Lion Nathan Australia Pty Ltd (ACN 008 596 370) v Coopers Brewery Limited

Manufacturers' Mutual Insurance Ltd v Withers & Anor (1988) 5 ANZ Insurance Cases ¶60-853 referred Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 applied Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 cited Butt v McDonald (1896) 7 QLJ 68 cited Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 cited Egyptian Salt and Soda Ltd v Port Said Salt Association [1931] AC 677 referred Bowler v Hilda Pty Ltd (2001) 112 FCR 59 cited Simon v HPM Industries Pty Ltd (1989) 15 ACLR 427 cited Stanham v The National Trust of Australia (NSW) (1989) 15 ACLR 87 cited Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693 cited National Roads and Motorists' Association Ltd v Parkin (2004) 60 NSWLR 224cited Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1967) 118 CLR 429 referred Cotman v Brougham [1918] AC 514cited Holmes v Keyes [1959] Ch 199 referred Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99 cited Re GIGA Investments Pty Ltd (in admin) (1995) 17 ACSR 472 cited Ray Brooks Pty Ltd v NSW Grains Board [2002] NSWSC 1049 referred BP Australia Pty Ltd v Nyran Pty Ltd (2003) 198 ALR 442 not followed Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 cited Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 cited Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 cited Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 cited CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 cited Buche v Box Pty Ltd (1993) 31 NSWLR 368 cited Coles Myer Ltd v Commissioner of State Revenue [1998] 4 VR 728 distinguished

Lewison, The Interpretation of Contracts, 7.15 (3rd ed, 2004) E McKendrick, "The Interpretation of Contracts: Lord Hoffman's Re-Statement" in S Worthington (ed), Commercial Law & Commercial Practice, 139 (2003) McLauchlan, "Objectivity in Contract" (2005) 24 UQLJ 481 Peden & Carter "Taking Stock: the High Court and Contract Construction" (2005) 21 JCL 172 Spigelman, "The poet's rich resource: Issues in statutory interpretation" (2001) 21 Aust Bar Rev 224 LION NATHAN AUSTRALIA PTY LTD (ACN 008 596 370) v COOPERS BREWERY LIMITED (ACN 007 871 409), ARGO INVESTMENTS LTD (ACN 007 519 520), BAKSTOPER SERVICES PTY LTD (ACN 007 886 115), MARITA BOWDEN, KEITH PROSSER BOWMAN, ANNE LOUISE CHESTER, MARGARET ANN CORFIELD PIPER, RACHEL HANAN, LAWRENCE THOMAS HARROLD, JOHN COUNTER PIPER, FRANCIS GEOFFREY PIPER, ROBERT WILLIAM PIPER, JOSEPHINE MARY PROSSER, BARRY D SCHRAPEL, ANDREW DAVID SHORT, MARGARET HEATHER THOMSON AND PETER PRATT THOMSON No S 140 of 2005 FINN J ADELAIDE 13 DECEMBER 2005

BETWEEN: LION NATHAN AUSTRALIA PTY LTD (ACN 008 596 370)

AND: COOPERS BREWERY LIMITED (ACN 007 871 409)

THE COURT ORDERS THAT:

1. The application be dismissed.
2. The applicant pay the respondents' costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: LION NATHAN AUSTRALIA PTY LTD (ACN 008 596 370)

AND: COOPERS BREWERY LIMITED (ACN 007 871 409)

REASONS FOR JUDGMENT 1 In Manufacturers' Mutual Insurance Ltd v Withers & Anor (1988) 5 ANZ Insurance Cases ¶60-853 at 75,343, McHugh JA observed: "… few, if any, English words are unambiguous or not susceptible of more than one meaning or have a plain meaning. Until a word, phrase or sentence is understood in the light of the surrounding circumstances, it is rarely possible to know what it means." 2 This case is a testament to this observation. At issue is the proper interpretation to be given the word "any transfer of shares" in the following sentence in Article 38 of Coopers Brewery Ltd's Articles of Association ("the Articles"): "No member may make any transfer of shares and the Directors must not register any transfers of shares without complying with Articles 40-53." Articles 40 to 53 establish a detailed three level (or tiered) pre-emptive rights regime. 3 The rival constructions advanced by the applicant, Lion Nathan Australia Pty Ltd ("Lion Nathan") and the respondent, Coopers Brewery Ltd ("Coopers") are (i) "any transfer" encompasses a transfer to any legal person including Coopers and thus Article 38 applied to a share buy-back by Coopers under Div 2 of Pt 2J.1 of Ch 2J of the Corporations Act 2001 (Cth) ("the Corporations Act") with the consequence that the pre-emptive rights regime had to be complied with before Coopers could acquire and cancel shares under the buy-back Scheme (Lion Nathan); or (ii) "any transfer" means a transfer to a third party so leaving the buy-back provisions of the Act unaffected by the pre-emptive rights regime (Coopers). 4 Lion Nathan's claim against Coopers is for breach of a term of an Agreement between them ("the Coopers Shares Agreement"). That agreement is premised upon Coopers acting in strict compliance with its Articles of Association (including the pre-emptive rights regime under which Lion Nathan has a third tier pre-emption right). 5 The construction of Art 38 necessarily involves a close consideration of the text of the article in the setting of Coopers' Constitution. However, its resolution also requires a like consideration of "the surrounding circumstances known to [Coopers and its members] and to the purpose and object of [Article 38]": cf Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22] ("Pacific Carriers"). 6 My own conclusion is that a reasonable person in the position of Coopers and its members would understand that the language of Art 38 was addressed to transfers to third parties alone. 7 Because of the significance that both the surrounding circumstances and the purpose of Art 38 have in this matter, it is necessary to preface my consideration of the parties' contentions with a rather lengthy history of events that were, or became known to Lion Nathan, Coopers and its members leading up to the entry into the Coopers Share Agreement in 1995 and certain related agreements, and then to the share buy-back in 2003. 8 I should also note at the outset that the second to the seventeenth respondents are the shareholders who sold their shares to Coopers under the 2003 share buy-back. No relief is sought against any of them. None has participated in this proceeding.

