NRMA Limited (Application of); NRMA Insurance Limited (Application of) [2000] NSWSC 408 - NSWSC 2000 case summary — Zoe

NSWNSWSC

NRMA Limited (Application of); NRMA Insurance Limited (Application of) [2000] NSWSC 408

[2000] NSWSC 408

Supreme Court of NSW|2000-05-18|Before: Santow J, Beach J

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Source facts

Court

Supreme Court of NSW

Decision date

2000-05-18

Before

Santow J, Beach J

Catchwords

Division 2 of Part 2, s12BA(1), s12BB, s12DA(1A) LEGISLATION CITED : Company Law Review Bill 1997 Corporations Law
s163, s`164(4), s166(2), s167, s411(4)(b), s411(6), s765, s995, s1317B Trade Practices Act, 1974 (Cth)

Source

Original judgment source is linked above.

Catchwords

Division 2 of Part 2, s12BA(1), s12BB, s12DA(1A) LEGISLATION CITED : Company Law Review Bill 1997 Corporations Laws163, s`164(4), s166(2), s167, s411(4)(b), s411(6), s765, s995, s1317B Trade Practices Act, 1974 (Cth)

Judgment (76 paragraphs)

[1]

Background and development of the Proposal 1.1 Mr Snodgrass argued that the directors who voted in favour of the Proposal, the "Members First" team led by Mr Whitlam, had engaged in an expensive and misleading advertising campaign for the 1999 Board election, and he suggested that certain aspects of that campaign should be investigated. Mr Gallagher also raised concerns about elections of directors, and previously stated positions as to future demutualisation. Objector : Mr Snodgrass; Mr Gallagher Source : Mr Snodgrass' written submission, 2.5.00, page 5-6; Mr Gallagher's written submission, 3.2.00, page 1; transcript (Mr Gallagher) page 91 26 It is no part of this Court's task to investigate a prior campaign for board election or specific concerns about election of directors, when approving later schemes of arrangement. Those are matters which would need to be the subject of separate proceedings and considerable time has elapsed. A similar comment applies to the complaint of Mr Alexander, in a late faxed letter of 11 May 2000. 27 That a director may have a previously stated position as to future demutualisation is likewise not of itself relevant. What matters is the accuracy and non-misleading character of the material put by the Board before members when they voted on the schemes.

[2]

[5]

2.3 Some objectors argued that a shareholder company would act to maximise profits, which could be to the detriment of policy holders or members and would otherwise not act in the benevolent fashion expected of a mutual. Objector : Mr Snodgrass; Mr Robinson; Mr Gallagher Mrs Murrell Source : Mr Snodgrass' written submission, 2.5.00, page 3; Mr Robinson's handwritten notes for oral submission, 4.5.00, pages 3, 6; transcript (Mr Robinson) page 79, 80; transcript (Mr Gallagher) page 90; Mr Robinson's written 'rejoinder' of 8.5.00, page 1, 4; Mrs Murrell's written submission, 4.5.00, introduction, page 1 33 The general point which objectors put here, namely that a shareholder company must act to maximise profits whereas a mutual may act in more benevolent fashion, is connected to the matter raised by Mr Parker in sub-para 3.4 below (para 55) in relation to the charging of premiums on insurance. He and other objectors assert that premiums will have to rise, being driven by the requirement of NIGL to achieve listing and to remain a financially viable listed entity under pressure to provide greater shareholder returns. It is also said in the latter context by Mr Talbot that disclosure was insufficient but I will return to that latter aspect later (para 120). 34 It is important to put the contrast between the position of Insurance as a mutual and the position Insurance will have as the subsidiary of NIGL when demutualised, in proper perspective. As the analysis in my earlier judgment made clear, it is wrong to conclude that Insurance is currently under an obligation, fulfilled or not, to price as a mutual or that its board may be called to account for failure to do so; see the earlier judgment at paras 155 to 174. 35 First of all, it is clear that a mutual in the position of Insurance is not obliged to provide "mutuality benefits", but merely permitted to do so though not without constraint. In practice while Insurance has the legal ability to pay rebates subject to prudential requirements, it has apparently only done so for two periods in its history. Policy rebates were provided in some years prior to the 1970's and from 1 August 1992 until 31 July 1995 (see Information Memorandum at 26). Current policy is to charge premium rates on a commercial basis, "having regard to a number of factors, including the appropriate rating of different risks and the desired return on capital as determined by the Insurance Board."; see Information Memorandum at 23. Thus, to the extent that Insurance is empowered as a mutual to charge premium rates on a lower than commercial basis, it is currently not doing so. There is no suggestion that there is any prospect of that commercial approach changing if demutualisation goes ahead. 36 There is a further complication, namely that an increasing number of policy holders are not members of Insurance. This is by reason of a Board approved strategy of growth and diversification outside of New South Wales and the Australian Capital Territory; see Information Memorandum at 17 and 30. Mutuality pricing to the extent it has any meaning in the present context must mean pricing in such a way as to subordinate profit maximisation to benefits to policy-holders by charging a lower premium or offering premium rebates and generally offering greater benefits in terms of claims, coverage and/or treatment. But this presupposes that there is total identity between members and policy-holders; mutuality permits benefits to policy-holders on the basis that all policy-holders are members. It is true that for practical purposes it can be said that all members are policy-holders. But the converse does not apply, because a substantial and increasing number of policy-holders are not eligible to be members of Insurance. Thus if benefits were to be maximised for policy-holders who were not members, it may be questioned whether that is truly for the benefit of members even if they too benefit as policy-holders. Some members may prefer to maximise their benefits as members, not policy-holders. 37 There is a further potential divergence between the interests of policy-holders and other members, the latter having no direct interest in Insurance's assets and hence profitability. It emerges from a feature of Insurance's constitution. Under it (para C) in the event of winding up or dissolution of Insurance (otherwise than for the purposes of reconstruction), if there shall remain any surplus assets after payment of all liabilities and expenses of winding-up those assets are to be given to Association, not the members. Undoubtedly Association as the road service entity will have some members who also happen to have insurance policies with Insurance. But there is no necessary identity between membership of Association and the holding of an insurance policy through Insurance. 38 Thus in circumstances where there is no actual policy of mutuality pricing nor has there been for some years and where even its legal possibility would not be without constraint, it is over-simplistic to contend that NIGL would, in maximising profits for shareholders, operate in a distinctly different fashion as compared to the way Insurance does operate to-day where it appears driven by purely commercial considerations in its pricing. But even if some contrast between NIGL as a shareholder company maximising profits could be made, that is a matter where, provided there has been adequate disclosure, members are the best judge of their own interests and it is not for the Court to substitute its view of what is fair. 39 I deal under para 57 with how members will receive the additional assurance that any prospectus for the listing of NIGL will repeat the statements made in the Information Memorandum as to "what will happen to insurance premium rates, policy features and benefits" and "whether insurance claims management principles will change". These matters are dealt with at pages 4, 15, 23, 30 and 31 of the Information Memorandum. It essentially states as the Board's view that insurance premium rates will not increase as a consequence of the Proposal and that claims management principles and the rights of Insurance members as policy-holders including policy features and benefits will likewise not change emphasis as a consequence of the Proposal. It is true Ernst & Young Corporate Finance Pty Limited in their expert's report state, "while the approach to the setting of premium rates is not intended to change under the Proposal, premium rates and service levels could change in the future either as a result of the Proposal or for reasons unrelated to the Proposal. The Board of NIGL will need to balance the interests of Shareholders and policy-holders to manage the potential conflict of interest between the parties which could adversely impact the premium rates, quality of service and capital strength. This is balanced by the fact that in practice, listed companies must focus on customer satisfaction to attract new customers and achieve required growth in profits.";

