In the matter of Keybridge Capital Ltd [2020] NSWSC 1917

Catchwords

[2009] HCA 41 Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1[1932] HCA 9 Attorney General (Cth) v Alinta Limited (2008) 233 CLR 542[2008] HCA 2 Baini v The Queen (2012) 246 CLR 469[1969] HCA 4 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384[1997] HCA 2 Coverdale v West Coast Council (2016) 259 CLR 164[2016] HCA 15 Croome v Tasmania (1997) 191 CLR 119[1997] HCA 5 Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317[2004] SASC 119 Flinders Diamonds Ltd v Tiger International Resources Inc (No 2) [2003] SASC 182(2003) 45 ACSR 608 G and M v Armellin [2008] ACTSC 68(2008) 219 FLR 359 Gerrard Company of Australasia Ltd v Johns Perry Ltd (1982) 7 ACLR 699(1983) 1 ACLC 646 Harrison v Melhem (2008) 72 NSWLR 380[2008] NSWCA 67 Henderson v Henderson (1843) 3 Hare 10067 ER 313 In the matter of McMahon Holdings Ltd [2008] FCA 1079 Islington London Borough Council v Uckac [2006] EWCA Civ 340(1985) 60 ALR 58 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566

Judgment (65 paragraphs)

[1]

Background

Before turning to the respective applications, it is desirable to set out the relevant background.

[2]

Keybridge and WAM Active

Keybridge, a company limited by shares listed on the Australian Stock Exchange (ASX), is an investment and financial service group with a portfolio of listed and unlisted investments (see [8] of the affidavit sworn on 1 June 2020 by one of its directors, Mr Jeremy Kriewaldt - the First Kriewaldt Affidavit).
Meanwhile, WAM Active is an ASX listed entity that engages in investment activities on behalf of its clients (see [7] of the affidavit affirmed on 16 July 2020 by Mr Jesse Hamilton, the Chief Financial Officer of Wilson Asset Management (International Pty Limited), which is the ultimate parent company of WAM Active's investment manager - the Hamilton Affidavit).

[3]

Lodgement of WAM Active Bidder's Statement on 13 December 2019

On 13 December 2019, WAM Active announced an off-market takeover bid (the WAM Active Offer) for all the shares in Keybridge at 6.5 cents per fully paid ordinary share (see First Kriewaldt Affidavit at [15]) and lodged the bidder's statement (the WAM Active Bidder's Statement) with ASIC (see the Hamilton Affidavit at [25]). WAM Active had twice previously announced an intention to make an offer for Keybridge (see the Hamilton Affidavit at [11], [21], [24]).
The WAM Active Offer (dated 3 January 2020) made under the WAM Active Bidder's Statement was conditional (see Section 10.7 of the WAM Active Bidder's Statement lodged with ASIC) on WAM Active acquiring a "Relevant Interest" in at least 50.1% of the issued capital of Keybridge, as well as being conditional on certain other matters (including there being no material adverse change, no regulatory action or decision and no prescribed occurrences).
More specifically, Section 10.7 of the WAM Active Bidder's Statement relevantly provided: 10.7 Defeating Conditions This Offer and the contract that results from acceptance of this Offer are each subject to the fulfilment of the following Conditions: […] (c) No Prescribed Occurrences None of the following happens during the period commencing on the Announcement Date and ending on the expiry of the Offer Period (each being a separate condition): (i) the shares of KBC [i.e., Keybridge] or any of the Controlled Entities of KBC are converted into a larger or smaller number of shares; […] (iv) KBC or a subsidiary of KBC makes an issue of or grants an option to subscribe for any of its securities or agrees to make such an issue or grant such an option; […].
As is immediately apparent from the wording of the condition contained in Section 10.7(c), this was a negative condition (i.e., that none of the events there stated happened during the relevant period); a matter to which Keybridge here supports in relation to its construction of s 650G of the Corporations Act - to which I will refer in due course. Keybridge also maintains that the condition was "forward looking".
Section 10.8 of the WAM Active Bidder's Statement relevantly provided: 10.8 Nature of Conditions (a) Each paragraph of Section 10.7: (i) is a condition subsequent; and (ii) subject to the Corporations Act, operates only for the benefit of WAM Active and any breach or non-fulfilment of such condition may be relied upon only by WAM Active which may waive (generally or in respect of a particular event) the breach or non-fulfilment of that Condition. (b) The Condition does not prevent a contract to sell your KBC shares resulting from your acceptance of this Offer but breach of the Condition or non-fulfilment of the Condition at the end of the Offer Period entitles WAM Active to rescind that contract by notice to you. (c) Where an event occurs which would mean at the time the event occurs the Condition to which this Offer or the contract resulting from your acceptance of this Offer is then subject would not be fulfilled, each paragraph of the Condition in Section 10.7 affected by that event becomes two separate Conditions on identical terms except that: (i) one of them relates solely to that event; and (ii) the other specifically excludes that event. WAM Active may declare the Offer free under Section 10.7 from any paragraph of the Condition without declaring it free from other paragraphs and may do so at different times.

[4]

Competing bid from Aurora Funds Management Limited on 8 January 2020

On 8 January 2020, Aurora Funds Management Limited, as the responsible entity for the Aurora Dividend Income Trust (Aurora), announced an intention to make an off-market takeover bid for all the shares in Keybridge at 6.6 cents per share (see First Kriewaldt Affidavit at [16]).

[5]

Lodgement of Keybridge target's statement on 17 January 2020

On 17 January 2020, Keybridge lodged with ASIC its target's statement in respect of WAM Active's bid (see First Kriewaldt Affidavit at [17]).

[6]

Extension of WAM Active Offer on 24 January 2020

On 24 January 2020, WAM Active extended its offer so that the closing date for acceptances was 7:00pm (Sydney time) on 17 February 2020 (unless otherwise extended or withdrawn) (see First Kriewaldt Affidavit at [18]).

[7]

Lodgement of Aurora Bidder's Statement on 7 February 2020

On 7 February 2020, Aurora lodged with ASIC its bidder's statement (the Aurora Bidder's Statement) (see First Kriewaldt Affidavit at [19]).

[8]

Further extension of WAM Active offer on 10 February 2020

On 10 February 2020, the WAM Active Offer was further extended to 7:00pm (Sydney time) on 3 March 2020 (see First Kriewaldt Affidavit at [20]).

[9]

Placement on 17 February 2020

On 12 February 2020, Keybridge announced that it had agreed to place 22 million shares to sophisticated investors at an issue price of 6.9 cents per Keybridge share to raise $1,518,000 (the Placement).
On 17 February 2020, Keybridge completed the Placement (see the Hamilton Affidavit at [58]-[59]). The Placement triggered the condition in Section 10.7(c)(iv) of the WAM Active Bidder's Statement (which related to Keybridge issuing securities).

[10]

WAM Active's application to Takeovers Panel on 18 February 2020

On 18 February 2020, WAM Active lodged an application (the Keybridge Capital Limited 04 application) with the Australian Takeovers Panel (the Takeovers Panel), seeking a declaration of unacceptable circumstances.
As I understand it, WAM Active submitted, inter alia, that the Placement was a frustrating action denying Keybridge's shareholders their right to consider and choose between competing control transactions and alleging that there were material disclosure deficiencies in both Keybridge's target statement (including in relation to the Keybridge directors' recommendations and the value of Keybridge) and in the Aurora Bidder's Statement (as will be recalled, a rival bidder for Keybridge), including in relation to funding (see Keybridge Capital Limited 04, 05 and 06 [2020] ATP 6 at [17]; [39] (Reasons of the Takeovers Panel)).

[11]

Lodgement on 19 February 2020 of notice of initial substantial holder by Catalano Super Investments Pty Ltd

On 19 February 2020, Catalano Super Investments Pty Ltd (Catalano) as trustee for the Catalano Superannuation Find and its associates lodged a notice of initial substantial holder disclosing that entities controlled by Mr Antony Catalano received 19.275 million shares in the Placement (see Reasons of the Takeovers Panel at [19]).

[12]

Lodgement on 19 February 2020 of supplementary target's statement

Also on 19 February 2020, Keybridge lodged with ASIC a supplementary target's statement in respect of WAM Active's bid dated 18 February 2020, in which it stated that WAM Active's notice of 10 February 2020 did not comply with s 650D(1)(a)(ii) of the Corporations Act and called upon WAM Active to correct its notice and confirm that those shareholders that had accepted into WAM Active's bid might now withdraw that acceptance (see Reasons of the Takeovers Panel at [20]).

[13]

Increase in WAM Active Offer price on 24 February 2020

On 24 February 2020 (one day prior to the s 630 notice date), WAM Active announced an increase in its offer price from 6.5 cents to 6.9 cents per Keybridge share and announced that it had elected to waive the majority of the defeating conditions to its bid, and that the WAM Active Offer was now only subject to the "No Prescribed Occurrences" condition set out in Section 10.7(c) of the WAM Active Bidder's Statement (see the Hamilton Affidavit at [79]-[73]; Reasons of the Takeovers Panel at [21]).

