NEW ASHWICK PTY LTD & ANOR v WESFARMERS LTD & ANOR No. SCGRG-00-665 [2000] SASC 289

(a) copies of any documents setting out the terms of any relevant agreement or arrangement between the defendants and IAMA which contributed to Wesfarmers acquiring approximately 15 per cent of the issued share capital of IAMA, and

(b) a statement giving full and accurate details of any contract, scheme or arrangement that contributed to Wesfarmers acquiring approximately 15 per cent of the issued share capital of IAMA.

2 New Ashwick is a wholly owned subsidiary of Elders Australia Limited ("Elders Australia") which, in turn is a 99.99 per cent owned subsidiary of Futuris Corporation Limited ("Futuris"). CP is a wholly owned subsidiary of Innerhadden Limited which is in turn, a wholly owned subsidiary of Futuris.

3 Futuris is the ultimate parent entity of the Futuris group. The group is large and diverse and includes the provision of services to the rural sector and livestock production through Elders Australia.

4 Wesfarmers is a public company registered in Western Australia under the Corporations Law. Westralian Farmers is the ultimate holding company of the Wesfarmers Group. The business activities of that Group are in part similar to those of the Futuris Group and IAMA.

5 IAMA's shares are listed and traded on the Australian Stock Exchange Limited.

6 New Ashwick and CP are shareholders in IAMA, the aggregate holding representing a little over 19 per cent of the total shares on issue.

7 On 5 July 2000, Mr Michael Chaney, Managing Director of Wesfarmers, wrote to Mr Neil Roberts, Chairman of IAMA, outlining a proposal that would ultimately result in a merger of Wesfarmers Dalgety Limited ("WDL") and IAMA for consideration by the IAMA Board. In the letter of 5 July 2000, Mr Chaney noted that the proposed outline in the letter represented Wesfarmer's conclusions based on the information that had been provided to them. The proposal was not put forward as a negotiating position. He believed that the proposal was one which had substantial benefits for IAMA shareholders, that could be recommended by IAMA directors and one that an independent expert would find fair and reasonable.

8 In the letter, Mr Chaney said that in order to proceed with the merger and to provide IAMA with greater financial security as it moved forward, he proposed an immediate placement to Wesfarmers of new IAMA shares comprising 15 per cent of IAMA's issued capital and the entering into of heads of agreement to exclusively pursue merger negotiations between IAMA and Dalgety for a period not exceeding 90 days.

9 The letter then proceeded to outline the proposal. Mr Chaney said that after consideration of the recent information that had been provided by the IAMA management team and discussions with the Board of Directors of Wesfarmers, he proposed the following:

* An immediate placement to Wesfarmers of approximately 15 per cent of the capital of IAMA at a price of $1.20 per share as set out later in the letter.

* The sale of 100 per cent of WDL to IAMA in return for an issue of IAMA shares to Wesfarmers

10 The letter set out in detail the advantages which the proposal was likely to confer on IAMA.

11 The following paragraph also appears in the letter:

"Wesfarmers is making this proposal on the basis that it remains non-binding and confidential until binding heads of agreement are concluded at which time an appropriate ASX announcement would be made. We anticipate that the announcement to be made at the time of the placement will not require disclosure of the terms of this merger proposal. No announcement will be made in relation to the exclusive merger negotiations without mutual consent and in any event premature announcement may give rise to the termination of the merger negotiations."

12 On 7 July 2000, a joint press release was issued by Mr Roberts, and Mr Chaney announcing that IAMA had made a 15 per cent placement of shares to Wesfarmers at a price of $1.27 per share to raise approximately $16.4 million. In the release it was stated:

"IAMA concurrently confirmed that it had entered into discussions with Wesfarmers in relation to a potential merger between IAMA and Wesfarmers Dalgety ('Dalgety'), the rural services arm of Wesfarmers. It is anticipated that if a merger is approved by IAMA shareholders, Wesfarmers would become a major shareholder in IAMA.

The IAMA Board expects that unless a more favourable proposal is made to the Company, they should be in a position to recommend approval of the merger to a meeting of shareholders which would be held later this year."