9 The following is drawn largely from Lion Nathan's Contentions of Fact.

A. Lion Nathan's acquisition of an economic interest in 19.9 per cent of Coopers' issued shares in 1993 10 In 1962, South Australia Brewing Holdings Ltd (now "SABH") became the registered owner of 87,751 "D" class shares and 372,003 "C" class shares in Coopers. These together constituted approximately 25 per cent of the issued shares in Coopers. SABH also owned all of the issued shares in the South Australian Brewing Co Ltd ("SABC"). SABC was a brewer of beer in competition with Coopers. 11 In about May 1993, SABH decided to sell its brewing division (essentially SABC) and it procured BT Corporate Finance Ltd ("BT") to issue an information memorandum and invite expressions of interest from persons wishing to purchase the brewing division. 12 In July 1993, Lion Nathan acquired from SABH the whole of its Brewing Division, including all of the issued shares in SABC. As part of the transaction with SABH, on 1 August 1993, Lion Nathan entered into a deed with SABH pursuant to which it purchased from SABH an economic interest in 19.9 per cent of the issued shares in Coopers held by SABH (the "Coopers Deed"). 13 At that time Art 46 of Coopers' Articles of Association provided: "Except where the transfer is made pursuant to article 53, the person proposing to transfer any share (hereinafter called the 'proposing Transferor') shall give notice in writing (hereinafter called 'the Transfer notice') to the Company that he desires to transfer the same. Such Transfer notice shall specify the sum he fixes as the fair value and shall constitute the company his agent for the sale of the share to any member of the company or nominee of the holders of 'D' shares as hereinafter provided at the price so fixed or at the option of the purchaser at the fair value to be fixed by the Auditor in accordance with these Articles … A Transfer notice shall not be revocable except with the sanction of the Directors." 14 Article 40 of the Coopers' Articles of Association provided: "40. No notice of any trust, expressed, implied or constructive shall be entered in the register." 15 Article 11 of Coopers' Articles of Association provided: "11. No person shall be recognised by the company as holding any share upon any trust and the company shall not be bound by or recognise any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these presents otherwise expressly provided) any other right in respect of any share except an absolute right to the entirety thereof in the registered holder." 16 The Articles of Association of Coopers did not, in 1993, include a definition of "transfer" for the purposes of Arts 45 to 53 (being the Articles then regulating the transfer of shares in Coopers).

B. The 1 August 1993 "Coopers' Deed" 17 Clause 4.2 of the Coopers Deed provided that, on the sale and purchase by Lion Nathan of the whole of the issued capital of SABC, all right, title and interest in 87,751 "D" class shares and 263,242 "C" class shares in the capital of Coopers held by SABH as at 1 August 1993 ("the Coopers shares") would be sold by SABH to Lion Nathan with all rights attached or accruing to them. Nonetheless, the subclause went on to provide by way of qualification that, notwithstanding the purchase by Lion Nathan from SABH of all rights attached or accruing to the Coopers shares, no right, title or interest in the Coopers shares was sold to Lion Nathan which related to: (a) the right or entitlement to seek registration of a transfer of legal title of the Coopers' shares on the register of members of Coopers or that would require the giving of a Transfer notice (as defined in Article 46 of the Articles of Association of Coopers as at August 1993);

(b) the right of SABH as a member of Coopers to acquire shares in the capital of Coopers following the giving of a Transfer notice by another member of Coopers; or

(c) any power or control to dispose of a voting share in the capital of Coopers (other than a Coopers share) including, but not limited to any rights relating to the sale of such shares.

18 Clause 5.1 of the Coopers Deed provided that on the sale by SABH to Lion Nathan of all the issued shares in SABC, the Coopers shares (being equal to 19.9 per cent of the issued shares in Coopers) were to be held by SABH on trust for Lion Nathan and subject to Lion Nathan's directions and instructions. Clause 5.3 of the Coopers Deed provided that SABH must (in accordance with Lion Nathan's written instructions) co-operate with Lion Nathan to effect any reasonable arrangements to provide to the company the full economic benefit of ownership of the Coopers shares without a transfer of the Coopers shares taking place. Further subclauses in cl 5 were designed to secure for Lion Nathan, in a variety of ways, the advantage of the agreement. 19 Subclause 7(b) of the Coopers Deed provided that the provisions of that Deed did not constitute a transfer or agreement to transfer a Coopers share for the purposes of Art 46 of the Articles of Association of Coopers.

C. Coopers disputes SABH's right to sell the economic interests; the Coopers/Lion Nathan compromise 20 Though little direct evidence was tendered on the following matters, it is clear from later documents (and especially the Coopers Shares Agreement) that in late 1993/early 1994 (i) Coopers had threatened litigation against SABH and Lion Nathan challenging SABH's sale and Lion Nathan's purchase of the economic interest in SABH's shares, Coopers asserting but SABH - now Southcorp Holdings Ltd ("Southcorp") - denying that the circumstances of the sale triggered the provisions of the pre-emptive rights regime; and (ii) a dispute arose between Coopers and Southcorp, Lion Nathan and the Adelaide Bottle Co Pty Ltd ("the Bottle Co") as to the rights of Coopers to bottles produced by the Bottle Co. It is conceded by Lion Nathan that on 20 December 1993, it provided a copy of the Coopers' Deed to Coopers. 21 These various disputes were resolved by negotiation and were later formalised in the Coopers Shares Agreement of 3 March 1995. Prior to the execution of that agreement Coopers sought written approval from the Australian Securities Commission ("the ASC") under s 633(c) of the Corporations Law ("the Law"), that s 615 of the Lawnot apply to the acquisition of shares in Coopers which the Lawdeemed would occur upon Coopers granting a pre-emptive right to Lion Nathan in consequence of the proposed Coopers Shares Agreement. That approval was granted on 9 February 1995. 22 Prior to the approval being sought, Coopers' solicitors forwarded to Lion Nathan's solicitors for comment a draft of the proposed letter to the ASC. That draft annexed the amendments to Coopers' Articles of Association provided for in the Coopers Shares Agreement. The amendments relating to the proposed new pre-emptive rights regime were described in the letter itself in the following terms: "It is proposed that amendments be made to the Memorandum of Association and Articles of Association which deal with the pre-emptive rights of shareholders in Coopers. In effect these amendments provide as follows: (a) They extend the definition of 'transfer' to avoid assignment of interests, or a change in control of a shareholder which may not be considered to be a formal transfer (proposed Articles 45A, 50A and 50B). (b) In essence the existing Articles 46 to 50 inclusive are retained although the rights are extended to relatives of members. This is consistent with shareholding in Coopers being substantially held by Coopers' family members. (c) Additional pre-emptive rights are triggered if no A, B, C or D shareholder or a member's relative seeks to purchase the shares the subject of the transfer notice. In particular the shares are then offered to: (i) the Australian Mutual Provident Society Limited or some other trustee of a superannuation fund for employees of Coopers (proposed Articles 51, 51A and 51B); (ii) thereafter the shares are offered to Lion Nathan Australia Limited (proposed Articles 51C, 51D and 51B); and (iii) thereafter they are offered to the public (proposed Article 52). (d) A consequential amendment has been made to Article 141": emphasis added. 23 The draft was tendered by Lion Nathan. It was not suggested that Lion Nathan had sought that alterations be made to it.

