Partnership Agreement is entitled "Notices". Clause 31.1 requires a "notice or other communication ... given under this Agreement" to be in writing, signed by or on behalf of the sender. I agree that the Acceptance Notice required to be sent by an accepting Remaining Holding Company under clause 22.3(a) is, by definition, a notice given under the Partnership Agreement, and falls within the scope of clause 31.
36 By clause 31.2, a notice may be given to the addressee by hand delivery, pre-paid mail or facsimile transmission. Clause 31.3 provides for deemed receipt of postal notices on the third Business Day after posting (or the tenth Business Day if posted outside of Australia), unless it is in fact received earlier. In other words, it facilitates proof of service, but permits proof of actual service at an earlier time.
37 Clause 31.4 provides for deemed service of notices sent by facsimile to certain specified facsimile numbers:
Subject to this Agreement, a Notice sent by facsimile transmission to the facsimile number shown for the addressee in Schedule I will be deemed to have been received by the addressee when transmission of all pages of the Notice has been confirmed by the sender's facsimile machine.
38 Clause 31.4 facilitates proof of service in the cases to which it applies. However, it does not apply to service on the Chair of the Partnership Committee, who is not listed in Schedule 1. Contrary to REST's submission, the words "Subject to this Agreement" do not permit the clause to be read as if the Chair were listed with a facsimile number in Schedule 1, when he is not. Thus "deemed" service under clause 31.4 is not available in the case of service on him; actual notice must be proved - although here, it was not in issue.
39 Clause 31.4 does not contain a provision, equivalent to that in clause 31.3, permitting proof of actual service earlier than deemed service. This is unsurprising, because of the instantaneous nature of facsimile transmission. However, clause 31.5 provides:
If clause 31.4 would deem a Notice to have been received on a day other than a Business Day or at a time after 4.00pm on a Business Day, that Notice will be deemed to have been received by the addressee at 10.00am on the next Business Day after transmission.
40 Clause 31.5 also does not expressly contain a provision, equivalent to that in clause 31.3, permitting proof of actual service earlier than deemed service. However, the purpose of clause 31.5 is to mitigate the rigours of deemed service under clause 31.4. In my view, it does not apply where "deemed" service is not relied upon, but actual notice is established. This is consistent with the provisions of clause 31.3, allowing for proof of earlier actual notice. It is also consistent with the circumstance that there is no limit (to 4.00 pm or otherwise) in respect of service by hand, which could therefore take place until 2359, if the Chair could be found. In those circumstances, there is no reason for excluding proof of earlier actual notice by facsimile, where deemed service is not relied upon.
41 Accordingly, clauses 31.3, 31.4 and 31.5 are about deemed service. They facilitate proof of service. They do not exclude proof of earlier actual service.
42 Here, the chair of the partnership committee is shown to have actually received the supplementary acceptance communications before the close of the twentieth Business Day after the date of Transfer Notice, albeit after 1600. In those circumstances, they were within time. The deeming provisions need not be - indeed, because the chair is not listed in the schedule, cannot be - invoked.
43 It follows that the supplementary APT acceptance correspondence was in time, and even if (contrary to my principal conclusion) the 1430 Acceptance Letter did not have effect as an unconditional acceptance, any doubt was removed by the subsequent correspondence.
Validity of the Transfer Notice
44 APT did not ask me that the Transfer Notice be held invalid if I concluded, as I have, that it had effectively accepted the offer. The defendants argued that APT was precluded from impugning its validity, and that in any event it was valid.
45 I would not accept that APT was precluded, on any of the various bases advanced by the defendants, from contending in the alternative that the Transfer Notice was not a valid one. All the "preclusion" arguments arose, in one way or another, from the circumstance that APT had purported to accept the offer, which was said to be inconsistent with contending that there was no valid offer.
46 Estoppel. It was argued that APT was estopped, either by an equitable estoppel or a conventional estoppel, founded on an assumption entertained by the defendants and either encouraged or shared by APT, that the Transfer Notice was valid, upon which the defendants are said to have acted. However, any change in the defendants' positions arose from REST's acceptance of the Transfer Notice, which was undertaken without reference to anything done or omitted by APT. Moreover, APT's letter to ANP of 1 September had referred to "the purported Transfer Notice", and to a contemplated response by APT "assuming it is valid", in a manner that left open the question of the validity of the Transfer Notice. In my view, no estoppel arises.