13 In a letter dated 7 July 2000 from Mr Roberts to the secretary of New Ashwick, Mr Roberts said:

"As you are aware, in recent times the Board has considered two merger options in depth, neither of which ultimately proceeded to completion. That relating to Wesfarmers Dalgety in 1999 was suspended when the Board decided to prefer a different proposal. Your surmise is correct that in recent weeks Wesfarmers has expressed interest to the Company in reactivating previous negotiations in some form and that in that context some updated management data was mutually exchanged in early June. The Company did not by so doing commit to a general policy of providing access to other parties who have not made, or evidenced an intention to make, a specific proposal. The discussions with Wesfarmers have now resulted in the announcement of a share placement of 15% of the capital of IAMA and continued discussions for the purpose of a proposed merger of the company and Dalgety."

14 On or about 7 July 2000, IAMA and Wesfarmers entered into heads of agreement. The recitals to the agreement were as follows:

"A. The Company [IAMA Limited] and WDL [Wesfarmers Dalgety Limited] each carry on the business of supplying agricultural goods and services in Australia.

B. The Company and the Investor [Wesfarmers Limited] have agreed in principle that the Investor will subscribe for Shares [being the placement of shares referred to earlier in these reasons] and that thereafter they will investigate a possible Merger of the businesses of the Company and WDL.

C. These heads of agreement set out the terms on which the Investor will subscribe for the Shares and on which the parties will investigate the possibility of a Merger."

15 Clause 2 dealt with the question of subscription for shares by Wesfarmers in the capital of IAMA as follows:

Contemporaneously with the execution of these heads of agreement:

(a) The Investor shall tender to the Company an application to subscribe for the Shares [12,896,134 ordinary shares in the capital of the Company], together with the Subscription Price [$16,378,090.18 (being $1.27 for each share)] in Immediately Available Funds; and

(b) The Company shall immediately issue and allot the Shares to the Investor.

During the Exclusivity Period [the period from and including the date of the heads of agreement to and including midnight (Perth time) on the date which is 90 days after the first-mentioned date or the date of publication of the documentation seeking company shareholder approval for the merger (whichever period is the shorter)], the Company will not, without the prior written consent of the Investor, issue or agree to issue any further equity securities."

16 Clause 4 of the heads of agreement is in the following terms:

The objective of the Merger is to combine the agricultural goods and services businesses of WDL and the Company into a single entity under the control of the Investor.

(a) The parties acknowledge and agree that it is presently intended that the Merger will be effected by the sale of WDL by the Investor to the Company in return for the issue of ordinary shares in the capital of the Company to the Investor which issue shall be subject to all necessary shareholder and other consents.

(b) Notwithstanding sub-clause (a), the parties will use their best endeavours to agree upon the most favourable structure for the Merger having regard to all pertinent taxation, legal and commercial considerations."

17 The heads of agreement contemplated a definitive agreement within the 90 day period referred to above. The relevant clause of the heads of agreement is as follows:

Subject to clause 6.5 [the need to respond to a superior proposal], the parties shall negotiate exclusively and in good faith, having regard to the contents of the letter from the Investor to the Company dated 5 July 2000 with a view to concluding, as soon as practicable after execution of these heads of agreement, and in any event before the expiry of the Exclusivity Period, the terms a Definitive Agreement containing detailed provisions reflecting:

(c) any other provisions that are mutually acceptable to the parties."

18 In other respects, the heads of agreement dealt generally with matters relating to the proposed merger with the object of the parties being in a position to put the proposed merger to IAMA shareholders with the 90 day period.

Relationship between Wesfarmers and Westralian Farmers

19 In his affidavit sworn 18 July 2000, Mr Wozniczka deposed to the fact that Wesfarmers is a public company duly registered in Western Australia pursuant to the Corporations Law. He said that Wesfarmers' ultimate holding company was Westralian Farmers, a body incorporated under the Companies (Co-operative) Act, 1983 (WA) of which the principal asset is an indirect interest in the Wesfarmers Group. Westralian Farmers is the ultimate parent entity of the Wesfarmers Group.

20 In the Annual Accounts of Westralian Farmers for the year ended 30 June 1999, Wesfarmers is listed as a controlled entity with the beneficial interest in Westralian Farmers being 50 per cent. There is a footnote at the bottom of the page in question, which reads, so far as is material, as follows:

"Westralian Farmers Co-operative Limited has the capacity to dominate the composition of the board of directors of Wesfarmers Limited."