[14]

Section 630(3) notice issued on 25 February 2020

As a result of inter alia the extension of the WAM Active Offer on 10 February 2020, the date by which WAM Active was required to give notice of the status of conditions to its bid was 25 February 2020 (see the Hamilton Affidavit at [31]; [73]).
On 25 February 2020, WAM Active issued a notice (the 25 February 2020 Notice) under s 630(3) of the Corporations Act to the effect that the WAM Active Offer remained subject to the condition in Section 10.7(c) (again, the "No Prescribed Occurrences" condition) but had been freed of all other conditions set out in Section 10.7 of the WAM Active Bidder's Statement. More specifically, the 25 February 2020 Notice stated: (a) the Offer remains subject to the condition in section 10.7(c) (No Prescribed Occurrences) but has been freed of all other conditions set out in section 10.7 of the Bidder's Statement; (b) as far as WAM Active is aware, the No Prescribed Occurrences condition has not been fulfilled; and (c) as at the date of this notice, WAM Active's voting power in Keybridge is 21.88%.
Relevantly, insofar as the s 630 issue is concerned, although the 25 February 2020 Notice was given to ASX on 25 February 2020 (and ASX forwarded it to various email accounts at Keybridge on that date), WAM Active (inadvertently, as I explain below) did not directly give the notice to Keybridge until 26 February 2020. Keybridge accepts that it was given the notice on 25 February 2020, albeit that it was not given notice directly from WAM Active on that date.
Mr Tun Lian Yeo, by affidavit affirmed on 16 July 2020 (the Yeo Affidavit), has deposed that he drafted the notice required by s 633 (see Yeo Affidavit at [5]); he emailed it to Mr Hamilton and Mr Martyn McCathie of WAM Active, noting that the notice was to be released on the ASX once it was signed; and that he asked that they give him a copy of the signed notice once it had been announced on the ASX (see Yeo Affidavit at [7]). Mr Yeo has deposed that the announcement was made on 25 February 2020 (at [10]); and that his understanding was that the ASX would cross‑release the announcement (see Yeo Affidavit at [11]; and see the reference at [13] to an email to Keybridge on 25 February 2020).
Mr Yeo has deposed (see Yeo Affidavit at [15]-[17]) that he forgot to "follow up" Mr McCathie; that he received the email from Mr McCathie at 10:12am the next day, and that he sent it straight away to the directors of Keybridge (such that the email was received directly by Keybridge on 26 February 2020).

[15]

Further application to Takeovers Panel on 28 February 2020

Returning to the chronology of events, WAM Active then sought to vary the terms of the Keybridge Capital 04 application in order to submit that Mr Catalano and Aurora were acting in concert with others (including Mr Bolton a director of Keybridge) in respect of the control of Keybridge and that Keybridge had misled shareholders in its supplementary target's statement by suggesting that accepting shareholders had acquired withdrawal rights (see Reasons of the Takeovers Panel at [40]).
The Takeovers Panel refused to vary the terms of the Keybridge Capital 04 application (on the basis that it did not accept that the variation related to new circumstances - see at [41]).
On 28 February 2020, WAM Active then submitted a new application containing those allegations (see Reasons of the Takeovers Panel at [41]) (the Keybridge Capital Limited 05 application), which again sought a declaration of unacceptable circumstances but this time including the terms indicated above (see Reasons of the Takeovers Panel at [40]).

[16]

Issue of s 650F notice on 2 March 2020

On 2 March 2020, WAM Active issued a notice stating that its bid was free of the "No Prescribed Occurrences" condition and declaring its bid unconditional (see Reasons of the Takeovers Panel at [24]) (this being the notice asserted by Keybridge and found by the Takeovers Panel not to have been validly issued); and, on that date, WAM Active announced that its bid was extended to 7:00pm (Sydney time) on 3 April 2020 (the 2 March 2020 Notice) (see Reasons of the Takeovers Panel at [25]).
More specifically, the 2 March 2020 Notice stated (see Hamilton Affidavit at [80]): Pursuant to section 650F of the Corporations Act 2001 (Cth), [WAM Active] gives notice that: (a) The Offer is free of the Condition set out in section 10.7(c) (No Prescribed Occurrences) of the Bidder's Statement; and (b) as at the date of this Notice, [WAM Active]'s voting power in [Keybridge] is approximately 50.06% Accordingly, the Offer is now unconditional.

[17]

Notice pursuant to s 650D on 2 March 2020

By a separate ASX announcement and notice pursuant to s 650D of the Corporations Act, issued on 2 March 2020, WAM Active announced that the WAM Active Offer period had been extended to 3 April 2020 and that it declared the WAM Active Offer unconditional. The notice stated that WAM Active intended to pay Keybridge shareholders who had accepted into its bid before 2 March 2020 on or around 6 March 2020; and that, if it received valid acceptance forms by shareholders by 4:00pm each Thursday during the (extended) offer period, it intended to pay the WAM Active Offer consideration to those shareholders the following day (see the Hamilton Affidavit at [82]).
Pausing here, it may be noted that s 650F of the Corporations Act provides for two separate periods in which an offeror may free bids from conditions: first, if the relevant condition relates to the occurrence of an event or circumstance referred to in s 652C(1) or (2) in relation to the target, then the offer may be freed from the condition "not later than [three] business days after the end of the offer period"; and, second, in any other case, s 650F requires that the condition must be freed "not less than [seven] days before the end of the offer period".
Keybridge says that the conditions set out in Section 10.7(c)(i) and (c)(iv) did not comply with s 652C(1) or (2) of the Corporations Act, such that those conditions were required to be freed "not less than [seven] days before the end of the offer period" (namely, by no later than 25 February 2020) and that they were not purportedly freed until 2 March 2020 (which, it says, was prohibited under s 650F of the Corporations Act). Hence, it says (and the Takeovers Panel subsequently accepted), that the WAM Active Offer had closed subject to defeating conditions (and hence all takeover contracts, and all acceptances that have not resulted in binding takeover contracts, were void pursuant to s 650G of the Corporations Act).

[18]

Processing of transfers from 2 March 2020

From 2 March 2020, WAM Active instructed Boardroom (its share registry) to process transfers of those Keybridge shareholders that had accepted the WAM Active offer (referred to above and throughout as, the Processed Shares).

[19]

Aurora announcement on 3 March 2020

On 3 March 2020, Aurora announced that it would increase the cash consideration for its bid from 6.6. cents to 7.0 cents cash for each fully paid ordinary share on the condition that Keybridge shareholders are able to withdraw their acceptances from the WAM Active Offer dated 3 January 2020 (see the Hamilton Affidavit at [92]).

[20]

Bentley Capital Limited announcement on 3 March 2020

Also on 3 March 2020, Bentley Capital Limited (Bentley) announced that it had accepted into WAM Active's bid on the basis that the bid was now unconditional (see the Hamilton Affidavit at [91]).

[21]

Aurora supplementary bidder's statement on 4 March 2020

On 4 March 2020, Aurora lodged with ASIC (see Reasons of the Takeovers Panel at [27]) an announcement of intention to increase the consideration under its bid and confirmed that, in relation to the Placement, it had waived any prescribed condition that would otherwise have been triggered in relation to the issuance of such new shares.
Pausing here, WAM Active says the Supplementary Bidder's Statement dated 5 March 2020 by Aurora indicates that Aurora understood that WAM Active had validly waived defeating conditions to its bid (see the Hamilton Affidavit at [93]). Nothing, here turns on whether Aurora had such an understanding at the time - it seems to be raised by WAM Active in the context of its submission that no one had raised any issue about the validity of the 2 March 2020 Notice prior to the Takeovers Panel hearing (in response to criticism made by Keybridge, and at least implicitly by the Takeovers Panel, as to delay or dilatory conduct by WAM Active in not raising this issue or seeking any remedial relief at an earlier time - see below).

[22]

Submissions in Keybridge Capital 04 and Keybridge Capital 05 applications

Between 28 February 2020 and 11 March 2020, the Takeovers Panel proceedings on foot concerning the affairs of Keybridge were the Keybridge Capital 04 application and Keybridge Capital 05 application (in both of which, as will be recalled, WAM Active sought declarations of unacceptable circumstances).
Mr Hamilton has deposed that, on 4 March 2020 (in submissions apparently received by the Takeovers Panel on 5 March 2020), Keybridge first raised (in response to the Takeovers Panel brief in the Keybridge Capital 04 and Keybridge Capital 05 proceedings) concerns as to the inclusions of the "Controlled Entities of KBC" in Section 10.7(i) of the Bidder's Statement (see the Hamilton Affidavit at [106]); and he says that, at no time prior to 5 March 2020, did Keybridge raise any concerns regarding the defeating condition with respect to the Placement with WAM Active (see the Hamilton Affidavit at [109]). (The submissions made to the Takeovers Panel were not in evidence but some of their content can be gleaned from the Takeovers Panel's reasons.)