[11]

The Information Memorandum and other disclosure issues 3.1 A number of objectors argued that the IM was too complex for members to understand. Objector : Mr Snodgrass; Mr Robinson; Mr Hughes; Mrs Murrell; Mr Gallagher; Mr Crosby; Mr Date Source : Mr Snodgrass' letter, 23.3.00, handwritten notes for oral submissions, pages 5, 9-10; transcript (Mr Snodgrass) pages 97, 100; Mr Robinson's handwritten notes for oral submission, 4.5.00, page 2; transcript (Mr Robinson) pages 76-78; Mr Hughes' written submission; Mrs Murrell's written submission, 4.5.00, page 3; transcript (Mr Gallagher) page 93; transcript (Mr Crosby) page 105; transcript (Mr Date) page 112 47 This particular objection starts with the undoubted complexity of the Proposal. Then the argument bifurcates into two alternative ways in which it seems to have been put. The first way is to say that intrinsically a proposal of this complexity could never be adequately explained so as to the comprehensible to the ordinary man or woman in the street and thus it could not ever be properly put to members. That proposition would carry the consequence that no organisation could ever put a highly complex proposal to its members. The alternative way in which the argument is put is that the Information Memorandum did not do proper justice to the need for an adequate presentation of the full complexity of the proposal and thus left members unable to judge for themselves whether to vote for or against it, so that the vote for should be disregarded. 48 The first way of putting the argument finds no support in any authority. Indeed the full Federal Court in Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 468 clearly contemplated that complex cases can be put to members when it gave this guidance as to how: "The need to make full and fair disclosure must be tempered by the need to present a document that is intelligible to reasonable members of the class to whom it is directed, and is likely to assist rather than confuse …. In complex cases it may be necessary to be selective in the information provided, confining it to that which is realistically useful. …. It is important that the adequacy of the information provided by the prospectus and supporting documents be assessed in a practical, realistic way having regard to the complexity of the proposal. In the circumstances the court should not be quick to conclude that a contravention of s52 has occurred because other information could have been provided that was not. The need for the Applicants to establish the materiality of errors and omissions is an important step in the proof of their claims. …."

[13]

49 There is nothing novel in any of this. As far back as 1938, principles now long settled were articulated in Bulfin v Bebarfald's Ltd (1938) 38 SR(NSW) 423 at 432 and 440 where Long Innes CJ referred to the obligation of directors to "…. make full disclosure of all facts within their knowledge which are material to enable the members …. to determine upon their action." 50 Without, at this point, dealing with the particular contended examples of misleading and deceptive disclosure, including by silence, but dealing with the matter on an overall basis, it could not be said that the present Information Memorandum was incapable of dealing with a proposal of this level of complexity or must necessarily fail in its task. In particular, the Information Memorandum, as emerged, was the product of an extensive due diligence process in which each proposition or statement of fact was, on the material before me, carefully tested; see affidavit of Mr Stuart Nelson as Project Manager of the Proposal, paras 11 to 34. Furthermore, the Information Memorandum did on the whole do what the Full Federal Court states should be done, namely to be selective in the information provided, confining it to that which is realistically useful, though there is some repetition. Indeed the format of the Information Memorandum was designed to give members both "the wood for the trees" in the opening outline of the Proposal and then the material detail in the later elaboration. Members are assisted by clear headings, a glossary and an index at the end of the Information Memorandum so that particular topics, such as rebates are identified by reference to the relevant pages. 51 Thus, while as the Full Federal Court observed in Fraser v NRMA Holdings Ltd (supra) at 467B, it is difficult to envisage a wider cross-section of the community than is constituted by the membership of the Association, it should not be assumed that that membership was incapable of having a sufficient understanding of the proposal if fairly presented, as overall I am satisfied it was. Members were thus in a position where they could decide whether or not to attend the meeting or to vote by proxy or to leave it to the majority attending and voting to determine the matter. 52 I should add just this. As has often been remarked about political elections or about juries, one should not underestimate the capacity of a broad cross-section of the Australian community to understand the issues before it when they have been fairly presented, whether complex or not. The same applies to the present Proposal. It would be condescending and a discount of the basic good sense of such an audience to suppose otherwise.

