Cvetanoski & Ors v Filaria Pty Ltd & Jaywood Pty Ltd [2002] ACTSC 103

4. Special condition 38 dealt with what were described as the "retained units" of the Hotel. That condition was in the following terms:

The units referred to in the heading of this clause ("Retained Units") relate to the restaurant, kitchen, bar, office area, shop and two functions [sic] rooms and are held by the Seller on the following trust:

(a) For the period of three years after the registration of the Units Plan and for such further time as Jaywood Pty Limited is manager of 2/3 of the serviced apartments in the Hotel for the persons for whom the Seller now holds the Land beneficially.

(b) After the period of 3 years from the date of registration of the Units Plan and as soon as Jaywood Pty Ltd ceases to manage 2/3 of the serviced apartments in the Hotel for all the unitholders in the Units Plan who may direct the Seller either to: [sic]

(i) sell the Retained Units to such person as they direct (subject to payment to the Seller of the sum of $60,000); or

(ii) until sale, to hold all of the Retained Units in accordance with their instructions subject to the provision of an indemnity.

(c) For the first 3 years of the registration from the Units Plan and for such longer period as Jaywood Pty Ltd manages more than 2/3 of the serviced apartments in the Hotel, the Seller is to grant to Jaywood Pty Ltd a licence to occupy the Retained Units in connection with the management and operation of the Hotel and during that time Jaywood Pty Ltd will covenant with the Seller to manage the Hotel in a good and efficient manner.

5. The business was to be conducted at the risk of the second defendant and the plaintiffs had no immediate right to any share of the profits. However, clause 17 in Annexure "A" of the leases provided as follows:

17.1 In this part, "Profit" means the profit derived by the Lessee from the letting of rooms in the Building after deduction of the costs in letting, supply of services to the rooms, Rent, promotion and marketing costs, repair and maintenance and the management fees properly payable to the Lessee.

17.2 The Lessee agrees within twelve months of the date of this Sublease to prepare a deed and lodge it for approval and to prepare a prospectus and lodge it for registration as required by the Corporations Law (should the Lessee be required to do so) to enable the Lessee to offer to the Lessor and other persons from whom it has sublet rooms in the Building and share in the Profit.

17.3 Subject to approval of a deed and registration of a prospectus (should the Lessee be required to do so) as contemplated in clause 17.2, the Lessee agrees to offer to the Lessor a share in the Profit by which the unit entitlement of the Premises bears to the aggregate unit entitlement of all other units in the Building for the time being managed by the Lessee for the purpose of letting them.

6. Mr Simpkins SC, who appeared for the plaintiff, argued that both contracts for the purchase of the apartments and the leases of them to the second defendant had been voidable by virtue of s 1073(2) of The Corporations Law which at all relevant times was in the following terms:

Where: -

(a) an offer of a prescribed interest for subscription has been made; or

(b) an invitation to subscribe for a prescribed interest has been issued;

in contravention of this law, a contract entered into by any person (other than the management company) to subscribe for the prescribed interest as a result of the acceptance by the person of the offer, or the acceptance of the offer made by the person pursuant to the invitation, is voidable at the option of that person by notice in writing given to the management company.

7. He contended that the provisions of special conditions 37 and 38 of the purchase contracts and clause 17 of annexure "A" to the leases made it clear that the rights acquired by the plaintiffs in entering into these transactions had extended to prescribed interests.

8. Sections 1018 and 1065 of The Corporations Law provided that:

1018 Prospectus in relation to securities

(1) A person shall not offer for subscription, or issue invitations to subscribe for, securities of a corporation unless:

(a) a prospectus in relation to the securities has been lodged;

(b) the prospectus complies with the requirements of this Division; and

(c) if the prospectus is a registrable prospectus - the prospectus has been registered by the Commission under section 1020A.

1065 No issue without approved deed

(1) A person shall not issue, offer for subscription or purchase, or issue invitations to subscribe for or buy, any prescribed interest unless, at the time of the issue, offer or invitation, there is in force, in relation to the interest, a deed for the purposes of this Division or a corresponding law that is an approved deed.

(2) Where a deed would, but for this subsection, have ceased to be an approved deed for the purposes of this Division because there is no trustee or representative for the purposes of the deed or the approval of the trustee or representative has been revoked or because of any other circumstance relating to the trustee or representative, the Commission may, despite section 1066, direct that the deed is to continue to be an approved deed for such period and for such purposes as the Commission directs and, upon the giving of such a direction, the deed continues to be an approved deed accordingly.