[23]

Processing of acceptances by WAM Active

Meanwhile, on or about 6 March 2020 (in line, it says, with its announcement to the market of 2 March 2020), WAM Active commenced processing acceptances (see Reasons of the Takeovers Panel at [28]; the Hamilton Affidavit at [113]ff) and acquired a substantial interest in Keybridge (in circumstances, Keybridge maintains, where its bid had closed subject to the defeating conditions). CHESS acceptances, in respect of 16,057,929 Keybridge shares, were immediately paid for and processed (see the McCathie Affidavit at [32]).
Relevantly, these were the only acceptances into the WAM Active Offer that were processed (there is some reference in the submissions to this being the 16 million basket of shares, in contrast to the 10 million basket of shares to which I will refer shortly - those being shares in respect of which holders exercised reversal rights following the Takeovers Panel decision and then sought to accept into a new WAM Active bi, with; the so-called 10 million shares issue being one that WAM Active says cannot properly be dealt with here, not least because all necessary parties have not been joined to the present proceedings - see, for example, White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd (No 2) [2009] NSWCA 194). A master transfer form was prepared in respect of Keybridge shares accepted into the WAM Active Offer that were held on SRNs (see the McCathie Affidavit at [31]ff). Mr McCathie has deposed that this master transfer form was never processed and that all associated acceptances were cancelled.
WAM Active says that, as at 6 March 2020, when WAM Active announced its intention to commence processing accepted offers, it had not been suggested to WAM Active (by Keybridge, Aurora or any other party) that WAM Active's bid had closed subject to unfulfilled defeating conditions such that s 650G of the Corporations Act was enlivened. It says that the only place where 'warnings' of the kind referred to by Keybridge in its submissions on the present applications could be said to have been contained are in in the submissions made by Keybridge and Aurora to the Takeovers Panel (which, as adverted to above, Keybridge says are confidential and for that reason were not disclosed to this Court).

[24]

Application by WAM Active on 10 March 2020 (March Court Proceeding)

On 10 March 2020, WAM Active filed an originating application in this Court (in proceedings no 2020/0076908) (the March 2020 Proceeding) seeking relief in the nature of a declaration that WAM Active had given the requisite s 630(3) notice to the target (Keybridge) or in the alternative an extension of the time for the giving of that notice to 26 February 2020 (the day after the notice was due to be given, that being the day upon which an email attaching the notice was sent by WAM Active to Keybridge directly).

[25]

Takeovers Panel application by Keybridge on 11 March 2020

On 11 March 2020, Keybridge lodged an application with the Takeovers Panel against WAM Active (the Keybridge Capital 06 application), seeking a declaration of unacceptable circumstances, on the basis that WAM Active had not freed its bid of the defeating conditions not less than seven days before the end of the WAM Active Offer period (the time required under s 650F of the Corporations Act) and, accordingly, that WAM Active was not able to extend its bid on 2 March 2020 and the purported extension was not valid (see Reasons of the Takeovers Panel at [30]).
WAM Active again emphasises that, as at 11 March 2020, it had still yet to be suggested by Keybridge (or any other party) that the events of the first week of March 2020 had triggered s 650G of the Corporations Act. WAM Active says that this is significant insofar as Keybridge now alleges that WAM Active was dilatory in responding to suggestions of irregularity in its bid and in seeking relief from this Court (see below).

[26]

Interim determination of the Takeover Panel

On 11 March 2020, the Acting President of the Takeovers Panel made interim orders prohibiting WAM Active from taking any steps to process acceptances received under, or any transfers in relation to, WAM Active's bid (see Reasons of the Takeover Panel at [31])

[27]

Aurora bid unconditional on 12 March 2020

On 12 March 2020, Aurora made an announcement declaring its bid unconditional (see the Hamilton Affidavit at [32]).

[28]

Keybridge Capital 07 application on 16 March 2020

On 16 March 2020, two shareholders (Bentley and Scarborough) made applications to the Takeovers Panel seeking final orders to the effect that their acceptances into Aurora's bid be reversed and any contracts between those entities and Aurora arising as a result of the acceptances be cancelled (see Reasons of the Takeovers Panel at [34]). Pausing here, I note that, it seems, on 10 March 2020, the broker for Bentley Scarborough incorrectly sent CHESS takeover messages to accept Aurora's bid instead of WAM Active's (see Reasons of the Takeovers Panel at [29]).

[29]

Events in late March 2020

On 24 March 2020, Aurora issued an announcement in relation to its March 2020 announcement that its bid was unconditional (at 7.0 cents per share - see at [44] above) (see Reasons of the Takeovers Panel at [35]).
On 25 March 2020, Keybridge lodged its target's statement in respect of Aurora's bid with ASIC (see Reasons of the Takeovers Panel at [36]).
On 30 March 2020, Aurora lodged a second supplementary bidder's statement with ASIC (see the Reasons of the Takeovers Panel at [37]).

[30]

Events in early April 2020

On 5 April 2020, the Takeovers Panel notified WAM Active of the Takeovers Panel's proposed decision and orders in the Keybridge Capital 04, Keybridge Capital 05 and Keybridge Capital 06 proceedings (see Reasons of the Takeovers Panel at [119]).
On 6 April 2020, Aurora's bid for Keybridge closed (see Reasons of the Takeovers Panel at [38]).

[31]

Leave to discontinue the March 2020 Proceeding

As noted above, on 10 March 2020, WAM Active commenced proceedings in this Court, seeking declaratory relief in relation to a possible contravention of s 650G of the Corporations Act. On 8 April 2020, Black J made orders, by consent, granting WAM Active leave to file a notice of discontinuance in relation to the March 2020 Proceeding, pursuant to r 12.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and directed that WAM Active pay Keybridge's costs of the discontinued proceedings as agreed or assessed. Keybridge, in its submissions, relies on this as giving rise to an Anshun estoppel (see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 (Anshun)) or as otherwise leading to the conclusion that WAM Active's present application is an abuse of process - see below).

[32]

Determination by Takeover Panel on 7 April 2020

On 7 April 2020, the Takeovers Panel made a declaration of unacceptable circumstances (with orders being made on 9 April 2020), concluding that WAM Active had acquired a substantial interest in Keybridge purportedly under a takeover bid in circumstances where its bid had closed subject to defeating conditions. More specifically, the Takeovers Panel concluded that WAM Active did not effectively free its bid of all its defeating conditions, and was unable to extend its bid at the time it purported to do so; and, hence, that the WAM Active Offer closed at 7:00pm (Sydney time) on 3 March 2020 subject to defeating conditions. The Takeovers Panel declared that all takeover contracts and acceptances in relation to the WAM Active Offer then became void and no transfers should have been registered.
The Takeovers Panel published its reasons on 8 May 2020, concluding that the 2 March 2020 Notice was invalid for two separate reasons, as follows.
First, that the Placement announced by Keybridge on 12 February 2020 (see at [20]ff above) triggered the "no prescribed occurrence" condition in Section 10.7(c)(iv) of the WAM Active Bidder's Statement and, as a result of Section 10.8(c), this had the effect that the condition bifurcated into two: one relating specifically to the Placement; and the other relating generally to Keybridge issuing securities (but specifically excluding the Placement) (see Reasons of the Takeovers Panel at [58]); and that the bifurcated conditions did not fall within s 652C of the Corporations Act (see Reasons of the Takeovers Panel at [60]). The Takeovers Panel, in effect, simply adopted the submission or analysis of ASIC (not here before me) in relation to the first of the bifurcated conditions and extended that analysis to the second of the conditions, saying (at [60]): 60. ASIC submitted that "the condition relating to the Placement does not fall within s652C. Accordingly s 650F(1)(b) required that condition to be waived not less than 7 days before the end of the offer period. This was not done, as the WAM Active 630 Notice dated 25 February 2020 expressly excluded 10.7(c)". We agree with this analysis. We also note that, as an extension of this analysis, the other part of the bifurcated condition (i.e., the condition specifically excluding the Placement) would also not fall within section 652C.

[33]

Takeovers Panel Orders on 9 April 2020

As noted above, on 9 April 2020, the Takeovers Panel published its orders, inter alia, restricting WAM Active's rights in relation to voting the Processed Shares for a period of 6 months. Further, WAM Active was ordered to cancel unprocessed acceptances and to send notices to unprocessed and processed shareholders in a form to be approved by the Takeovers Panel. In addition, a number of orders were made which provided former holders of the Processed Shares with the right to reverse the holder's transfer.
Pausing here, I note that there was debate in the course of submissions in the present application as to the "perpetual" nature of this right, in the sense that there was no temporal limitation on its exercise (see further below). ASIC, by way of background, noted that at [118] the Review Panel responded to a submission ASIC had made that those reversal rights be time limited (and, thus, it says that at the review panel stage the temporal issue was considered and declined). Relevantly, for present purposes, it may simply be noted that any differential treatment between classes of shareholders - in respect of which Keybridge criticises the relief here sought by WAM Active - arose at the outset from the making of the Takeovers Panel orders.
Relevantly, Order 3 provided: Unless a Court makes orders or declarations inconsistent with this Order, from and including the date of these orders WAM Active must comply with a request from any Processed Shareholder to reverse the transaction by which WAM Active acquired any Processed Shares from that Processed Shareholder.
Order 5 required WAM Active to forward within two business days (see Order 5(a)(2)) a notice to all processed shareholders informing them that their acceptances had been processed and the effect of order 3. Order 5(d) provided that: Unless an order were to be made inconsistent with order 3, as soon as practicable after the date, after the later of the panel confirming it has no comments or further comments on the draft notice, and any date set by the panel not later than the date after these orders WAM Active is to send the notice by Express Post to all process shareholders with no other company documents.
Thus, processed shareholders were notified in April 2020 of their withdrawal or reversal right (on which no temporal limit was there placed) but also (as Keybridge notes) of the possibility that the Court might make an inconsistent declaration. Hence there was some inconsistency in the submissions of Keybridge, as between the reversal right being a valuable right for processed shareholders but also as to the proposition that there could be orders affecting processed shareholders without them being heard on that issue.

