52 Accordingly, the findings of fact by the primary judge that the contraventions of s 615 ensured a successful takeover at a price which was then attractive to the parties, and resulted in a rival bid being even more unlikely and the takeover market for shares in Great Central being even less competitive, are not shown to have been erroneous. In that context, the fact that a joint bid might have been made at $1.50 per share without entering into the contravening agreements is not to the point. The takeover bid was made in its terms because the parties perceived advantages in doing so which were secured by the contraventions of s 615. Those advantages led to the bid at that price at that time, and were advantages which included Normandy agreeing with Edensor to provide Edensor with its "carried interest" which the primary judge valued at $28.5 million. Nor does it follow, as Edensor contends, that those Central Gold shareholders who accepted the takeover offer after ASIC announced to the ASX its concerns in relation to the fairness of the takeover offer did not accept the offer at its then price in part at least because they had little practical option. Those shareholders at that time remained in ignorance of the shareholders agreement and the benefits it delivered to Edensor, and of the bid structure agreement and the retention agreement, and there had been at that time no determination as to any contraventions of s 615 by the respondents at first instance. Those matters do not lead to the conclusion that those findings of fact by the primary judge were erroneous.
53 Edensor also challenged the characterisation of the benefits to Edensor under the shareholders agreement as a "carried interest", and that those benefits were of the value of $28.5 million. Its contention that there was no evidence on which the benefit to Edensor under the unlawful arrangements could be valued is largely based upon the proposition that the evidence of the expert witness called by ASIC, whose evidence the primary judge accepted, was based upon a false premise. That so called "false premise" was that Edensor had a call option that could be valued on that basis. In our view, the primary judge did not address the issue of the value of the benefit received by Edensor in an erroneous way, or misconceive the nature of, or the foundations for, the expert evidence upon which he acted. Upon the basis of the terms of the shareholders agreement, his Honour identified the fact that Edensor received a valuable "carried interest". That was the price Normandy was prepared to pay to secure Edensor's support for the takeover bid. That bid was structured so that Normandy might achieve full ownership of Great Central in conjunction with Edensor, through Yandal Gold. It may be accepted that Edensor did not, in strict terms, have a call option in respect of the Great Central shares. But the primary judge did not address its position in that way. He looked to the price that Normandy was prepared to pay for the shares in Great Central, namely $1.50 per share plus the value of the carried interest granted to Edensor. Mr Richards said that the benefit to Edensor was in the nature of a call option because, if the value of the Great Central shares acquired by Yandal Gold under the takeover offer rose when the Chase financing facility came to be repaid in three years, then Edensor would or could realise a ready profit, and if the value of those shares fell then Edensor could "walk away" leaving Normandy as the bearer of the financial exposure. The shareholders agreement meant that in substantive terms there was no financial recourse to Edensor beyond the value of its holding in Yandal Gold. It was only in the sense of using a convenient simile that the expert witness called by ASIC described that arrangement as being like a call option. That simile is not inappropriate. It is not shown that that expert witness misunderstood the nature of the shareholders agreement. Nor is it shown that the primary judge erred in describing the benefits Edensor received under the shareholders agreement as a carried interest. In our judgment, that is an appropriate description for those benefits, notwithstanding the other features of the shareholders agreement to which senior counsel for Edensor directed our attention. Those features do not alter the fundamental character of those elements of that agreement to which Mr Richards referred in his evidence.
54 Edensor in its written submissions on the appeal complained that ASIC had not formally sought an order for payment by Edensor to ASIC of $28.5 million in its application. We are not persuaded that, in the circumstances, there was unfairness to Edensor in the primary judge making the order for payment by Edensor of $28.5 million. The fact that such an order might be made had been raised during the course of the hearing. The fact that ASIC wished to prove the value of Edensor's carried interest and its reasons for doing so was identified in the opening of its case, as well as being the subject of certain particulars to par 16 of the Further Amended Statement of Claim dated 27 April 1999. Almost at the end of the hearing, the respondents at first instance sought leave to amend their defences to raise the potential unfairness which might result to Great Central by the primary judge making vesting orders as sought by ASIC. That was because, it was alleged, the effect of such vesting orders would be to trigger a "change of control" provision in the Senior Notes referred to in [20] above for US$300 million, so that Great Central would be exposed to the detriment of the bondholders requiring the repurchase of those Senior Notes at a premium. The primary judge, in the light of that issue arising, was invited by ASIC to make the disgorgement order. His Honour gave to the parties the opportunity to address that issue specifically, as well as the opportunity to address the proposed amendment. The hearing was adjourned for a few days for the parties to do so. In the event, the primary judge did not consider that a vesting order would work unfair prejudice to Great Central so as to enliven s 744(1) by any vesting order. However, the course of events in our view indicates that Edensor was not deprived of the opportunity to confront and address the prospect of the primary judge making a disgorgement order.