[16]

3.4 Mr Parker asserted that premium prices will have to rise to enable NIGL to achieve listing and to remain a financially viable listed entity, and failure to disclose that in the Information Memorandum was misleading and deceptive. Mr Robinson also referred to press reports that premiums would rise after demutualisation. Mr Toltz argued that the prospect of increased insurance premiums to provide greater shareholder returns should have received greater prominence in the Information Memorandum. Objector : Mr Parker; Mr Robinson; Mr Toltz Source : Mr Parker's written submission, 2.5.00, page 16; transcript (Mr Parker) page 213; Mr Robinson's handwritten notes for oral submission, 4.5.00, page 5; Mr Toltz' letter 7.5.00, page 1, 2; transcript (Mr Toltz) page 170 56 The assumption behind this assertion, namely that premium prices will have to rise to enable NIGL to achieve listing and remain a financially viable listed entity has not been established. It follows that no statement to that effect should have been made, such that the failure to include it was misleading and deceptive. I have dealt earlier with the question of premiums under sub-paras 2.3 and 2.4 of this section of my judgment. 57 However, I should add this. As I there foreshadowed, a parallel representation is to be made by NIGL to ASIC in the following terms, being a representation which I would note in any orders I make approving these schemes. Representation To: The Australian Securities & Investment Commission NRMA Insurance Group Limited ACN 090 739 923 ("Company") hereby represents that the statements on page 8 of the information memorandum issued by NRMA Limited and NRMA Insurance Limited on 14 February 2000 on: (a) what will happen to insurance premium rates, policy features and benefits; and (b) whether insurance claims management principles will change, together with those statements on pages 4, 15, 23, 30 and 31 of the information memorandum which are material to the matters raised by those statements, will be adopted by the Company and fully disclosed in the disclosure documents to be prepared in connection with the Company's proposed listing on Australian Stock Exchange Limited (as contemplated in that information memorandum). ……………………………………. Signed for and on behalf of NRMA Insurance Group Limited"

[17]

58 Some debate occurred as to whether such a representation should in fact be in the form of an undertaking either to ASIC or to the Court, possibly accompanied by a court imposed condition to the approval of the arrangements. 59 In all the circumstances I am satisfied that the appropriate course is to leave the matter to be dealt with as a representation to ASIC and noted by the Court as I have foreshadowed. Thus I do not consider that the imposition of a condition which required a legally enforceable undertaking from Insurance and NIGL in some kind of implementation deed would be appropriate or necessary. This is because it potentially alters what was put to members and which they voted upon, in a way which might disadvantage Insurance. It is admittedly a very remote prospect of disadvantage. One would have to envisage a future increase in premiums as a result of the Proposal, which directors felt impelled to make in the interest of Insurance and NIGL shareholders notwithstanding their representations to the contrary at this point in time. There seems clear enough evidence that it would be commercial or perhaps prudential considerations independent of the Proposal that would lead to that result. That could equally occur if there never were this Proposal. It might conceivably be the case that in practice, the fact of listing may bring home to directors more sharply the need for profit, but that is speculative. 60 The representation earlier referred to does not have the same effect as such a condition. It is not in enforceable form, though one would expect that NIGL and for that matter Insurance, would take very seriously doing all it could to ensure the fulfilment of that representation. The representation says that the statements contained in the Information Memorandum will be repeated in the prospectus for NIGL's listing, thus placing NIGL directors at risk to the same degree as Insurance's directors from any unjustified departure; see paras 18 and 19 of my earlier judgment. 61 I also considered whether the representation should be converted to an undertaking and if so, to whom. ASIC were unwilling to receive it as an undertaking because it considered that it was unclear what powers it would have to enforce such an undertaking. ASIC also submitted that the Court should not require such an undertaking to be given to it, as this would involve the Court in continuing supervision of a kind said to be inappropriate in relation to a scheme; see R.M. Eastmond Pty Ltd (1972) 4 ACLR 801 at 803 and in particular the authorities to the effect that a scheme once approved can only be amended by a subsequent scheme; Re Forklift Sales (SA) Pty Ltd (1972) 3 SASR 21 at 24-5; Re BTS Bearings Pty Ltd v Transmission Supplies Pty Ltd (1983) 1 ACLC 923 and more generally Renard & Santamaria in "Takeovers and Reconstructions in Australia (Butterworths Sydney, 1990) (looseleaf) at [1622]. 62 I have not at this point reached the view that a court should never accept such an undertaking, reinforced or not by a condition of approval, on the basis that an undertaking must necessarily involve ongoing supervision inappropriate for a Court. Much may turn on the circumstances and how the undertaking is framed, in which ASIC may have the main supervisory role. I reserve that question for when it is necessary to decide. In the present case, I am satisfied that a formal representation of the kind here contemplated would suffice for the purpose and that a formal undertaking in addition would not be necessary. 63 It follows from the above that I do not consider that the prospect of increased insurance premiums is of sufficient likelihood as to have required any greater prominence in the Information Memorandum than it received. Members are aware of the view expressed by Ernst & Young Corporate Finance Pty Limited in the Information Memorandum at 82, para 6.4.4 and were in a position to form their own views.