[34]

Review of the Takeover Panel decision and orders

WAM Active then sought a review of the Takeovers Panel's decision. In May 2020, the Review Panel affirmed the initial decision of the Takeovers Panel. The Review Panel stated (see Keybridge Capital Ltd 08R, 09R and 10R [2020] ATP 9 at [115] (Reasons of Review Panel)) that the Panel agreed with the initial Takeovers Panel that "the legal status of the registration of the Processed Shares is more appropriately adjudicated by a Court".

[35]

Filing of notice of discontinuance of the March 2020 proceeding

On 15 June 2020, WAM Active filed its notice discontinuing the March 2020 proceeding.

[36]

Processed Shares

Approximately 8.5% of the share capital of Keybridge was accepted by WAM Active initially (the Processed Shares).

[37]

Relevant legislative and other provisions

I now turn to outline the relevant legislative provisions.
Section 630 of the Corporations Act relevantly provides that: 630 Defeating conditions Off‑market bid may include defeating conditions (1) Offers under an off-market bid may be made subject to a defeating condition only if the offers specify a date (not more than 14 days and not less than 7 days before the end of the offer period) for giving a notice on the status of the condition. (2) If the offer period is extended by a period: (a) the date for giving the notice is taken to be postponed for the same period; and (b) as soon as practicable after the extension, the bidder must give a notice that states: (i) the new date for giving the notice of the status of the condition; and (ii) whether the offers have been freed from the condition and whether, so far as the bidder knows, the condition has been fulfilled on the date the notice under this subsection is given. […] (5) A notice under this section is given by: (a) giving the notice to the target; and (b) for quoted bid class securities - giving the notice to the relevant market operator; […]
The term "defeating condition" is defined in s 9 of the Corporations Act as follows: "defeating condition" for a takeover bid means a condition that: (a) will, in circumstances referred to in the condition, result in the rescission of, or entitle the bidder to rescind, a takeover contract; or (b) prevents a binding takeover contract from resulting from an acceptance of the offer unless or until the condition is fulfilled.
Section 650G of the Corporations Act, entitled "[c]ontracts and acceptances void if defeating condition not fulfilled", as amended by class order 13/521, provides as follows: 650G Contracts and acceptances void if defeating condition not fulfilled All takeover contracts, and all acceptances that have not resulted in binding takeover contracts for an off-market bid are void if: (a) offers made under the bid have at any time been subject to a defeating condition; and (b) the bidder has not declared the offers to be free from the condition within the period before the date applicable under subsection 630(1) or (2); and (c) the condition has not been fulfilled at the end of the offer period. A transfer of securities based on an acceptance or contract that is void under this section must not be registered.

[38]

Legislative history and extrinsic materials

It is next desirable to outline in some greater detail the legislative history and extrinsic materials to which the parties have referred.
It is noted by Keybridge that a provision declaring "void" contracts which had been entered into subject to conditions which had not been waived prior to the end of the offer period was first enacted by s 28(9) of the Companies (Acquisition of Shares) Act 1980 (Cth) (Companies (Acquisition of Shares) Act) (as amended by the Companies and Securities Legislation Miscellaneous Amendments Act 1985 (Cth)); and that the explanatory memorandum to that Bill records that the amendment was implemented to overcome the effect of the decision in Gerrard Company of Australasia Ltd v Johns Perry Ltd (1982) 7 ACLR 699; (1983) 1 ACLC 646 (Gerrard).
In Gerrard, Tadgell J determined that offers which had been accepted, but which were subject to conditions subsequent which had not been fulfilled or waived by the end of the bid period, were capable of resulting in binding contracts for the acquisition of shares even though such conditions could entitle the bidder, at its election, to rescind the contracts.
It is noted that, by the introduction of s 28(9), the legislature reversed the outcome in Gerrard by mandating that such contracts would be void. More specifically, the Explanatory Memorandum accompanying the Companies and Securities Legislation Miscellaneous Amendments Bill 1985 (Cth) that introduced the amendments explained that the intended effect of them was to ensure that where bids were not validly declared free of conditions, and where conditions have not been met, the bid should not proceed and acceptances should be returned. The Explanatory Memorandum stated (at [71]-[73]) that: 71. Background An offeror may not treat a conditional take-over offer as being free from a condition unless he publishes a declaration to that effect not less than 7 days before the end of the offer period (CASA s.28). Where no such declaration is made, and at the end of the offer period the condition has either failed or has not been fulfilled, then the intent of CASA is that the take-over scheme should not proceed and acceptances received under the scheme should be returned to offerees. However, the interaction of CASA and the common law of contract has created a degree of uncertainty in this area. While CASA seeks to ensure that the only way an offeror may treat a conditional take-over offer as being free from a condition is by making a declaration under CASA s.28 prior to the end of the offer period, the common law still allows an offeror (who has not made a declaration under CASA s.28) to waive the condition after the close of the offer period (see Gerrard Company of Australia Ltd v. Johns Perry Ltd (1983) 1 ACLC 646). 72. Proposed amendment It is proposed that CASA s-sec. 28(9) will be amended so that where offers under a take-over scheme have at any time been subject to a prescribed condition, all contracts formed by the acceptance of offers under the scheme will be void if at the end of the offer period: (a) the offeror has not declared the offers to be free from the condition; (b) the offers have not become free from the condition under CASA s-sec. 30(1); and (c) the condition has not been fulfilled. (Bill cl. 16 - proposed s-sec. 28(9)). 73. The purpose of this proposed amendment is to overcome the decision in Gerrard Co. v. Johns Perry.

[39]

Issues for determination

Keybridge's application focusses on the consequences of, and hence is predicated upon, a contravention of s 650G of the Corporations Act, that being the finding of the Takeovers Panel and affirmed on review by the Review Panel. However, there are two logically anterior questions raised by WAM Active in resisting the application by Keybridge, namely: first, whether s 650G of the Corporations Act was engaged, as alleged by Keybridge; and, second, if so, whether remedial orders should be granted as sought in WAM Active's interlocutory process to cure the defect or defects which otherwise would lead to s 650G being engaged.
WAM Active says that the question as to the consequences of a contravention of s 650G of the Corporations Act arises only if the first two questions are resolved adversely to WAM Active. I note that I agree with this proposition.
Following then, that third question is as to whether s 650G of the Corporations Act has the effect of making void completed transfers (or conveyances) of shares as distinct from contracts for transfer. In that regard, WAM Active submits that s 650G of the Corporations Act does not render void completed share transfers and therefore does not affect WAM Active's status as owner of shares in respect of which acceptances have been processed via CHESS (i.e., the Processed Shares).
The final question (which WAM Active says does not affect Keybridge's originating process but is relevant to one of the prayers for relief sought by WAM Active), is as to whether WAM Active has failed to comply with s 630 by giving notice of the status of defeating conditions to its bid at the prescribed time to Keybridge. As adverted to above, WAM Active submits that it has complied with s 630 of the Corporations Act or, alternatively, that remedial orders should be made to cure its inadvertent breach.
Before addressing the first of those two anterior questions (i.e., whether s 650G of the Corporations Act was engaged), it is relevant to deal with the complaints made by Keybridge as to abuse of process or Anshun estoppel in the raising by WAM Active of the matters here relied upon in resisting the relief sought by Keybridge and in bringing its own interlocutory process.

[40]

Preliminary issue: abuse of process and/or Anshun estoppel

As noted, Keybridge's submissions as to abuse of process or Anshun estoppel are referred to in the context of WAM Active's interlocutory application, but it is convenient to deal with them at the outset.