D. The pre-emptive rights regime pre 7 March 1995 24 As at 1994 the pre-emptive rights contained in Coopers' Articles were directed to the various classes of shares then issued. Their clear intent was to privilege the holders of "A", "B" and "C" class shares should a member wish to transfer shares. 25 Article 47(a) provided that where the shares the subject of the Transfer notice, were class "A", "B' or "C" shares, the Directors on receipt of the Transfer notice, were required to endeavour to find a member holding class "A", "B" or "C" shares to purchase the shares. If within 28 days after the Transfer notice was served, the Directors found such a member holding class "A", "B" or "C" shares, the Directors were required to give notice to the proposing Transferor that such a member (or members) was (were) willing to purchase the shares, and thereupon the proposing Transferor became bound upon payment of the price so fixed, or the fair value as certified by the auditor, to transfer the shares to the purchasing member. 26 Article 47(b) provided that where the Directors did not, within 28 days after receipt of a Transfer notice in respect of shares being class "A", "B" or "C" shares, find a member holding shares of such a class willing to purchase the proposing Transferor's shares, the Directors were required to offer the proposing Transferor's shares to members holding "D" class shares. If within 28 days after such shares being offered to the "D" class holder of shares, one or more of them or the nominee of one or more of them informed the Directors in writing that they accepted the offer, then upon the Directors giving notice of such acceptance to the proposing Transferor, the proposing Transferor became bound upon payment of the price fixed by the Transfer notice, or the fair value, to transfer the shares to the class "D" member of its nominee. 27 Article 48 provided that where the shares referred to in the Transfer notice were class "D" shares, the Directors were required to endeavour to find a member holding class "A", "B" or "C" shares willing to purchase the same within 28 days of the Transfer notice having been served. If the Directors found such a shareholder willing to purchase the "D" class shares, then upon the Directors giving notice to the proposing Transferor, the proposing Transferor became bound upon payment of the price fixed by the Transfer notice, or the fair value, to transfer those class "D" shares to the purchasing member. 28 Article 51 provided that where the company was unable, within the time stipulated in Arts 47 and 48, to find a member willing to purchase the shares, then the proposing Transferor, as and from the expiration of the relevant time period (i.e. 56 days for "A", "B" and "C" class shares, and 28 days for "D" class shares), became at liberty and subject only to Art 54, to sell and transfer the shares the subject of the Transfer notice to any person and at any price. 29 Article 53 authorised a member to transfer shares to specified family members and relatives without having to comply with the pre-emptive rights regime. 30 Article 54 provided that the Directors were entitled to refuse to register a transfer of a share where Coopers had a lien over the share or where the Directors were of the opinion that it was not desirable to admit the proposed transferee to membership save and except that the Directors were not able to refuse to register a transfer of a share where the proposed transferee was already a member or where the transfer was being made pursuant to Art 53. 31 Article 8 provided that the funds of Coopers could not be applied in the purchase of its own shares.

E. Recording the Compromise - the Coopers Shares Agreement 32 On 10 February 1995, Coopers gave notice to its members that an extraordinary general meeting of Coopers Brewery Ltd would be held on 7 March 1995 to consider (inter alia) whether the meeting thought fit to pass a special resolution to amend both the Memorandum of Association of Coopers and the Articles of Association of Coopers, inter alia, in the manner set in Schedule 1 to the Coopers Shares Agreement (referred to below). 33 On 22 February 1995, Coopers' solicitors informed Lion Nathan's solicitors that the settlement agreements could be executed. 34 On 3 March 1995, Lion Nathan and Coopers each entered into the Coopers Shares Agreement. Put shortly, that Agreement provided for the grant of a third tier pre-emptive right in return for Lion Nathan giving up the 19.9 per cent interest which it held in the shares of Coopers then registered in the name of Southcorp. It also brought to an end the Bottle proceedings which Coopers had brought against SABC in August 1993. Recital C of the Coopers Shares Agreement recorded that "Coopers and [Lion Nathan]have agreed to settle their differences in relation to the Bottle proceedings and the Coopers Deed on the following terms and conditions". 35 Clause 2.1 of the Agreement provided that Coopers would use its best endeavours to ensure that the Memorandum and Articles of Association of Coopers were amended by the Coopers Amendments (set out in Schedule 1 to the Coopers Shares Agreement) as soon as practicable. By clause 2.4, Coopers represented and warranted to Lion Nathan that the Board of Directors of Coopers unanimously recommended and proposed to continue to recommend to Coopers' shareholders that they vote in favour of the Coopers Amendments. Clause 2.7 recorded Lion Nathan's and Coopers' joint acknowledgement that Southcorp had informed Coopers that Southcorp intended to vote in favour of the Coopers Amendments. Under one of the proposed amendments a "second tier" pre-emptive right was to be given to the trustee or trustees of superannuation funds for Coopers' employees. 36 Pursuant to cl 3.1 of the Coopers Shares Agreement, Lion Nathan, upon being advised by Coopers of the fulfilment of the Settlement Conditions (which included that the Coopers Amendments were in full force and effect) agreed to enter into an agreement with Coopers and SABC, described as a Release Agreement which was attached as Sched 2 to the Coopers Shares Agreement. The Release Agreement was later executed by the parties on fulfilment of the "Conditions". 37 In cl 4.1 of the Coopers Shares Agreement, Lion Nathan agreed that upon being advised by Coopers of the fulfilment of the Settlement Conditions and following its execution of the Release Agreement, it would enter into an agreement known as a Termination Agreement, the parties to which agreement were to be Southcorp and Lion Nathan. A copy of that was attached as Sched 3 to the Coopers Shares Agreement. This agreement (which is referred to further below) was later executed by Southcorp and Lion Nathan. 38 In cl 7.2 of the Coopers Shares Agreement, Lion Nathan and Coopers agreed to discuss in good faith the possibility of entering into a distribution arrangement regarding: (a) the sale of Coopers' ale products on tap in hotels owned by SABC;

(b) the sale of Coopers' products in New Zealand; and

(c) the distribution and sale of Coopers' products in South Australia and/or Australia generally, if at any time Coopers contemplated changing its existing distribution or sale arrangement.

39 Coopers agreed, in cl 8, to take all steps, execute all documents and do everything required to give effect to any of the transactions contemplated by the Coopers Shares Agreement, including the provision of information, negotiation in good faith with respect to any matters requested by Lion Nathan, and by the execution and delivery of documents and other instruments. 40 Clause 10.5 of the Coopers Share Agreement provided that the rights and obligations of each of Coopers and Lion Nathan under the Agreement did not merge upon the Coopers Amendments being incorporated in the Memorandum and Articles of Coopers.

