Elderslie Finance Corporation Ltd v Australian Securities Commission

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 308 of 2012

JUDGE: MCKERRACHER J DATE: 30 NOVEMBER 2012 PLACE: PERTH

INTRODUCTION 1 These are reasons for orders I made on 15 November 2012 following an urgent application by the applicant (sic-plaintiff) (Sprint). Sprint sought orders including: declaratory relief and relief against liability pursuant to subs 1322(4)(a) and subs 1322(4)(c) of the Corporations Act 2001 (Cth) (CA) respectively, with regard to the past sale or offers of sale of up to 85,244,037 of Sprint's fully paid ordinary shares that may have occurred between 4 January 2012 and 6 November 2012 and that may have been in contravention of s 707(3) CA; requiring service of a sealed copy of the orders on the Australian Securities and Investments Commission (ASIC) as well as publishing an announcement of the orders on the website maintained by the Australian Securities Exchange Limited (ASX); and importantly, granting any party to whom substantial injustice has been or is likely to be caused in respect of the orders, liberty to apply to vary or discharge the orders within 28 days of the date of re-quotation of Sprint's shares on the ASX. 2 Three affidavits were filed in support of the application, one affirmed by Sprint's company secretary, another sworn by Sprint's managing director, and a third sworn by Sprint's solicitor. 3 Copies of the application and the affidavits were provided to ASIC and ASX. Written responses from both ASIC and ASX provided in evidence on the urgent return date of the application indicated that neither entity opposed or wished to be heard in relation to the relief sought. Each made the point, correctly, (and which Sprint accepts) that it was not the duty of either of those bodies to inform Sprint of its obligations at law.

