The same point is made in other places.
18 I return now to clause 5 of the deed of 1 February 2007. The effect of clause 5, taken as a whole, must be that the obligation to which Macquarie is subjected by clause 5.1(a) will be negated by clause 5.3(d) if an event described in clause 5.3(d) has occurred before the deadline fixed by clause 5.1(a), that is, on or before the fifth business day after the posting of Lionsgate's bidder's statement (and offer) to Macquarie and the other Magna shareholders.
19 As I have said, Lionsgate's bidder's statement was posted to some shareholders on Friday 23 March 2007 and to the others on Monday 26 March 2007. The DCL announcement was delivered to ASX and released by ASX to the market on Friday 30 March 2007, that is, on the fifth business day after the earlier of the posting dates and the fourth business day after the later of the posting dates. If the actions of 30 March 2007 in relation to the DCL announcement were actions described by clause 5.3(d), it will follow that an event specified in clause 5.3(b) occurred within the period referred to in the clause and that Macquarie was thereby freed from the clause 5.1(a) obligation. But if those actions were not within the clause 5.3(d) description, the clause 5.1(a) obligation was not affected and still binds Macquarie.
20 The central question is therefore whether an "offer [was] made for all of the ordinary shares issued by" Magna, as contemplated by clause 5.3(d) when, on 30 March 2007, DCL delivered the DCL announcement to ASX and its content was released to the market. If such an "offer" was thereby "made", it was, clearly enough, a "higher" offer because of the reference to a cash consideration of 38 cents compared with Lionsgate's 32 cents.
21 If the words "offer" and "made" were to be understood in their strict contractual sense, delivery of the DCL announcement to ASX in the circumstances described could not possibly entail the making of an offer - even an offer capable of being acted upon by the world at large or the section of the world capable of performing the obligations that acceptance would bring into existence: cf Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. This is because, according to its terms and having regard to its nature, the communication was not one making it possible for any person to perform some act amounting to acceptance so as to give rise to a contract in accordance with traditional approaches to contract formation. The DCL announcement communicated nothing capable of being accepted or rejected by anyone.
22 It was accepted by Mr Leeming on behalf of Macquarie that DCL has not made a contractual offer capable of acceptance so as to give rise to a contract. As Mr Leeming pointed out, however, the word "offer" is sometimes used otherwise than in its strict contractual sense. What is, in contractual terms, an invitation to make an offer may, in some contexts, be viewed as an offer: Attorney General v The Mutual Home Loans Fund of Australia Ltd [1971] 2 NSWLR 162; Australian Softwood Forests Pty Ltd v Attorney General (1981) 148 CLR 121. The word "offer" may also refer to solicitation to enter into a course of negotiations calculated to result in a contractual relationship between the person soliciting and the person solicited: Attorney General v Australian Fixed Trusts Ltd [1974] 1 NSWLR 110. In contexts of these kinds - contexts, it must be noted, involving steps on the way to contract formation - an "offer" would be regarded as "made" by communication of the relevant invitation or other solicitation to the person intended by the initiator to act upon or respond to it.
23 The DCL announcement was not addressed to shareholders of Magna. It was addressed to ASX and delivered to ASX in a way calculated to ensure that its content should become widely known. The DCL announcement referred to an intention, being the intention of both DCL and Magna, "to implement a scheme of arrangement ('Scheme') under which [DCL] will acquire all of the issued capital of Magna". The DCL announcement also said:
"Under the Scheme, [DCL] will acquire all of the issued ordinary shares in Magna …"
24 Among several "conditions precedent" to which "[i]mplementation of the scheme" was said to be subject is:
"execution of a Merger Implementation Agreement acceptable to [DCL] and Magna".
25 It was thus made clear by DCL in the DCL announcement that the objective it had in view (acquisition of all the issued shares in Magna), if achieved at all, would be achieved by means of a scheme of arrangement under Part 5.1 of the Corporations Act and a "merger implementation agreement" between DCL and Magna. It is possible to infer from this and from the heads of agreement released on 13 April 2007 (and I do infer) that the envisaged methodology entails a combination of stipulations made binding on and in favour of Magna's shareholders pursuant to Part 5.1 (being, of necessity and having regard to s.411(4), stipulations operative between Magna itself and each and all of its shareholders) and stipulations made binding as between DCL and Magna by a contract to which those two companies are parties.