F. Amendment of Coopers Articles 41 At the extraordinary general meeting, the prescribed amendments to the Articles of Association and to the Memorandum of Association (contained in Schedule 1 to the Coopers Shares Agreement) were passed. Notice of this was given to Lion Nathan on the same day. 42 In accordance with the terms of the Coopers Shares Agreement, on 7 March 1995, the Board of Directors of Coopers unanimously recommended that Coopers' shareholders amend Coopers' Constitution by incorporating therein proposed Article 45A which, insofar as presently relevant, was in the following terms: "In Articles 45-52D, 'transfer' includes: (a) sell, assign, offer, dispose of, transfer or deal in any way with any right, title or interest in any share (whether legal or beneficial and whether for valuable consideration or not); and (b) to agree to sell, assign, offer, dispose of, transfer or deal in any way with any right, title or interest in any share (whether legal or beneficial and whether for valuable consideration or not); and (c) create, declare or allow to be created any trust over any share." This amendment was duly made. It introduced for the first time a definition of "transfer" in Coopers' Articles. 43 In addition to extending the pre-emptive rights regime by adding two new tiers, the amendments strengthened the reach of the first tier (or members') pre-emptive right by allowing a member's relative (a defined term) to be offered shares of which a notice of transfer had been given. 44 Accompanying the notice for the 7 March 1995 meeting was a document entitled "Explanatory Notes". Clause 1 of it described the background disputes and their settlement which gave rise to the proposed changes to the pre-emptive rights regime. It stated amongst other things that: "As part of the settlement, it has been proposed that the Articles and Memorandum of the Company be altered so as to: 1.1 Strengthen the pre-emptive rights provisions to ensure that any future assignments of the nature of the Southcorp Holdings Limited and Lion Nathan Australia Pty Ltd transaction trigger the pre-emptive rights in the articles." A copy of (inter alia) the Explanatory Notes was provided to Lion Nathan's solicitors at their request by letter of 3 March 1995.

G. The Termination Agreement, Southcorp's disposition of its Coopers shares and Coopers' reduction of capital 45 Under the Termination Agreement, Lion Nathan sold to Southcorp all of its interest in the Coopers shares it bought from SABH and the two parties agreed to terminate the Coopers Deed. One provision in the Agreement (cl 4.1) obliged Lion Nathan to purchase under the new pre-emption regime in Coopers' articles all shares of which Southcorp had notified the directors of Coopers it wished to sell (by giving a transfer notice) and which not otherwise been acquired by persons having prior pre-emptive rights, had been offered to Lion Nathan. An agreed formula fixed the consideration that was payable by Lion Nathan for those shares. 46 On 21 March 1995, Southcorp by transfer notice informed the Coopers Board of its desire to sell its entire Coopers shareholding. The pre-emptive rights regime was activated. Only a relatively small number of these shares were taken by persons having pre-emptive rights prior to Lion Nathan. A balance of 371,353 shares were available for offer to Lion Nathan on 16 June 1995. 47 Coopers entered into discussions with Southcorp for the cancellation of its remaining shares with the proceeds being returned to it by way of a reduction of capital. In the event Lion Nathan acquiesced in that course being taken; a tri-partite agreement to that effect was executed; and on 13 September 1995 a judge of this Court made an order confirming the Coopers reduction of capital. 48 Coopers tendered an internal Lion Nathan memorandum of 31 May 1995 from one of its officers to Mr Smith indicating the view of the writer that Lion Nathan did not want the shares.

H. The 2003 Buy-back 49 By letter of 5 September 2003, Coopers forwarded to each of its members an offer to buy back up to 10 per cent of the company's issued capital at $45.01 per share. The offer period ended on 15 October 2003. The Chairman of the Company in that letter characterised this offer in the following terms: "The Buy Back will give shareholders the opportunity to liquidate a proportion of their shareholding, which may not otherwise be available given that the Shares have not had an easily accessible market in which to sell. It also has the effect of improving earnings per share and return on equity which has long term benefits for shareholders." 50 Seven of the 14 pages of the main offer document ("the Offer document") dealt with the Australian taxation implications for shareholders. The $45.01 buy-back price was debited by Coopers as to $2.00 to its share capital account, the dividend component amounting to $43.01. In consequence, members with pre-capital gains tax shares were advised to consider not participating in the buy-back and consider selling their shareholding to a suitable purchaser so realising a tax-free gain. 51 The buy-back itself was to be funded from unused bank facilities and trading cash flows. The Offer document cast the "offer" insofar as presently relevant (cl 5.2) in the following terms: "Coopers may, in its complete discretion, buy back any number of Shares up to a maximum of 10% of the issued Shares. If the acceptance under the Buy Back exceeds 10% of the issued Shares, Coopers will" (a) buy back 10% of the issued Shares; and (b) scale back on a pro rata basis all acceptances so that the total Shares accepted under the Buy Back is no more than 10% of the issued Shares." 52 The Offer document described how "to accept" the buy-back offer (i.e. by completing and signing an Acceptance Form etc). Nonetheless, Coopers was entitled under cl 5.8 to withdraw the buy-back "offer" at any time before the close of the offer period. A shareholder had a like entitlement by notice received prior to the close of the offer period to withdraw "your acceptance". The Acceptance Form in turn used the language of "accepting the buy-back offer". Equally the letter that remitted funds to members who took advantage of the offer likewise spoke in terms of "your acceptance of the offer to buy-back". 53 Only the second to the seventeenth respondents took up the offer. It resulted in only 30,259 of Coopers' 1,383,617 shares being acquired by Coopers. Coopers "Transfer Journal" records the various transfers of these shares into Coopers' name.

A PRELIMINARY ISSUE OF LAW 54 The parties disagree sharply as to whether or not Coopers had an unfettered right to utilise the power to buy back its own shares under s 257A of the Corporations Act 2001 (Cth). The issue arises in this way. Section 125(1) of the Act provides that if a company has a constitution, it may contain "an express restriction on, or a prohibition of" its exercise of any of its powers. Nonetheless, an exercise of the power contrary to such a restriction or prohibition is not invalid. 55 As originally formulated, Lion Nathan's contention was that the pre-emptive rights regime constituted either an express prohibition of, or else an express restriction on, the power of a company to exercise its buy-back power. As its contention was developed orally, the submission was limited to the regime being a restriction on the exercise of the power. The basis of this was that, the buy-back required an accepting member to transfer his, her, or its shares and any such transfer was automatically caught by the Art 38 prohibition: "[n]o member may make any transfer of shares and the Directors must not register any transfers of shares without complying with Articles 40-53". The restriction so placed on the exercise of the buy-back power is said to be as follows. As any transfer must comply with the pre-emptive rights regime, then any buy-back scheme must first comply with the pre-emptive rights regime in respect of any "accepting members". The shares of those members must be dealt with in accordance with that regime, with the consequence that only those shares not acquired by any person(s) having pre-emptive rights under that regime will be available to be bought back by Coopers. 56 Coopers' contrary contentions are, in effect, twofold. First, the pre-emptive rights regime is not an express restriction etc on Coopers exercise of its buy-back power. Secondly, the "transfer of shares" envisaged by Art 38 does not extend to a transfer under a s 257A buy-back. 57 There are in fact two issues here as the submissions of both parties recognise. One raises a question of construction of s 125(1): Is an article cast in the form of Art 38 capable of being characterised as "an express restriction on … the company's exercise of its [buy-back] powers?" The other raises a question of construction of Art 38 itself: "Does a transfer under a buy-back fall within the meaning of "any transfer of shares" for Art 38's purposes?"