BACKGROUND 4 Sprint is a public company listed on the ASX. Its shares have been quoted on the ASX since 21 November 2007. 5 Between 30 December 2011 and 19 September 2012, inclusive, Sprint issued fully paid ordinary shares to a number of persons through multiple share issues. The shares the subject of eight separate share issues during this period (Relevant Share Issues) were the subject of this application (Shares). The Relevant Share Issues took place for a number of reasons including issuing shares to convert debt, raise capital generally, to holders of convertible notes, and also as consideration for settlement of claims and proceedings against Sprint. 6 The total number of Shares issued pursuant to the Relevant Share Issues was 363,415,650. Details of, amongst other things, the dates on which the Shares were issued and the circumstances in which the Shares were issued were set out in the affidavit evidence. During the period of the Relevant Share Issues some of the subscribers sold a number of the Shares to various purchasers. The total number of shares sold was 85,244,037. 7 Upon issue, the Shares the subject of each of the Relevant Share Issues were the subject of applications for quotation on the ASX by virtue of Sprint lodging with the ASX an Appendix 3B notice for each of the Relevant Share Issues (3B Notices). The 3B Notices were published by the ASX on its website on or about the date that each 3B Notice was lodged. 8 Section 707(3) and s 1012C(6) CA respectively provide: 707 Sale offers that need disclosure … Sale amounting to indirect issue (3) An offer of a body's securities for sale within 12 months after their issue needs disclosure to investors under this Part if: (a) the body issued the securities without disclosure to investors under this Part; and (b) either: (i) the body issued the securities with the purpose of the person to whom they were issued selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them; or (ii) the person to whom the securities were issued acquired them with the purpose of selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them; and section 708 or 708A does not say otherwise. 1012C Obligation to give Product Disclosure Statement - offers related to sale of financial products … Sale amounting to indirect issue (6) This subsection covers the circumstances in which: (a) the offer is made within 12 months after the issue of the financial product; and (b) the product was issued without a Product Disclosure Statement for the product being prepared; and (c) either: (i) the issuer issued the product with the purpose of the person to whom it was issued selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product; or (ii) the person to whom the product was issued acquired it with the purpose of selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product. 9 On the final page of each of the 3B Notices, Sprint provided a number of warranties to the ASX including a warranty that: An offer of the securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act… (3B Warranty) (emphasis added) 10 Section 708A(5) and s 708A(6) provide: 708A Sale offers that do not need disclosure … Sale offer of quoted securities - case 1 (5) The sale offer does not need disclosure to investors under this Part if: (a) the relevant securities are in a class of securities that were quoted securities at all times in the 3 months before the day on which the relevant securities were issued; and (b) trading in that class of securities on a prescribed financial market on which they were quoted was not suspended for more than a total of 5 days during the shorter of the period during which the class of securities were quoted, and the period of 12 months before the day on which the relevant securities were issued; and (c) no exemption under section 111AS or 111AT covered the body, or any person as director or auditor of the body, at any time during the relevant period referred to in paragraph (b); and (d) no order under section 340 or 341 covered the body, or any person as director or auditor of the body, at any time during the relevant period referred to in paragraph (b); and (e) either: (i) if this section applies because of subsection (1) - the body gives the relevant market operator for the body a notice that complies with subsection (6) before the sale offer is made; or (ii) if this section applies because of subsection (1A) - both the body, and the controller, give the relevant market operator for the body a notice that complies with subsection (6) before the sale offer is made. (6) A notice complies with this subsection if the notice: (a) is given within 5 business days after the day on which the relevant securities were issued by the body; and (b) states that the body issued the relevant securities without disclosure to investors under this Part; and (c) states that the notice is being given under paragraph (5)(e); and (d) states that, as at the date of the notice, the body has complied with: (i) the provisions of Chapter 2M as they apply to the body; and (ii) section 674; and (e) sets out any information that is excluded information as at the date of the notice (see subsections (7) and (8)). 11 Notices were created by Sprint and given to the ASX pursuant to s 708A(5)(e) CA (cleansing notice) in respect of some of the Relevant Share Issues, namely, each of the following: the issue of 48,375,000 shares on 30 December 2011; the issue of 17,970,000 shares on 16 January 2012; the issue of 67,5000,000 shares on 27 February 2012; and on the issue of shares on 19 September 2012. 12 The cleansing notices were published on the ASX website. Each cleansing notice contained a representation to the effect that offers for sale of the shares referred to in the relevant 3B Notice would not require disclosure under s 707(3) CA as these would fall within the exemption in s 708A(5) CA (Cleansing Notice Representation). 13 Sprint's company secretary and managing director deposed that each 3B Warranty and Cleansing Notice Representation was provided in the context and circumstances in which it was not appreciated that the sale of the Shares within 12 months following their issue required disclosure by the sellers of those shares. There was therefore a lack of appreciation of the effect and operation of s 708(5) and s 707(3) CA. 14 Had Sprint appreciated the true position that the Relevant Share Issues required disclosure to obviate the need for subsequent disclosure by subscribers thereto under s 707(3) CA, then Sprint could have lodged a prospectus prior to any of the Shares being offered for sale and sold, and thus bring any subsequent offer for sale within the exemptions in s 708A(11) CA which provide: Sale offer of quoted securities - case 2 (11) The sale offer does not need disclosure to investors under this Part if: (a) the relevant securities are in a class of securities that are quoted securities of the body; and (b) either: (i) a prospectus is lodged with ASIC on or after the day on which the relevant securities were issued but before the day on which the sale offer is made; or (ii) a prospectus is lodged with ASIC before the day on which the relevant securities are issued and offers of securities that have been made under the prospectus are still open for acceptance on the day on which the relevant securities were issued; and (c) the prospectus is for an offer of securities issued by the body that are in the same class of securities as the relevant securities.

Further sales 15 Some of the Shares were sold after they were issued. Sprint submits that it is difficult, if not impossible, to determine who the Shares were sold to after 30 December 2011, which was the earliest date of issue of the Shares. The subscribers to the Shares may have relied on one or more of the 3B Warranties and the Cleansing Notice Representations that the offer for sale and sale would not require disclosure. On 12 November 2012, Sprint lodged with ASIC a prospectus for the issue of 100 shares in the same class as the Shares (Cleansing Prospectus). 16 Sprint submits that the Cleansing Prospectus complies with the requirements of s 708A(11) CA. Accordingly, any offers for sale of the Shares after the lodgement date of the Cleansing Prospectus do not require disclosure. Therefore the orders sought in Sprint's application were in respect of sales of Shares that occurred prior to that date, and in particular prior to 7 November 2012 being the commencement date of the current suspension of Sprint's shares.