[41]

Keybridge's submissions

Keybridge's position is that it was open to WAM Active in March 2020, at the time it was notified of the bid closing subject to defeating conditions, to apply to the Court for curative or remedial relief under s 1325D of the Corporations Act. Keybridge says that, while WAM Active did commence the March 2020 Proceeding for declaratory relief, it only did so in respect of certain (and not all) of the defects in its s 630 notice.
Keybridge submits that, given the history of WAM Active's "abandoned" application and its decision to contest the merits of the defeating condition issue in the Takeovers Panel, there is an "obvious and serious vice" in the relief now sought in WAM Active's interlocutory process. Specifically, it says that WAM Active, having started Court proceedings for curative relief in the context of the then takeover bid, now (ex post, and in an attempted answer to the orders sought by Keybridge) seeks through its interlocutory process relief which it should reasonably have sought in the proceeding which it issued but then abandoned. It is said that, in the Hamilton Affidavit (see at [98]), Mr Hamilton concedes that each time any allegation was made by Keybridge, its complaints were given "due consideration", noting that Mr Hamilton refers (see at [105]ff) to the circumstances in which Keybridge complained that WAM Active had not freed its bid from defeating conditions.
Keybridge says that, as the Takeovers Panel found (see at [71]) on 4 March 2020, "WAM Active was on notice that its bid may have closed subject to defeating conditions"; but, despite this, WAM Active commenced processing acceptances on 6 March 2020 and issued proceedings on 10 March 2020 (before the Takeovers Panel had determined Keybridge's complaints raising the issue of whether it had complied with s 630 of the Corporations Act). It is noted that WAM Active's application to the Court in the March 2020 Proceeding did not raise Keybridge's complaint (and, again, that WAM Active discontinued its proceeding).
Keybridge says that WAM Active presumably decided that it was content to let the Takeovers Panel deal with the matter instead of raising the issue in the proceeding that it had issued on 10 March 2020 and, in these circumstances, it is submitted that the discretion to grant relief in favour of WAM Active should not be exercised, as to do so would encourage parties to have a "second bite at the cherry" approach to Takeovers Panel proceedings and would encourage multiplicity of proceedings and forum shopping.

[42]

WAM Active's submissions

In response to the above submissions, WAM Active says as follows.
First, with respect to the Takeovers Panel, that as at 10 March 2020 the only possible procedural defect for which judicial relief could be necessary or useful to any party was the defect for which WAM Active sought relief, namely the alleged non-compliance with s 630(5). It is said that, by 9 April 2020, further and other defects had been disclosed (or identified) by the Takeovers Panel in its reasons but that, as at the time WAM Active commenced the March 2020 Proceeding seeking to remedy procedural defects in its bid, those potential problems which the Takeovers Panel would later identify (and in particular, the possibility that s 650G of the Corporations Act was engaged by a failure to waive the condition triggered by the Placement prior to the close of the offer period) had not yet been canvassed. In this regard, it is said that the Takeovers Panel's expressions of "surprise" and disapproval of WAM Active's actions are misplaced, in that they suggest that WAM Active was expected to litigate issues which had yet to crystallise.
WAM Active says that on 10 March 2020, when WAM Active commenced the March 2020 Proceeding seeking relief in relation to its giving notice pursuant to s 630, WAM Active was not on notice of the potential engagement of s 650G of the Corporations Act. It is said that the evidence establishes only that WAM Active was on notice that its bid may have closed subject to condition 10.7(c)(i) (as to which, see the above chronology). WAM Active maintains that that condition had been fulfilled and so its non-waiver could not engage s 650G of the Corporations Act. WAM Active says that no question as to the operation of 10.7(c)(iv) in conjunction with condition 10.8 as invalidating acceptances was raised until later (and not before 9 April 2020 when the Takeovers Panel handed down its reasons for decision).
Thus it is submitted that there was nothing untoward or "surprising" about WAM Active not having sought relief in respect of a possible contravention of s 650G in the now discontinued proceedings (cf Reasons of the Takeovers Panel at [73]); and that this should not affect the exercise of discretion in respect of the relief here sought here. WAM Active says that no other procedural defects necessitating relief had been alleged at the time when WAM Active commenced the (subsequently discontinued) proceedings.

[43]

Determination re abuse of process and/or Anshun estoppel

The principles of Anshun estoppel prevent a party from raising, in subsequent proceedings, matters which that party ought reasonably to have raised in prior proceedings (see Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 at 319 per Wigram VC; and the statements by the High Court in Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 58 at 71 and also the Victorian Court of Appeal in Timbercorp Finance Pty Ltd (In Liq) v Collins [2016] VSCA 128 at [136]-[137] per Warren CJ, Santamaria and McLeish JJA (Timbercorp Finance)). The public interest underlying the Anshun doctrine is "reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole" (see Timbercorp Finance at [138], citing Johnson v Gore Wood at 31).
For the reasons submitted by WAM Active, I do not consider that there is any abuse of process or Anshun estoppel that would preclude WAM Active here seeking the relief sought in its interlocutory process. I accept that this is a defensive application and that it is not inappropriate for WAM Active here to raise issues as to the validity of the steps it took (or to seek relief for the contraventions alleged) particularly in circumstances where it is Keybridge itself that is seeking relief predicated on a conclusion that there was a contravention of s 650G of the Corporations Act.
As to the suggestion that comity should preclude a consideration of the issues raised as to the construction of s 650G of the Corporations Act, the difficulty I have is that Keybridge has itself opened up that review by seeking declaratory relief based on the fact of a contravention. It therefore behoves me to consider that issue, which brings me to the first of the two anterior questions.

[44]

Issue 1: whether s 650G was engaged

I turn then to the first of the two anterior questions identified above (see at [105] above).

[45]

WAM Active's submissions

WAM Active emphasises that the relevant legislative scheme is such that s 650G of the Corporations Act is engaged in relation to its bid if (and only if) three requirements are satisfied: first, that offers made under the bid have at any time been subject to a defeating condition (which it accepts was clearly the case here); second, that the bidder has not declared the offers to be free from the defeating condition within the period before the date applicable under s 650F(1) (by reference to the class order referred to above) (i.e., here, by 25 February 2020); and, third, that the relevant defeating condition has not been fulfilled at the end of the offer period.
In the present case, the relevant defeating conditions are those contained in Sections 10.7(c)(i) and (iv) (as set out above). In essence, WAM Active's position is that s 650G was not breached in relation to either of the conditions: as to Section 10.7(c)(i), because it was fulfilled (or has not been shown to be unfulfilled); as to Section 10.7(c)(iv), because both the specific and the general condition (into which the original condition was bifurcated on the happening of the Placement on 17 February 2020) related solely to the happening of the event in s 652C(1)(d) and, therefore, were able to be waived up to three days after the end of the bid period (there being no dispute that the 2 March 2020 Notice was within that period). For that reason, WAM Active says that Keybridge's originating process should be dismissed and that WAM Active's interlocutory process, insofar as relief is sought for anything other than the 25 February 2020 Notice (i.e., the s 630 notice), is irrelevant.
WAM Active says that the position for which Keybridge contends as to the construction of s 650G of the Corporations Act requires the impermissible reading into the section of words that are not there (as to which, see below).
As to the condition specified in Section 10.7(c)(i), that during the offer period no shares in Keybridge or its controlled entities are converted into a larger or smaller number of shares, WAM Active argues that the issue raised by Keybridge (and accepted by the Takeovers Panel) that this condition does not correspond to s 652C(1)(a) (because the former includes the words "or its Controlled Entities" and the latter refers only to the target) is moot because the condition was fulfilled at all times up to and including the close of the offer period. WAM Active says that there is no suggestion that such an event occurred; and therefore it follows that s 650G of the Corporations Act was not enlivened in respect of that condition.

[46]

Keybridge's submissions

Keybridge, in essence, adheres to the result arrived at by the Takeovers Panel (see T 22.13ff; and see above), that is, relevantly, that: as to Condition 10.7(c)(i), by reason of the inclusion of the words "or any of the controlled entities", it did not relate only to the happening of an event or circumstance referred to in s 652C(1) or (2); and, as to Condition 10.7(c)(iv), because the effect of Section 10.8 is that the condition bifurcated into one specifically related to the Placement which was not satisfied) and one related generally to the issuing of securities but specifically excluded the Placement; those conditions again did not fall within s 652C(1)(a) of the Corporations Act.
Keybridge emphasises that the relevant conditions in this case are negative conditions (for example, that Keybridge does not convert shares). The supposed vice that Keybridge points to in WAM Active's argument is that, if there is a negative condition that could never be fulfilled, then in any case the bidder could have until three days after the bid closed to decide whether or not to withdraw its bid (see T 65.26). Keybridge says that it would be "absurd or an unreasonable position" to allow to be waived three days after the bid closed a condition that had not been fulfilled and never could be fulfilled (see T 65.33ff). It is said that, for a condition to be fulfilled in the statutory context, something has to happen (see T 65.37ff) such that it could then be waived.
Further, it is said that the statutory regime relevantly envisages forward-looking conditions (referring to the language of s 652C(1)(d): "the target or a subsidiary issues shares …"). It is said that when the specific Placement Condition came into existence, the Placement had already occurred and therefore this was not a condition that was forward-looking and hence not within s 652C(1)(d) (see T 66.3ff). Keybridge says that the Placement Condition relates to a specific event not within s 652C(1)(d) and, therefore, it was not a condition able to be waived three days after the bid expired (see T 66.7-11).
Keybridge says that the reference to s 650F(1) in s 650G of the Corporations Act emphasises that the time at which offers are to be declared free from defeating conditions is fundamental. Keybridge says that the time mandated by the legislation is designed to give certainty to the market. Thus, it says that offers must be free from conditions 7 days before the end of the offer period. It says that it is only in the limited circumstances where the relevant condition is in accordance with s 652C(1) or (2) that the condition may be freed 3 days after the end of the offer period.

[47]

ASIC's submissions

As to the question of the interpretation of ss 650F and 652C of the Corporations Act and the application of those legislative provisions to Sections 10.7 to 10.9 of WAM Active's Bidder Statement, ASIC made brief submissions (from its perspective of administering the takeovers provisions of the legislation having regard to the purposes of Ch 6 as set out in s 602 of the Corporations Act).
ASIC submits that a strict interpretation of the scope of the matters that fall within s 652C is consistent with the purposes of ensuring that: the acquisition of control over voting shares in a listed company "takes place in an efficient, competitive and informed market" (see s 602(a)); and that the holders of shares are "given enough information to enable them to assess the merits of [a] proposal" (see s 602(b)(iii)).
ASIC submits that the provision of additional time under s 650F(1)(a) for matters included in s 652C(1) or (2) was intended to address the then unjustified advantage to offerees if conditions are lifted, and the uncertainty and unsatisfactory consequences which may follow if and where they are not. It says that it is consistent with the underlying purpose of those provisions to exclude from the operation of s 650F(1)(a), by reason of the interpretation given to s 652C, clauses designed to address an event that arose prior to the final seven days of the offer period.
Pausing here, WAM Active's response to the above submission is that the provision of additional time (in s 650F) in this context was intended to address unwarranted advantage to offerees if the conditions are lifted (and the uncertainty and unsatisfactory consequences which may follow if they are not); and submits that it is inconsistent with the underlying purpose to exclude from s 650F(1)(a) clauses designed to address an event that arose prior to seven days before the end of period. WAM Active says that consistency with purpose is not sufficient to read into the legislation words that are not there. Reference is made to the CASAC extract (see at [103] above) and the proposition that a bidder might reasonably be given an additional period after the close of the bid to consider whether to abandon conditions relating to the position of the target company. WAM Active says that that is the relevant purpose, not a purpose to exclude conditions where the event arose more than seven days before the end of the offer period (but, rather, to give additional time where the event relates to the target company). WAM Active says that the words used in the legislation are consistent with that purpose and, again, that there is no warrant to read words into the legislation as suggested by Keybridge.

[48]

Determination re issue 1: whether s 650G was engaged

I have extracted above the relevant legislative provisions and also excerpts from the WAM Active Bidder's Statement.
As has been noted, "[d]efeating condition" is defined in Section 11.1 of WAM Active's Bidder's Statement (as each "condition" set out in Section 10.7). If a defeating condition is not satisfied then the bidder is entitled to rescind. The relevant conditions in this case include subsection (c) ("No Prescribed Occurrences"), namely that "[n]one of the following happens during the period commencing on the Announcement Date and ending on the expiry of the Offer Period (each being a separate condition)".
It is accepted that the relevant conditions here are, more specifically: (i) - that the shares of Keybridge or any of its controlled entities are converted into a larger or smaller number of shares (the wording of this condition following, but it is accepted extending further than, the situation contemplated in s 652C(1)(a)); and (iv) - that Keybridge or its subsidiary makes an issue of or grants an option to subscribe for any of its securities or agrees to make such an issue or grant such an option (the wording of this condition mirroring the situation contemplated in s 652C(1)(b)).
It has also been noted above that, pursuant to Section 10.8(a)(ii) of the WAM Active Bidder's Statement, subject to the Corporations Act, each paragraph of Section 10.7 is a condition subsequent which operates only for the benefit of WAM Active and that any breach or non-fulfilment of such "condition" may be relied upon only by WAM Active which may waive (generally or in respect of a particular event) the breach or non‑fulfilment of that "Condition" (there being a difference in usage between the defined term "Condition" and the expression "condition").
As to condition (i) (and proceeding, as WAM Active was prepared to do, on the assumption that the inclusion of the words "or any of its controlled entities" means that this is not a condition that only relates to the happening of an event or circumstance within s 652C(1)(a)), I accept the analysis of WAM Active, namely that: the offers under the bid were subject to a defeating condition; the offer was not declared to be free from that condition within the period applicable; but, importantly, there is no evidence to suggest that the condition was not fulfilled because there is no evidence to suggest that there was any conversion of shares. It follows that, at the end of the offer period, condition (i) was fulfilled or has not been shown by Keybridge to be unfulfilled (here bearing in mind that Keybridge is seeking declaratory relief predicated on that assumption).

[49]

Issue 2: alternatively, whether remedial orders should be made

The second anterior question is whether, if (contrary to WAM Active's primary submission) the condition in Section 10.7(c)(iv) (whether alone or in conjunction with Section 10.8(c)) did not fall within s 650F(1)(a) (such that it could not be waived after 25 February 2020), there should be relief granted in favour of WAM Active extending to 2 March 2020 the time for declaring offers to be free from the Placement Condition.
As may be observed, this issue does not here arise in light of my preceding determination. However, in the event that I am in error, I now turn to determine this issue.
As noted, WAM Active here invokes s 1322 of the Corporations Act (here noting that the authorities recognise that it is to be exercised liberally so as not unreasonably to stifle corporate and financial activity by restricting such activity merely on technical grounds - see, for example, Winpar Holdings v Goldfields Kalgoorlie Ltd (2001) 40 ACSR 221 at 241 per Giles JA (Beazley JA, as Her Excellency then was, and Davies AJA agreeing); Re Emerald Capital [2008] FCA 1739; (2008) 68 ACSR 579 at [20] per McKerracher J (Re Emerald); and Blaze Asset Pty Ltd v Target Energy Ltd (2009) 72 ACSR 431 (Blaze)). WAM Active points out that s 1322(4) and related provisions reflect a long-standing legislative recognition that mistakes will happen in corporate governance and that it is not in the public interest that the validity of such decisions, that do not occasion substantial injustice to third parties, should be undermined (see, for example, Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14 at [39] per French CJ).
I turn first to consider WAM Active's submissions.

[50]

WAM Active's submissions

WAM Active notes that the exercise of the power in s 1322(4) involves, in effect, a two-stage process: first, the determination as to whether it is appropriate to make an order extending the relevant period; second, determination as to whether any substantial injustice has been or likely would be caused to any person by the making of such an order (s 1322(6)(c); and see Blaze).
WAM Active argues that it is open to make an order extending the relevant period; and that, while a bidder "may only" vary in accordance with ss 650B-650D, that does not exclude relief under s 1322(4) (citing Pinnacle VRB Pty Ltd v Reliable Power Inc [2001] VSC 262; (2001) 163 FLR 215 at [19] per Mandie J (Pinnacle VRB)). It is said that it is no obstacle to the grant of the relief sought that the bid period has closed, in circumstances where WAM Active tried to waive (and believed that it had validly waived) the Placement Condition prior to the close of the bid period.
WAM Active further says that there would be no injustice to any party if the order sought were made. It is said that, between 2 March 2020 and 6 March 2020, the market (including Aurora) proceeded on the basis that the defeating conditions to WAM Active's Offer had been validly waived (see the Hamilton Affidavit at [91]; [93]); and that all unprocessed acceptances under WAM's bid were cancelled after the Takeovers Panel made its declaration of unacceptable circumstances on 7 April 2020. WAM Active says that shareholders of the Processed Shares have had the benefit of reversal rights (that is, all those shareholders who accepted into WAM Active's Offer and had their acceptances processed have had the opportunity to reverse out of that bid).
WAM Active says that those shareholders who have not exercised this right are consequently all shareholders who do not see advantage in having their acceptances invalidated. In these circumstances, it is said that the only orders which would preserve the right of the shareholders to choose whether or not to accept into WAM Active's Offer are the orders that WAM Active here seeks (cf Pinnacle VRB at [24]). It is said that the fact that Keybridge remains suspended from trading elevates the importance of preserving that right.
I now turn to consider Keybridge's submissions.