The Construction of s 125(1) 58 Because of the view I take of the second of the above questions, it is strictly unnecessary for me to express a concluded view on the first. It is appropriate, though, that I make the following comments given counsels' submissions. 59 It would, in my view, be an unduly cramped construction of s 125(1) to require that, before a provision in a company's constitution can properly be characterised as an express restriction on, or prohibition of, the company's exercise of a particular power, it must refer explicitly to that particular power and to the prohibition or restriction imposed. Rather I incline to the view that, if a provision in the constitution expressly states that the company must or may only, or must not, conduct itself a particular way, such an express requirement is itself capable of constituting an express restriction on, or prohibition of, the company's exercise of a statutory power the exercise of which would conflict directly with the requirement so imposed on the company by its constitution. 60 Accordingly, given the imperative character of Art 38 I am satisfied it is capable of constituting an express prohibition or restriction. This leaves, though, the question whether on its proper construction it is for present purposes a restriction on Coopers' s 257A buy-back power. 61 Before turning to that question there are a number of historical matters concerning the power to buy-back shares and concerning Coopers' constitution to which it is necessary to refer.

Matters of history: Coopers and buy-back powers 62 The story of the evolution of buy-back powers in Australia's corporations legislation began in 1989. Against the common law background that a company could not lawfully acquire its own shares: see Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at [22]; a background enshrined in Art 8 of Coopers' Articles until at least 1993, the then Companies Code was amended to permit companies to pay shareholders to cancel ordinary shares through "buy-backs", i.e. by buying shares in itself, subject to prescribed conditions: see Companies Code, s 133BC. One such condition, applicable to all such buy-backs, was that the company's articles contain a buy-back authorisation at the relevant time: s 133DA(1). 63 Coopers did not then or at any time thereafter seek to insert such an authorisation in its Articles. The significance of this will become apparent below. 64 When the Corporations Law came into operation on 1 January 1991 it continued the 1989 regime in its Division 4B of Pt 2.4: "Permitted Buy-back of Shares". It retained the requirement that the company's articles contain a buy-back authorisation. Subdivision P dealing with the effect of buy-back on shares (i) provided for the suspension of all rights attached to the shares bought back so long as the agreement constituting the buy-back was in effect: s 206PA; (ii) prohibited the company from selling, agreeing to sell, etc. shares it had brought back: s 206PB; and (iii) cancelled the bought back shares and extinguished the rights attached to them by force of s 206PC(1) "[i]mmediately after a transfer to [the] company of shares in the company is registered by the company". 65 In December 1995, the First Corporate Law Simplification Act 1995 (Cth) relaxed the controls on buy-backs and extended the ability of a company to buy-back shares. Importantly, one of the changes made was that there was no longer any need for companies to have buy-back authorisations in their constitutions: see Note 1 to s 206B. 66 At the time of the disputes leading up to the Coopers Share Agreement and of the agreement itself on 3 March 1995, Coopers did not have the power to make a buy-back offer. Its Articles contained no authorisation provision. For this reason alone, it is improbable that the Directors of Coopers had in mind the possibility that their proposed Art 45A (now Art 39) which defined "transfer", would encompass transfers pursuant to a buy-back. What also is clear from the Coopers Shares Agreement, is that the parties did not wish their agreement to be affected by "supervening legislation" insofar as this could be avoided. Clause 10.7 provided: "Any present or future legislation which operates to vary an obligation or right, power or remedy of a person in connection with this agreement is excluded except to the extent that its exclusion is prohibited or rendered ineffective by law." 67 Nonetheless, on and from 9 December 1995, Coopers acquired the power to make buy-back offers subject, if it was the case, to there being a restriction on, or prohibition of, the exercise of that power imposed by the Articles' pre-emptive rights regime.

THE CONSTRUCTION OF "TRANSFER" IN COOPERS' CONSTITUTION

1. The Basis of Lion Nathan's Case 68 Notwithstanding the variety of ways in which its entitlement to relief has been pleaded in its Statement of Claim, Lion Nathan's case as now put is that by effectuating the 2003 buy-back without complying with Art 38, Coopers acted in breach of the Coopers Shares Agreement. The term of that Agreement said to have been so breached is put variously as (i) an implied actual term that Coopers would comply with and enforce the share transfer regulations; and/or (ii) a term implied in fact to the same effect, so as to give business efficacy to the contract; and/or (iii) a Butt v McDonald (1896) 7 QLJ 68 duty to cooperate to enable Lion Nathan to have the benefit of the agreement. 69 Notwithstanding the differing bases of the term, the issue raised is the same: did a member's acceptance of the 2003 buy-back offer trigger the pre-emptive rights regime, hence the focus here on compliance with Coopers' constitution and on the meaning of "any transfer of shares" in Art 38. 70 For the sake of completeness I should add that, as its case is now put, Lion Nathan has not sought to enforce the articles directly as a third party beneficiary: cf Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 per Mason CJ and Wilson J.