Westralian Farmers and Wesfarmers - substantial holders

21 Wesfarmers has a substantial holding in IAMA because the total votes attached to voting shares in IAMA held by Wesfarmers or in which it has a relevant interest is 5 per cent or more of the votes attached to all voting shares in IAMA.

22 Westralian Farmers is an associate of Wesfarmers because Wesfarmers is a body corporate controlled by Westralian Farmers; see definition of "associate" in s 9 of the Corporations Law. Westralian Farmers has a substantial holding in IAMA because the total votes attaching to the voting shares in IAMA held by Wesfarmers, an associate of Westralian Farmers, is 5 per cent or more of the total number of votes attaching to all voting shares in IAMA: see the definition of "substantial holder" in s 9 of the Corporations Law. According to s 608 of the Corporations Law, in dealing with a relevant interest, it does not matter how remote the relevant interest is or how it arises.

23 So far as is material, s 671B of the Corporations Law provides as follows:

"(1) A person must give the information referred to in subsection (3) to a listed company ... , if:

(a) the person begins to have, or ceases to have, a substantial holding in the company ... ; or

(b) the person has a substantial holding in the company ... and there is a movement of at least 1% in their holding; or

(c) the person makes a takeover bid for securities of the company ...

The person must also give the information to each relevant securities exchange.

(2) [This subsection sets out how a movement of at least 1% in a person's holding is determined.]

(c) details of any relevant agreement through which they would have a relevant interest in:

(d) the name of each associate who has a relevant interest in voting shares in the company ... together with details of:

(i) the nature of their association with the associate; and

(iii) any relevant agreement through which the associate has the relevant interest; and

(4) The information must be given in the prescribed form and must be accompanied by:

(a) a copy of any documents setting out the terms of any relevant agreement that:

(i) contributed to the situation giving rise to the person needing to provide the information; and

(ii) is in writing and readily available to the person; and

(b) a statement by the person giving full and accurate details of any contract, scheme or arrangement that:

(i) contributed to the situation giving rise to the person needing to provide the information; and

(ii) is not both in writing and readily available to the person.

(6) [This sets out the deadline for giving information.]

24 On 11 July 2000, Westralian Farmers gave Notice ("the Notice") pursuant to s 671B of the Corporations Law to IAMA and the Australian Stock Exchange. The Notice was given by Westralian Farmers on its own behalf and on behalf of each of its subsidiaries described in Annexure "A" to the Notice, including Wesfarmers. For present purposes Westralian Farmers and Wesfarmers should each be regarded as having given the Notice. The Notice makes it clear under the heading "relevant interest" that Wesfarmers is the registered holder of the shares and that Westralian Farmers is the "holding company of [the] company which is the registered holder". The Notice states that in accordance with direction 7, a document on Wesfarmers' letterhead was attached and marked "A". It was in the following terms:

Wesfarmers Limited hereby agrees to subscribe for 12,896,134 ordinary shares in the Company for an amount of $1.27 per share in full payment.

Wesfarmers Limited also hereby agrees to be bound by the Constitution of the Company.

25 In letters dated 12 July 2000 in substantially the same terms to Wesfarmers and Westralian Farmers the solicitors for the plaintiffs Messrs Fisher Jeffries, said inter alia:

"It is clear that the placement of IAMA shares to Wesfarmers is part of a wider set of arrangements and understandings which have not been disclosed in any meaningful way which have been put in in place between the IAMA Board and Wesfarmers.

As you are aware, Section 671B(4) of the Corporations Law requires any substantial shareholder notice to be accompanied by a copy of a document setting out the terms of any relevant agreement that 'contributed to the situation giving rise to the person needing to provide the information'. Alternatively if there is no such document available a statement by the substantial shareholder giving full and accurate details of 'any contract, scheme or arrangement that ... contributed to the situation giving rise to the person needing to provide the information'.

The Substantial Shareholder Notice lodged by your company annexes only a letter confirming an agreement by Wesfarmers to subscribe for shares in IAMA for cash consideration. Plainly, this does not reflect the wider arrangements and understandings already concluded between Wesfarmers and IAMA and does not reflect the terms of the media release in which the Chairman of IAMA and the CEO of Wesfarmers stated jointly that Wesfarmers would become a 'major shareholder' in IAMA pursuant to a proposed merger, should it be approved by IAMA shareholders.