(3) A person shall not, in any deed, prospectus, statement, advertisement or other document relating to a prescribed interest, make any reference to an approval of a deed, or an approval of a trustee or representative, granted under this Division, a corresponding law or a corresponding previous law.

9. In fact, a prospectus was not lodged until 11 May 1995 and the trust deed was not approved until 17 May 1995.

10. It was not disputed that each of the plaintiffs had given notice in writing purporting to avoid the contracts of purchase and leases but Mr Walton SC, who appeared for the defendants, maintained that the plaintiffs had had no right to do so and that the notices were ineffective. He submitted that the actions reflected cynical opportunism by investors who had made considered decisions to accept the commercial risks involved in purchasing the apartments in order to obtain guaranteed high rentals but now sought to pass those risks on to others who had entered into the transactions in good faith. It was not suggested that the purchases had been induced by any misrepresentation, that the apartments had not been worth what the plaintiffs had paid for them or that the promised rent had not been paid. Hence, perhaps understandably, Mr Simpkins did not attempt to claim the high moral ground. However, the plaintiffs' claims were based upon contentions that they had statutory entitlements to avoid the transactions and it was unnecessary for them to demonstrate any moral entitlement to the relief sought if those contentions could be established.

11. Mr Walton also pointed out that the contracts for the purchase of apartments by the eleventh and twelfth plaintiffs were not exchanged until after the prospectus had been lodged and the deed approved. He submitted that there was no evidence of any offer of a prescribed interest being made to them prior to such lodgement and approval. Hence, in those cases at least, the plaintiffs contentions were fundamentally misconceived.

12. The provisions of s 1073(2) must be considered in the context of the definitions of various terms provided by s 9 of The Corporations Law. The term "management company" was defined to mean the body corporate by or on behalf of which the prescribed interest was made available, the term "prescribed interest" was defined to include a "participation interest" and the latter term was defined to mean:

. . . any right to participate, or an interest: -

(a) in any profits, assets or realisation of any financial or business undertaking or scheme whether in Australia or elsewhere;

(b) in any enterprise, whether in Australia or elsewhere, in relation to which the holder of the right or interest is led to expect profits, rent, or interest from the efforts of the promoter of the enterprise or a third party;

(c) an investment contract.

13. Mr Simpkins submitted that by entering into the contracts to purchase and lease the apartments the plaintiffs had -

* acquired unit title to individual apartments within the Hotel;

* acquired beneficial interests in the restaurant, kitchen, bar, office area, shop and functions rooms contingent upon the expiration of a period of three years after registration of the Units Plan and any further period in which the second defendant continued to manage two thirds of the apartments;

* subjected their rights in respect of the common property to the second defendants "special privileges";

* leased the apartments they had acquired to the second defendant for a period of five years; and

* become entitled by reason of the lease to obtain a share of the profits which the second defendant obtained by the letting of all the apartments within the Hotel conditional upon the approval of any necessary deed and registration of any necessary prospectus.

14. Mr Simpkins quite properly conceded that a person does not obtain an interest in a financial or business undertaking or scheme merely by acquiring an apartment and thereby obtaining a shared interest in common property and associated services in respect of the management, maintenance and letting of the apartments: see Jones v Acfold Investments Pty Ltd (1985) 6 FCR 512 at 519-20; Brisbane Unit Development Corporation Pty Ltd v Deming No 456 Pty Ltd (No 2) [1983] 2 QD R 92 at 102-3; and Maunder-Hartigan v Hamilton (1984) 8 ACLR 937 at 946. In such circumstances the owner's rights are limited, in essence, to a reversionary interest in the apartment and that interest is not used in the financial or business undertaking or scheme, at least when the rental payable to the owner is not dependent upon the returns obtained by the lessee managing the overall property.

15. Whilst not purporting to provide a comprehensive explanation of the circumstances in which investors would be held to have acquired a participatory interest in property, in Amadio Pty Ltd and Another v Henderson and Others [1998] FCA 823; (1998) 81 FCR 149 at 183 the Full Court of the Federal Court of Australia pointed to a potentially crucial distinction:

In cases such as Munna Beach or Brisbane Unit Development Corporation_, the owners of interest held the title to a specific apartment, as well as to a share in the common property. Thus, where separate interests in an investment are to be held by individuals and there are to be separate benefits and obligations on the part of the holder of each interest the separate and discrete interest offered to the participants may not be a prescribed interest._

However, where investors hold title to an asset with no separate or discrete interest which they could use or employ for their own benefit and will be obliged to use and mortgage their interest in common with other investors if they wish to make a profit from it, the interest held is more likely to have the requisite interaction of rights, benefits and obligations and therefore constitute a prescribed interest under pars (a) and (c).

16. In the present case, the most obvious business undertaking was that defined in cl 1.1 of Annexure "A" of the lease as "the hotel and/or serviced apartment business conducted . . . under the name and style `Canberra International Hotel'". The assets of the business consisted largely of leasehold interests in the apartments of the Hotel, the licence to use the restaurant, kitchen, bar, office area, shop and function rooms and the "special privileges" created in respect of the common property. As in Amadio v Henderson, each plaintiff held the title to a specific apartment as well as a share in the common property and each such title clearly gave rise to separate benefits and obligations. Furthermore, the most direct and obvious return from their investment was the rent payable under the leases and that was obviously derived without any need for them to use or mortgage their interest in common with other investors.

17. Whilst conceding that the plaintiffs' reversionary interests in their apartments had not been employed in the financial or business undertaking or scheme, Mr Simpkins submitted that their interests in the common property had been so employed by virtue of the grant of "special privileges" to the second defendant and that this amounted to participation in an enterprise from which they stood to profit by virtue of the rent payable by the second defendant. He also argued that the provision dealing with the grant of special privileges was sufficient to justify the conclusion that the plaintiffs had been offered rights to participate in an "investment contract".

18. The term "investment contract" was defined in s 9 of The Corporations Law to mean:

. . . any contract, scheme or arrangement that, in substance and irrespective of its form, involves the investment of money in or under such circumstances that the investor acquires or may acquire an interest in, or a right in respect of property, whether in this jurisdiction or elsewhere that, under or in accordance with, the terms of investment will, or may at the option of the investor, be used or employed in common with any other interest in, or right in respect of, property, whether in this jurisdiction or elsewhere, acquired in or under like circumstances.

19. It has been held that payment of the purchase price for land may be an investment of money for the purposes of this description, see Maunder-Hartigan, supra, at 949; Co-operative Building Society of South Australia Ltd v ASC (1993) 11 ACLC 262 at 271; cf Brisbane Unit Development Corporation Pty Ltd v Deming No 456 Pty Ltd (No 2), supra, at 102. However the mere letting of individual units in a pool by an agent does not involve the use or engagement of rights in common with other similar rights and rent received from the lessee is not rent received from a common use. As Mr Simpkins properly conceded the right to common property is a legal abstraction and that right is not ordinarily used "in common with" the rights of other unit holders. The mere contemporaneous exercise of individual rights is insufficient. What is required is some contemplated common action. See, Munna Beach Apartments Pty Ltd v Kennedy [1983] 1 Qd 151 at 154-156. He argued, however, that because the "special privileges" were subject to withdrawal by a special resolution of the Corporation, their grant involved the common employment of the common property by the unit holders to facilitate the conduct of the hotel business and that their rights in respect of that common property were therefore used or employed in common with other such rights.

20. I am unable to accept these submissions. It may be noted that the question of whether or not a contract, scheme or arrangement amounts to an investment contract must be resolved by reference to its substance and not its form and, in my opinion, the question of whether what was offered fell within sub-pars (a) or (b) of the definition of a participation interest must be similarly resolved. Special condition 32 of the purchase contracts did not purport to require that the rights of the plaintiffs to the common property be used in the conduct of the business. It merely provided an acknowledgement by the plaintiffs that the second defendant would be granted a special privilege to use the common property in connection with the management and operation of the hotel business and, to the extent necessary, to "the exclusion of the buyer". The effect of this provision was not to require or to facilitate the use of the plaintiffs' interests in the common property in common with the rights of other purchasers but, rather, to make it clear that the rights to the common property otherwise acquired by virtue of their purchase of their respective apartments would be subject to and limited by the special privileges so conferred. Hence, in my opinion, it did not create a participation interest.

21. Mr Simpkins advanced similar arguments in relation to the contractual provisions for the plaintiffs to ultimately obtain beneficial interests in the retained units.