55 We also reject the contention on behalf of Edensor that the primary judge failed to have regard or proper regard to its detailed submissions, and those put on behalf of the Normandy Group, on the question of the valuation of Edensor's "carried benefit", or that there is an inconsistency in his Honour's reasons in accepting the evidence of that expert witness on the one hand but in indicating that it was not necessary to resolve the question as to the fair price for the shares in Great Central at the time of the bid on the other.
56 As to the latter contention, we do not see any inconsistency in the approach of the primary judge. One issue which was the subject of evidence at the trial was the fair price to be offered for the Great Central shares at the time of the bid. The parties called expert evidence on that issue. The respondents at first instance did so to counter the case put by ASIC that, if the Law had been observed, either there would have been no bid at all or the bid would have been at a higher price because the contraventions of s615 enabled the bidders to launch the bid from a joint platform of 40.37% shareholding in Great Central and so no "premium for control" element needed to be included in the bid offer price. The respondents sought to show that, in substance, control had already passed in Great Central to the Normandy Group and Edensor, and that the control premium was built into the bid offer price to make the offer price a fair one. The primary judge did not resolve the dispute about whether the bid offer price was fair, for the reasons set out in [19] above. The amount of $28.5 million, the subject of the disgorgement offer, is not an assessment of any "control premium" element which should have been included in the fair price for shares in Great Central. It is an assessment of the value of Edensor's carried interest in the overall transaction. It was a value arrived at upon acceptance by the primary judge of the evidence of the expert witness called by ASIC. That evidence involved a process of valuation similar in economic substance to that applicable to valuing a call option. The exercise undertaken by that expert witness in that regard did not involve arriving at the fair value of the Great Central shares at the time of the bid. That expert witness adopted the value of those shares as $1.50, namely the bid offer price, for the purpose then of valuing the carried interest of Edensor. We accordingly see no inconsistency in the approach of the primary judge as claimed on behalf of Edensor.
57 The principal reason why the valuation of Edensor's carried interest accepted by the primary judge is now said to be erroneous is because it proceeded upon the basis of the bid offer price of $1.50 per share. It is contended that there was no basis for proceeding upon that foundation for valuing its carried interest, and that the valuation of its carried interest should have proceeded on the basis of the then prevailing price of Great Central shares. It was also contended at the trial, and on appeal, that it was also necessary to have regard to the advantages obtained in return by Normandy for granting to Edensor the benefits of its carried interest. Edensor also contended that, contrary to the observations of the primary judge that the expert witness called by ASIC "was only partly challenged in cross-examination on the valuation" and that his use of certain valuation models was "not really challenged", the respondents at first instance did in fact challenge the reliability of that expert witness and his methodology. The primary judge gave the "short answer" to the contention that a starting point for valuing Edensor's carried interest was wrongly accepted to be the bid offer price, that it was not shown that the witness had adopted an incorrect methodology or had made wrong or unacceptable assumptions. There was brief cross-examination only directed at the appropriateness of the use of the valuation models, but the expert witness called by ASIC maintained that they were generally accepted "option valuation methodologies" and that their use in valuing the carried interest of Edensor was appropriate. The expert witness called on behalf of the respondents at first instance, whose evidence on this aspect was referred to in the course of the submissions in reply of Edensor, did not really assert to the contrary. Once the step is taken, and as we have accepted, appropriately taken by the primary judge, that it was legitimate to approach the valuation of Edensor's carried interest on the basis that that the carried interest was similar to a call option, the review of that evidence does not demonstrate that, in relevant respects, the evidence of the expert witness called by ASIC was challenged in any substantial way so as to demonstrate that the primary judge's approach to the acceptance of that evidence involved appealable error. The acceptance of that witness' evidence, in particular for present purposes that in the circumstances the use of the bid offer price as one foundation for the valuation of Edensor's carried interest was appropriate, is also not shown to involve appealable error. The primary judge was entitled to conclude upon that evidence, as he did, that the assumptions made by that expert were proper assumptions and that his methodology was also appropriate. The valuation accepted by the primary judge was therefore one which he was entitled to accept on the evidence at trial, having had the benefit of seeing that witness cross-examined to the extent that cross-examination occurred and having had the benefit of seeing the limited extent to which evidence was adduced by the respondents at first instance in relation to the methodology adopted or criticising the assumptions made.
58 The primary judge dealt with the proposition that the valuation of Edensor's carried interest should be reduced to reflect the corresponding benefit received by Normandy in the following terms: