FE Limited v Padbury Mining Limited

REASONS FOR JUDGMENT 1 On 24 August 2010, the plaintiff, FE Limited, lodged an off-market takeover bid for the defendant, Padbury Mining Limited. On that date, the plaintiff also sent a copy of its bidder's statement to the defendant. 2 Section 625(3) of the Corporations Act 2001 (Cth) (the Act) provides that: (3) If: (a) the consideration offered is or includes securities; and (b) the offer or the bidder's statement states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere); the following rules apply: (c) the offer is subject to a condition that: (i) an application for admission to quotation will be made within 7 days after the start of the bid period; and (ii) permission for admission to quotation will be granted no later than 7 days after the end of the bid period; (d) the offer may not be freed from this condition. 3 Section 9 of the Act provides that the "bid period" commences when the bidder's statement is given to the takeover target. In this case, therefore, the bid period commenced on 24 August 2010. 4 However, the plaintiff did not apply to the Australian Stock Exchange (ASX) for the quotation of the shares referred to in the bidder's statement by 31 August 2010 - being seven days from 24 August 2010. What happened was that the plaintiff made the application for the quotation of the shares on 10 September 2010, which was within seven days of the commencement of the offer period, which was 8 September 2010. 5 The plaintiff now seeks an order under s 1325A(2)(b)(i) of the Act extending the time for compliance with the requirement in s 625(3)(c)(i) of the Act to 10 September 2010 - being the date upon which the application for the quotation of the shares was actually made by the plaintiff. 6 Mr David Grant Sanders is a solicitor employed by the solicitors advising the plaintiff in relation to its takeover bid. Mr Sanders deposed that he had made an error in the advice that he gave the plaintiff in relation to the making of the application to the ASX under s 625(3). Mr Sanders said that he misconstrued the legal position and was of the view that the share quotation application had to be made to the ASX within seven days of the commencement of the offer period, rather than within seven days of the commencement of the bid period. 7 The Court has the power under s 1325A(2)(b)(i), in these circumstances, to make orders of the kind which are sought by the plaintiff. The Court has in a number of recent cases, exercised that power in similar circumstances to those prevailing in this case. (See, Re Grain Corp Ltd [2008] FCA 996; Re McMahon Holdings Ltd [2008] FCA 1079; and Re Venturex Resources Ltd (2009) 177 FCR 391.) 8 I observe, in passing, that this application was heard at the same time as application WAD 308 of 2010 because the same error was made by Mr Sanders in relation to the takeover bid, the subject of that application. (See, Dourado Resources Limited v Aurium Resources Limited [2010] FCA 1208.) 9 I am of the view that the orders sought by the plaintiff should be made. 10 In my view, the error which was made by Mr Sanders was an honest mistake. 11 Further, on being informed by Freehills, the solicitors for the defendant, of the plaintiff's failure to comply with s 625(3)(c)(i) of the Act, the plaintiff acted with expedition to regularise the position, by commencing this application. 12 In addition, if the orders were not made, the acceptances of the takeover bid, which have been received by the plaintiff, would likely be rendered void, and the interests of third parties would thereby be prejudiced. 13 These factors weigh in favour of the Court exercising its discretion in favour of making the orders. 14 Further, I observe that this application was served on the Australian Securities and Investments Commission. The Commission has not appeared today, but it did inform the Court that it neither consented to, nor opposed, the making of the orders. The application was also served on Freehills, solicitors for the defendant. The defendant did not appear today, either, but Freehills advised the Court that the defendant neither consented to, noropposed, the making of the orders. It follows that neither of those interested parties has sought to be heard in opposition to the making of the orders. 15 In those circumstances, I will make the orders sought by the plaintiff. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.