26 Having regard to the form that arrangements of this kind have typically taken in recent years, the likelihood is that, by force of the scheme of arrangement and Part 5.1, Magna would be invested with the authority of each of its shareholders to transfer the shareholder's Magna shares to DCL and, by force of the contract between DCL and Magna (supplemented, perhaps, by deed poll or deposit arrangement for ensuring payment), DCL would be obliged to provide to Magna's shareholders (either directly or via Magna) the envisaged compensation or consideration for the shares transferred by Magna, as their agent, to DCL.
27 The underlying concept is thus not that each Magna shareholder will be given an opportunity to sell the shareholder's shares. Rather, each shareholder will be given an opportunity to vote for or against (or to abstain or refrain from voting on) a resolution intended to be placed before shareholders at a meeting of shareholders convened in accordance with an order that a court of competent jurisdiction will be asked to make under s.411(1). An individual shareholder's response to that opportunity will not of itself determine the fate of that shareholder's shares. One of two results will ultimately emerge: either every shareholder will retain the whole of the shareholder's shares or every shareholder will, whether the shareholder likes it or not, see the whole of the shareholder's shares transferred to DCL, in which event every shareholder will receive consideration or compensation provided by DCL. Assuming eventual court approval of the arrangement under s.411(4)(b), a particular shareholder will become subject to one of these two eventualities in respect of the shareholder's shares; and this will be so whether the shareholder votes for the resolution, votes against the resolution or does not vote at all on the resolution.
28 If the matter is looked at in terms of solicitation of persons holding Magna shares, the most that will occur is that Magna and its directors, acting in concert with DCL, will solicit shareholders' support for the proposed Part 5.1 arrangement by means of the casting of positive votes at the meeting of Magna's shareholders. DCL may itself actively solicit Magna's shareholders to cast positive votes. If the resolution is passed by the requisite majority and the court approves the arrangement by order made under s.411(4)(b), each shareholder of Magna will, through the agency of Magna, transfer the shareholder's shares to DCL. But such a transfer will not represent an exercise of the will of the particular shareholder that the shares be transferred. It will occur because of the binding force upon both the shareholder and Magna produced through Part 5.1.
29 The circumstances envisaged by the DCL announcement are such that Magna, no doubt at the prompting of and in conjunction with DCL, will propose to its members what is intended to be done, but it will be for the members to say whether they will confer the power on Magna to do what is foreshadowed. The form of words I have just employed corresponds with that used by Wells J in Re The Bank of Adelaide (1979) 22 SASR 481 at p.509 to describe a similar process embarked upon by the Bank of Adelaide qua its members in relation to a scheme of arrangement involving cancellation of all existing shares by reduction of capital, issue of equivalent new shares to the ANZ Bank and provision by ANZ of consideration to the former holders of the cancelled shares. It was held by a majority of the Full Court of the Supreme Court of South Australia in that case that such a scheme of arrangement did not entail either an offer to acquire shares or an invitation to offer to dispose of shares caught by Part VIB of the Companies Act 1962 (SA). Reference may also be made to the following observation of Jenkinson J in the analogous case of Re Wallace Dairy Co Pty Ltd (1980) 5 ACLR 139 (at p.143):
"… to invite the holder of shares to cast a vote at a meeting of the company for a resolution that those shares and other shares of the same class be cancelled is not in my opinion to invite the holder to offer to dispose of shares …".
30 According to the same reasoning, to invite the Magna shareholders as a body and each shareholder individually to cast a vote at a meeting of Magna shareholders in favour of a motion for the approval of a scheme of arrangement between Magna and its members of the kind I have outlined (entailing the creation of compulsion for all members to suffer transfer of their shares by Magna as their agent) does not involve any offer, whether "for all the ordinary shares issued by" Magna or of any other kind.