[51]

Keybridge's submissions

Keybridge maintains that s 1325D is the remedial provision which applies, not s 1322(4)(d). Keybridge says that the general remedial provision now found in s 1322(4) has existed in general company legislation for many years and prior to the introduction of the takeover provisions (referring, by way of example, to s 539 of the Companies Act 1981 (Cth) and s 366 of the Companies Act 1961 (Vic)). It is noted that s 1325D, on the other hand, has its origins in the takeovers code (Keybridge providing a schedule setting out the history and introduction of this section together with associated Explanatory Memorandum). It is said that there is nothing to indicate that when the takeover specific provisions were incorporated into the company law in 1988 that it was intended that the takeover-specific provision, then s 743 of the Corporations Law (which was predominantly based on ss 48 and 45(3) of the Companies (Acquisition of Shares) Act - see also at [100]ff above), should not continue to be the operative remedial provision in the context of contraventions of Ch 6. Keybridge argues that, had it been intended that s 1322 would be available in these circumstances, there would have been no need for s 1325D.
Following, Keybridge says that this leads to the conclusion, as a matter of statutory construction, that the legislature intended in a remedial application such as the present that the specific provisions in s 1325D would apply, rather than the general provisions in s 1322(4) (referring to the principles summarised in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566; [2006] HCA 50 at [54]-[59] per Gummow and Hayne JJ (Nystrom)). Reference is also made to the observations of Gavan Duffy CJ and Dixon J, as his Honour then was, in Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1; [1932] HCA 9 (Anthony Hordern) (at 7): … When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.
It is said that this is all the more so where the requirements for relief in s 1325D are more onerous than the general s 1322(4)(d) in that s 1325D requires regard to be had to the specific factors in sub-s 1325D(4). Keybridge says that such factors do not feature in the general considerations called for by s 1322(4)(d), which only requires consideration of "substantial injustice". Keybridge says that to apply the general provisions of s 1322 in such circumstances is to deprive s 1325D of any work to do. It is said that s 1325D(5) confirms that s 1325D is intended to be the dominant or operative provision in circumstances such as the present, stating that the section applies notwithstanding anything in any other provision of the chapter (i.e., Ch 9, which includes s 1322).

[52]

ASIC's submissions

Without making submissions as to whether the various orders sought by the other parties are necessary or should be made in the circumstances in order to resolve the dispute between Keybridge and WAM Active, ASIC makes the following submissions about the availability and operation of the legislative provisions.
ASIC submits that the words "must not be registered" in s 650G of the Corporations Act contain a prohibition on the registration of securities based on an acceptance or contract that is void under that section; and that registration of the securities in such circumstances amounts to a contravention of Ch 6 of the Corporations Act.
ASIC notes that, under s 1325A(1)(a), such orders (including remedial orders) as considered appropriate may be made if a person contravenes a provision of Ch 6. ASIC submits that, if it is found that there is a contravention of the registration prohibition in s 650G of the Corporations Act, that is sufficient to enliven the powers in s 1325A(1)(a).
ASIC submits that, if the power to make orders under s 1325A(1)(a) is enlivened by a finding of a contravention of the registration prohibition in s 650G, then it would not be necessary for the Court also to find that the registration itself is void or invalid, or that the title to any shares registered in the circumstances of a s 650G contravention could not be validly transferred to third parties, in order for the Court to exercise that power (cf Keybridge's submissions at [68]).
ASIC also submits that, if the Court's power to make orders under s 1325A is enlivened by a finding of a contravention of the registration prohibition in s 650G, then the Court would continue to have that power even if there is a finding that a transfer and registration of securities is valid and complete under the Corporations Act, Corporations Regulations 2001 (Cth) (Corporations Regulations) and ASX Settlement Operating Rules despite the contravention (cf WAM Active's Submissions at [47]). ASIC notes in this respect that "remedial orders" are defined in s 9 and paragraph (g), and that definition includes "vests securities, or an interest in securities, in ASIC" and paragraph (d) of that definition "directs a person to dispose of, or not to dispose of securities or interests in securities". It is noted that both definitions are not limited (other than by the terms of the sections in which the defined term "remedial orders" appears) and contemplate that, if considered appropriate, there is power to make orders that may alter the effect of a previous transfer.

[53]

Determination re issue 2: whether remedial orders should be made

As I have said above, in light of my ruling on the first anterior question, this issue does not arise. Had it arisen, I would have concluded that there was power to grant remedial relief and that, in this case, it was appropriate to do so in circumstances where the breach was not deliberate and there is no substantial injustice to any of the shareholders of the Processed Shares.
Insofar as Keybridge emphasises that both Keybridge and Aurora notified (through the Takeover Panel proceedings) WAM Active, at the time that the 2 March 2020 Notice was issued, that they considered that the WAM Active Offer had been defeated (and that each of Keybridge and Aurora advised WAM Active that it should not proceed to process any shares of persons that had accepted its purported offer), I accept that WAM Active was not on notice at that stage of the basis on which Keybridge ultimately challenged (and was successful before the Review Panel) WAM Active's right to process acceptances.
As to the Anthony Hordern principle, I accept ASIC's submission that the principle identified in Anthony Hordern does not here apply because the two powers here are not the same power. As Gummow and Hayne JJ said in Nystrom (at [61]), it is not sufficient for the purposes of the principle that a practical consequence of exercising the two powers may be the same (i.e., instead, they must be the same substantive power in law). To my mind, this is the case here.

[54]

Issue 3: whether s 650G renders the transfers (or conveyances) void

I turn then to the third of the issues identified by Keybridge (which, again, does not arise in light of the determinations that I have made as to the anterior issues, but which I deal with for completeness in case my determinations above are incorrect).
It is convenient first to set out Keybridge's submissions.

[55]

Keybridge's submissions

Keybridge starts by emphasising that the determination by the Takeovers Panel that the bid closed subject to defeating conditions was that the contracts entered into in respect of the Processed Shares are "void" and that any such transfers in respect of the Processed Shares "must not be registered", but that the Takeovers Panel expressly left open for determination by the Court the effect of s 650G of the Corporations Act (see as set out above).
Keybridge says that the orders here sought by it are necessary to give effect to the legislative intent of s 650G of the Corporations Act, including that such takeover contracts and acceptances that have not resulted in binding contracts are void and transfers must not be registered. In the absence of the orders sought by Keybridge, it is submitted that that statutory intent will not be fulfilled.
As has also been adverted to above, Keybridge submits that the terms of s 650G of the Corporations Act as to the consequences of a contravention of that provision are unambiguous. It emphasises that the section provides that takeover contracts (such as those in relation to the Processed Shares) are "void" (cf voidable), as are acceptances of offers that have not resulted in binding contracts. Thus, it is said that the word "void" is intended to apply both to contracts that have been completed following the acceptance of an offer and (if it be relevant) the transfer of payment to the vendor, as well as to contracts where offers have been accepted but binding contracts have not been completed.
Keybridge submits that the statutory language comfortably covers situations where contracts have purportedly been formed and performed, as well as situations where purported contracts have partly been performed and situations where they remain conditional. In particular, it is contended that the term "void" covers situations where, as in this case, bids have not validly been freed from defeating conditions. Keybridge submits that such an intention is made explicit by the terms of sub-ss 650C(a)-(c) of the Corporations Act.
Keybridge contends that there are two consequences that follow where a bid has closed subject to a defeating condition: first, that contracts and acceptances are void; second, that a transfer of securities based on an acceptance or contract that is void "must not" (cf "may not") be registered. It is noted that the provision does not say that the contracts are void unless some identified contingency occurs, or that the contracts are void at the option of a party or that contracts are void unless payment has been made by the bidder (cf Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56). It is submitted that the use of the mandatory language ("must not be registered") means that no legal effect must (cf may) be given to the transfer. Keybridge says that there is nothing in the extrinsic material to s 650G (see above) that suggests that the word "void" should be given any other meaning.

[56]

WAM Active's submissions

As to the third question, whether s 650G of the Corporations Act operates to render void completed share transfers, WAM Active emphasises that the text of s 650G of the Corporations Act provides that "all takeover contracts" and "all acceptances that have not resulted in a binding takeover contract" are "void" (if the criteria in sub-ss (a) to (c) are satisfied) and provides that "a transfer of securities based on an acceptance or contract that is void under this section must not be registered". WAM Active says that the section itself thus draws a distinction between contract and conveyance or transfer.
Insofar as Keybridge submits that the effect of s 650G of the Corporations Act is that no legal effect must ("not may") be given to a transfer affected by s 650G, WAM Active says that this is not what the text of s 650G provides; rather, that the text says only that a transfer "must not be registered". WAM Active says that s 650G of the Corporations Act does not invalidate or purport to effect the validity of any transfer/conveyance of shares, nor does it make an offence a transfer or conveyance of shares effected where the criteria in sub-ss (a)-(c) are satisfied.
WAM Active submits that, given that the purpose of Ch 6 is to provide commercial certainty (referring to Pinnacle VRB at [12]; Primelife at [8]), WAM Active says that, if it had been intended that s 650G should have any consequences for completed conveyances, the legislature would have said as much in specific terms. Furthermore, in this respect, it is contended that Keybridge's submissions to the contrary conflate a contract and a conveyance.
WAM Active points to the means by which the Processed Shares were conveyed to it (as prescribed by the Corporations Act in conjunction with the Corporations Regulations and the ASX Settlement Operating Rules). It refers to the operation of those provisions as set out above.
More specifically, WAM Active points out that, under the ASX Settlement Operating Rules, a Takeover Transfer is effected by the shareholder accepting into the bid when that shareholder transmits a message within CHESS accepting the bidder's offer (see r 14.17.3). It says that the effect of the interaction between the Corporations Act, Regulations and ASX Settlement Rules is therefore that "any ASTC Regulated Transfer" is "a proper ASTC transfer", "whether or not completed in accordance with the Rules"; and that once a proper ASTC transfer has been effected, r 7.11.27 dictates the result. Thus, it says that s 650G of the Corporations Act does not purport to invalidate a proper ASTC transfer.