Chapter 6D 17 Chapter 6D CA is concerned with fundraising. As I stated in Re Golden Gate Petroleum Ltd (2010) 77 ACSR 17 (at [24]): Chapter 6 is designed to ensure that investors are provided with all information that they and their professional advisers would reasonably require to make an informed assessment in connection with securities offered for issue or sale. This includes the rights and liabilities attaching to securities (and the underlying securities in the case of interests in or options over securities) and the assets, liabilities, financial position and performance, profits and losses and prospects of the body that is to issue or issued securities (or the underlying securities in the case of interest in or options over securities) that are offered for issue and, in certain cases, for sale to investors. 18 The starting point is that an offer of securities for issue requires disclosure to investors under Pt 6D.2 CA: s 706 CA. The manner of disclosure is provided for in s 709 CA. Section 708 and s 708AA contain a number of exceptions to that general rule: Golden Gate (at [26]). Sprint considered that the circumstances of the Relevant Share Issues fell within exceptions in s 708 CA. 19 Pursuant to s 707(1) CA an offer of securities for sale only requires disclosure to investors under Pt 6D.2 CA if required by any of s 707(2), (3) or (5) CA. Section 707 is an anti-avoidance provision to prevent the avoidance of disclosure requirements including those under s 706 CA. In Golden Gate (at [27]) I described the purposes of s 707 as being to: ... prevent the policy of Chapter 6D being circumvented by the issue of securities or offer of sale of securities to a party to whom disclosure is not required (under s 708 or s 708AA) and that party then offering those securities for sale to investors without disclosure. 20 As noted, s 707(3) CA provides that offers of sale or the sale of securities in a body needs disclosure to investors within 12 months in certain circumstances. 21 In Golden Gate (at [29]) I noted that: Pursuant to section 707(4)(b), securities are taken to have been issued or acquired with the purposes referred to in sub-paragraphs 707(3)(b)(i) and (ii) if any of the securities are subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the issue and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the securities were issued or acquired with that purpose. 22 In other words, s 704(b) CA reverses the onus of proof.

Section 708A - Exemptions for Sale Offers 23 As also noted in Golden Gate (at [30]), s 708A CA contains three exceptions to the requirement to give disclosure for offers for the sale of securities that would otherwise contravene s 707(3) CA in circumstances where comparable information to that which would be given in a disclosure document is publicly available before an offer for sale is made. 24 Section 708A applies if: but for subss 708A(5), (11) or (12), disclosure to investors would be required by s 707(3) CA for the sale offer; and the securities were not issued by the body with the intention that the person to whom they were issued would sell or transfer the securities, or grant issue or transfer interests in, or options over, them; and a determination by the ASIC under s 708A(2) CA (to the effect that the body contravened certain provisions of the CA) was not in force in relation to the body at the time when the relevant securities were issued. 25 Relevantly, s 708A(5) and s 708A (11) CA give rise to exemptions from s 707(3) CA. Section 708A(11) CA is often referred to as the 'cleansing prospectus' or 'concurrent prospectus' exemption: Golden Gate (at [33] and [34]). 26 Section 708A(5) CA applies if: the securities offered for sale are in a class of securities that were quoted on the ASX at all times in the three months before the day on which the relevant securities were issued; trading in the class was not suspended for more than a total of five days in the shorter of the period during which the class was quoted or the period of 12 months before the day on which the securities were issued; the body complied with the disclosure obligations under Pt 2M and s 674 CA; and a notice was given to the ASX within five business days of issue of the securities stipulating certain information and including any information of a character that would have been in a disclosure document (had one been provided), which had been excluded from a continuous disclosure notice in accordance with the ASX listing rules. 27 Section 708A(11) CA applies if: the securities offered for sale are in a class that is quoted on the ASX; and a prospectus has been lodged with ASIC: (i) on or after the issue but before any offer of sale; or (ii) before any issue but where offers for sale under the prospectus remain open; and the securities offered for sale are in the same class as those in the prospectus. 28 Further, as noted in Golden Gate (at [36]): The policy underlying s708A of the CA appears to be that no further disclosure will be required where investors have the benefit of information comparable to or otherwise available in a prospectus. Specifically, with regard to section 708A(11), the provision recognises that investors may receive relevant information through a prospectus, although not issued pursuant to the placement, that relates to the same class of securities as the placement: Explanatory Memorandum: Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Bill 2004, para 5.532, 5.542.