31 But all these matters lie in the future. And, more significantly, they lay in the future on 30 March 2007. This is an important point. The question posed by clause 5.3(b) of the deed is whether an "offer" was "made for all of the ordinary shares issued by" Magna when, on 30 March 2007, DCL delivered the DCL announcement to ASX and its content was disseminated. It is the immediate and contemporary impact of the DCL announcement on 30 March 2007 that must be considered.
32 The clear message that came from the DCL announcement on 30 March 2007 was that DCL and Magna had formed and held a common intention as to future action. Persons becoming aware of the content of the DCL announcement would have been justified in thinking that DCL and Magna held the stated intention. But no other message could have been derived from the DCL announcement. There was no message of solicitation. There was no request or invitation to embark upon any particular course of action. As I have said, there was nothing to be accepted or rejected. Delivery and dissemination of the DCL announcement on 30 March 2007 did not create any avenue for disposal of shares by Magna shareholders. Nor did it create any avenue for the acquisition of Magna shares by DCL. There was nothing that a Magna shareholder or anyone else could (or was expected) to do in response to the DCL announcement.
33 It is submitted on behalf of Macquarie that, despite the character of the DCL proposal being as I have described, it is still an "offer" - and, of course, a "higher offer" as referred to in clause 5.3(d). Macquarie points to a statement of Magna's CEO, of which the market has been informed, that he "proposes to accept the offer of one destra fully paid ordinary share and 15 cents cash in exchange for one Magna share". Macquarie here resorts to what is said to be the market's understanding. When I asked Mr Leeming what the CEO would do to accept the "offer" from DCL, he said that he would exercise a positive vote at the scheme meeting.
34 Mr Leeming also referred to recognition in case law and ASIC statements of the reality that both Chapter 6 takeover bid and part 5.1 arrangement may achieve takeover of a company, with neither method having dominance over the other: see, for example, Re Equinox Resources Ltd (2004) 49 ACSR 692 at p.695 and cases there cited; and ASIC Policy Statement No 60. It is pointed out that this ASIC publication uses the language of "offer" in relation to Part 5.1 arrangements. I note that in paragraph 15 there is reference to "the 'offeror' company (ie the company whose shares are offered as consideration)".
35 Submissions on behalf of Macquarie also refer to ASIC Policy Statement 188 paragraph 5 of which reads:
"An invitation to vote at a reconstruction or capital reduction meeting on the issue or transfer of securities constitutes an offer for the purposes of Ch 6D."
36 Chapter 6D imposes disclosure rules and proscribes certain forms of conduct unless disclosure has been made in accordance with those rules. One of the relevant forms of conduct is the offering of securities for subscription - the activity that was held to warrant an extended meaning of "offer" in Attorney General v The Mutual Home Loans Fund of Australia Ltd (above) and Australian Softwood Forests Pty Ltd v Attorney General (above).
37 These ASIC pronouncements - or, perhaps more accurately, passing observations - are of no assistance in the present case. Policy Statement 60 is concerned with Part 5.1 schemes by which takeovers are achieved. That it may, in places, equate the acquiring company under such an arrangement with an "offeror" can be no more than resort to analogy or metaphor. Policy Statement 188 is concerned with a different context (involving solicitation of essentially contractual behaviour) in which "offer" has long been recognised as having an extended meaning (see the cases mentioned at paragraph [22] above).
38 It cannot be doubted that a Part 5.1 arrangement can achieve the same outcome as offers to buy made to all shareholders. That has been clear at least since Re National Bank Ltd [1966] 1 WLR 819. But the availability of the alternatives does not mean that a Part 5.1 arrangement is an offer or that any element of it or step in it constitutes the making of an offer. As Mr Sullivan said, one can travel to Parramatta by car or by train. But that does not make a train a car or a car a train. The two modes of proceeding are quite distinct despite their capacity to produce the same result.
39 Both parties emphasise that a commercial document such as the deed now before me must be construed so as to avoid making commercial nonsense or working commercial inconvenience: Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at p.559. It must be approached in a commercial way and given what Gleeson CJ, in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at p.589, called "a businesslike interpretation". His Honour also said (at p.589):
"Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure."