[21]

68 In those circumstances, I asked at the initial hearing what the current status of that report was; see transcript 14 February 2000, 8.51-13.26. 69 It was clear that Marsden Jacobs Associates Pty Limited would not release their report or permit it to be quoted, quite possibly because the Association would not give an indemnity against any liability that might flow to them from that course. The question which that poses is whether Association should have been required to give such an indemnity in order for that disclosure to be possible. In my judgment such a requirement would have been quite unreasonable. It remains the responsibility of the Board to form a view materials of that sort, but it is not incumbent on the Board merely because it has a report reaching a different conclusion that it disclose it, especially when the Board has disclosed the fact that such report did challenge the recommendations and methodology of the Credit Suisse First Boston report. ASIC have seen the Marsden Jacobs report and made no demur about its non-inclusion. 70 Where matters of opinion are concerned, the question of disclosure has in any event a different aspect. What is critical is that facts be disclosed and, to the extent they involve any stated interpretation, that interpretation should be reasonably open. It certainly does not require that, having reached an opinion as the Board has done and having obtained independent experts' reports supporting that opinion, that the Board should still have to set out the detailed reasoning of a report which differs from the other reports, more especially when the Board has disclosed the fact of having received the differing report and the broad fact of its difference. What is important is that the arguments against the Proposal are fairly presented. 71 As to the criticism that the views of former members of the board of Association who are against the Proposal should have been included in the Information Memorandum, that has no substance. There is no requirement that previously departed members of the board should have their opinions included.

[30]

Other communications with members 4.1 A number of members submitted variously that the advertising campaign and the 'outcall' process was designed to secure a 'yes' vote or indicated a lack of confidence in the Information Memorandum. Objector : Mr Snodgrass; Mr Manson; Mr Toltz; Mr Date; Mr Scandrett Source : Mr Snodgrass' handwritten note for oral submissions, page 12; Mr Manson's handwritten notes, 3.5.00, page 3; transcript (Mr Manson) page 83; transcript (Mr Date) page 112; Mr Toltz' letter 7.5.00, page 2; transcript (Mr Toltz) page 171; Mr Scandrett's letter 8.5.00; transcript (Mr Scandrett) page 173-174, 212 78 In my earlier judgment (at para 4) I emphasised the importance in a complex proposal such as this with the enormous and widespread membership, to let the documents speak for themselves. I emphasised that phone queries from members should be handled with strict neutrality. Finally I commented on the importance of these strictures applying equally to any paid or inspired publicity though I made it clear that nothing I had said precluded individual directors, whilst avoiding undue partisanship, from participating in public debate. 79 On the material before me there is nothing to indicate that the advertising campaign and the "outcall" process was unfairly designed to secure a "yes" vote or indicated a lack of confidence in the Information Memorandum. The clear thrust of the advertising campaign was to encourage members to vote; there can be nothing wrong in that. The encouragement did not go further and actually urge members to vote in a particular way. To urge members simply to vote is not a process designed to secure a "yes" vote, even if it be the case that those who urged that vote were aware of a favourable trend of proxies. Nor did this indicate a lack of confidence in the Information Memorandum which was still able to speak for itself. 80 Finally, I should note that Mr Nelson in an affidavit of 9 May 2000 elaborated on his earlier affidavit of 28 April 2000 and in particular paras 161-169 on the Outbound Call Campaign. It is clear from the matching process which he describes leading to some 500,000 calls encouraging people to vote that, as paras 7 and 8 attest, neither at the time the decision was made to engage in the Outbound Call Campaign nor at any time subsequently during the Outbound Call Campaign, was Mr Nelson or any other officer of NRMA aware of the voting trend or breakdown in the proxies received by the company Computershare Registry Services Pty Ltd. This was the company that had been engaged by Association and Insurance to act as Returning Officer for and to assist each of them to conduct the relevant meetings; see para 5 of Mr Randle's affidavit of 28 April 2000. 81 Significantly, clause 2(f) of the contract between Computershare Registry Services Pty Limited and Association and Insurance provides for a constraint, though not absolute, on communicating the progressive results "for" and "against". In any event, even if the trend of voting were known, contrary to the evidence before me, it does not follow that to phone up and encourage people to vote is of itself manipulating the vote. 82 The affidavit material shows that the scripts for the Outbound Core Programme were carefully prepared and reviewed by Mallesons Stephen Jaques and there was associated supervision by an organisation called Taverners and overall review by PricewaterhouseCoopers. It is not necessary for me to review this material further; much of it is contained in SJN 1 in the Exhibit Vol. 2 under tabs 44-66. Both Mr Nelson as Project Manager of the team working upon this proposal in his affidavit of 28 April 2000 and Mr Randle in his various affidavits of 28 April 2000 and 2 May 2000 (Mr Randle being Executive Chairman of Computershare Registry Services Pty Limited engaged to act as returning officer in relation to the relevant votes) substantiate that the advertising campaign and the outcall process were not designed to secure a "yes" vote or to manipulate it in any way.

[47]

(iii) by force of s166(2) assisted by s167 of the Corporations Law , on the change of type the members cease to be members of the company and any new shares issued are taken to be issued to the former member with that former member's consent; the new shares can be issued either by the company changing status or its holding company (s167(1)(b)) provided in the latter case the business, assets and liabilities of the issuing company (together with its subsidiaries) is substantially the same as that of the company changing type (with its subsidiaries). 102 Significantly, s164(4) of the Corporations Law, here to be read in conjunction with s1317B of the Corporations Law, permits review of ASIC's decision during the one month window for that review allowed by s164. This starts after ASIC notifies its intention to alter the details of the company's registration. That of itself may constitute an independent basis for excluding the Gambotto principles, as is assumed at page 2 of the Explanatory Memorandum to the Company Law Review Bill 1997 introducing the new Pt 2B.7. (Its predecessors were not as comprehensive.) 103 Thus Mr Talbot did not submit that Gambotto principles stood in the way of the demutualisation that is to occur pursuant to the associated and inter-independent steps in the Proposal. This would recognise, as I accept, that there are two possible bases for excluding the Gambotto principles. One is that the scheme provisions themselves embrace approval of a scheme which, though it does not itself effect the expropriation (that is done by Pt 2B.7) nonetheless could not be appraised for fairness without taking into account that latter inter-dependent step as an essential part of the Proposal. That leaves no work for a separate fairness test at general law, based on proper purpose and thus no room for Gambotto principles. 104 The second basis is that Pt 2B.7, though not directly employing any fairness appraisal, provides an express statutory regime for expropriation, more accurately described as an exchange of membership for shares in a new holding company that has essentially the same assets and liabilities when subsidiaries are taken into account (s167(1)(e)). Furthermore, the right to challenge is at least an indirect means of introducing concepts of fairness analogous to Gambotto. Such a statutory regime again leaves no room for Gambotto principles to operate independently. 105 But in any event, Mr Talbot put an alternative argument which he attempts to base upon the reasoning of the Federal Court in Fraser v NRMA Holdings Limited at 480-2. The essential thrust of the argument is that clause 5 of the Association's constitution (now clause C) must be repealed before a proposal of the present kind can be effected legally (T, 134, 135, 153-7). That clause provides as follows: "If upon the winding-up or dissolution of the Association there remains after satisfaction of all its debts and liabilities any property whatsoever, the same shall not be paid to or distributed among the members of the Association that should be given or transferred to some other institution or institutions having objects similar to the objects of this Association such institution or institutions to be determined by the members of the Association at or before the time of dissolution …. "

[49]

108 Earlier, at 481, the Federal Court referred to there being "two keys" needed to unlock the wealth, one key being held by the members of each of Association and Insurance. 109 However, the fallacy in this reasoning can be readily exposed. This is not a proposal equivalent to that which occurred in 1994 being the subject matter of Fraser. Rather it proceeds by what can fairly be described as "a major re-organisation of the structure of the whole organisation" being the very circumstance which the Full Federal Court distinguished from that before it; see para 94 of my earlier judgment. That is to say, there is a major re-organisation here effected by a scheme of arrangement and by an inter-dependent and associated set of demutualisation steps reliant upon the provisions earlier identified of Pt 2B.7 of the Corporations Law. 110 Nor is this a case of the Association effecting an informal winding up and distribution of shares in NIGL that would otherwise have gone wholly to Association but are now to go (as to 40%) to members of Association. If one analyses the steps taken, Association members who become members of Insurance receive the shares in NIGL not as some kind of distribution from Association but as compensation from a third party NIGL for the extinction of their membership in Insurance; see paras 185 to 194 of my earlier judgment. Thus it is not as if Association was entitled to 50% of the shares to be issued by NIGL and ceded its entitlement to 40% in favour of its own members. In fact, as the report from PricewaterhouseCoopers makes clear, Association receives only 10% essentially for relinquishing the equivalent value inherent in its special Membership rights in Insurance; see Information Memorandum, at 127-8. The special rights that Association gives up as an Insurance member are described in section 7.4 of the Information Memorandum and section 5.6 of PricewaterhouseCoopers' report. Thus Association may no longer appoint and remove directors of Insurance and will lose the right to any surplus assets in the event of winding-up of Insurance together with other associated powers and rights. That is explained in more detail in Ernst & Young Corporate Finance Pty Limited' expert's report and the Information Memorandum at 73 and following. 111 There can be no doubt that what is occurring is therefore not a winding-up or dissolution of Association or for that matter Insurance. Neither clause 5 of Association or clause C of Insurance's memorandum address or have application to what is occurring. 112 It is in any event well settled that a scheme of arrangement can override a contrary provision in the constitution of Association or Insurance were those provisions otherwise applicable; see in relation to articles of association Re Glendale Land Development Ltd (No. 2) (1982) 2 NSWLR 563.

[51]

Breach of directors' duties and/or oppression particularly in relation to asset transfers. 114 This ground of objection appears in Mr Talbot's written memorandum of 1 May 2000 at para E, page 35 and following. The substance of this objection is that certain assets (shares in jointly owned companies carrying on insurance) were transferred from Association to Insurance and that this was not a transaction properly entered into for the benefit of either transferor or transferee. Rather it was for the purpose of facilitating the Proposal then well in prospect, though not yet publicly formulated in its detail. Those transfers are fully described at page 19 of the Information Memorandum. They were either immaterial in dollar amount or supported by a KPMG report as to the fairness of the consideration. That report was sighted by ASIC, its counsel indicating that it had no reason to doubt the KPMG conclusion. Indeed counsel for Mr Talbot fairly conceded that there was nothing to suggest that the asset transfer transactions were other than at fair value; T, 149. 115 The argument turned ultimately upon whether, because the transfers occurred between June 1998 and June 1999 when the board had in mind a proposal along the lines of that finally put to members, and because the later Business Relationship Agreements included a restraint on competition which was framed in terms of the existing activities of Association which no longer included insurance activities of the companies jointly owned, that two things must follow. First, that the transfer of the entities must have been influenced by the prospect of these schemes being put to the Court and contrary to what was put to the Court. Second, that the transfer was for that reason a breach of fiduciary duty or oppressive or both. 116 When this matter was previously before me, a memorandum was prepared by Association and Insurance, called MFI 22, which stated that the transfer was not in any way influenced by the prospect of these schemes being put to the Court but rather were actuated by commercial reasons there set out. Furthermore, the companies asserted that the transactions were justified on an arm's length basis and that the $30-40 million attributed to the Insurance trademark valuation was not influenced negatively by these transfers. 117 Mr Talbot as a director of the company and thus not an outsider, was not able to advance any evidence in support of there being a breach of fiduciary duty, improper purposes, inadequate consideration, oppression or any consequential misleading conduct in relation to the asset transfers, save what he sought to derive from the temporal coincidence of the transfers and the planning of the Proposal. So to argue is to commit the fallacy of arguing from correlation to causation. I am satisfied that the asset transfers, justified as they were on an arm's length basis, were not actuated by the planned reorganisation. There were commercial reasons independently of the Proposal for doing what was done. There is no reason to suggest that if the Proposal were not approved the transfers would need to be reversed. 118 Finally, there could be no suggestion that the relevant transactions were vitiated by "interested director" voting exclusions, as each of the directors was not himself or herself "interested" in the "contract or arrangement". Each are remunerated on a fixed fee basis rather than on a basis affected by the profitability or otherwise of the transferor or transferee companies. In any event the transactions should not significantly impact on profitability if at arm's length and the books reflect that arm's length value.

[55]

(b) then are repeated earlier paragraphs in Mr Talbot's written submissions of 1 May 2000 which amount to a repetition of the basis for saying that Association and Insurance were and are mutual companies offering mutual benefits or under an obligation and owing fiduciary duties to members so to do, including through mutual pricing and/or rebates, taking into account factors which would need to be considered in any decision to provide rebates such as whether the provision of rebates is appropriate, ensuring sufficient funds were retained to meet capital needs of Insurance's business and other factors, "whereas Insurance and/or the majority of Insurance directors failed to provide such mutual benefits in breach of their obligations and duties." 123 This contention as evinced by the last particularisation is really an attempt by another means to revisit the abandoned earlier objection found at para (f) under the heading "Mutuality principles and their breach" from Mr Talbot's written submissions of 1 May 2000. By abandoning those objections, having regard to the fact that they were directly contradicted by the reasoning and conclusions in my earlier judgment at paras 148-164, this necessarily means that their underlying basis is removed for the purpose of misleading and deceptive conduct. There is simply no basis for the assertion that the directors of Insurance owe any duty to their members requiring them to price policies on a concessional basis or give premium rebates; see para 160 in my earlier judgment. 124 In any event, the Information Memorandum went to some pains to explain the nature of the mutuals, their structure and the pricing and rebate policy hitherto followed and anticipated to be followed in the future, see for example, pages 17, 18, 19, 23 and 29, and in relation rebates, the references noted in the index. 125 Disclosure obligations generally were dealt with at para 19 of my earlier judgment. I concluded that here there is a "dealing in securities" effected by the combination of the scheme of arrangement and the associated steps of the Proposal. What needs to be added to that analysis is that the first provision capable of applying appears to be s995 of the Corporations Law. It, whilst mirroring s52 of the Trade Practices Act 1974 (Cth), at first sight appears to contain no equivalent to s51A of that Act dealing with representations as to any future matter where the onus is placed on the corporation to adduce evidence of having reasonable grounds for making the representation. The significance of this distinction is that s51AF now states that s52 of the Trade Practices Act 1974 (Cth) does not apply to conduct engaged in "in relation to financial services". However that apparent difference is not in fact the case. Section 765 of the Corporations Law is in equivalent terms to s51A, save that, since 13 March 2000 (when amendments to the Corporations Law came into force) the reversal of the onus of proof is removed that was formerly contained in s765(2) though the question is still whether the corporation had reasonable grounds for making the (future) statement. The present Information Memorandum predates 13 March 2000 however so the reverse onus of proof still applies; see s109E(c) of the Corporations Law preserving any past liability under the repealed Corporations Law. 126 "Financial service" is defined in s4 of the Trade Practices Act 1974 (Cth) as having the same meaning as in Division 2 of Part 2 of the Australian Securities and Investments Commission Act 1989 ("ASIC Act"). Under s12BA(1) of that Act,

[58]

127 Section 12DA(1) of the ASIC Act mirrors s52 in relation to "conduct in relation to financial services" whilst s12BB mirrors s51A of the Trade Practices Act. 128 However, s12DA(1A) excludes the operation of s12DA but only from any "dealing in securities", in contrast to s12DA(1) which uses the wider expression "in relation to". 129 The end result is if the relevant conduct surrounding the Information Memorandum and its circulation and the steps contemplated thereby is conduct "in relation to" a "dealing in securities", then s995 of the Corporations Law applies. But so too does ss12DA and 12BB of the ASIC Act. However (not that it matters) s52 of the Trade Practices Act 1974 (Cth) will not apply with the associated s51A dealing with future events. 130 In addition I should note that s995A of the Corporations Law now provides that the provisions of the "State Fair Trading Act" legislation do not apply to "dealings in securities". 131 I prefer the view that the Information Memorandum should not be treated as separate from any dealing in securities, though it be by NIGL with scheme members. I consider that there is such a close connection that any relevant conduct of disclosure by the Information Memorandum is "in relation to" a dealing in securities. Accordingly disclosure under the information memorandum is conduct which is not governed by s52 of the Trade Practices Act 1974 (Cth) or its Fair Trading Act equivalent. To require a separation of the Information Memorandum from the later inter-dependent issue of shares in NIGL would be highly artificial, where clearly all of the inter-dependent and associated steps of the Proposal embraced by the schemes culminate in a dealing in securities and involve the provision of financial services. Accordingly, I would conclude that the better view is that s995 of the Corporations Law coupled with s12DD of the ASIC Act (but not s52) govern conduct concerned with the Information Memorandum and the Proposal contemplated by it. This has the result that the criterion of misleading and deceptive conduct applies, as well as those provisions relating to future conduct contained in s765 of the Corporations Law and s12DA(1) of the ASIC Act. However, that conclusion is necessarily a tentative one since the matter has not been fully argued. As regards future events, some caution is in any event needed in pressing the reverse onus of proof any further than the ordinary onus of proof borne by the proponent of a scheme seeking the Court's approval. That ordinary onus requires the Court to be generally satisfied that statements as to future events, like other statements, have been made on reasonable grounds pursuant to a proper due diligence process, as I am satisfied has been the case. That in turn, goes to the Court's discretion concerning approval of the scheme. I treat s995 as setting a standard of disclosure in this context, analogous to s52 as setting a standard of conduct.

[61]

(b) premium rebates are less effective and financially inferior means of accessing Members' reserves and retained profits on an ongoing basis than the mechanism available under the Proposal, namely the payment of dividends ("the Second Representation). 134 The second of these proposed representations is indubitably a matter of opinion and, on analysis so is the first, assuming that both such representations could indeed be made out from silence. 135 As to how silence may constitute misleading conduct in a context such as this, more particularly where there is involved a judgment or an opinion, the observations of Giles J in NRMA Ltd & Ors v Morgan (1999) 31 ACSR 435 at 788: "[ 1429 ] Silence may constitute misleading conduct as part of all relevant circumstances constituted by acts, omissions, statements or silence, for example if the circumstances are such as to give rise to the reasonable expectation that if a particular state of affairs exists it will be disclosed. Put another way, if the silence gives rise to an inference that the state of affairs does not exist, a failure to disclose that it exists may be misleading conduct. It is sufficient to refer, among the many cases on the subject, to Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608; and Warner v Elders Rural Finance Ltd (1993) 41 FCR 399; 113 ALR 517. [ 1430 ] Where the circumstances include that the existence of the state of affairs involves a judgment or an opinion, that it does so must be taken into account in determining whether the silence constitutes misleading conduct. That is so because in the circumstances as a whole the silence may itself be an expression of judgment or opinion by the silent party, to be tested for its misleading nature according to whether the judgment or opinion represented an honest opinion with a rational basis (cf Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; 55 ALR 25; Bateman v Slatyer (1987) 71 ALR 553 at 559; 8 IPR 33), and because the other party's expectation or inference may be affected by his recognition that the silent party is exercising judgment or expressing an opinion. That, however, will only be part of the overall circumstances."

