AUSTRALIAN AGRICULTURAL COMPANY LTD v AMP LIFE LTD

Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038 TRADE PRACTICES - Application for interlocutory injunction - sale of shares in pastoral company by tender - unsuccessful tenderer claims to have been misled by seller's misleading and deceptive conduct - whether serious issue to be tried as to falsity of representations - whether injunction should be granted which affects the rights of successful tenderer - balance of convenience.

Life Insurance Act 1995 (Cth), Pt 4 Div 1, s 32(1)(b) Trade Practices Act 1974 (Cth), ss 52, 75B(1)(c), 80, 82 87 Pastoral Land Act 1992 (NT), s 34 General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 cited Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 cited Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 cited Tidy Tea v Unilever Australia Ltd (1995) 32 IPR 405 cited American Cyanamid Co v Ethicon Ltd [1975] AC 396 cited Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159 followed Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 cited Chan v Cresdon Pty Ltd (1989) 168 CLR 242 cited ANZ Executors & Trustees Ltd v Humes Ltd [1990] VR 615 cited Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 cited Re LSH; Ex parte RTF (1987) 164 CLR 91 cited Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 distinguished Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 cited AUSTRALIAN AGRICULTURAL CO LTD v AMP LIFE LTD & ORS N 1444 OF 2003 SACKVILLE J SYDNEY 30 SEPTEMBER 2003

BETWEEN: AUSTRALIAN AGRICULTURAL COMPANY LIMITED

THE COURT ORDERS THAT: 1. The application for an interlocutory injunction be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

a claim for an interlocutory injunction 1 In April 2003, the first respondent ("AMP Life") commenced a tender process in order to dispose of its 100 per cent shareholding in Stanbroke Pastoral Company Limited ("Stanbroke"), which is said to be the world's largest cattle producer. AMP Life carries on life insurance business in Australia and is a registered insurer under the Life Insurance Act 1995 (Cth) ("Life Insurance Act"). Its shareholding in Stanbroke ("the Stanbroke Shares") was held as an asset of AMP Life's statutory fund established pursuant to the provisions of Part 4, Div 1 of the Life Insurance Act. A life company must give priority to the interests of owners and prospective owners of policies in the investment, administration and management of the assets of a statutory fund: Life Insurance Act, s 32(1)(b). 2 The second respondent ("AMP Henderson") is a funds manager. Like AMP Life, it is ultimately a wholly owned subsidiary of AMP Ltd. AMP Henderson was the agent of AMP Life for the purpose of managing the latter's assets, including the Stanbroke Shares. The person handling the transaction on behalf of AMP Henderson, and who was responsible for making recommendations to the board of AMP Life concerning the sale of the Stanbroke Shares was Mr Mark Derwin, Director of Operations for Henderson Private Capital, a division of AMP Henderson. Mr Derwin is also a director of Stanbroke. 3 The events which directly gave rise to these proceedings occurred during the period Wednesday, 3 September 2003 to Tuesday, 9 September 2003, most particularly on Friday 5 September 2003 and the early hours of Saturday 6 September 2003. These events represented the culmination of the tender process that began in April 2003. 4 At 9.51 am on Friday 5 September 2003, Mr Holmes ŕ Court, the Chief Executive Officer of the applicant ("AACo"), made an offer on behalf of AACo to purchase the Stanbroke Shares for a "Pre-Adjustment Purchase Price" of $420 million. The offer was said to reflect the nature and amount of the liabilities (including external bank debt) disclosed in Stanbroke's 30 June 2003 Management Accounts. The offer provided for an adjustment to be made to the purchase price depending on whether Stanbroke's "Net Assets" on completion exceeded or were less than the Net Assets recorded in the management accounts as at 30 June 2003. 5 At 3.22 pm on the same day, the third respondent ("Nebo") made an offer to purchase the Stanbroke Shares for a price of $417.5 million plus payout of what was described as "the ANZ Liability" of $73 million. The ANZ liability was a reference to the interest bearing current liabilities recorded in the Management Accounts. The Nebo offer made no provision for adjustments. At 7.52 pm on the Friday evening, Nebo faxed a slightly revised form of offer to Mr Derwin. The amount of the offer was, however, unchanged. 6 At about 11.30 pm that night, Mr Derwin collected Nebo's faxed offer at his office. At 12.30 am on Saturday, 6 September 2003, Mr Derwin confirmed AMP Life's acceptance of Nebo's offer. Earlier that day, the board of AMP Life had resolved to delegate to AMP Henderson to accept an offer from either AACo or Nebo to acquire AMP Life's 100 per cent interest in Stanbroke "at or in excess of $408 million (which equates to an Enterprise Value of $498 million, including consolidated debt of $90 million)" and to agree to the terms of sale. 7 AACo, which is a publicly listed company and is said to be the world's second largest cattle producer, now seeks an interlocutory injunction under s 80 of the Trade Practices Act 1974 (Cth) ("TP Act"), or otherwise in equity, restraining AMP Life from transferring the Stanbroke Shares to Nebo or any third party, otherwise than pursuant to an order requiring AMP Life to repeat the Stanbroke tender process under independent supervision as determined by the Court. Its case is pleaded in an Amended Statement of Claim ("ASC") filed on the second morning of the interlocutory hearing. 8 The ASC was filed in consequence of a direction made by me at the conclusion of the first day of the interlocutory hearing. In opening AACo's case on the first day, Mr Meagher SC (who appeared with Mr Karas for AACo) made several allegations that clearly travelled beyond the scope of the original Statement of Claim filed on 18 September 2003, at the time the proceedings had been instituted. The allegations made by Mr Meagher included a claim that Mr Derwin had engaged in a "deception" in order to prefer the interests of Mr Hughes, a director of Stanbroke and a shareholder in Nebo, and "perhaps" to prefer his own interests, over those of AMP Life's policy holders. Mr Meagher also said that there had been "collusion" between Mr Derwin and Mr Hughes designed to bring about Nebo's success in purchasing the property at the expense of AACo and the policy holders. 9 Because of the serious nature of these allegations, I made the direction for further pleadings. The ASC makes no mention of "collusion", nor do the particulars refer to any deception or similar conduct designed to enhance the interests of Mr Hughes or Mr Derwin over those of the policy holders. I interpret the ASC as retreating from the sweeping claims of misconduct made by Mr Meagher in opening the case. 10 The hearing continued for three days, concluding late on Friday 26 September 2003. Although Mr Derwin was the only witness who was cross-examined, numerous affidavits were read and a large volume of documentation admitted into evidence. The parties also made detailed submissions. Conscious of the urgency of the matter, I indicated that I would deliver judgment at 2.15 pm on Tuesday, 30 September 2003. Because of the constraints of time, the judgment is less complete than it otherwise would have been. 11 I should emphasise that my reasoning is based, as it must be, on the evidence adduced at the hearing. If the matter proceeds to a final hearing, the evidence may well be different in scope and effect.

The pleadings 12 AACo's case, as pleaded in the ASC, rests on two causes of action.

the process contract 13 First, it is said that there was a contractual relationship between AACo and AMP Life and AMP Henderson as to the procedure and guidelines that would apply in respect of the Stanbroke tender process (the "Process Contract"). The terms of the Process Contract are said to include implied terms that

• AMP Life and AMP Henderson (together "AMP") would act fairly and in good faith in the conduct of the Stanbroke tender process;
• the evaluation of the competing tenders would accord with the statutory obligation of AMP Life to give priority to the interests of owners and prospective owners of policies;
• the bid with the highest financial return, subject to certainty as to payment, would be preferred to other bids with lower returns; and
• the criteria disclosed to bidders would be the only criteria relevant to the final determination of the successful bidder. 14 AACo pleads that AMP was in breach of the Process Contract in that
• AMP did not act fairly and in good faith in the conduct of the Stanbroke tender process;
• the evaluation of the competing tenders was not in accord with, but contrary to the statutory obligations of AMP Life to give priority to the interests of owners and prospective owners of policies;
• AMP Henderson did not recommend and AMP Life did not accept the AACo bid, notwithstanding that it was the bid with the highest financial return, with certainty as to payment, in preference to other bids with lower returns;
• AMP treated as determinative Nebo's intention to operate Stanbroke as an independent entity, contrary to representations made by AMP in a document entitled "Stanbroke Pastoral Company Pty Ltd - Information Flyer" ("the Information Flyer") that it would be equally acceptable for a bidder to operate Stanbroke as a merged operation; and
• AMP acted upon criteria not disclosed to AACo, whose tender unknowingly proposed a future course of action inimical to the undisclosed criteria. 15 AMP's breaches of the Process Contract are said to have caused losses to AACo. These are said to be the costs incurred by AACo in participating in the tender process, and the loss of opportunity to profit from AACo acquiring the Stanbroke Shares. The particulars provided by AACo rely on the similarity of its business with that of Stanbroke and the fact that Stanbroke has very substantial grazing properties contiguous and adjacent to those of AACo in the Northern Territory and Queensland. It is said that the acquisition of the Stanbroke Shares, and the merger of the two businesses, would have produced economies of scale of a significant magnitude and would have enhanced the profits made by AACo.