2. The Applicable Principles 71 But for a number of recent decisions on the interpretation both of commercial contracts and of statutes and statutory instruments, a statement of the principles to be applied in construing Arts 38 and 39 of Coopers' Articles would be somewhat more problematic than it now is. 72 (i) The constitution (if any) of a company is deemed by s 140 of the Corporations Act to have effect as a contract between variously, the company and its members, the members inter se and the company and its directors and company secretary. 73 (ii) Nonetheless, it is not a contract which in all respects attracts those principles which are applicable to contracts in general or to commercial contracts in particular. The reason for this is that corporate constitutions historically have served public purposes going beyond the mere delineation of the rights and obligations of the contracting parties for their benefit. So, for example, the memorandum of association in times past served the important purpose of enabling creditors and those who dealt with a company to know what was "its permitted range of enterprise and for this information they are entitled to rely on the constituent documents of the company": Egyptian Salt and Soda Ltd v Port Said Salt Association [1931] AC 677 at 682. As in other fields where contractual documents serve public purposes beyond those of the parties themselves (cf eg Bowler v Hilda Pty Ltd (2001) 112 FCR 59 esp per Gyles J at [57] ff on the position of Crown leases in the ACT), the bifurcated functions so performed by a company's memorandum and articles has lead to the exclusion of (see e.g. Simon v HPM Industries Pty Ltd (1989) 15 ACLR 427 - no rectification of articles for mistake), or qualifications on (see e.g. Stanham v The National Trust of Australia (NSW) (1989) 15 ACLR 87; Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693 at 698 - implication of terms), principles ordinarily applied to contracts. 74 (iii) The function of a company's constitution in informing those who dealt with it or who acquired shares in it, has in the past influenced in a direct way the principles of construction that have been applied to the constitution and, in particular, to the extent to which extrinsic materials were admissible as an aid to interpretation. Because third parties who dealt with a company would not have had access to information (other than the constitution itself) which might reveal the true meaning of a provision in the constitution, "[t]he intention of the framers of the [constitution] [had to] be gathered from the language in which they have chosen to express it": Egyptian Salt and Soda Co Ltd at 682. 75 (iv) As was recognised by the New South Wales Court of Appeal in National Roads and Motorists' Association Ltd v Parkin (2004) 60 NSWLR 224 ("Parkin") changes in Australia's corporations legislation have borne directly upon the significance to be attributed to the public purposes served historically by the documents making up a company's constitution. Ipp JA, for example, noted (at [51]-[52]): "51. The idea that the constitution should inform the public with absolute precision of the field in which the company is to undertake its activities (Lord Wrenbury's first purpose in Cotman v Brougham [1918] AC 514 at 518) is no longer of significance. This is the consequence of s 124 and s 125 of the Corporations Act (Cth). Section 124 provides that a company has the legal capacity of an individual. By s 125(2) an act of a company is not invalid merely because it is contrary to any of the objects in the constitution. 52. It follows, also, from s 124 and s 125, that, nowadays, a company is able to embark on new fields of endeavour untrammelled by objects clauses. Accordingly, the second of the purposes mentioned by Lord Wrenbury (that anyone who deals with the company should know without reasonable doubt whether the contract contemplated is within the company's corporate objects) has fallen away." This in turn has led to some reappraisal of principles applied to a company's constitution which differ from those applied to contracts generally where the reason for a distinct company principle has been undermined or has gone. So, for example, in Parkins' case, the ordinary rules of contractual certainty exemplified in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1967) 118 CLR 429 were applied in preference to the more stringent "company principle" exemplified in Cotman v Brougham [1918] AC 514, and thisfor the reasons given in the two paragraphs from Parkin noted above. I will return to this process of reappraisal of principles below. 76 (v) There is now a body of Australian case law (see Parkin at 235) which has endorsed and followed what is a well accepted principle for construing contracts. As it was put by Jenkins LJ in Holmes v Keyes [1959] Ch 199 at 215: "… the articles of association of the company should be regarded as a business document and should be construed so as to give them reasonable business efficacy, where a construction tending to that result is admissible on the language of the articles, in preference to a result which would or might prove unworkable." As to the like principle to be applied to contracts, see e.g. Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99 at 109-110; Lewison, The Interpretation of Contracts, 7.15 (3rd ed, 2004). 77 (vi) It is consistent with now orthodox rules of construction of articles of association for a court to recognise that articles "are instruments of company governance intended to endure and to be capable of operating with flexibility in changing circumstances: Re GIGA Investments Pty Ltd (in admin) (1995) 17 ACSR 472 at 476 ("Re GIGA Investments"). Nonetheless, progressive interpretation does not permit the extension of an expression in the constitution to a subject matter that might later be comprehended by the expression itself, if this would be inconsistent with what can reasonably be said to have been the purpose contemplated by the use of that expression at the time of its adoption: see Ford's Principles of Corporations Law, 6.080. 78 (vii) Until very recently there has been considerable controversy as to whether in the interpretation of contracts evidence of surrounding circumstances was admissible only if it first appeared that the language of the contract was ambiguous or whether it is admissible at the outset for the purpose of ascertaining the meaning of contractual language in its context: contrast (a) the decision of Palmer J in Ray Brooks Pty Ltd v NSW Grains Board [2002] NSWSC 1049 in which it was held that ambiguity did not have to be shown within the four corners of a contract before it was permissible to have regard to "the surrounding circumstances known to all parties in which the contract came into existence": [66]; and (b) the decision of R D Nicholson J in BP Australia Pty Ltd v Nyran Pty Ltd (2003) 198 ALR 442 in which the contrary view was taken. This controversy centred initially on the proper interpretation to be given to the observation of Mason J in Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 at 352 ("Codelfa") that: "The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning." The controversy was amplified when both English and New Zealand courts embraced further departure from literalism in contractual interpretation in favour of Lord Hoffman's more open contextual analysis of contractual meaning in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896: see generally Ray Brooks Pty Ltd, above, [41] ff; see also E McKendrick, "The Interpretation of Contracts: Lord Hoffman's Re-Statement" in S Worthington (ed), Commercial Law & Commercial Practice, 139 (2003). For the purposes of Australian law, while the above controversy took some time to be stilled: cf Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at [39]; it must now be accepted that the meaning of commercial contract is to be construed objectively by reference to what it conveys to a reasonable person: but see McLauchlan, "Objectivity in Contract" (2005) 24 UQLJ 481. This normally "requires consideration not only of the text of the documents, but also the surrounding circumstances known to [the parties], and the purpose and object of the transaction": Pacific Carriers at [22]: see also Peden & Carter "Taking Stock: the High Court and Contract Construction" (2005) 21 JCL 172 at 180. I should note that the Investor's Compensation Scheme case was footnoted by the five judge joint judgment in Pacific Carriers as authority for the proposition just quoted. The same proposition was reiterated by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]. A consequence of this is that the decision in BP Australia Pty Ltd v Nyran Pty Ltd must no longer be considered as correct in this court. 79 (viii) The approach to contractual construction affirmed in Pacific Carriers marks another step in the convergence in organising principles governing the construction of contracts and of statutes. It is now well settled in this country that, irrespective of the provisions of s 15AB of the Acts Interpretation Act 1901 (Cth): "… the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy." See CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. While what constitutes "context" for the purposes of statutory construction and "surrounding circumstances" (or "the matrix of facts") for contractual construction will differ significantly given the differing end purposes of construction in each case, what is common to both is the recognition that meaning is contextual: what a document or statute conveys to a reasonable person is what, against the relevant background, the words used by the parties in one case, the legislature in the other would reasonably be understood to have meant: see The Rt Hon Lord Nicholls of Birkenhead, "My Kingdom for a Horse: the Meaning of Words" (2005) 121 LQR 577 at 579. Though the principles of statutory construction are not directly relevant to the present matter, in their congruence with the principles of contractual construction they reinforce my view that the Pacific Carriers' principles provide the appropriate approach that ought be adopted in the construction of the pre-emptive rights regime of Coopers' articles. Nonetheless I do recognise that a tight reign may well need to be kept on what should count as "surrounding circumstances" when construing at least aspects of a company's constitution. In taking the above approach I probably am doing no more than applying to the construction of articles of association the new understanding of what was conveyed by Mason J in Codelfa, earlier cases having applied a more limited understanding of what Mason J said to the construction of articles: see e.g. Buche v Box Pty Ltd (1993) 31 NSWLR 368 at 374.