22. I accept that the phrase "financial or business undertaking or scheme" is of wide application. See, for example, Australian Softwood Forests Pty Limited v Attorney-General (NSW) [1981] HCA 49; (1981) 148 CLR 121 at 129. The hotel business would obviously have fallen within this description. I also accept that in appropriate circumstances a single venture may fall within this description. See Wade v A Home Away Pty Limited [1981] VicRp 48; [1981] VR 475 at 492. However, it is difficult to see how a right to acquire at some future time a beneficial interest in a trust for the sale of the retained units earlier used in a business venture could have been regarded as a participation interest in that business.

23. The rights to eventually acquire interests in these units were not used in the conduct of the business and the plaintiffs and other unit holders derived no profit from them. It is true that the beneficial interest they may ultimately acquire will be an interest in common with others but that is also true of their rights in respect of other common areas and, perhaps, many of the financial arrangements commonly entered into by bodies corporate for the benefit of unit holders. In my opinion, it is again necessary to look at the substance of the transaction to ascertain whether what was acquired by each of the plaintiffs was, in essence, the title to a specific apartment together with a share in common property or whether it extended to a participation interest. These questions cannot be resolved by mere advertence to the fact that common rights to some parts of the property were contingent upon the expiration of some period of time or the completion of some arrangement with a third party. I do not accept that a person who purchases an apartment at a time when the body corporate agreed to buy a reversionary interest in adjoining land to provide car parking spaces for the apartment owners upon the expiration of an existing lease would thereby acquire a right to participate in assets of a financial or business undertaking or scheme or an investment contract. Nor can such questions be resolved by mere advertence to the fact that the plaintiffs stood to ultimately acquire rights to direct the sale of common property or its retention pending sale, even if it is conceivable that the property could be used for business purposes whilst so retained. In the example just mentioned, the apartment owners would presumably have the right to direct the body corporate to re-sell the adjacent land or, subject to approval from the relevant regulatory bodies, to conduct some form of business upon it. But those entitlements alone would not in my opinion be sufficient to constitute prescribed interests for the purposes of The Corporations Law. Legal or equitable interests in property cannot be regarded as participation interests merely because it might be possible to use them in an existing or future businesses. Such interests may properly be regarded as participation interests only if they involve the right to participate in or an interest in transactions of the kind described in pars (a), (b) or (c) of the definition quoted earlier.

24. In the present case, the only entitlements conferred upon the purchasers were contingent interests in a trust with power to direct the first defendant to sell the units or, pending sale, to hold them in accordance with the unit-holders' instructions subject to the provision of an indemnity. These entitlements must be considered in the context of the overall transactions. In substance, the transactions provided for the purchase of apartments, the lease of those apartments to a managing company and ancillary provisions to ensure that the managing company would be able to reap the benefits of such leases by conducting hotel business involving, inter alia, the hire of the apartments. The special conditions in relation to the retained units were plainly intended to ensure that the hotel business would have necessary facilities such as a restaurant, kitchen and bar. However, since it could not be assumed that the second defendant would always be willing or able to operate the hotel business, it was obviously necessary to include some provision for the sale or retention of such units in the future. Hence, the special condition in question provided that if the stipulated period of three years elapsed and the second defendant at some stage no longer managed at least two thirds of the apartments then the unit holders would have a beneficial interest in the retained units and the right to give directions as to their sale. This provision does not, in my opinion, suggest that any contingent equitable interests acquired by the plaintiffs would be participation interests in the hotel business but, rather, that they would be rights exercisable on the termination of that business that would enable the plaintiffs to negotiate fresh leases with a new hotel manager.

25. The relevant special condition did not authorise or envisage the common use of such beneficial interests in a business and the mere possibility that unit holders might ultimately instruct the first defendant to hold the remaining units so that they might be used in some business undertaking is not sufficient to justify a conclusion that any of the transactions constituted an investment contract. That possibility, even if realised, would not, in my opinion involve a use "under or in accordance with, the terms of investment"

26. I do not accept that the rights which the plaintiffs acquired in relation to the retained units constituted a participation interest in either the hotel business or in any separate financial or business undertaking or scheme constituted by the acquisition of contingent equitable interests and rights to give directions in relation to the ultimate sale of those units.