47 Common law election. It was argued that by (of necessity, unconditionally) accepting the Transfer Notice offer, APT elected against impugning its validity. However, there were no inconsistent rights between which APT had to elect. There were no concurrent rights to rescind or affirm: APT could if it wished state, "we do not accept that this is a compliant offer, but lest it is we unconditionally accept it". The requirement that any acceptance be unconditional does not dispense with any entitlement to dispute the validity of the offer; it means only that the acceptance cannot be hedged with conditions (for example, made subject to finance approval, or to a third party's consent).
48 Approbation and reprobation. It was argued that, by accepting the offer in the Transfer Notice and then disputing the validity of the offer, APT was impermissibly "approbating and reprobating" the Transfer Notice. The complaint of "approbation and reprobation" is commonly made, but is usually inapt: the doctrine is of limited application, being indistinguishable from that of equitable election [Lissenden v CAV Bosch Ltd [1940] AC 412, 417; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, 588 [57]], by which equity fastens on the conscience of a person talking under a deed or will to refuse to permit him or her to take the benefit conferred free of the conditions attached to the gift [Pridmore v Magenta Nominess Pty Ltd (1999) 161 ALR 458, 470]. The circumstances necessary to attract the doctrine - in effect, a conditional gift - do not exist here.
49 Inconsistent pleading. It was argued that to plead the invalidity of the Transfer Notice was inconsistent with pleading valid acceptance of it. So it is, but the rules permit the pleading of inconsistent cases in the alternative [(NSW) Uniform Civil Procedure Rules 2005, r 14.18(2)]. Specifically, it is permissible for a defendant in a claim for breach of contract to deny the contract, and alternatively to plead that if there was one, then then plaintiff was in breach and liable to pay damages to the defendant [Peninsula & Oriental SN Co v Britnell (1892) 18 VLR 580].
50 Validity. However, I would not accept that the Transfer Notice was invalid. Essentially, the argument was that because various aspects of the SSA with SIH (such as the "purchaser guarantor") were not relevant or capable of application to a sale to REST and/or APT under the pre-emption provisions, and others such as the warranty thresholds arguably required adjustment, the offer in the Transfer Notice either was not capable of immediate acceptance, or was too uncertain to found a contract. But although I accept that some difficulties arise from the form of the SSA, they are not insuperable; they are capable of resolution by a process of construction. The requirement of clause 22.1(b)(iii), that the Transfer Notice contain "all the other terms …, which must be the same as those of the proposed Third Party transfer", must be read as if it included words to the effect: "mutatis mutandis and so far as relevant to the pre-emptive transaction". While that may leave some room for dispute, it is a dispute that can be resolved by a process of construction of the Partnership Agreement and the SSA. Any contrary conclusion would wholly defeat the intention of the parties that there be an enforceable pre-emptive regime.
Conclusion
51 APT accepted the offer contained in the Transfer Notice by its letter of 1430 on 22 September 2010. In the context that the Acceptance Letter was sent, 90 minutes before the offer lapsed, to the person nominated for receipt of notices of acceptance (as distinct from the offeror); that any acceptance was required to be unconditional; that the Acceptance Letter expressed in terms acceptance of the offer contained in the Transfer Notice, and did not state that it was other than unconditional, nor expressly impose any condition; and that it concurrently addressed the Change of Control Request, in circumstances where a concurrent response to that request had been sought: the recipient could not reasonably have thought that APT was really not accepting the offer (as the letter stated) but instead insisting on various amendments.
52 The other issues do not therefore arise. However, even if (contrary to my principal conclusion) the 1430 Acceptance Letter did not have effect as an unconditional acceptance, the subsequent APT acceptance correspondence was in time, and removed any doubt.
53 Although I would have rejected each of the so-called preclusion arguments, I would not have accepted that the Transfer Notice was invalid. The requirement of clause 22.1(b)(iii), that the Transfer Notice contain "all the other terms …, which must be the same as those of the proposed Third Party transfer", must be read as if it included words to the effect: "mutatis mutandis and so far as relevant to the pre-emptive transaction", and while that may leave some room for dispute, it is a dispute that can be resolved by a process of construction of the Partnership Agreement and the SSA.
54 I make declarations in accordance with claims 1, 3 and 4 in the Summons. I order that the defendants pay the plaintiff's costs.
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