[57]

Determination re issue 3: whether s 650G renders the transfers (or conveyances) void

As I have said, it is not necessary to determine this issue. Had it been necessary to do so, I would have accepted WAM Active's submissions (and, also, as relevant, those made by ASIC). I consider that there is a distinction between a finding that a contract is void (and that a takeover acceptance pursuant to such a contract must not be registered) and the consequences if (inadvertently or otherwise) registration takes effect. Unless and until the register is rectified (on an application by a relevant party), the register records who is the legal or beneficial holder of the shares.
Moreover, as I have said above, I do not accept that a contravention of the section means that the Court is deprived of the remedial powers provided for under the Corporations Act.
I now turn to the final issue for determination identified above as to whether WAM Active has failed to comply with s 630.

[58]

Issue 4: whether WAM Active failed to comply with s 630

It is convenient first to consider WAM Active's submissions.

[59]

WAM Active's submissions

Again, I have set out above the relevant provisions. It is accepted that, as at 24 February 2020, the date by which WAM Active was required to give notice of the status of the defeating conditions to its bid pursuant to s 630 was 25 February 2020. I have set out in the chronology of events the evidence as to the giving of the 25 February 2020 Notice. It is not disputed that Keybridge in fact was given notice (by email from the ASX) on 25 February 2020. The issue is that it was not given notice directly by WAM Active.
As WAM Active notes, the first question which here arises is whether, by giving the notice to the ASX, WAM Active also gave the notice to Keybridge on 25 February 2020 within the meaning of s 630(5)(a) of the Corporations Act.
In this regard, WAM Active says that a requirement to "give" notice in Ch 6 of the Corporations Act means to "send" or "dispatch" and does not connote service or actual receipt (citing Pinnacle VRB at [12]; Primelife at [8]). It is said that while s 630(5) requires that, for quoted bid class securities (as here), notice be given both to the target and the market operator, the section does not mandate any particular means by which such notice is to be given. WAM Active argues that the section does not require that notice be given without any intermediate steps and notes that it does not say that each person identified in s 630(5) must be sent the notice by separate and independent processes.
WAM Active submits that the requirement that a s 630 notice be given to Keybridge on 25 February 2020 was satisfied by the combination of the delivery of the notice to the ASX and the steps which the ASX took on that day.
In the alternative, in the event that WAM Active has failed to give the notice required by s 630 to the target (Keybridge) on 25 February 2020, WAM Active seeks orders: extending the time for the giving of the s 630 notice to the target, to 26 February 2020; or declaring that WAM Active's giving notice for the purposes of s 630 was not invalid merely because it was late, and has had effect at all times as if there had been no contravention of s 630(5).
It is noted that a failure to comply with the procedural stipulations of s 630 amounts to a contravention of s 630. Thus it is said that a failure to give the s 630 notice in time is therefore a contravention against which relief pursuant to s 1325D is available.

[60]

Keybridge's submissions

As to the invocation by WAM Active of s 1322(4)(d) of the Corporations Act to extend time in respect of the notice requirements regarding defeating conditions or otherwise seeks curative relief under s 1325D of the Corporations Act, Keybridge submits as follows (on the assumption that there has been a contravention of s 650G of the Corporations Act).
First, Keybridge says that neither s 1325D nor s 1322(4) (if it applies - as to which, see above) should be relied on to make orders having the effect of validating WAM Active's "title" to the shares in circumstances where s 650G of the Corporations Act has the effect that contracts and acceptances are void. It is said that the curative relief would be contrary to the statement by Isaacs and Gavan Duffy JJ (set out at [234] above) to the effect that courts cannot permit personal relations to effect a virtual repeal of an enactment and contrary to the intended consequence of the provision, which is that acceptances should be returned.
Second, that, in circumstances where s 1325D is a specific remedial or curative power, it is that provision that applies (not s 1322(4)(d) - as to which, again, see above).
Third, Keybridge says that s 1325D(4) identifies the matters that ought be taken into account in determining whether the contravention of Ch 6 should be excused, noting that sub-para (b) refers to "the person not having been aware of a relevant fact or occurrence" and sub-para (c) to "circumstances beyond the control of the person". Keybridge maintains that WAM Active is "on the wrong side" of these discretionary matters, on the basis that WAM Active disregarded the warnings given to it and failed to raise promptly the issue with the Court. It is submitted that this favours the Court declining to exercise any relief in WAM Active's favour and that, to do so would, be implicitly to sanction the actions of WAM Active and its officers in circumstances where those acts were not inadvertent or mistaken and where the circumstances were not beyond the control of WAM Active.
Fourth, Keybridge says that, even if s 1322(4)(d) applies, for similar reasons to those considered above, curative relief should be declined in circumstances where WAM Active has acted deliberately (referring to Re PW Saddington & Sons Pty Ltd (1990) 19 NSWLR 674).
As to the s 630 notice issue specifically, Keybridge accepts that if its primary submissions as to s 650G of the Corporations Act are not accepted then WAM Active should obtain remedial relief to the extent needed for its procedural breach set out at [48]ff of WAM Active's submissions. I note that I agree with this proposition.

[61]

ASIC's submissions

As to the relief sought by WAM Active in relation to the s 630 notice, ASIC's position is that providing the notice to the ASX rather than to the target does not fulfil the requirements of s 630(5)(a). However, ASIC does not oppose a remedial order being granted, though raises concern that there not be a finding that such a notice is sufficient. As to the remedial order, ASIC accepts that there would be power to exercise the discretion to grant relief in circumstances where there is a contravention but nothing flows therefrom and does not cavil with the fact that notice was provided the next day (such that an extension of time under s 1322(4)(d) may be appropriate).
As to sufficiency of notice, ASIC does not accept that the ASX giving notice to the target is sufficient; rather, it says that the legislation requires that the bidder give that notice (referring to s 633 of the Corporations Act). It is said that, read with that section, for the purposes of s 635, the bidder must give the notice. ASIC says s 630(5) has a conjunction and is not disjunctive, such that it requires giving notice to the target (and either sub-s (b) or (c) will apply).
Accordingly, in those circumstances, ASIC contends that the particular declaration sought in the interlocutory process should not be made and that the proposed order for an extension of time to the next day is preferable.
As to the last submission, again, WAM Active says it is open to construe the section as requiring the bidder to give notice but for that to be able to be given indirectly (i.e., through another person).

[62]

Determination re issue 4: whether WAM Active failed to comply with s 630

In the circumstances, I do not propose to make the declaration. It might be fortuitous that ASX forwarded the email on that date, even though I accept that the participants understood that the ASX would forward it on to the target. However, my tentative view is that what is required is the giving of notice by the bidder to the target directly. I say that this is a tentative view because, here, other relief will adequately address the issue.
For this reason, it is not appropriate here to make the declaration sought.

[63]

Conclusion

For the reasons given above, I have concluded that there were no relevant unfulfilled conditions to the WAM Active Offer at the end of the offer period because the condition at clause 10.7(c)(iv) was waived in accordance with s 650F(1) on 2 March 2020. Had I concluded otherwise, I would have extended the time within which to waive that condition to 2 March 2020 under s 1325D or s 1322 of the Corporations Act. It follows that Keybridge's originating process should be dismissed.
As to WAM Active's interlocutory process, I am not persuaded that a declaration should be made that WAM Active did not breach s 630(3) of the Corporations Act. This is because I consider, without expressing a concluded view, that the better view is that what is required by way of the giving of notice to the target for the purposes of that section is the giving of notice by the bidder. Furthermore, and even if it is possible to give notice through a third party, here there was no direct causation by, or intention on the part of, WAM Active of the giving of notice through ASX, simply an assumption on its part that the ASX would on-forward the notice. It is also not necessary to make any concluded finding on this issue because I am of the view that the alternative remedial relief should be made which will adequately address the issues.
As to costs, WAM Active seeks its costs of the originating process and interlocutory process. In the ordinary course, costs should follow the event. ASIC submits that it is appropriate that its costs as second defendant in the proceedings be paid by either Keybridge or WAM Active, as best reflects the resolution of the issues between those parties. I agree with these propositions. It follows that Keybridge should pay the costs of WAM Active and ASIC on the ordinary basis.

[64]

Orders

As it is not necessary in light of the above determinations to consider any formulation of orders referable to the Processed Shares, I do not need further submissions from the parties and will make the following orders: 1. Dismiss Keybridge Capital Limited's originating process filed 1 June 2020 with costs. 2. Pursuant to s 1322(4) or s 1325D of the Corporations Act 2001 (Cth), extend to 26 February 2020 the time for compliance by WAM Active Limited with s 630(3) of the Corporations Act 2001 (Cth), in respect of the giving of notice to Keybridge Capital Limited of the status of the defeating conditions of the WAM Active Offer (as defined) in accordance with s 630(5)(a) of the Corporations Act 2001 (Cth). 3. Order Keybridge Capital Limited to pay WAM Active Limited and the Australian Securities and Investments Commission their costs of the interlocutory process filed by WAM Active Limited on 16 July 2020 and amended on 15 October 2020.

[65]

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 December 2020

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