3. The Parties' Contentions 80 Lion Nathan's contentions can be put relatively shortly. (i) The 2003 Buy-back was affected by Coopers' members transferring their shares to Coopers within the meaning of "transfer" as defined in Art 39. (ii) In consequence, Coopers could not comply with the provisions of s 257H(3) of the Corporations Act (relating to the registration and cancellation of the shares bought-back) without contravening the pre-emptive rights provisions of the articles. (iii) Article 40 of the pre-emptive rights regime required a person proposing to transfer any share (a) to give notice in writing to the company that he, she or it so desired and (b) to specify the sum that person fixes as the fair value of the shares. For present purposes, it is said that the Acceptance and Transfer Form sent to the company by members participating in the buy-back must sensibly be treated as an Art 40 notice. (iv) On receiving that notice the pre-emptive rights regime was triggered. (v) The board was then required to make the offers required in the sequence specified in Arts 41 to 49 within the times limited in those articles. The time has expired for the making and accepting of offers to the right holders of tiers one and two. Lion Nathan is entitled to assume (or has no means of knowing otherwise) that the required offers were made and not accepted. (vi) Accordingly it is entitled to be now offered the shares and, as it is willing to buy the shares at the "buy-back" offer price, it seeks rectification of the register. (vii) By acting as they did in not complying with the articles the directors put Coopers in breach of the Coopers Shares Agreement. (viii) The court can derive no assistance on the question of what is a "transfer" for the purposes of the pre-emptive rights regime, from the decision of the Victorian Court of Appeal in Coles Myer Ltd v Commissioner of State Revenue [1998] 4 VR 728 ("Coles Myer"). In that case Ormiston JA (Winneke P agreeing) analysed the buy-back regime established under Part 2.4 of Division 4B of the Corporations Law (Vic) for the purposes of determining whether a share transfer in a buy-back scheme was chargeable with ad valorem duty as a "transfer of any marketable security" within the meaning of the provisions of the Stamps Act 1958 (Vic). His Honour found it was not as, upon a consideration of the real nature and substance of the instrument calling itself a "transfer" under the buy-back scheme, it was not a transfer of a kind subject to duty under the Stamps Act "in that it failed to vest any property, right or interest" in the transferee, Coles Myer. 81 Coopers' principal contentions are, in essence, threefold. First, consistent with Ormiston JA's analysis in Coles Myer, it is said that what the Coopers Articles contemplated as a "transfer of shares" was a dealing with the share which resulted in the transferee acquiring the same rights against, and owing the same obligations to, the company as were held by the transferor. The expression did not envisage a process in which, as under a buy-back, the transferee was precluded from exercising the rights of an owner of the shares and suffered immediate cancellation of those shares on their registration by operation of s 257H(3) of the Corporations Act. Such was the meaning it had and retained in 1995 when the amendments were made to the articles pursuant to the Coopers Shares Agreement. That meaning cannot be changed under the guise of progressive interpretation exemplified by Re GIGA Investments, above. 82 Secondly, the provisions of the pre-emptive rights regime cannot in the context of a buy-back offer sensibly be made a condition precedent to Coopers buying its own shares. The requirements of the Articles on the one hand and the Corporations Act on the other are not compatible. The nomination of fair value under an Art 40 notice for the purposes of the pre-emptive rights scheme, for example, cannot be equated with acceptance of a buy-back at a price stipulated by the company. 83 Thirdly, Lion Nathan is not entitled to the relief sought. Even if Lion Nathan is right on the meaning of "transfer", the pre-emptive rights regime was not activated in fact because everyone assumed it was not engaged as there was a buy-back. The proper inference is that Lion Nathan knew nothing was done under the scheme. It cannot now "leapfrog" the rights of the first tier members and the second tier rights of superannuation fund trustees. Nothing at all in the language of the application or the conduct of the proceedings until final submissions put anyone on notice that Lion Nathan was to engage in such a "leap-frogging" of rights. 84 I will refer to other more detailed aspects of the parties contentions in my own consideration of the matter.