Given these statements, our client has reasons to conclude that the Substantial Shareholder Notice does not comply with the requirements of Section 671B. The share placement is not a 'stand alone' subscription agreement which is capable of being viewed in isolation. IAMA has been quoted in the financial press as describing the placement as a 'condition precedent of any merger'.

The clear intention of Section 671B(4) is to require disclosure of agreements (binding or 'in principle') or 'arrangements' even if those agreements or arrangements are conditional or indicative only. ...

As shareholders in IAMA, our clients have a clear interest in requiring full and complete compliance with the provisions of Section 671B. As the market in IAMA securities remains uninformed, the matter is urgent. Our clients require your company to comply with its obligations by close of business Friday 14 July 2000 by making full disclosure of the arrangements between Wesfarmers and IAMA, failing which proceedings will be issued by our clients seeking mandatory orders under Sections 1318 and 1324 of the Corporations Law to force compliance by your company with their legal obligations under Section 671B."

26 These letters were replied to by Messrs Freehills by letter dated 16 July 2000 who said that their clients had complied with their obligation but that out of an abundance of caution they had referred the subject matter of the enquiry to the Australian Securities and Investment Commission ("ASIC") for advice.

27 On 14 July 2000, New Ashwick and CP commenced legal proceedings against IAMA in this Court seeking inspection of various books and records of the company pursuant to s 247A of the Corporations Law. Shortly after that date Mr Neil Roberts, Chairman of IAMA, wrote to shareholders in connection with the merger with WDL. The first paragraph of that letter was as follows:

"The Board of IAMA Limited wishes to keep you informed of developments at IAMA. On 7 July, IAMA announced it had begun discussions with Wesfarmers Limited ('Wesfarmers') in relation to a potential merger between IAMA and Wesfarmers Dalgety ('Dalgety'), the rural services arm of Wesfarmers. As a precursor to these discussions, and to secure commitment of Wesfarmers to the discussions, IAMA made a 15% placement of shares to Wesfarmers on 7 July 2000 at a price of $1.27 per share to raise approximately $16.4 million. The funds will be used for needed working capital. There are no other obligations to Wesfarmers resulting from the placement. In particular, even if the proposed merger does not proceed, IAMA will retain those funds which will remain available for working capital."

28 The information to be given in a notice of substantial holder is set out in s 671B(3) of the Corporations Law. In the present case, it includes details of the relevant interest of the defendants in voting shares in IAMA. It also includes details of any relevant agreement through which the defendants or either of them have a relevant interest in voting shares in IAMA.

29 In s 9 of the Corporations Law, "relevant agreement" is defined in wide terms as follows:

"'relevant agreement**'** means an agreement, arrangement or understanding:

(a) whether formal or informal or partly formal and partly informal;

(b) whether written or oral or partly written and partly oral; and

(c) whether or not having legal or equitable force and whether or not based on legal or equitable rights."

30 In Cornwall Resource Corporation NL v Waraluck Limited & Ors (1997) 23 ACSR 571, the following passage appears at p 573 of the judgment:

" The 'relevant agreement' for the purposes of s 12 need not be an enforceable contract, but may be an arrangement or understanding within the definition contained in s 9. Such an arrangement may be 'implied or inferred from the circumstances or the conduct of the parties' and may be 'something less than a binding contract or agreement, something in the nature of an understanding which may not be enforceable at law'; it 'may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.'"

31 "Relevant agreement" is to be similarly defined and applied for the purposes of s 671B.

32 The clear legislative intent of the precursor to s 671B of the Corporations Law was recognised by the full Federal Court in Australian Securities Commission v Bank Leumi Le-Israel (Switzerland) (1996) 21 ACSR 474. At p 479, Lehane J said that it was evident that the primary purpose of the provisions in question was to maintain an informed market in listed shares of Australian companies. Section 671B should be similarly construed. I respectfully adopt the following statement of Merkel J in ASIC v Terra Industries Inc [1999] FCA 525; (1999) 31 ACSR 186 where he said at p 207:

"The legislative intention to maintain an informed market for listed shares is so fundamental that the court was conferred with power in the widest of terms to make such order as 'it thinks just' whenever there has been a contravention of any of the relevant provisions, including the substantial shareholding provisions: see s 741 [recently replaced by s 1325A]. The court is empowered to make any order 'calculated to conduce to the attainment of purchases on an informed market or calculated to set aside now and discourage in the future purchases made on an uninformed market': see Re North Broken Hill Holdings Limited [(1986) 10 ACLR 270] at 286 per Fullagher J."

33 The expression "relevant agreement" goes well beyond agreements strictly so called to include all manner of arrangements and understandings.

34 The statutory definition and case law to which I have just referred concentrate on the expression "agreement". However, for an agreement to be caught by s 671B(3) it must be a "relevant" agreement through which a person would have a relevant interest in voting shares.

I am not altogether clear on the difference between a "relevant" agreement through which the defendants have a relevant interest in shares in IAMA and a simple agreement through which the defendants have a relevant interest. An agreement for the acquisition of shares, whether by way of placement or purchase will always be a "relevant" agreement in relation to those shares. All there has to be is a reasonable nexus between the agreement on the one hand and the relevant interest on the other. "Relevant" in relation to "agreement" may well be otiose.

35 Section 671B of the Corporations Law also requires in par 671B(3)(d) that the name of each associate with a relevant interest to be stated in the Notice. In the present case, Wesfarmers is regarded as an associate of Westralian Farmers. The nature of the association is stated in the Notice as "subsidiary of Westralian Farmers Co-operative Limited".

36 Subsection 671B(4) is supplementary to subs 671B(3) and sets out particulars of documents which are required to accompany the Notice. The subsection requires that information to be provided under subs 671B(3) must be accompanied by a copy of any document setting out the terms of any relevant agreement that contributed to the situation giving rise to the person needing to provide the information and which is in writing and readily available. In the present case, the persons needing to provide information are Westralian Farmers and its subsidiaries including Wesfarmers. The situation giving rise to Westralian Farmers and its subsidiaries needing to provide information is the placement of the shares in the capital of IAMA. The relevant agreement could include a subscription agreement. The subscription for shares need not be the only topic dealt with by the agreement. If it deals with the shares in question in one way or another, a copy of the complete document is liable to be attached to the Notice. The agreement in question need not be the only agreement dealing with the shares concerned. If it is one such agreement and "contributed to the situation", a copy must be attached to the Notice. While the agreement may deal with the topic of the shares as merely one of a number of topics, a copy of the whole agreement must nevertheless be attached to the Notice.

Contravention of Chapter 6C of the Corporation Law

37 The question then arises whether the letter dated 5 July 2000 from Mr Chaney of Wesfarmers to Mr Roberts of IAMA is a "relevant agreement" within the meaning of par 671B(4)(a) of the Corporations Law. In my view it is not. It is a letter which clearly makes a proposal or at best an offer and no more. The terms of that letter were never agreed to. For example, the price of $1.20 per share was not accepted. The price agreed to was $1.27 per share and that figure was not mentioned in the letter. Even if one applies the extended definition of a "relevant agreement" to embrace arrangements and understandings, before there is a relevant agreement, there must nevertheless be consensus of some sort. In no way does this letter embody consensus of any kind. It is merely designed to open negotiations between the parties. It is entirely in the hands of IAMA whether it ignores the letter or pursues a course of negotiation. The letter dated 5 July 2000 is not a relevant agreement and therefore falls outside the scope of par 671B(4)(a) of the Corporations Law.

38 Paragraph 671B(4)(b) refers, not to a document setting out the terms of a relevant agreement, but rather to a statement giving full and accurate details of any "contract, scheme or arrangement" that contributed to the situation giving rise to the person needing to provide the information. In my opinion, this paragraph is not applicable in relation to the letter of 5 July 2000 referred to above. In order for there to be a contract, scheme or arrangement there must be consensus of some sort. For the reasons already given there is no evidence of any in relation to this letter.