Section 1322(4)(a) Relief 29 Section 1322(2) CA provides automatic relief for procedural irregularities. Section 1322(4) CA provides the Court with a discretion to make the orders stated therein, either unconditionally or subject to conditions, upon the satisfaction of the relevant criteria stated therein and in s 1322(6) CA. Section 1322(4)(a) CA gives the Court the power, upon the application of an interested person, to make an order declaring that any act, matter or thing purporting to have been done under the CA or in relation to a corporation is not invalid by reason of any contravention of a provision of the CA. 30 Section 1322(6)(a) CA provides additional criteria to be satisfied for exercise of the power in s 1322(4)(a). 31 Accordingly, for s 1322(4)(a) CA to apply, Sprint needed to satisfy the Court: that it was an interested person: s 1322(4)(a) CA; and that there was an act, matter or thing purporting to have been done under the Act or in relation to a corporation that may be invalid by reason of a contravention of a provision of the Act: s 1322(4)(a) CA; and either that: ○ the act, matter or thing referred to in s 1322(4)(a) CA was essentially of a procedural nature: s 1322(6)(a)(i) CA; or ○ that the person or persons concerned in or party to the contravention or failure acted honestly: s 1322(6)(a)(ii) CA; or ○ that it is just and equitable that the order be made: s 1322(6)(a)(iii)); and no substantial injustice has been or is likely to be caused to any person: s 1322(6)(c) CA (emphasis added). 32 Sprint need only satisfy one of the three criteria in s 1322(6)(a) CA: Golden Gate (at [39]); Re Charter Hall Ltd [2007] FCA 1316 (at [7]); Primelife Corporation Ltd v Aevum Ltd (2005) 53 ACSR 283 (at [8] and [16]); Re Commonwealth Bank of Australia (2005) 57 ACSR 28 (at [21]); Re Westpac Banking Corporation (2004) 53 ACSR 288 (at [27]); and Jordan v Avram (1997) 141 FLR 275 (at 281). 33 The general approach is that s 1322 CA is remedial in nature and is to be given a liberal interpretation: Golden Gate (at [38]); Re Wave Capital Ltd (2003) 47 ACSR 418; Re Insurance Australia Group Ltd (2003) 128 FCR 581 (at [27]); NRMA Ltd v Gould (1995) 18 ACSR 290 (at 292); and Elderslie Finance Corporation Ltd v Australian Securities Commission (1993) 11 ACSR 157 (at 160). The application of s 1322(4)(a) CA has not been confined to procedural or quasi procedural cases and it may be used to cure substantive as well as procedural contraventions of the CA: Golden Gate (at [40]); Jordan (at 279). 34 Section 1322(4)(a) CA has been applied to validate transactions where: share issues or transfers by a company to a company it controls were void under s 259C CA: Re Westpac; Re Commonwealth; Re MLC Ltd (2006) 60 ACSR 187; directors were appointed in contravention of the company's constitution: NRMA; Jordan; takeover offers lapsed by operation of the CA where the bidder attempted to extend the offer period with non-conforming notices of extension: Primelife; Re Centennial Coal Co Ltd (2006) 226 ALR 341; the issue of options were void for non-compliance with s 723(3) CA; Re Golden Gate Petroleum Ltd (2004) 50 ACSR 659; offers of sale and sale of securities were made in contravention of s 707(3) CA where there was non-compliance with s 708A(5)(e) CA: Re Charter Hall; Re Diversified United Investment Limited [2008] FCA 720; Re Chameleon Mining NL [2009] NSWSC 660; Re RCR Tomlinson Ltd [2009] FCA 1130. 35 In Golden Gate and Re Silver Lake Resources Ltd (2012) 87 ACSR 436, s 1322(4)(a) CA was applied to validate offers of sale and sale of securities made in contravention of s 707(3) CA where there was inadvertent non-compliance with s 708A(5) CA, in that the requirements of s 708A(5) CA were not met prior to the offer of sale and sale of securities. In particular, in Golden Gate, s 708(5)(a) CA was not satisfied as the relevant securities had not been quoted for a period of three months prior to issue. In Silver Lake, the Company failed to issue a cleansing notice under s 708A(5)(e) CA. 36 The validation of a contravention may operate retrospectively: Golden Gate at [42]. This was also the effect of the orders made in Silver Lake. 37 Sprint submits, and I accept, that interested persons should be relieved of unnecessary liability or inconvenience or the consequences of invalid transactions where: a non-compliance with the CA is the product of honest error or inadvertence; to do so is without prejudice to third parties; and to do so is without prejudice to the public interest in compliance with the CA.