4. Consideration 85 I am satisfied that the pre-emptive rights regime of Coopers' Articles was neither intended to apply, nor on its proper construction does apply, to a share buy-back effected under the provisions of Div 2, Pt 2J.1 of the Corporations Act. The primary concern of the "Transfer and Transmission of Shares" provisions of the Articles (which include the pre-emptive rights regime) both before and after the 1995 amendments was to contrive and regulate prospective membership of the company when shares became available because a member had died or sought to dispose of shares in the company. Insofar as concerned voluntary dispositions of shares, the articles contrived a gated hierarchy of potential purchases of those shares (i.e. the tier of pre-emptive rights) before the transferor was able to sell them "to any person". If a sale to such a person eventuated, the clear intent of the Articles was that person would become a new member who in turn was bound by the same pre-emptive rights regime. Put shortly, the Articles erected impediments to the introduction of new members into the company when the possibility for a change in membership resulted from death or the voluntary transfer of shares. Far from detracting from this scheme and its purposes, the 1995 amendments enhanced it by (inter alia) extending the first tier pre-emption right to "members' relatives". 86 While a share buy-back under the Corporations Actmay affect the membership of a company, it has no concern with regulating and impeding the introduction of new members into the company. The company that purchases its own shares does not in any meaningful or substantial sense become a member of itself enjoying the benefits and experiencing the burdens of that membership. By the very act by which it formally becomes a member of itself, i.e. registration of the transfer of the shares bought back, that membership ceases immediately as the shares are cancelled by operation of the Corporations Act: s 257H(3). 87 My reasons for reaching these conclusions and for rejecting Lion Nathan's submissions stated more fully are as follows. I do not consider that it is open to serious doubt that the purpose of the Transfer and Transmission of Shares provisions in the old (or pre-1995 amended) Articles was to regulate a member's capacity on death or by transfer of shares, to introduce new members into the company. This purpose was bluntly manifested in "old" Art 45: "No share shall save as provided by Article 46 to 51 inclusive be transferred to any person". "Person" in this setting could not be construed as including the company itself though it would clearly have encompassed companies other than Coopers. Not only did the old Memorandum and Articles not have a provision authorising a share buy-back, the Articles also expressly prohibited the use of company funds in the purchase of its own shares. Further, and consistent with the membership pre-occupation manifest in the event of death or voluntary transfer, the Articles also regulated in other ways both existing membership and the introduction of new members. Old Art 141 prohibited, subject to approval, a member from being interested in a concern carrying on a competing business or having interests inconsistent with Coopers. The member was given the option of terminating the member's interest in that concern or of having his, her or its shares dealt with under the pre-emptive rights regime. Distinctly, old Art 70A prohibited the company from inviting the public to subscribe for shares in the company. And under old Art 67, all new share issues were in the first instance to be offered proportionately to existing shareholders, with only those not taken up by members being available to the Board for disposition. 88 The one point I would emphasise in the above is that while the word "person" in the formula "transferred to any person" in the old Art 45 I have quoted above, might in some other particular context embrace Coopers itself, it clearly did not in the context of the Transfer and Transmission of Shares provision. 89 I would note in passing that the construction I have given the old Articles for present purposes has been arrived at without resort to surrounding circumstances, no evidence of such circumstances having been put into evidence. 90 Turning to the new (or 1995 amended) Articles, what is clear from the surrounding circumstances which were known both to Coopers and Lion Nathan and which, more importantly, were made known to the then members of Coopers who passed the alterations to the Memorandum and Articles, was that the 1995 Amendments were proposed and made against a particular background; they had a known provenance; and they had particular purposes and objects. 91 Given (a) the small and in quite some degree closely held and relatively static membership of Coopers; (b) the distinctive character and purpose of the pre-emptive rights regime; and (c) the particular and publicised provenance of the 1995 amendments to it, I consider that a reasonable member of Coopers (whether or not that member joined the company prior to the 1995 Amendments) would have known or had available the means of knowing that the purpose and intent of Articles 38 and 39 were such that they did not apply to a buy-back. 92 I emphasise this because, as I earlier indicated, I consider these articles in the setting of this company are to be construed in light of the principles in Pacific Carriers. I would add that the only "surrounding circumstances" material to which I have had resort beyond the new Memorandum and Articles are, first, the old Articles and, secondly, the materials provided to the 7 March 1995 extraordinary meeting. 93 Save for the introduction of Lion Nathan into the pre-emptive rights regime, the 1995 amendments to the Transfer and Transmission of Shares Articles were not intended to derogate, and did not have the effect of derogating, from the old Articles' focus of contriving and controlling company membership and access to membership consequent upon shares becoming available by reason of death or of a proposed inter vivos transfer. 94 The old Art 45 ("No share shall … be transferred to any person") was deleted and in its stead were inserted what are now Arts 38 and 39. These two articles were manifestly intended to be for Coopers' benefit. As Coopers stated in its Explanatory Notes for the 7 March 1995 Extraordinary General Meeting, they were designed further to strengthen Coopers' control over its membership via the pre-emptive rights regime. This was effected, in part, by enlarging the definition of "transfer" in Art 39 but, more importantly, by enlarging what could constitute the subject matter of what, if to be transferred, would trigger the pre-emptive rights regime. 95 Bearing in mind that (a) a share in property is a chose in action; (b) some at least of the rights attaching to a share are of such a proprietary character as enables them to be assigned separately (if only in equity); and (c) a share can be the subject matter of a trust, it is unsurprising that the definition of transfer was extended in the two ways I have mentioned. Given what the word "transfer" is capable of comprehending in the context of disposition of property, a deal of tautology is apparent in the definition. Nonetheless, it does extend the meaning of the word in relation to a dealing with property in a number of ways. It encompasses offers, agreements to transfer, contingent dealings (though with a qualified exemption for mortgages, charges and encumbrances) and, more obviously, the creation and declaration of a trust of shares. 96 More significant, though, given the strengthening purpose of Art 39 in light of the transaction Lion Nathan entered into with SABH, is the enlargement for Art 38 purposes of the possible subject matter of a "transfer". It was extended to cover the transfer of "any right, title or interest in any share whether legal or beneficial" that fell short of a transfer of the legal and beneficial ownership of a share but which nonetheless was capable of being "transferred" (as that term was defined in Art 39) at law or in equity. Though I do not in this proceeding have to express any view on the actual effect of this extension in the context of the pre-emptive rights regime, its apparent intent was to make a transfer of such an extended right, etc either, on one view, a prohibited transaction or else, on another view, a trigger for the pre-emptive rights regime. 97 Considered in the setting of the Transfer and Transmission of Shares Articles and in light of their manifest purpose, there is no intent revealed in Arts 38 and 39 to serve a purpose beyond addressing membership of the company when, because of death or an intended transfer, shares would be available potentially for transmission to, or acquisition by, a new member. In short, the pre-emptive rights regime, as amended, addressed the question of who could become and continue to be the owner of those shares. In this sense, Art 38 was addressed to what Coopers described as a "bilateral transaction" in that it contemplated the continuing existence and ownership of the shares. A reasonable shareholder in Coopers would, in my view, have understood that this was the case. 98 This conclusion would have been put beyond all doubt if the new Art 38, like the old Art 45, had retained the phrase "to any person" after the words "any transfer of shares". The omission of that phrase, though, does not cast any doubt on the meaning conveyed by Arts 38 and 39. 99 There are a number of additional matters to which I should make reference. First, I have not derived assistance from Coles Myer in resolving the issue of construction raised in this matter. For the purposes of this matter, I am of the view that the share buy-back provisions could as a matter of ordinary English usage be said to involve a transfer of shares to Coopers (that being the usual method by which property in shares are consensually passed between two legal persons). Nonetheless, such a transfer does not fall within the new Art 38 because in this setting "any transfer of shares" means "any transfer of shares to any other person other than Coopers". I should add that in so reading Art 38, I am not implying words into the article. Rather I am simply indicating "in express, and therefore more readily observable form the true construction of the words actually used" in the article: cf Spigelman, "The poet's rich resource: Issues in statutory interpretation" (2001) 21 Aust Bar Rev 224 at 233. 100 Secondly, because of the meaning I have ascribed to Art 38 there is no scope for it to be interpreted progressively so as to encompass transfers pursuant to a share buy-back scheme: cf Re GIGA Investments at 476-477. To do that would be to change the meaning of the Article itself without an alteration of the Articles for that purpose. Relatedly, as I earlier indicated, the old Art 8 (prohibiting company funds being used to purchase its shares) and the lack of an authorisation to engage in share buy-back negatively reinforced the interpretation to be given the pre-emptive rights regime prior to and at the time of the 1995 amendments. The seemingly later removal of Art 8 (on the materials before me) and the acquisition of a buy-back power in late 1995 did not work any change in the meaning of Arts 38 and 39. The powers so acquired were addressed to quite distinct subject matter with which the two articles as I have construed them could without any tension co-exist. 101 Thirdly, I consider the construction I have given is not only a reasonable one: see Lewison, The Interpretation of Contracts, 7.15; it avoids consequences in Lion Nathan's proposed construction which are artificial and inconvenient: see Australian Broadcasting Commission, above, at 109. To treat the sending to Coopers of an Acceptance and Transfer form for a buy-back as if it were an irrevocable transfer notice under Art 40 is not only artificial, it would ascribe an intention to a member to commit to a procedure having its own conditions and consequences which that member would not, and reasonably would not, entertain as of course. 102 Finally, Lion Nathan also sought to support its interpretation of Art 38 by pointing to the possible impact a buy-back might have on the balance of control in Coopers and of its keen interest in that matter. While it may be the case that a buy-back might have such an effect, it also is the case that that very same effect might also follow from the ordinary and unexceptionable operation of the pre-emptive rights regime. I do not consider either possible effect of any moment in this matter.

CONCLUSION 103 I will order that the application be dismissed with costs. I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn .

Associate: Dated: 13 December 2005 Counsel for the Applicant: Mr A Myers QC with Mr M Wyles and Mr R Strong

Solicitor for the Applicant: Mallesons Stephen Jaques

Counsel for the Respondents: Mr D Whitington QC with Mr Blight

Date of Hearing: 5 & 6 December 2005