39 The next material document so far as s 671B of the Corporations Law is concerned is the heads of agreement. This document embodies an agreement in the true sense of the word. It is not known when it was signed but it is reasonably clear that execution would have taken place on or before 11 July 2000, the date upon which the Notice was signed. Most pages of the heads of agreement bear the date 7 July 2000 at the foot. The document was probably signed on that date. In the recitals it speaks of the parties having agreed in principle that Wesfarmers would subscribe for shares and would investigate a possible merger of the businesses of IAMA and WDL. The recitals continued by stating that the heads of agreement set out the terms on which Wesfarmers would subscribe for the shares and on which the parties would investigate the possibility of a merger. Clause 2, to which I have already referred, provides in contractual terms for the 15 per cent subscription for shares. For the purposes of subs 671B(3), the heads of agreement is a "relevant agreement" and both Wesfarmers and Westralian Farmers have relevant interests.

40 I have no doubt that the heads of agreement fall within the ambit of par 671B(4)(a) of the Corporations Law. I do not think par (b) would be applicable because the heads of agreement are readily available.

41 The next document is the one attached to the Notice and marked "A". On its own, this document is not an agreement; properly construed, it is merely an offer in writing and as such can be accepted, rejected or ignored by IAMA. It may give effect to some other agreement. In relation to this document, an agreement would have arisen on IAMA signifying its acceptance to the offer or issuing the 12,896,134 shares in consequence of the offer. In the Notice, this document is described under the heading "Document title" as "Agreement to subscribe for shares". In my opinion, it is not an agreement to so subscribe. In all probability, on the faith of that document, and on receipt of a cheque for the subscription price, the directors of IAMA issued a parcel of shares to Wesfarmers. The evidence does not indicate how the subscription for the shares took place.

42 The heads of agreement are a fully enforceable subscription agreement under which Wesfarmers is obliged to pay the subscription monies and IAMA is obliged to issue a specified number of shares in its capital for an agreed price per share. On the evidence before me, the heads of agreement are the only such agreement; but even if they were not, they would still be a relevant agreement so far as subs 671B(3) of the Corporations Law is concerned. If there are several agreements on foot in relation to the placement of shares to Wesfarmers, each can be regarded as contributing to the situation referred to in par 671B(4)(a). Each is relevant and each makes a contribution. The expression "contribution" is used because the draftsman recognised that there might well be more than one relevant agreement in the situation concerned and that any contribution, even if it duplicates what had been said elsewhere, would be regarded as relevant for the purposes of subs 671B(4) of the Corporations Law. Once a relevant agreement is found to have made a contribution, the quality or degree of that contribution is beside the point. In my view, the heads of agreement certainly make a contribution to the situation. In reality, they probably make the only contribution.

43 In my opinion in failing to attach a copy of the heads of agreement to the Notice, Westralian Farmers and Wesfarmers were each guilty of a contravention of s 671B of the Corporations Law.

44 Section 1325A of the Corporations Law deals with remedies for breach of ch 6C. Subsection (1) provides that the Court may make any order or orders (including a remedial order) that it considers appropriate if a person contravenes a provision of ch 6C. The term "remedial order" includes within its scope an order directing compliance with a requirement of ch 6C where a person has failed to comply with such requirement.

45 An appropriate order in this case would be one directing the defendants to comply with the requirements of ch 6C of the Corporations Law by giving to IAMA and the Australian Stock Exchange Limited a Notice with the existing attachment and a copy of the heads of agreement earlier referred to within a limited period of time from the date of the making of the order.

46 In addition I think that consideration ought to be given to a more general order directing compliance with s 671B of the Corporations Law.

47 Subsection 1325A(3) gives standing to a company whose securities are involved in the contravention. Standing is also given to a member of the company concerned. In the present case, it is clear that the plaintiffs as members of IAMA as at the date upon which the proceedings were commenced have standing to bring these proceedings.

48 Section 1325D of the Corporations Law enables the Court to excuse a contravention of ch 6C. Subsection (1) of that section provides that the Court may declare that any act, document or matter is not invalid merely because a person has contravened a provision of ch 6C of the Corporations Law and has had effect at all times as if there had been no contravention if the Court is satisfied that the contravention ought to be excused in all the circumstances. In the present case there is no question of invalidity. The current Notice is valid as far as it goes. It is, however, an inadequate notice because it does not contain all the information which it is required to contain under s 617B of the Corporations Law. A copy of the heads of agreement has not been attached.