the tp act claim 16 Secondly, the ASC pleads that AMP made a series of representations, each of which was misleading and deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("TP Act"). 17 The first representation is said to have been made on 4 April 2003 in conversations between Mr Mohl, the Chief Executive Officer of AMP, and Mr Roberts, a director of AACo (the "Mohl Representations"). In those conversations, Mr Mohl is said to have stated, consistently with AMP's statutory obligations, that "the Stanbroke [S]hares were offered for sale by tender so as to obtain the best price and thereby discharge responsibilities to its policy holders". 18 It is pleaded that the Mohl Representations were intended to mean and were intended by AACo to be understood as meaning that "(a) the sole purpose of the Stanbroke tender process was to achieve the best price for the sale of the Stanbroke Shares and so achieve a maximum return on investment for its policyholders[; and] (b) the achievement of the said purpose would be given priority over other considerations that did not advance the interests of its owners and prospective owners of policies." 19 The second of the representations (the "Derwin April Representation") is said to have been made in a media release by AMP Henderson on 29 April 2003, whereby it was stated on behalf of AMP Life that "the principal objective of the Stanbroke tender process was to maximise the investment return for [AMP Life]". This was intended, so it is alleged, to convey the same meaning as the Mohl Representations. 20 The third representation is said to have been contained in the Information Flyer issued by AMP in late April 2003 relating to the tender process (the "Information Flyer Representation"). The Information Flyer is alleged to have stated that "the principal objective of the Stanbroke tender process was to maximise the investment return, embrace bidders wishing to operate Stanbroke either as an independent entity or as a merged entity, that a nonconforming bid would be acceptable if return to policy holders was enhanced, and that the second respondent did not plan to manage any residual interest in Stanbroke following completion of the sale." The Information Flyer Representation is said to have conveyed the same meaning as the Mohl Representation and, in addition, two further requirements as follows: "(a) a non-conforming bid would be accepted if the return to policyholders would be enhanced[; and] (b) there would be no residual interest retained by the respondents in the Stanbroke Shares or Stanbroke Assets following completion of the sale." 21 The fourth representation relied on is said to have been made on 3 September 2003, by Mr Derwin in a conversation with Ms Catanzaro, the chief financial officer of AACo. This representation (the "Derwin September Representation") is said to have been to the effect that "the only matter of concern in the AACo First Tender [made on 1 September 2003] was the terms of the material adverse change clause in AACo's final share sale agreement permitting withdrawal from the purchase of the Stanbroke Shares if specified circumstances occurred between acceptance and settlement." 22 The Derwin September Representation is alleged to have been intended to convey the following: "(a) That the respondents were evaluating the AACo First Tender by giving priority to the interests of owners and prospective owners of life policies referable to the first respondent's statutory fund. (b) That consistently with this priority the respondents were seeking to maximise the financial return on the investment in Stanbroke Shares. (c) That the terms of the material adverse change clause in the final share sale agreement was the only impediment to the AACo First Tender being considered. (d) That if AACo was prepared to amend the material adverse change provisions of the final share sale agreement comprising part of the AACo First Tender and submit a revised tender, the revised tender would be considered in keeping with their primary objective, namely to maximise a return on investment to policyholders." 23 AACo pleads that each of the four representations was intended to induce it to submit an expression of interest in acquiring the Stanbroke Shares and to participate in the tender process after being selected as a short listed bidder. It is also said that AACo was entitled to assume that AMP Henderson would inform it if at any time during the tender process, the sale of the Stanbroke Shares was not being made for the purpose of maximising a return on investment for policyholders. 24 AACo alleges that at the time each representation was made AMP Henderson knew or ought to have known that undisclosed criteria would be applied in the evaluation of tenders. The particulars state that AMP, from the commencement of the tender process, intended that the successful bidder should have the intent of preserving Stanbroke as a going concern and applied that consideration in determining to award the tender to Nebo to the exclusion of AACo. 25 The Derwin September Representation is said to have re-enforced AACo's belief as to the continuing nature of the other Representations and "thereby prevent AACo from making any revision to [its] tender to address the undisclosed criteria". 26 The ASC next alleges that, prior to 9 September 2003 (the date on which the media announcement publishing the sale of the Stanbroke Shares to Nebo was made), AMP conducted itself in a manner that falsified the representation. In particular, it is said that:

• AMP Life decided that it would, and it in fact did, agree to sell the Stanbroke Shares to Nebo in circumstances where the bid submitted by Nebo did not, in comparison to AACo's bid, maximise return on investment for its policy holders;
• AMP Henderson made a recommendation that the Nebo bid be accepted on the basis of undisclosed criteria; and
• AMP agreed to evaluate bids by considering whether they would satisfy undisclosed criteria, rather than maximise a return on investment to policy holders. 27 It is then said that by reason of the various representations, AMP Life and AMP Henderson were under a positive duty to disclose to AACo, on becoming aware that they or either of them intended to act contrary to the representations, the changed circumstances for the conduct of the tender process, thereby ensuring that AACo was afforded an opportunity to submit bids expressly addressing the undisclosed criteria. AMP is alleged to have failed to discharge that duty. 28 The ASC pleads that AACo at all times would have been prepared to give an undertaking in reasonable terms to satisfy the undisclosed criteria had they been made known. Accordingly, AMP's misleading and deceptive conduct unfairly precluded AACo from selection as the preferred bidder. 29 It is alleged that by reason of AMP's misleading and deceptive conduct AACo suffered loss or damage in that it has been "unfairly deprived of an opportunity to enjoy the fruits of participating in the Stanbroke tender process and [of acquiring] the Stanbroke Shares". 30 The losses are said to include the costs of participating in the tender process and the "loss of opportunity to profit from AACo acquiring the Stanbroke Shares". I have already referred to the particulars provided in support of the latter claim.

the allegations against nebo 31 The original Statement of Claim and Application did not join Nebo as a party to the proceedings. At the commencement of the hearing Nebo applied, without opposition, to be joined as a party to the proceedings. I granted the application because an injunction, clearly enough, would affect Nebo's rights under its contractual arrangements with AMP Life (assuming such rights to be enforceable): General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164, at 193, per Davies and Einfeld JJ; at 196, per Gummow J. The ASC of course names Nebo as a party but seeks no relief against it. 32 Nonetheless, the ASC makes certain allegations against Nebo. As Mr Meagher explained, these allegations are not intended to plead a case that Nebo was knowingly concerned in, or party to, AMP's alleged contravention of s 52 of the TP Act: see TP Act, s 75B(1)(c). Rather, the allegations are intended to show that Nebo should not be regarded as an "innocent third party" when it comes to considering whether to grant injunctive relief in favour of AACo. 33 The ASC alleges that at all material times Nebo knew that the various representations made by AMP had been made to others who participated in the tender process, including AACo. It is said that Nebo knew or should have known that the representations were intended to mean that the sole purpose of the Stanbroke tender process was to achieve the best price for the sale of the Stanbroke Shares and that the achievement of that purpose would be given priority over other considerations that did not advance the interests of policy owners. 34 The ASC continues as follows: "67. At all times material Nebo knew that before and from the commencement of the tender process the first and second respondents had the intention of ensuring that the successful bidder would have the intent to preserve Stanbroke as an ongoing concern, and would apply that consideration in its 'decision making process' when determining to award the tender, and thereby knew, or ought to have known, that an undisclosed criteria would be applied in the evaluation of the bids received during Stage 2 of the Stanbroke tender process. Particulars of Knowledge Nebo by its director Peter M Hughes in writing by letters dated 26 March 2003 to the first respondent and Stanbroke, and by letters dated 15 April 2003 to Stanbroke stated that it would maintain Stanbroke as a going concern well into the future, and would maintain the same management structure, and thereby acknowledged the significance to the first and second respondents of that criteria. 68. In the premises, at all times material Nebo knew or ought to have known that the said conduct of the first and second respondents was misleading or deceptive or likely to mislead or deceive AACo in breach of Section 52 of the Trade Practices Act 1974 (Cth). 69. With the knowledge referred to in paragraph 68, Nebo addressed the undisclosed criteria by making representations to the first and second respondents asserting an intent to maintain Stanbroke as an independent entity and thereby enhanced its success in gaining the Stanbroke shares in preference to AACo."

the relief sought 35 AACo seeks by way of final relief a permanent injunction in the terms to which I have referred. It also seeks an order under ss 80 or 87 of the TP Act requiring AMP Life "to repeat Stage 2 of the Stanbroke tender process under independent supervision as determined by the Court". AACo further seeks damages for breach of the Process Contract and recovery under ss 82 and 87 of the TP Act for the amount of loss and damage caused by the conduct of AMP in contravention of s 52 of the TP Act.

the course of events 36 On 29 January 2003, Mr Holmes ŕ Court and Ms Catanzaro of AACo met with Mr Blackadder, the Chairman of Stanbroke, and Mr Derwin. AACo made a presentation with a view to acquiring Stanbroke. The presentation addressed the benefits of a merger between Stanbroke and AACo having the effect of creating Australia's largest cattle company. 37 On 10 March 2003, AACo made an indicative cash offer for AMP Life's equity interest in Stanbroke based on an "ungeared equity value of $423 to $438 million". Taking into account parent company debt of $63 million as at 31 December 2002, this was said to provide a value for AMP's equity of $360 to $375 million. 38 On 26 March 2003, Mr Hughes wrote to Mr Derwin stating that he (Mr Hughes) was involved in an entity which would like to purchase Stanbroke and keep it as a going concern. The letter asked whether AMP Life would entertain an offer in excess of $400 million. 39 On 1 April 2003, AMP Henderson announced the tender process for Stanbroke. The media release included these statements: "Maximising investment returns for our client is our principal objective here; taking advantage of the keen interest in Stanbroke and favourable market conditions positions us well to achieve this. If a suitable sale price is not forthcoming, we will have no hesitation in continuing to manage this investment on behalf of our client. It has provided AMP Life with strong returns". 40 On 10 April 2003, AACo withdrew its indicative offer. 41 On 15 April 2003, Mr Hughes wrote to Stanbroke's managing director confirming that Nebo was a new entity incorporated specifically for a proposed tender bid for the acquisition of Stanbroke. The letter also confirmed previous advice that "Nebo, should it be the successful tenderer, would continue with the same management structure, subject to satisfactory agreement being reached with management, and continue to operate Stanbroke as a going concern well into the future." 42 On 24 April 2003, Mr Derwin wrote to Mr Hughes in the latter's capacity as a director of Nebo, stating that "[n]either AMP nor I have ever held any opinion about your intentions for Stanbroke and note your current and previous commitment to continue with the current management structure". The letter stated that Mr Hughes would be contacted by a representative of Rabo Corporate Finance & Securities Pty Ltd ("Rabobank") with further details about the tender process. (Rabobank had been appointed as corporate adviser to AMP in respect of the sale of the Stanbroke Shares.) 43 On 29 April 2003, AMP Henderson issued a media release. The release included the following passage: "Maximising investment returns for our client is our principal objective here; the tender process is being undertaken due to significant expressions of interest from a number of parties, at a time when market conditions for a possible divestment are favourable. Taking advantage of these conditions positions us well to achieve our objective." 44 The Information Flyer published at the same time contained an "IMPORTANT NOTICE" which included the following disclaimer: "AMP Life has not committed to entering into any transaction regarding the sale of shares in Stanbroke and reserves the right to negotiate with one or more interested parties at any time, to provide additional information to any interested party (whether or not such information is provided to other interested parties), to withdraw from discussions, enter into a similar transaction with another party, or not to progress with a transaction at any time without notice to the interested party." 45 The Information Flyer required parties interested in proceeding further with the tender process to execute a confidentiality agreement. Interested parties were advised that AMP would determine a short list on the basis of expressions of interest. The Information Flyer reiterated the statement in the media release as to the objective of the process. It stated that parties were at liberty to lodge non-conforming bids if an alternative could increase the net proceeds of sale. 46 The Information Flyer set out a two stage process. Stage 1 required intending bidders to evaluate Stanbroke on the basis of the Information Flyer and public information and to lodge their expressions of interest and indicative non-binding offers by 16 May 2003. A short list of bidders would then be selected to proceed to Stage 2 which would give bidders access to a due diligence process and require them to lodge a binding offer following completion of that process. 47 Section 4.2 of the Information Flyer contained the following statement: "AMP Henderson reserves the right at any time to alter or amend the sale process and timetable, enter into negotiations with any party to the exclusion of others, decline to proceed with any party or terminate the sale process. 48 Section 5.2 of the Information Flyer set out the requirements for the expression of interest under fourteen headings, including "Reasons for interest" and "Funding capacity". Section 5.3 stated that the intention was "to select those parties that AMP Henderson in its discretion considers are best qualified to acquire the properties, have the financial capacity to complete the acquisition in a timely manner and meet AMP Henderson's sale objectives." 49 On 16 May 2003, AACo submitted its expression of interest to Rabobank. The letter stated that a "combination of AACo and Stanbroke would create the world's largest cattle company capable of delivering a year-round supply of quality cattle in a low production-cost environment…. It is AACo's intention to fully utilise Stanbroke's entire property portfolio, operations and management capabilities in executing a combined group strategy and [AACo] is uniquely placed to combine the full operations of Stanbroke…in a manner that will maximise value". 50 The expression of interest contained AACo's indicative cash offer for 100 per cent of AMP's equity interest in Stanbroke of $360 million to $375 million. This was said to represent an asset value of approximately $483 million to $498 million, from which parent company debt of $63 million and the deferred tax liabilities of $60 million as disclosed on Stanbroke's 31 December 2002 balance sheet were to be deducted so as to equate to the indicative cash offer. 51 On 23 May 2003, AACo and AMP Henderson signed the Stanbroke Confidentiality and Sale Process Deed ("Confidentiality Deed"). Clause 6 of the Confidentiality Deed provided as follows: "[AACo] acknowledges and agrees subject to any provisions to the contrary in any document relating to or connected with the Permitted Transaction [that is, any transaction arising out of the Sale Process], even if entered into after the date of this Deed, that: (a) [AMP] may enter into discussions with and conduct negotiations with any other party or parties in relation to the Sale Process on any basis which [AMP] considers appropriate; (b) [AMP] may at any time by notice to [AACo]: (i) vary the timetable for the Sale Process; (ii) extend, suspend, terminate or otherwise vary all or any part of the Sale Process; and (c) [AMP] may in its absolute discretion: (i) shortlist any number of bidders for the Sale Process (which may or may not include [AACo]); or (ii) select a preferred bidder for the Sale Process (which may or may not include [AACo]), but is under no obligation to make such a shortlist or select a preferred bidder". 52 On 27 May 2003 Rabobank recommended that five bidders be shortlisted for Stage 2 of the tender process, including AACo and Nebo. Nebo's indicative non-binding offer was said to be $337 million, compared with AACo's indicative bid of $360 million to $375 million. The Rabobank document recommended rejection of a number of other parties, notwithstanding that their indicative bids were substantially higher than those of the five recommended potential bidders. The reason for rejection of these apparently higher bids, in general, was concern about the credibility or bona fides of those making the bids. 53 From June 2003 to August 2003 AACo undertook due diligence in respect of Stanbroke. This involved a very considerable amount of work. 54 On 15 August 2003, Rabobank issued to the shortlisted potential bidders a set of bid instructions, a proposed final share sale agreement and a pro forma letter for an irrevocable binding offer. The bid instructions stated that "Offers lodged with deviations from the enclosed Final Share Sale Agreement will not be favourably considered. Bidders should direct their efforts towards fulfilling the vendor's sale objectives…". Those objectives were said to include minimising counterparty and completion risk, to which end a deposit was required to be paid at the exchange of contracts and a substantial entity had to be a counterparty, either as the buyer or as a guarantor of the buyer. The bid instructions also stated the following: "The Vendor retains the ultimate discretion in relation to the sale process and reserves the right (without any liability on their part): (a) to terminate or alter the sale process at any time; (b) to enter into exclusive negotiations with any interested party; and (c) to negotiate with multiple parties at any time. By continuing in the process, you are taken to agree to these conditions and agree not to make any claim, action or demand against the Vendor in relation to the sale process. No agreement for the sale of Stanbroke will exist (and the Vendor will have no liability or obligation to a Buyer) unless and until formal exchange of Share Sale Agreements by the Vendor and Buyer. The Share Sale Agreement will contain the entire agreement between the parties." 55 The Share Sale Agreement enclosed with the bid instructions included a definition of "a Material Adverse Change" as follows: "'Material Adverse Change' means the occurrence of: (a) an outbreak amongst cattle in Australia of any of the following diseases: (i) foot and mouth disease (FMD); (ii) bovine spongiform encephalopathy (BSE); or (iii) tuberculosis; and (b) a decrease of 50% or more in the Eastern Young Cattle Indicator over the period of one week, which decrease is directly attributable to the outbreak referred to in paragraph (a) of this definition." 56 The Share Sale Agreement also provided that the obligations of the parties were not to become binding until written confirmation had been issued by the Northern Territory Minister for Lands and Planning to the effect that the acquisition by the buyer of the Stanbroke Shares would not cause a breach of s 34(1) of the Pastoral Land Act 1992 (NT). Section 34(1) provided that a person was not to hold, either alone or together with an associate, pastoral land exceeding in aggregate 13,000 square kilometres unless the Minister advised the parties at the time the land was to be acquired that, in his opinion, it was in the interests of the Northern Territory for the acquisition to proceed. 57 On 15 August 2003, AMP Henderson provided to AACo the draft Stanbroke management accounts for the six months to 30 June 2003. 58 The bidder instructions stated that offers were required by 1 September 2003, but that AMP reserved the right to accept or reject late submissions of offers. On 20 August 2003, AACo sought an extension of the deadline for the delivery of offers. This request was rejected by Mr Cvetko of Rabobank following consultations with Mr Derwin. 59 On 1 September 2003, at 5.30 pm, Mr Derwin and Mr Cvetko opened the four bids which had been received. The bids, in descending order of price were AACo ($410 million); Nebo ($388 million) and two other bidders offering, respectively, $360 million and $327 million. 60 The AACo offer comprised the Share Sale Agreement (incorporating amendments to the version originally provided by AMP Henderson) duly executed by it for a "Pre Adjustment Purchase Price" of $410 million. This price was said to reflect "the nature and amount of the liabilities (including external bank debt) disclosed in Stanbroke's 30 June 2003 Management Accounts and the minimal Vendor warranties and indemnities included in the Share Sale Agreement". AACo's covering letter indicated that if AMP had an interest in continuing an investment in the merged Stanbroke/AACo entity, AACo would be prepared to discuss an alternative transaction structure whereby shares could be issued to AMP making it appropriate for AMP to be represented on AACo's board of directors. 61 The AACo bid incorporated amendments to the Share Sale Agreement. The amendments included an altered definition of "material adverse change" in the Share Sale Agreement. The definition had the following added to it: "(b) a material adverse change in: (i) the business, assets or prospects of the Buyer Group or any of its Related Bodies Corporate or the Group; or (ii) the international financial markets which, in the Joint Lead Underwriters' opinion, would directly or indirectly affect the ability of the Joint Lead Underwriters to achieve a successful Syndication (as defined in the Syndicated Facility Agreement)". It appears that this altered definition may have reflected the language of a facility offer dated 1 September 2003 from AACo's bankers, although there is no evidence that AMP saw that offer. 62 The amended Share Sale Agreement provided for an adjustment of the Purchase Price on the "Final Payment Date" of the amount by which the "Net Assets at Completion" exceeded (or were less than) the "Net Assets at the Management Accounts Balance Date". 63 On 3 September 2003, Mr Derwin and Mr Holmes ŕ Court had a conversation. In the course of that conversation, Mr Derwin advised Mr Holmes ŕ Court that AACo's Material Adverse Change ("MAC") clause was unacceptable, because it created risks that AMP were not prepared to entertain. Mr Holmes ŕ Court indicated that "there were always ways around speed humps". According to Mr Holmes ŕ Court, Mr Derwin did not discuss price, except to say that it was an issue that would be raised later. 64 By this stage, two of the four shortlisted bidders had been excluded on the basis of price. Thus only AACo and Nebo remained in contention. 65 On 3 September 2003, Mr Derwin received a letter from Mr Cvetko of Rabobank, providing recommendations in relation to the offers that had been received at that time. Mr Cvetko recommended that the AACo bid be pursued by engaging in negotiations to improve the offer in respect of matters that had been raised by legal advisers. In particular, the MAC clause was too broad and introduced a higher degree of completion risk. Otherwise, AACo's offer was the highest and, in Mr Cvetko's view, had the better prospects of moving to a successful completion (assuming the MAC clause could be removed or renegotiated successfully). The letter noted, however, that subsequent discussions were being held with Nebo and that these had indicated that its offer might be improved. If so, the recommendation could change. 66 Mr Cvetko recommended that no preferred bidder be announced until absolutely necessary and that negotiations continue simultaneously with both AACo and Nebo with a view to exerting maximum pressure on both parties to improve their offers. 67 Mr Derwin and Mr Holmes ŕ Court had a number of conversations on Thursday, 4 September 2003. The effect of those discussions was that Mr Holmes ŕ Court said that he would be able to adapt the MAC clause, but it would not be completely to his liking or to AMP's liking. He said that he could take out most risk from the process by bringing forward closure. 68 According to Mr Holmes ŕ Court, Mr Derwin raised the issue of price and invited AACo to make a revised offer. Mr Derwin asked Mr Holmes ŕ Court if there was anything more in AACo's price. Mr Holmes ŕ Court replied that he had authority to increase the price from $410 million to $420 million and there was perhaps another $5 million available, but he would need Board approval for the additional amount. Mr Derwin indicated that only a standard MAC clause would be acceptable and he provided some suggested rewording to Mr Holmes ŕ Court. 69 On 4 September 2003, a copy of a funding letter jointly executed by the National Australia Bank Ltd and the Commonwealth Bank of Australia in favour of AACo was faxed to Mr Derwin. This indicated that each of the banks was prepared to underwrite 50 per cent of the Syndicated Facility. The amount of the available finance was not specified in the letter. 70 Shortly after 6 pm on 4 September 2003, Nebo faxed a letter to Mr Cvetko submitting "a revised binding offer to purchase the Shares in identical terms to the Original Offer except that the Purchase Price is revised from A$388 million to A$408 million dollars [sic], plus payout of the ANZ liability of A$73 million dollars [sic] (the New Offer). We acknowledge that this correspondence, together with the documents and statements submitted with the Original Offer, constitutes an offer immediately binding on Nebo but this New Offer will remain open for acceptable only until 5.00 pm (eastern standard time) on Friday 5 September 2003…". 