40 I have already dealt with the language used by the parties. But I should refer briefly to the commercial circumstances and the intended objectives, in so far as they are discernible.
41 When the deed of 1 February 2007 was made, Macquarie held a parcel of shares in Magna which, as I have said, represented 11.23% of the issued share capital of Magna and was the largest single shareholding. Lionsgate proposed to initiate a Chapter 6 takeover bid at 32 cents per share in relation to all shares in Magna. An 11.23% parcel was of particular significance both because of the ability of its holder to block compulsory acquisition under s.664A of the Corporations Act and by reason of the voting strength attached to it (something that will be of particular significance if the proposal the subject of the DCL announcement is progressed). Macquarie, by entering into the deed, committed itself to accept Lionsgate's bid for the 11.23% strategic stake and to do so within the first five business days of the bid period. It was recognised by the parties that Lionsgate might be out-bid and might not wish to match or better the competing bid. It was accepted that, if and to the extent that it became possible for Macquarie to take advantage of any more favourable offer made before the agreed deadline for its acceptance of Liongate's bid, then Macquarie should be free to do so. Otherwise, Macquarie was to honour its commitment to Lionsgate.
42 The intended objectives were, it seems to me, to ensure that Macquarie accepted Lionsgate's bid promptly in order to get that bid off to a strong start and to enable Lionsgate to represent itself as having a commitment to that effect from Macquarie, but with Macquarie preserving its ability to choose some alternative method of disposal more favourable to it should that alternative become available to be taken up by Macquarie before the contracted deadline for acceptance of the Lionsgate bid. It cannot have been part of the parties' objectives to allow Macquarie to retain its shares and reserve its decision-making with respect to them to some future time because of the emergence of some possibility that a combination of a vote of Magna shareholders and court approval might at some stage subject Macquarie's shares, along with those of all other shareholders, to a regime of compulsory disposition.
43 The parties are apparently sophisticated commercial operators. They (or, at least, their legal and investment banking advisers) may be taken to be aware of the various mechanisms available to complete transactions in the market for corporate control, including transactions which see the whole of the issued share capital of a target company come to be owned by a single entity. They could have framed clause 5.3(d) in a way that clearly comprehended all such mechanisms, including, for example, "off-market bid" and "market bid" as referred to in s.616, acquisition approved as mentioned in Item 7 of s.611 and acquisition by Part 5.1 arrangement as referred to in Item 17 of s.611. They could also have used words referring to the announcement of a proposal or the notification of an intention, both of which are concepts expressly recognised by the statutory provisions in the context of which the parties struck their bargain: see, for example, ss.631 and 670E. Instead, the parties chose to use a form of words embodying the particular and specific concept of the making of an offer.
44 Having regard to the commercial context and the objectives that must be attributed to the parties, there is no need to give "offer" and "made", as used in clause 5.3(d), extended or special meanings. There is no reason to think that the emergence of a stated intention of pursuing a goal achievable only through future voting by Magna shareholders and subsequent approval by the court would have been seen by the parties as presenting an opportunity to dispose of shares within the stipulated period that Macquarie should be free to take up.
45 In summary, the words used in clause 5.3(d), viewed in light of the surrounding circumstances and the objectives that may be gathered from the parties' compact as a whole, warrant a conclusion that the making of the DCL announcement on 30 March 2007 was not an event within the description in that clause. No commercial nonsense or commercial inconvenience flows from that conclusion. The making of the DCL announcement did not cause clause 5.3(d) to negate the obligation imposed on Macquarie by clause 5.1.
46 With the questions of construction answered favourably to Lionsgate, it is necessary to consider other aspects of Lionsgate's claim for relief by way of specific performance as against Macquarie. The first contention of Macquarie in that respect is that performance by it of the deed would entail contraventions of the Corporations Act and that, for that reason, the court must decline to compel performance of the clause 5.1 promise.
47 Two statutory provisions were referred to in the submissions made on behalf of Macquarie. The first is s.619(1):
"All the offers made under an off-market bid must be the same."