27. The position is quite different in relation to the provisions of clause 17 of Annexure "A" of the lease. Mr Simpkins argued that this clause constituted an "offer" of a right to participate in the profits of the Hotel business. In the context of s 1073(2), the word "offer" is not used in the strict sense of a promise capable on acceptance of constituting a contract. See, Australian Softwood Forests v Attorney-General (NSW) [1981] HCA 49; (1981) 148 CLR 121 per Mason J at 134-5. It has been said that the term is used in its popular, not its legal sense, and it appears to be sufficient for people to be informed that, if they are prepared to advance certain amounts of money, the offeror would arrange for it to be invested in a particular way. See Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 436-438.

28. Clause 17 did not appear in the lease entered into by the tenth plaintiff but in the other cases the second defendant agreed to offer to each of the plaintiffs a share in the profit which it derived from the letting of rooms in the Hotel. It is true that the offer was contingent upon the approval of a deed and registration of a prospectus should those steps be required by The Corporations Law but the contingent nature of the offer did not, in my opinion, prevent it from being properly being regarded as an "offer" for the purposes of The Corporations Law.

29. Nor, in my opinion, did the fact that the contingency involved compliance with The Corporations Law preclude such a conclusion. I accept that there may appear to be some measure of incongruity in a finding that The Corporations Law had been breached by an offer which was contingent upon the necessary action being taken to comply with that law. However, the law was obviously intended to provide protection for investors who might otherwise have been enticed into financial or business undertakings or schemes without the benefit of the information that may have been obtained from the prospectus and the protection provided by the requirement that a deed be approved by the Commission. The purpose of these legislative requirements could be effectively thwarted if they were to be interpreted in a manner that would have permitted promoters of investment schemes to solicit funds from potential investors on the footing that the requirements would be complied with after the investors had made binding commitments and it was too late to extricate themselves from the transactions in the light of any information thereby disclosed.

30. I am satisfied that clause 17 of Annexure "A" of the leases constituted an offer of a prescribed interest to each of the plaintiffs who had entered into a lease containing it.

31. However, the conclusion for which Mr Simpkins contends, namely, that each purchase contract and lease was voidable by each of those plaintiffs does not follow ipso facto, from the mere making of such an offer, as even the Further Amended Statement of Claim filed by leave on 5 August 2002 appears to suggest. Subsection 1073(2) makes it plain that when an offer of a prescribed interest for subscription has been made in contravention of The Corporations Law it is only a contract entered into by any person to subscribe for the prescribed interest "as a result of the acceptance by the person of the offer" that is voidable the option of that person by notice in writing given to the management company.

32. In the present case, Mr Walton submitted that none of the plaintiffs had accepted the offer of a share in the profits of the business. All gave evidence to the effect that it had not influenced their decision to purchase their units and all agreed that at the time they entered into the purchase contract and lease they had been unaware of it.

33. Mr Simpkins responded by arguing that s 1073 did not require any element of causation between the statutory contravention and the acceptance of the offer. All that was required was the acceptance of an offer made in contravention. If I may say so, with respect, this submission seemed to involve an oversimplification of the terms of s 1073 which require a party seeking to avoid a contract to demonstrate that it was a "contract entered into . . . as a result of the acceptance of the offer . . .".

34. Mr Simpkins maintained, in effect, that it was self evident that each of the plaintiffs had accepted the offer. It was contained in the lease which each of the plaintiffs had executed. Furthermore, since each had entered into the purchase contract and lease on the same day, the purchase and lease should be viewed as elements of a single transaction. Hence, both were contracts entered into as a result of the acceptance of the offer. These contentions were persuasively argued but, in my opinion, there are several impediments to their acceptance.

35. First, the argument seems to be predicated upon an implicit assumption that acceptance of a contractual offer necessarily involves acceptance of any subsidiary or collateral "offer" contained in the same document, no matter how vague, contingent or speculative. In his submissions, Mr Simpkins skipped adroitly from the concept of an "offer" of a prescribed interest, which may be informal and need not be capable on acceptance of constituting a contract, to the contractual offer constituted by the presentation of the Memorandum of Lease, as though the validity of this assumption was self evident. However, as Mr Walton pointed out, the clause provided only that the first defendant would lodge the deed and prospectus and that if the former were duly approved and the latter duly registered then the first defendant would make an offer of a share of the profits. Accordingly, it seems clear that even if the contents of the clause constituted an "offer" of a prescribed interest for the purposes of The Corporations Law, it was not an offer capable on acceptance of constituting contractual rights and obligations. See, for example, Pym v Campbell [1856] EngR 480; (1856) 119 ER 903; and Haslemere Estates Ltd v Baker [1982] 1 WLR 1109. Furthermore, the nature and extent of any such share was not specified and there was no indication as to whether any conditions might be imposed. Hence, it would in any event have been void for uncertainty. In these circumstances, whilst it was contained within the Memorandum of Lease, it would not have formed part of the contractual offer that was accepted by the plaintiffs by executing that document and it is difficult to find any basis for an assumption that by accepting that contractual offer they should be taken to have accepted the "offer" to make a further offer contained in clause 17.