71 At 8.05 pm on 4 September 2003, Mr Derwin emailed Mr Holmes ŕ Court as follows: "Further to our ongoing discussions, I would appreciate overnight written confirmation of the following: Timing Revised price MAC clause issue - items (b) (i) and (ii) I will then consider such in assessing and make a recommendation on the Preferred Bidder status tomorrow am". 72 At 9 am on 5 September 2003, Mr Holmes ŕ Court telephoned Mr Derwin, informing him that AACo's revised letter of offer would be sent shortly. Mr Derwin told Mr Holmes ŕ Court that the banks' commitment letter did not specify any dollar figure. Mr Holmes ŕ Court confirmed that AACo was fully funded for its bid. 73 At 9.51 am on 5 September 2003, AACo's revised letter of offer was faxed to Mr Derwin. The letter is in the following terms: "Further to our conversations during the course of yesterday, I herein would like to confirm the contemplated variations to AACo's Irrevocable Binding Offer dated 1 September 2003. The variations are summarised as follows: · An increase in the Pre-Adjustment Purchase Price of 100% of the Sale Shares to $420 million. Consistent with our letter of 1 September 2003, AACo's revised Purchase Price reflects the nature and amount of the liabilities (including external bank debt) disclosed in Stanbroke's 30 June 2003 Management Accounts. · A variation in the definition of Material Adverse Change, AACo would be prepared to modify part (b) of the definition by removing the current wording and replacing it with the following wording: '(i) there is a suspension or material limitation of trading in all securities quoted or listed on ASX, the New York Stock Exchange or the London Stock Exchange; or (ii) the S&P ASX 200 Index at any time falls to a level which is 90% of its level at the close of trading on any day before and including the Completion Date'. · A proposed Completion Date of Thursday 11 September 2003, subject to satisfaction of the Conditions Precedent, at which time 100% of the Pre-Adjustment Purchase Price will be paid. I will arrange to have a revised and signed Share Sale Agreement in your possession by mid morning today. On the basis that you have indicated you may have Board approval to execute the Share Sale Agreement by close of business today, the revised Share Sale Agreement will be open for acceptance by close of business, Friday 5 September 2003." 74 At 2.35 pm on 5 September 2003, Mr Derwin forwarded a memorandum that the Board authorise AMP Henderson to accept an offer from either AACo or Nebo "at or in excess of $408M (which equates to an Enterprise Value of $498M, incl. consolidated debt of $90M)". The memorandum compared the two bids in chart form, under four headings: "Price", "Material conditions", "Other factors" and "Exchange/settlement". 75 As I have noted, the AMP Board, later that day, passed a resolution in the terms recommended. 76 At 3.22 pm on the same day, Nebo submitted a revised binding offer in identical terms to the Original Offer, except that the Purchase Price was revised from A$388 million to A$417.5 million, plus what was said to be "payout of the ANZ liability of A$73 million". The letter acknowledged that Nebo would procure and provide the appropriate guarantees for the Share Sale Agreement on receipt of acceptance of its revised offer and that the offer of finance from Rabobank contained with the letter of offer of 28 August 2003 had been varied so as to accommodate the financial requirements resulting from acceptance of the revised offer. 77 In the afternoon of 5 September 2003, Mr Derwin and Mr Cvetko discussed the competing offers of AACo and Nebo. At 3.30 pm that afternoon, a conference call took place involving, among a number of others, Mr Derwin and Mr Cvetko. The conference call was arranged by Mr Derwin to give a final update on the state of play before offers from AACo and Nebo expired at 5 pm. 78 Mr Derwin said that he believed Nebo presented the better of the two offers, as it was the less conditional. It did not contain an amended MAC clause and had limited departures from the standard contract issued by AMP Henderson to bidders. The MAC clause in AACo's bid still caused some concern as there was a possibility in the global environment that the conditions had some real prospect of being triggered. Nebo's bid was effectively only conditional on the consent of the Northern Territory Minister, although AACo's bid was also conditional on this consent. In regard to price, the $2.5 million difference had been assessed by AMP and, in effect, had been reduced by $1.6 million because the AACo bid had been structured to take the contingent liability for staff bonuses off the final price as part of the completion accounts process. On the other hand, Nebo was offering a fixed price. 79 Mr Derwin indicated that the main issue with the Nebo bid was a completion risk, since it was a $2 company. While there were credible parties behind the offer, the guarantee provisions had not been provided to AMP. Mr Cvetko gave his verbal agreement to Mr Derwin's analysis and indicated that he would issue a letter of recommendation by 5 pm. 80 In the course of the afternoon, Mr Cvetko sent to Mr Derwin drafts of the letter of recommendation he ultimately sent. In those drafts, Mr Cvetko said that AACo's revised offer still posed "some completion risk, particularly the Northern Territory Minister's consent", since completion under the current contract could not occur without this consent. He considered that, in view of AACo's extensive land holding in the Northern Territory, there was a risk that completion might not happen expeditiously. Mr Cvetko also noted that the MAC clause carried a financial market risk which "in the current terrorist/political and terrorist environment does carry some risks". AACo's bid also required completion accounts and had a price adjustment risk. In his judgment, Nebo presented less of a risk because, as a consortium, it had a more diverse shareholding base and the major shareholder had no significant landholdings in the Northern Territory. The major risk with Nebo was that it was not as substantial an entity. However, letters from bankers had been received indicating Nebo had the financial capacity to obtain unconditional credit facilities to satisfy the transaction. Mr Cvetko noted that the Rabobank offer to provide finance did not quantify the amount of the proposed advance. 81 Mr Cvetko recorded that, following internal authorisation to breach the so-called Chinese walls with Rabobank's finance personnel, he had called Mr Hislop, the General Manager Credit of Rabobank. Mr Hislop had confirmed that funding had been approved for approximately 70 per cent of the acquisition, being in the order of the high $400 million, with the remaining 30 per cent to be contributed by the syndicate members. 82 On balance and subject to confirming Nebo's guarantees, Mr Cvetko recommended the acceptance of Nebo's bid. It was the less conditional and the more likely to be approved by the Northern Territory Minister. The price margin between Nebo and AACo was small, taking into account the uncertainties and conditionality of the AACo offer. 83 Mr Holmes ŕ Court telephoned Mr Derwin at around 4.10 pm on Friday, 5 September 2003. The two had had a telephone conversation earlier that day, at about 11.20 am. In the earlier conversation, Mr Derwin said he had received AACo's revised offer and thought that AACo was very close. According to Mr Holmes ŕ Court, Mr Derwin said he wanted to confirm an understanding on timing of exchange and asked whether AACo would sign and complete simultaneously. Mr Holmes ŕ Court replied that AACo was prepared to do that. Mr Holmes ŕ Court formed the impression in that conversation that, although Mr Derwin had said that he had seen AACo's revised price, Mr Derwin had not "pushed" Mr Holmes ŕ Court on price. 84 In the conversation at 4.10 pm, Mr Holmes ŕ Court asked Mr Derwin if he had everything from AACo. Mr Derwin said: "Yes, I've got everything. I've got your revised offer. It's got your price in there. Is that your price?" Mr Holmes ŕ Court replied that that was his price "it is in there". The call ended. 85 According to Mr Derwin, following this call, and on the basis of his clear understanding that AACo would not improve its offer (as to price or conditionality), he decided to negotiate further with Nebo. Accordingly, in the late afternoon of 5 September 2003, Mr Derwin had further discussions with Mr Taylor, a legal representative of Nebo. Following those discussions, Mr Derwin sent to Mr Taylor, at about 6.15 pm that day, a marked up version of a fresh offer to be made by Nebo which included the following: "2. reinstatement of all of the 'Buyer's Guarantor' Guarantee and Indemnity provisions from the vendor's final 15 August 2003 Share Sale Agreement (Share Sale Agreement); 3. Peter M Hughes, Jack Cowin, Peter Menegazzo and [other Nebo consortium backers] jointly and severally acting as the Buyer's Guarantors (as defined in the Share Sale Agreement); and 4. deletion of the Foreign Acquisitions and Takeovers Act condition precedent". Mr Derwin had indicated that an offer in this form would be one that he would be happy to accept. 86 Mr Derwin left his office at 6.45 pm on 5 September 2003. He returned to the office at 11.30 pm and found the facsimile in the form of the offer that he had sent to Nebo, subject to some minor amendments that had been discussed and agreed with him by telephone. The revised offer had been signed on behalf of Nebo. The offer included the following clause: "We further acknowledge and agree that AMP Life will accept this Third Offer by notice in writing to Nebo on or before [6 pm on Saturday 6 September 2003] or by deleting the purchase price of A$417.5 million where it appears in the Share Sale Agreement submitted with the Original Offer and replacing it with the Purchase Price of $417.5 million and then signing the amended Share Sale Agreement and then returning the signed Share Sale Agreement to Nebo or before [6 pm on 6 September 2003]." This paragraph was substantially to the same effect (with different dollar figures and times) as a paragraph that had been included in Nebo's letter of 4 September 2003. 87 At 12.30 am on Saturday, 6 September 2003, Mr Derwin sent a facsimile to Nebo, for the attention of Mr Hughes. The letter was in the following terms: "We refer to Nebo Holdings & Investments Pty Ltd's letter of offer dated 5 September 2003, copy attached. On behalf of AMP Life Limited, we confirm acceptance of your offer". 88 On Monday 8 September 2003, Mr Derwin received Mr Cvetko's final letter of recommendation. The letter was substantially to the effect already recounted. 89 At 3.24 pm on 8 September 2003, Mr Holmes ŕ Court wrote to Mr Derwin. In that letter Mr Holmes ŕ Court indicated his surprise that he had not heard from Mr Derwin since Friday, when he (Mr Holmes ŕ Court) had communicated his "willingness to meet the Vendor's requirements". The letter reiterated AACo's desire and firm capability to assist AMP Henderson in achieving a successful outcome. 90 At 6.41 pm on 8 September 2003, Nebo's solicitors faxed to the solicitors for AMP Life the execution pages of the Share Sale Agreement duly executed by Nebo and by six directors of that company. The letter requested AMP Life to execute and return by way of facsimile transmission the enclosed execution pages. The letter noted that the deposit would be paid the following day. 91 At 11.06 pm in the evening of 8 September 2003, Mr Holmes ŕ Court faxed a revised offer to Mr Derwin on behalf of AACo. The revised "Pre-Adjustment Purchase Price" was $460 million and was said to imply that AACo would assume Stanbroke's net debt of $81 million, as set out in the 30 June 2003 Management Accounts. The offer was said to be open until 5 pm on Friday 12 September 2003. 92 At 8.34 am the following day, Tuesday 9 September 2003, AMP Henderson faxed the execution page of the Share Sale Agreement duly executed by AMP Life. The covering letter indicated that two full counterparts of the Share Sale Agreement including annexures would be sent the same day. According to Mr Derwin, AMP Life executed the Share Sale Agreement on 8 September 2003, although the document was not couriered to Nebo's solicitors until the following day. 93 On 9 September 2003, AMP Life received deposits totalling $41.75 million, representing the ten per cent deposit payable under the Share Sale Agreement. 94 In the afternoon of 9 September 2003, Mr Derwin telephoned Mr Holmes ŕ Court and informed him that a press release was about to be issued. 95 On the same day, Mr Holmes ŕ Court sent a letter to Mr Mohl. In that letter, Mr Holmes ŕ Court complained that AACo had been led to believe that the principal issue related to the MAC clause. For that reason, AACo had worked very hard in order to allow for completion of the transaction prior to the opening of financial markets in the United States on 11 September 2003 (the anniversary of the terrorist attacks in New York in 2001). Mr Holmes ŕ Court asserted that "[at] no time were we led to believe that our price was not satisfactory". The letter requested an opportunity for a "full and frank dialogue" to discuss the final offer put forward by AACo. 96 In the meantime, Mr Derwin wrote to Mr Holmes ŕ Court. In that letter, Mr Derwin pointed out that in the conversation held at about 4.15 pm on Friday, 5 September 2003, Mr Holmes ŕ Court had stated that he was not in a position further to reduce the conditionality of AACo's offer and had also stated that there would be no further revision to the offer price. Mr Derwin recorded that he had told Mr Holmes ŕ Court that AMP would be considering the offers on the table at the close of business on Friday and making a determination as to which offer to accept. 97 Mr Derwin's letter noted that AACo's revised offer of 8 September 2003 stated that it would be in a position to settle by 11 September 2003. Mr Derwin pointed out that AACo had not indicated how it proposed to satisfy the condition regarding the consent of the Northern Territory Minister, particularly as he was understood to be away on holidays until 16 September 2003. Mr Derwin stated that the revised offer would still leave AMP exposed to the MAC clause for "an extended period of time". 98 In the afternoon of 9 September 2003, AMP Henderson issued a press release announcing the sale of Stanbroke to Nebo. The press release attributed the following comment to Mr Mohl: "We are particularly pleased that Stanbroke's Australian ownership has been preserved and that Nebo will maintain the company as an ongoing concern. We are confident Stanbroke's new owners will enhance the contribution that AMP has made to the rural industry over the 40 years it owned the company." The media release also records Mr Derwin making the following comment: "In making our final decision, many considerations were taken, including the final offer price and the bidders' intent to preserve Stanbroke Pastoral Company as an ongoing concern…. We were also mindful of the bidders' intent to continue the efforts by Stanbroke's Board and management to run the company in a socially responsible and sustainable manner". Mr Derwin approved in advance the issue of the media release in this form. 99 By a letter dated 9 September 2003, Mr Ritch, the Managing Director of AMP Henderson, responded to Mr Holmes ŕ Court's letter to Mr Mohl. The letter asserted that at no stage did AMP Henderson indicate to AACo that it was the preferred bidder. Mr Ritch stated his belief that AACo had had every opportunity to win the tender and had been fairly treated throughout the process. 100 On 10 September 2003, Mr Holmes ŕ Court again wrote to Mr Derwin requesting AMP Henderson to identify all the considerations that had been taken into account in the final decision to recommend Nebo as the successful bidder. Mr Derwin replied on 12 September 2003, declining to provide any further information. 101 On 22 September 2003, the Northern Territory Minister for Lands and Planning confirmed that acquisition by Nebo of the Stanbroke Shares would not cause a breach of s 34(1) of the Pastoral Land Act, thereby satisfying the condition precedent to the sale specified in cl 2.1 of the Share Sale Agreement. 102 Under the terms of the Share Sale Agreement the "Completion Date" was five business days after satisfaction of the condition precedent. Since the Minister granted his approval to the sale on 22 September 2003, the Completion Date is 30 September 2003. However, it appears that AMP Life and Nebo subsequently agreed that the Completion Date should be brought forward to 26 September 2003. In the event, completion has not taken place because of an undertaking provided by AMP Life to AACo pending the determination of this application.

the principles 103 There was no dispute as to the principles to be applied in determining whether interlocutory relief should be granted to AACo. In order to secure an interlocutory injunction, AACo must show "(1) that there is a serious question to be tried or that [it] has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action [AACo] will be held entitled to relief; (2) that [it] will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction": Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, at 153, per Mason ACJ; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, at 217-218 [13], per Gleeson CJ. 104 Whether there is a sufficiently serious question to be tried and whether the balance of convenience favours AACo are not issues to be considered in strict isolation. The strength, or weakness, of the case can affect the balance of convenience: Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405, at 416, per Burchett J. 105 It is not ordinarily part of the Court's function at an interlocutory stage of the proceedings to solve conflicts in the affidavit evidence: American Cyanamid Co v Ethicon Ltd [1975] AC 396, at 407, per Lord Diplock. The point was put this way by the Full Court in Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159, at 163: "applying the 'serious question' test, it is clear that the inquiry whether there is a serious question to be tried must be answered with reference to the circumstances of the case. There may be cases in which the facts are so clearly and comprehensively established at the time of the application for the interim order that the court would conclude that the applicant had no arguable case. At the opposite extreme there may be cases in which the applicant has had little opportunity to ascertain the facts and to adduce evidence but there is some material to suggest an entitlement to relief. Upon further investigation that material may turn out to be capable of ready refutation or explanation but, in the meantime, it may be appropriate for the court to intervene. Everything must depend upon the circumstances of the case, including the extent to which the applicant has had an opportunity to present the facts to the court and the consequences of granting or of refusing relief." 106 In the present case, Mr Derwin was cross-examined at some length by Mr Meagher, although Mr Cvetko was not required for cross-examination. Despite the cross-examination including an attack on Mr Derwin's credit, it would not be appropriate in an interlocutory dispute to make a definitive judgment on matters of credit. Among other things, as Mr Meagher said, cross-examination on a final hearing might be more extensive and more material might become available to AACo. Thus where there is a conflict or apparent conflict between Mr Derwin's evidence and other evidence on a particular issue, it is open to find that there is a serious question to be tried in relation to that issue. This is so notwithstanding that there may be no clear basis for rejecting Mr Derwin's account. On the other hand, the fact that there may be further lines of inquiry that could be pursued by AACo at a final hearing is not a substitute for evidence. Nor is mere suspicion. Whether there is a serious issue to be tried on factual questions must ultimately depend on the evidence adduced at the interlocutory hearing.