Interested Person 38 In Golden Gate (at [44]) I noted: The legislature intended that s 1322(4) be available to a wide class of applicants. It is wide enough to include an applicant whose material legal rights or pecuniary or other economic interests are or may be substantially affected by the matter in issue: Twin v Deputy Commissioner of Taxation [2004] 1 Qd R 450 at [15], [16]. 39 Sprint made representations to the ASX and the public relating to listing and issuing of the Shares, namely the 3B Warranties and the Cleansing Notice Representations, and accordingly Sprint's material legal rights are or may be substantially affected by the matters in issue: for example, by s 1041H CA concerning civil liability for misleading and deceptive conduct. 40 In circumstances where a company has issued securities and sales and offers for sale of those securities have been made prior to compliance with s 708A(5) CA or s 708A(11) CA, Courts have made orders under s 1322(4) CA upon the application of the company that issued the securities: Golden Gate (at [44]), Silver Lake (at [17]). Sprint is an interested person for the purposes of s 1322(4) CA and has standing to make the application. 41 The sale or offers for the sale of the Shares between 4 January 2012 and 6 November 2012 fall within s 1322(4)(a) CA as: the offers for sale and ultimate sale and transfer of the Shares satisfy and fall within the description of any act purporting to have been done in relation to a corporation; the offers for sale and sales contravened s 707(3) CA as s 708A(5) CA did not apply because: (i) in certain instances cleansing notices were not issued when they should have been; and (ii) s 708A(5)(b) CA was not satisfied in that Sprint was suspended from trading on the ASX for a period of greater than 5 days in the 12 months preceding each of the Relevant Shares Issues. Accordingly, disclosure, though required, was not been given in relation to the offers for sale or sale of the Shares in circumstances where Sprint inadvertently represented that disclosure was not required; and The transactions resulting from the offers may be void or voidable: s 1325(5)(a) CA: Golden Gate (at [45]).

Procedural act: Section 1322(6)(a)(i) 42 Sprint does not submit and, in my view, it would not be appropriate in the context of the relief sought under this provision to describe the relevant act, matter or thing as 'essentially of a procedural nature'.

Honesty: Section 1322(6)(a)(ii) 43 The concept of 'acting honestly' can embrace active but incorrect consideration of a legal issue, as well as failure to consider the issue at all: Golden Gate (at [47]); Primelife (at [8]). 44 In this case: although generally aware of the requirements under s 708A(5) CA and of a cleansing notice, Sprint's company secretary did not understand or appreciate the significance of what would occur if a cleansing notice was defective or if the criteria providing the basis for the issue of a cleansing notice was not satisfied; the company secretary did not turn her mind to s 707(3) CA or appreciate its significance in relation to the offers for sale or sale of Shares following their issue; in particular, she was mistaken as to the effect and significance of the period of suspension of Sprint from quotation on the ASX from 3 October 2011 to 27 January 2012 (Period of Suspension) insofar as concerns the effect this had on the applicability of the exemption in s 708A(5) CA, namely the fact that s 708A(5) would not apply; the company secretary did not appreciate that a cleansing notice was required for all share issues and mistakenly thought that a cleansing notice was not required for those share issues where the purpose of the share issue was debt conversion or settling claims or litigation against Sprint, as she was inexperienced in share issues for that purpose; the company secretary was not legally qualified, nor did she have the benefit of any legal advice; although not an excuse, the company secretary's workload was substantial at all material times which was likely to have contributed to her inadvertence; the company secretary deposes to the fact that she did not at any time intend to act in deliberate disregard of s 708A(5) CA or wilfully intend to not issue a cleansing notice when one was required; and as soon as practicable after the issue was brought to Sprint's attention, legal advice was sought and there was full and frank liaison with ASIC, ASX and shareholders. Sprint also created and lodged the Cleansing Prospectus, requested a suspension from trading and commenced these proceedings. 45 On the basis of these facts I accept that Sprint, through its company secretary, genuinely and honestly believed that s 708A(5) CA did apply to each of the Relevant Share Issues and that when the 3B Warranties and Cleansing Notice Representations were made it genuinely believed them to be true, but in ignorance of the legal requirements. 46 Accordingly, s 1322(6)(a)(ii) CA is satisfied.