36. Secondly, the argument seems to be predicated upon a further assumption that any contract formed by the acceptance of a contractual offer may be regarded as having been entered into as a result of the acceptance of a subsidiary "offer" even if vague, contingent or speculative and even if it had no causal influence on the decision to enter into the contract.

37. It is true, of course, that people may enter into contracts "as a result of the acceptance . . . of the offer" of a prescribed interest even when the acceptance of that offer is not evident from and does not form part of those contracts. In the present case, for example, I would readily have concluded that the leases had been entered into as a result of the acceptance of the "offer" contained in clause 17 if the plaintiffs had been induced to enter into them by the prospects of obtaining the foreshadowed shares in the profits of the business. However, that was not the case. As I have mentioned, each of the plaintiffs gave evidence that they had been unaware of any such offer and that it had not influenced their decision to enter into the lease.

38. In all of the circumstances, I am not satisfied that by entering into the leases any of the plaintiffs accepted the offer of a prescribed interest or that they have otherwise demonstrated that they were entitled to avoid such leases by virtue of the provisions of s 1073(2). As mentioned earlier, that section was clearly intended to protect investors from being enticed into investing money in financial or business undertakings or schemes in respect of which there had been neither an approved deed nor a registered prospectus. I see no reason to construe the provisions of the section as reflecting a legislative intention to permit owners to avoid leases of real estate by opportunistic reliance upon the fact that the memorandums of lease contained provisions holding out vague hope of further benefits even when that hope had not influenced their decision to enter into the transactions.

39. Thirdly, even if I had accepted Mr Simpkins' argument that each such lease was a contract formed as a result of the acceptance of the "offer" contained within clause 17, I would have been unable to accept that such a conclusion could be drawn in relation to the contract of purchase. Those contracts did not contain provisions equivalent to clause 17 of the lease and could not have been formed as a direct "result of the acceptance ... of the offer". Hence, it would have been incumbent upon the plaintiffs to establish that, the contracts had been in a real and practical sense, the result of acceptance of the offer.

40. The plaintiffs clearly relied upon the contention that if the leases were entered into as a result of the "offer" contained in clause 17 and the contracts for the purchase of the apartments were entered into as a result of the availability of such leases, then the contracts of purchase should also be regarded as having been also entered into as a result of the "offer". However, this contention would be valid only if the "offer" had been a real and effective cause of the plaintiffs entering into the lease. It would not be valid if they were taken to have entered into the leases as a result of acceptance of the "offer" only by virtue of some technical argument to the effect that by executing the Memorandum of Lease they must be taken to have accepted the "offer" contained in clause 17 or that it formed part of the overall contractual offer acceptance of which had given rise to the leases.

41. Since all plaintiffs had said that they had not been influenced to purchase the apartments by the "offer" of the prescribed interest, and none claimed to have been induced to enter into the leases by any such "offer", there was, in my opinion, no basis for inferring that it had a causal influence on their decisions to do so.

42. Mr Walton, who appeared for the defendants, staunchly resisted the plaintiff's claims upon a number of other grounds. However, having regard to the view that I have taken of the matter, it is unnecessary for me to determine any of the issues so raised.

44. I need add only that the defendants also filed a counter claim seeking declarations pursuant to s 1073A of The Corporations Law that the notices purporting to avoid the purchase contracts and leases were of no effect. The counter claim was based on the grounds that if there had been any contravention of The Corporations Law as alleged it was minor or insubstantial and had not materially prejudiced and was not reasonably likely to prejudice materially the interest of the plaintiffs. Since I have found that there were no valid grounds for the plaintiffs to avoid either the purchase contract or leases, it is unnecessary for me to consider these issues. Hence the counter claim will also be dismissed.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Solicitor for the Plaintiffs: Rod J Barnett & Associates

Counsel for the Defendants: Mr M Walton SC and Mr C Erskine