The TP Act Claim 107 Mr Derwin denied that his decision to accept Nebo's tender in preference to AACo's bid turned in any way on the fact that Nebo proposed to preserve Stanbroke as an ongoing concern. Mr Derwin accepted that at some stage in the process this factor was considered, as one of many such matters. He said, however, that the decision was made on the basis that the two final bids were essentially equal in the price offered, but the AACo offer was riskier for AMP Life because of the uncertainties associated with the MAC clause. 108 Mr Derwin's evidence is difficult to reconcile with the media release of 9 September 2003, the terms of which he approved in advance. The media release, it will be recalled, quoted Mr Derwin as stating that in making the final decision many considerations were taken into account, including the bidders' intent to preserve Stanbroke as a separate entity. Mr Derwin's explanation was the media release was "factually incorrect" and that the purpose of the reference to the preservation of Stanbroke was to "outline and address concerns on the part of Stanbroke employees". 109 If Mr Derwin's evidence is to be accepted it reflects little credit on AMP, since it means that a false statement was knowingly included in a media release in order to create a favourable impression in the minds of Stanbroke employees and presumably the public at large. 110 It is, however, neither necessary nor appropriate for me to determine whether Mr Derwin's evidence that only price and the completion risks were considered in making the final decision in favour of Nebo's bid, should be accepted. In view of the terms of the media release and Mr Derwin's evidence, there is clearly a serious issue to be tried as to whether AMP Henderson did consider Nebo's intentions to preserve Stanbroke as a separate entity as a factor in the final decision to accept Nebo's offer. 111 I did not understand Mr Bathurst QC, who appeared with Mr Goodman for AMP, to dispute this conclusion. He submitted, however, that the highest that the matter could be put was that there was a serious issue to be tried as to whether Mr Derwin, as the responsible officer for AMP, had a preference, all other things being equal, for Stanbroke not to be broken up (or, I would add, merged). On this basis, he argued, AACo had not established that there was a serious issue to be tried as to whether AMP had engaged in misleading or deceptive conduct, as pleaded in the ASC. 112 Mr Meagher submitted that the question of whether the variously pleaded representations were misleading or deceptive has to be assessed by reference to the circumstances at the time they were made. At those times, according to Mr Meagher, Mr Derwin had in mind that the maintenance of Stanbroke as a separate entity would be a "relevant and substantial consideration". Mr Meagher submitted that the evidence was sufficient to establish that there is a serious issue to be tried as to whether this was the "dominant" consideration, although he contended that it was not necessary for AACo to go that far. 113 It is important to focus on the representations pleaded. None is pleaded as a representation concerning future conduct. The Mohl Representations were said to be that AMP was offering the Stanbroke Shares for sale by tender so as to obtain the best price and thereby discharge its responsibilities to its policy holders. The Derwin April Representation is pleaded as being to the effect that "the principal objective" of the Stanbroke tender process was to maximise the investment return for policy holders. The Information Flyer Representation is pleaded in similar terms. The Derwin September Representation does not add anything substantially different. The four representations are said to convey the meaning that · the sole purpose of the Stanbroke tender process was to achieve the best price for the Stanbroke Shares and to maximise the returns for policy holders; and · this purpose would be given priority over all other considerations that did not advance the interests of policy holders. There is in my view a serious issue to be tried as to whether the Representations bear these meanings. 114 The question of the falsity of the Representations is, however, another matter. The evidence in my view does not establish that there is a serious issue to be tried as to whether the maintenance of Stanbroke as a separate entity was regarded by Mr Derwin or AMP as a factor that could be taken into account in circumstances other than where competing bids were substantially equivalent in price. Mr Derwin did not suggest otherwise in his evidence. Nor is there anything in the documentation relating to the bidding process or AMP's internal deliberation processes that suggests that the preservation of Stanbroke was regarded as a factor that could override price or detract from AMP's objective of achieving the best price for the Stanbroke Shares. 115 AMP's media release of 9 September 2003 said only that the bidders' intent to preserve Stanbroke as an ongoing concern was one of many considerations taken into account. The terms of the release as approved by Mr Derwin, whether or not consistent with his evidence, have to be understood in the context of a bidding process which he claimed produced two bids which were substantially equivalent in relation to price. 116 Mr Meagher relied on a number of matters designed to show that the bids were not in fact substantially equivalent in price and that the inference should be drawn (for the purpose of determining whether there is a triable issue) that AMP always intended that a bidder's plans for Stanbroke should be a material consideration in the bidding process. I do not think, however, that the evidence establishes that there is a serious issue to be tried on the question of whether AACo's bid was materially better than Nebo's, having regard to the completion risks posed by the MAC clause. It is not necessary to deal with all the matters raised by Mr Meagher, but I shall briefly mention the most important. 117 First, Mr Meagher submitted that the AACo bid and the Nebo bid were not equivalent because each involved the purchaser taking over different amounts of debt. The evidence perhaps suggests that the competing bidders may have had different views as to the quantum of the liabilities being carried by Stanbroke. But their offers were relevantly identical (apart from the adjustment to the purchase price provided for in AACo's bid) in relation to the asset being acquired, namely the Stanbroke Shares. The offers made by the respective bidders to AMP Life, which incorporated the terms of the respective Share Sale Agreements, did not provide for the bidders to pay out or take over different levels of debt or for AMP to provide different warranties to the extent of Stanbroke's indebtedness to third parties. 118 Secondly, it was said that AMP Henderson had shut its eyes to the workings of cl 4.2 of AACo's Share Sale Agreement, which provided for an adjustment to the purchase price to take account of changes in Stanbroke's net asset position after 30 June 2003. The evidence on this issue does not support a finding other than that Mr Derwin and those advising him made a genuine attempt, on the basis of Stanbroke's actual and projected receipts and expenditure and other records for the relevant period, to assess the likely impact of cl 4.2. It may be that additional inquiries could have been made, but on the material available to me there is no ground for attributing to Mr Derwin or those advising him a desire or intent to understate the benefits (if any) to AMP Life of the adjustment provision or to assess the adjustment in a way that would detract from the objective of obtaining the best price for the Stanbroke Shares. 119 Thirdly, it was said that the MAC clause could not have genuinely played any part in AMP's assessment of AACo's bid, as Mr Derwin asserted. In my view, there is no basis for that contention on the material before me. The contemporary documentation supports Mr Derwin's evidence. Further, the fact that the Minister's consent was not obtained until 22 September 2003 suggests strongly that the concerns expressed by Mr Derwin and Mr Cvetko about the scope of the MAC clause in a potentially volatile international market had a solid foundation. 120 Fourthly, it was suggested that AMP Henderson had acted with undue haste on 5 September 2003, thereby indicating an intent to favour Nebo's bid over that of AACo. But the urgency was largely created by the fact that both bids imposed a deadline for acceptance of 5 pm on Friday, 5 September 2003. It is not clear how AACo can complain of haste in view of its self-imposed deadline. 121 Fifthly, it was said that Mr Derwin had failed to press AACo for a better price. This submission, however, cannot stand with Mr Holmes ŕ Court's own evidence as to the conversation that occurred late on Friday afternoon, 5 September 2003. It is difficult to understand, regardless of who initiated the telephone call, how Mr Derwin could assume anything other than that AACo had put its best price forward and that further negotiations with AACo were unlikely to bear fruit. If Mr Holmes ŕ Court had in mind in the late afternoon of 5 September 2003 that AACo was prepared to go higher, he certainly did not suggest that to Mr Derwin. 122 Sixthly, it was said that inferences should be drawn from Rabobank's dual role as financier to Nebo and adviser to AMP Henderson, and Mr Hughes' role as director of Stanbroke and chairman of Nebo. But the evidence shows that "Chinese walls" were in place at Rabobank and, whatever view one might have of Chinese walls in general, there is nothing to suggest that they were not maintained with due propriety. The uncontradicted evidence is that Mr Hughes stepped aside as a director of Stanbroke on 13 May 2003 and played no role in settling criteria by AMP by which to assess bids or in assessing the bids made as part of the tender process. 123 Once it is accepted that the evidence goes no further than suggesting that AMP was prepared to take into account the intentions of a bidder with respect to Stanbroke's future operations only if the price offered by competing bidders was substantially identical, there is no basis, on the present evidence, for the claim that the Representations were misleading or deceptive when made. It is not alleged that AMP represented that its intention was that it should not, under any circumstances, take into account factors other than price. The representation alleged, in essence, was that AMP would give priority to achieving the best price for policy holders over all considerations. The evidence does not establish that there is a serious issue to be tried as to whether AMP failed to give priority to achieving the best price. Accordingly, in my opinion evidence does not establish that there is a serious issue to be tried as to whether the alleged representations were misleading or deceptive.