Justice and equity - Section 1322(6)(a)(iii) 47 It is likely that participants to the Relevant Share Issues who may have offered the Shares for sale or sold the Shares have done so in good faith and in reliance on the 3B Warranties and/or the Cleansing Notice Representations which were to the effect that offers for sale did not require disclosure under s 707(3) CA. 48 The making of the orders sought will serve to give effect to the expectations held by the persons concerned. As noted above, it is difficult, if not impossible to identify the persons to whom the Shares were transferred. 49 Persons who acquired Sprint shares via the ASX had access to information concerning Sprint and the nature and characteristics of the Shares, via Sprint's compliance with its continuous disclosure requirements. 50 Accordingly, I am satisfied that it is in the interests of justice and equity that any offer for sale or sale of the Shares is not invalid by reason of Sprint's inadvertent failure to comply with s 708A(5) CA.

No substantial injustice - Section 1322(6)(c) 51 It is unlikely that any person who acquired any of the Shares was adversely affected by Sprint's failure. It is probable that all of the persons who engaged in the sale and purchase of the Shares acted in the bona fide belief that the Shares were tradable without having to make the disclosure called for in s 707(3) CA: Silver Lake (at [19]). In the event that any person who acquired any of the Shares, or a subsequent seller, claims to have suffered substantial injustice or is likely to suffer substantial injustice by orders 1 to 16, made on 15 November 2012, order 19 grants liberty to apply for an application to be made within 28 days to vary or dissolve the orders. 52 The requirements of s 1322(6)(c) CA are satisfied.

Sections 1322(4)(c) Relief 53 As to satisfying the requirement in s 1322(6)(b) that each of the sellers of the Shares who are subject to potential civil liability acted honestly, the offers for sale or sales of Shares took place in reliance on the 3B Warranties and the Cleansing Notice Representations. Each of the sellers of the Shares who are subject to potential civil liability under s 727(1) CA and otherwise have acted ostensibly honestly. 54 Accordingly, the requirements of s 1322(6)(b) and (c) CA are also satisfied with respect of Sprint's application under s 1322(4)(c) CA. 55 It is appropriate for an order to be made that the sellers of Shares be relieved from any civil liability arising out of the contravention of s 707(3) CA by reason of Sprint's failure to comply with s 708A(5) CA.

Discretionary considerations 56 Although the disclosure requirements in the CA were not met prior to the offer of sale or sale of some of the Shares, the public policy of the CA would not be undermined in this case if any sale transactions of the Shares were validated. 57 Given that Sprint has now realised its mistake, it can be inferred that Sprint will appreciate the requirements of s 708A(5) going forward, and will issue cleansing notices where required, and in circumstances where s 708A(5) is not satisfied, provide disclosure upon issue of shares or prior to any offer for sale or sale thereof to ensure that any securities issued may be freely sold without contravention of s 707(3) CA. 58 Sprint's position in this case is analogous to that of the plaintiffs in Golden Gate and Silver Lake. In those cases the Court retrospectively validated sales of the securities that had been made in contravention of s 707(3) and s 727(1) CA (as there had been no prior disclosure and s 708A CA had not been satisfied); and relieved the sellers of any civil liability they may have had to the persons to whom the securities were sold for failing to comply with s 707(3) and s 727(1) CA by reason of the companies' failure to satisfy s 708A CA. 59 For these reasons I granted the relief sought. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.