49 The interpretation of subs 1325D(1) presents some difficulty. The topics of "Substantial holding information" and "Tracing the beneficial ownership of shares" are the only matters that are dealt with in ch 6C of the Corporations Law. It seems reasonably clear that s1325D was intended by Parliament to operate as the means by which a failure to comply in relation to those matters could be excused in appropriate circumstances. While the language of subs 1325D(1) is in some respects inapt, I think the subsection can be interpreted in such a way that it can be made applicable to an inadequate Notice. I would need to be satisfied that there was a contravention of ch 6C and that it ought to be excused.

50 Grounds on which a contravention of s 617B can be excused include inadvertence or mistake on the part of the defendants, the fact that the defendants were not aware of a relevant fact or occurrence and circumstances beyond the control of the defendants. I have no evidence before me of any of these matters but from their nature it would seem that none of them is applicable in this case. However, they are not the only matters to be taken into account. Subsection 1325D(1) requires the Court to be satisfied in all the circumstances that a contravention of ch 6C ought to be excused before it will excuse it. In my view the Court has a wide discretion in the matter. The matters to which I have referred are merely examples of matters to be taken into account.

51 An application for an order under s 1325D to seek relief under that section may be made by any interested person: subs 1325D(2). An interested person would be one who is liable to attach documents to a particular notice of initial substantial holder but has failed to do so. I have no doubt that the defendants would have standing to seek relief under this section as interested persons.

52 The question which now arises is whether I should excuse the defendants' failure to attach a copy of the heads of agreement to the Notice.

53 I am mindful of the fact that an affidavit has not been filed on behalf of the defendants setting out the reasons why subs 671B(4) was not fully complied with at the appropriate time so that the reasons for non-compliance can be considered along with other factors.

54 The heads of agreement link the provisions relating to the placement of shares with a number of provisions relating to or incidental to negotiations for a merger with respect to IAMA and WDL. The subscription for the shares was made contemporaneously with the execution of the heads of agreement. The heads of agreement then proceeded to deal with a number of topics including the general nature of the merger (without specifying numbers or prices), restrictions on the solicitation of other offers, restrictions as to the making of announcements, confidentiality and other incidental matters. If an agreement as to matters relating to the prospective merger were a separate agreement altogether to the intent that neither agreement was in any way dependent on the other, there would be no need to attach the agreement relating to the merger to the Notice. But that is not the case here. The two subject matters are inter-dependent and both are dealt with in the heads of agreement. This agreement is an important one in that it is relevant, not only to the placement, but also to the interaction of the placement and the merger. It should be attached to the notice.

55 I am not aware of any grounds under which non-compliance with ch 6C in this case should be excused.

56 In the circumstances, I have decided not to excuse the contravention of s 671B of the Corporations Law on the part of the defendants in relation to the heads of agreement.

57 There will be an order under s 1325A directing compliance with s 671B of the Corporations Law generally and also specifically in relation to the heads of agreement. As I have said earlier the contravention in relation to the heads of agreement will not be excused.

58 I will consider submissions from counsel on the form the order should take. I will also hear the parties as to costs.

1 That the defendants give to IAMA Limited and the Australian Stock Exchange Limited a notice of initial substantial holder pursuant to s 671B of the Corporations Law in the form of the notice (including the attachment marked "A") contained in exhibit "LPW8" to the affidavit of Leslie Peter Wozniczka sworn in this action on 18 July 2000 together with a true copy of the heads of agreement undated but executed on or about 7 July 2000 and made between IAMA Limited and Wesfarmers Limited within two business days (within the meaning of the Corporations Law) from the making of this order.

2 That in addition to a copy of the heads of agreement referred to in paragraph 1 of this order, the defendants attach to the notice referred to in paragraph 1 of this order :

(a) a copy of each document setting out the terms of any relevant agreement (within the meaning of the Corporations Law) that contributed to the defendants Westralian Farmers Co-operative Limited and Wesfarmers Limited or either of them acquiring approximately 15% of the issued capital of IAMA Limited and which is in writing and readily available to the defendants; and

(b) a statement giving full and accurate details of any contract, scheme or arrangement that contributed to the defendants Westralian Farmers Co-operative Limited and Wesfarmers Limited or either of them acquiring approximately 15% of the issued capital of IAMA Limited and which is not both in writing and readily available to the defendants.

3 That the defendants pay the plaintiffs' costs of this action to be agreed or taxed.