The Process Contract Claim 124 In his oral submissions, Mr Meagher placed little reliance on the Process Contract cause of action pleaded in the ASC. This is not surprising. AACo's claim rests on the implied terms of the Process Contract pleaded in the ASC (see [13], above). 125 I leave to one side the question of whether a Process Contract came into existence between AMP and AACo in the manner pleaded. In determining what terms might be implied into the Process Contract, it is necessary to take into account the disclaimer in the Information Flyer, cl 6 of the Confidentiality Deed and the terms of Rabobank's letter of 15 August 2003 (see [44], [51] and [54], above). In view of these matters, it is very difficult to see how the Process Contract could include the implied terms alleged in the ASC: see Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187, at [173], per curiam. I do not think that AACo has established a triable issue on this point. 126 In any event, for the reasons I have given in relation to the claim under the TP Act, on the material before me there is no serious issue to be tried as to whether AMP breached the alleged implied terms of the Process Contract.

SHOULD AN injunctiON BE GRANTED WHICH AFFECTS NEBO'S RIGHTS? 127 AACo is seeking an injunction to restrain AMP Life from transferring the Stanbroke Shares to Nebo, otherwise than pursuant to an order requiring AMP Life to repeat Stage 2 of the Stanbroke tender process under independent supervision of the Court. As I have noted, Nebo has been joined as a party, on the basis that its rights may be affected by the grant of an injunction. 128 As was confirmed in ABC v Lenah Game Meats, a statutory power to grant interlocutory injunctions where it is just or convenient to do so (or, in the case of s 80(2) of the TP Act, where it is desirable to do so) is not at large. It is available only to protect some legal or equitable right that can be enforced by final judgment: at 218 [15], per Gleeson CJ; at 248 [105], per Gummow and Hayne JJ (with whom Gaudron J agreed). 129 It is important to appreciate that AACo does not claim to be entitled to an interest in the Stanbroke Shares. At the highest, its claim is to an order requiring AMP Life to repeat Stage 2 of the tender process. If that tender process is repeated AACo may or may not be the successful bidder for the Stanbroke Shares. Indeed, under the terms of the tender process, as reflected in cl 6 of the Confidentiality Deed, AMP Life would not be bound to select any tenderer. Thus AACo does not assert any equitable interest or equity in the Stanbroke Shares. 130 It is also important to appreciate that, on the material before me, AMP Life and Nebo have entered into a binding agreement for the sale and purchase of the Stanbroke Shares. That agreement was entered into at 12.30 am on 6 September 2003, when Mr Derwin accepted Nebo's revised offer submitted on the previous evening. It will be recalled that Nebo's letter specifically stated that the offer was immediately binding on Nebo and that AMP Life would accept the revised offer by notice in writing to Nebo before expiry of the offer at 6 pm on the Saturday. 131 Mr Meagher pointed out, correctly, that the bid instructions issued on 15 August 2003 stated that no agreement for the sale of Stanbroke Shares would exist unless and until formal exchange of the Share Sale Agreement by the vendor and buyer. These instructions did not, however, preclude the parties entering into a binding agreement even before formal execution of the Share Sale Agreement. In my opinion, this was the effect of AMP Life's acceptance of Nebo's offer. In any event, by 8.34 am on 9 September 2003, the parties had exchanged duly completed execution pages of the Share Sale Agreement. 132 Given that a binding agreement between AMP Life and Nebo came into force on 6 September 2003 or, alternatively, on 9 September 2003, Nebo is entitled to specific performance of the agreement (subject to satisfaction of the condition precedent), or the production of its interest by injunction and accordingly has an equitable interest in the shares: Chan v Cresdon Pty Ltd (1989) 168 CLR 242, at 252-253, per Mason CJ, Brennan, Deane and McMugh JJ; ANZ Executors & Trustees Ltd v Humes Ltd [1990] VR 615, at 629, per Brooking J. In these circumstances, it is difficult to see, assuming good faith on Nebo's part, how AACo has an interest sufficient to warrant the grant of an injunction which would infringe Nebo's rights under its contract to purchase the Stanbroke Shares. 133 In Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150, the Court was concerned with the position of the appellant, a publisher who was adversely affected by certain orders made or proposed to be made against a number of liquor retailers in proceedings brought under the TP Act. The orders, which required the retailers not to receive certain material published by the appellant, were held to be ultra vires on grounds not material to the present case. However, the joint judgment commented (at 164) on the suggestion that if the Federal Court had power to make the orders: "it should have taken into account as a reason for declining to make an order the damage which would be occasioned to the appellant's business. The appellant is bound to accept any damage to its business which is consequential upon the enforcement by the Commission against the defendants of the provisions of the Trade Practices Act so long as that damage does not constitute an infringement of the appellant's legal rights, if any. As it has not been suggested that the appellant possesses any relevant legal rights against the defendants it is necessarily bound to sustain such damage as may be caused to it by any agreement made between the Commission and the defendants whereby the defendants agree not to accept the appellant's Liquor Guide." (Emphasis added.) 134 In Re LSH; Ex parte RTF (1987) 164 CLR 91, Mason CJ, with whom Deane J agreed, said (at 99) of the broadly framed power granted by s 114 of the Family Law Act 1975 (Cth): "It is now well settled that in some circumstances the Family Court has power to make an order or an injunction directed to a third party or which will indirectly affect the position of a third party. On the other hand, an order will not be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which he or she would not otherwise be liable to perform". Of course each statutory power must be construed according to its terms and context. Nonetheless, the observations in Re LSH, which are consistent with those made in Thomson v TPC, suggest that s 80 of the TP Act is not intended to authorise injunctions which deprive innocent third parties of existing rights, at least in the absence of the applicant or plaintiff having an interest which prevails over that of the third party. 135 Mr Meagher sought to address this difficulty in two ways. First, he relied on observations by Kirby P in Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317, at 322, to the effect that a party to a contract can be enjoined by interlocutory injunction from performance of the contract where the effect of doing so is to prevent the other party, which is entirely innocent, from securing its contractual rights, notwithstanding that an injunction does not also lie against that innocent party. However, as Meagher JA (with whom Waddell AJA agreed) pointed out (at 333-334), the plaintiff in that case was an equitable mortgagee of shares seeking to set aside an improper sale. As such the plaintiff had either an equitable interest or at least an equity in the shares. The present case is different because AACo plainly has no interest in Stanbroke Shares. In a contest between AACo and Nebo, the former has no equitable interest or equity in the Stanbroke Shares capable of prevailing against Nebo's equitable interest. 136 Secondly, Mr Meagher sought to characterise Nebo as otherwise than an innocent third party. This submission appeared to be primarily directed towards the balance of convenience, although bad faith or other serious misconduct on Nebo's part might well preclude it from obtaining specific performance of its contract to purchase the Stanbroke Shares. 137 AACo's submission seemed to rest on Mr Hughes' dual role as a director of Stanbroke and, since 17 April 2003, the chairman of Nebo. However, the uncontradicted evidence was that Mr Hughes played no part in the tender process on behalf of AMP and stood aside from his position as director of Stanbroke as from 13 May 2003. There is no suggestion that Nebo received any information from Mr Derwin or anyone else as to the price AMP Life required in order to secure the tender. Even assuming, contrary to my view, that there is a serious issue to be tried as to whether AMP engaged in misleading or deceptive conduct, there is no basis on the material before me for concluding that there is a serious issue as to whether Nebo was aware of any such conduct or had disentitled itself from the remedy of specific performance. The mere fact that Mr Hughes wrote the letters of 26 March and 15 April 2003 cannot, in my view, sheet home to Nebo knowledge that AMP Life had engaged in misleading or deceptive conduct. 138 Given the effect of an injunction to restrain the transfer of Stanbroke Shares or Nebo's rights under its contract with AMP Life, it follows in my view that AACo's application for an injunction pursuant to s 80 of the TP Act must fail. The position is the same in relation to s 87 of the TP Act: General Newspapers Pty Ltd v Telstra Corporation, at 193, per Davies and Einfeld JJ.

balance of convenience 139 If I am wrong in the conclusions I have reached, and AACo has established that there is a serious issue to be tried and that it has an interest sufficient to grant an injunction affecting Nebo's rights, I think that the balance of convenience clearly lies against the granting of the injunction sought by AACo. 140 As I have noted, AACo does not assert an interest in the Stanbroke Shares. It claims that it has suffered two forms of loss or damage. First, it says that it has expended some $2.1 million in the tender process. Assuming that AACo can establish that it was induced to tender by AMP's misrepresentations, this loss can be recovered in a conventional claim for damages under s 82(1) of the TP Act. 141 The second head of loss or damage is said to be the lost opportunity to tender for the Stanbroke Shares. I think that there must be some doubt as to whether a court would be prepared to grant final orders in the form sought by AACo, having regard to the need for the court to supervise a tender process that AMP, in any event, is not bound to carry out or complete. Assuming, however, that relief can be granted, the upshot would merely be to give AACo an opportunity to participate in such a process, where the outcome might be that AMP could simply abandon the process or change the ground rules. Alternatively, of course, another bidder might succeed. If AACo is able to show that it has a claim for damages for loss of opportunity to tender, there is no reason in principle why such a claim cannot be quantified. It is true that the calculations will be less than precise, but that difficulty inheres in the nature of a claim for damages for loss of opportunity: cf Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469. 142 It is also relevant to note that if an injunction is issued with a view to a final order being made to require AMP to conduct Stage 2 of the tender process, there would be nothing to prevent AACo deciding at any time, for its own reasons, not to tender. No doubt the injunction could then be dissolved, but in the meantime AMP would have been restrained without AACo being subject to any obligation to maintain its status as a good faith tenderer for the Stanbroke Shares. 143 Nebo is entitled, for the reasons I have given, to be regarded as an innocent third party with an equitable interest in the Stanbroke Shares by virtue of its contractual relationship with AMP Life. On any view, this is an important consideration to take into account in assessing the balance of convenience: Silktone Pty Ltd v Devreal Capital, at 324, per Kirby P (and authorities cited there). 144 The evidence also establishes that a delay in completion of the agreement between AMP Life and Nebo will expose the latter to significant detriment or risks:

• the Nebo investors will be deprived of an income stream from Stanbroke and thus will be denied recoupment of their own investment (in the form of the deposit of $41.75 million) from this source;
• Nebo will be exposed under the Share Sale Agreement to a liability to pay interest on the balance of the purchase price if completion is delayed beyond 1 November 2003;
• there is a risk, if uncertainty continues, that key staff employed by Stanbroke, who are much in demand in the cattle industry, will leave and thus impair the ongoing operations of the company;
• there is a risk that Rabobank, the financier of Nebo's purchase, could withdraw its offer of finance or, alternatively, the terms of the drawdown could become less favourable to Nebo; and
• since Nebo made no provision for adjustment to the price in its bid in the expectation of early settlement, it is at risk of a downward movement in net assets for which no adjustment of the price is available. 145 Some of these matters can be addressed, at least to some extent, by AACo's undertaking as to damages. However, the undertaking is not likely to provide satisfactory safeguards in relation to other risks, such as the possible loss of staff or the withdrawal of the offer of finance. 146 AMP Life is also subject to a significant risk if completion of the sale is delayed. Under cl 6.7(a) of the Share Sale Agreement, if AMP Life fails to complete at the time specified in the agreement, Nebo can give a notice to complete. If AMP Life fails to comply with the notice to complete, Nebo may elect to terminate the agreement and sue for damages. 147 In my view, the detriment and risks to AMP Life and Nebo outweigh the benefits to AACo in the grant of an injunction. In making this assessment, I have not overlooked Mr Meagher's submission that an injunction may work to the advantage of AMP Life policy holders. That is possible, but it is also possible the grant of an injunction will create uncertainty that will ultimately work to the policy holders' disadvantage. 148 Accordingly, I conclude that the balance of convenience lies against the grant of injunctive relief.

other issues 149 There are other difficulties with AACo's claim to injunctive relief. They include the paucity of evidence as to precisely what AACo would have done had it known the true position (assuming that AMP had engaged in misleading or deceptive conduct). Mr Roberts, in his affidavit, acknowledged that there were two alternatives: AACo could have "refashioned [its] bid so as to satisfy [AMP's criteria] or not bid at all". The latter course of action would not provide any basis for an injunction. The former poses difficulties because, on the evidence, the value of Stanbroke to AACo lies in the opportunity to merge the businesses. 150 In view of the conclusions I have reached on other issues, it is not necessary to pursue this question further.

conclusion 151 The application for an interlocutory injunction must be dismissed. I certify that the preceding one hundred and fifty one (151) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Counsel for the Applicant: Mr D R Meagher QC with Mr J D Karas

Solicitor for the Applicant: Fisher Jeffries

Counsel for the 1st & 2nd Respondents: Mr T R Bathurst QC with Mr S A Goodman

Solicitor for the 1st & 2nd Respondent: Clayton Utz Counsel for the 3rd Respondent: Mr J C Sheahan SC with Mr S C G Burley Solicitor for the 3rd Respondent:

Date of Hearing: 24, 25 & 26 September 2003

Date of Judgment: 30 September 2003