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136 As to the First Representation being misleading or deceptive, the basis for that is said to be that it is "not the purpose or function of rebates to provide Association, Association Members and Insurance Members access to the entire accumulated wealth of Insurance. Rebates are a means of distributing and returning only surplus capital and retain profits". 137 As to the Second Representation, again by silence, it is said that, "the comparison between rebates in the Proposal is a false, misleading and deceptive one, insofar as it compares the ability of each to access surplus capital and retain profits on an ongoing basis. In this regard the correct and appropriate comparison between rebates and the Proposal is, and ought to have been, between rebates and dividends." 138 Applying this to the present objection, essentially what is contended is that each representation could be read or inferred from the Information Memorandum. Second, that the Information Memorandum failed to correct what was in truth an incorrect statement of opinion and thus by silence left readers of the Information Memorandum misled or deceived. This was when they were entitled to have the correct position disclosed to them by reason of the obligation of Association and Insurance in that behalf. I observe that if silence did amount to a representation in the terms alleged, it could not rise higher than "an expression of judgment or opinion by the silent party, to be tested for its misleading nature according to whether the judgment or opinion represented an honest opinion with a rational basis". 139 In explaining what was meant by the representations, counsel for Mr Talbot, in argument, said that though the two representations might appear to be inconsistent, they were in fact to be understood as in the alternative; see T, 184.45-.50. 140 Certainly it is difficult to see how both representations could be derived by silence when they are inconsistent. Thus the First Representation by silence would suggest that if premium rebates give access to the entire accumulated wealth of Insurance then they would be the more valuable as compared to the benefits under the scheme by way of shares. Whereas the Second Representation by silence seems to say precisely the opposite, namely that premium rebates are a less effective and financially inferior means of accessing reserves and the profits compared to the payment of dividends. 141 But in any event, a fair reading of the Information Memorandum, particularly pages 13 and 27 and elsewhere where these matters are mentioned, gives no basis for inferring from the silence in the Information Memorandum that First Representation. In fact on page 13 and elsewhere it is made clear (see penultimate dot point) that premiums are to be paid out of surplus capital including no doubt retained profits; that is hardly consistent with the notion that a reader would infer that there is a representation that rebates would actually give access to the entire accumulated wealth of Insurance. 142 I am satisfied there is simply no basis for finding a representation by silence in terms of the First Representation. Indeed the logical difficulty which faces the objector on this score is that in refuting the First Representation as misleading or deceptive, reference is made to the Information Memorandum to show how it implies to the contrary. If that be right then there is no basis for eking these representations by silence from the Information Memorandum. In truth they are in contradiction. 143 Turning to the Second Representation said to be made by silence, the Information Memorandum is at pains again to show that the payment of dividends, like the payment of rebates, would erode the net worth of the company in much the same way; see Information Memorandum, page 13, third dot point. 144 Indeed when attention is directed to what is actually said in the Information Memorandum, what the consulting actuary, PricewaterhouseCoopers does is estimate "the maximum net present pre-tax value of insurance premium rebates" being first those which could be paid to current Insurance Members and second, those which could be paid to current Insurance policyholders ($900 million and $1.4 billion respectively); see Information Memorandum, page 27. That calculation in turn leads to the statement in the same paragraph that, "Accordingly, all directors of Insurance and a majority of Association' directors believe that the Proposal is expected to release more value to Insurance Members as a whole in either of these estimated amounts." [emphasis added] Clearly here there is a statement of belief, that is to say of judgment or opinion to be tested for its misleading nature according to whether the judgment or opinion represents an honest opinion with a rational basis. 145 When one tests that basis, the starting point is a PricewaterhouseCoopers report of 17 November 1999 to the directors of Association and Insurance forming part of the due diligence (see tab 10 Judge's Issues Folder). That explains first how the maximum net present pre-tax value of the insurance premium rebates is calculated. Then the comparison is made between that figure and the prospective value of NIGL shares in order with other factors to support the opinion that for existing members the best financial outcome is the Proposal; see page 19 of that letter. Quite clearly, PricewaterhouseCoopers are not comparing dividends to rebates. The methodology that would do so is not that which the Board have chosen to use. There can be nothing misleading in that. 146 The matter is further elaborated in a letter from PricewaterhouseCoopers (also tab 10 Judge's Issues Folder) dated 2 February 2000 addressed to Mallesons Stephen Jaques, in clarifying the difference between the figure for maximum rebates payable to policy-holders and maximum rebates payable to Members. 147 Thus the second supposed representation by silence misstates what the Information Memorandum in fact sets out to say. This is by purporting to find in it a comparison between premium rebates and dividends when that is not the comparison that PricewaterhouseCoopers or the companies have chosen to make. The comparison they have chosen to make has been clearly demonstrated as having a rational basis and there is nothing to indicate that the opinion is not genuinely held. Whether the opinion is ultimately correct or incorrect may itself be a matter for argument. But there is nothing intrinsically misleading or deceptive in that which appears in the Information Memorandum on the subject of rebates.

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Misleading and deceptive conduct - takeover. 152 I refer here to para (k) at page 44 of the written submissions of Mr Talbot dated 1 May 2000. 153 Here the contended representations are again by silence and are as follows: "That the Proposal would not result in less protection against a hostile takeover of Insurance than that provided by the current dual mutual structure" ("the First Representation") and "the potential for an unsolicited restructure which was prejudicial to Insurance Members' interests under the current dual mutual structure outweighed the increased potential for a hostile takeover of Insurance which will arise as a consequence of the Proposal" ("the Second Representation"). 154 Each First Representation is said to be misleading and deceptive because (it is contended) the Proposal will in reality provide less protection against a hostile takeover of Insurance than is afforded to members of Insurance (including Association) by the current corporate and membership structure of the NRMA Group, citing Ernst & Young's report section 6.8, sixth bullet point, and the Information Memorandum section 4.3, the tenth bullet point. 155 As to the Second Representation it is said (para 62 of Mr Talbot's written submissions) to be misleading or deceptive because it is unknown whether the potential for an unsolicited restructure proposal which was prejudicial to Insurance members under the current dual mutual structure outweighs the increased potential for a hostile takeover of Insurance which will arise as a consequence of the Proposal. The objector however then cites two reasons why, according to the Information Memorandum, the current dual mutual structures are a significant barrier or provides greater protection; see para 61(a) of Mr Talbot's written submissions. 156 The latter citation and that in para 154 above refutes such representations could be derived by silence from the Information Memorandum. The Information Memorandum in fact carefully sets out the potential for an unsolicited restructure proposal (see section 2, page 17). There is a clear statement of the countervailing risk of takeover of NIGL in the reasons to vote for and against the Proposal; see sections 1 (page 15) and 4 (pages 24 and 25) where the potential for an unsolicited restructure proposal appears as a reason to vote for the Proposal and the increased exposure of NIGL to takeover appears as a reason to vote against the Proposal. 157 Again, we are dealing with judgment or opinion and there is nothing to indicate that the Information Memorandum is misleading by silence or to the extent it contains opinion or judgment that these are other than honest and held on a rational basis.

Legislation Cited (1)

Trade Practices Act 1974(Cth)

Cases Cited (14)

CITATION : NRMA Limited (Application of); NRMA Insurance Limited (Application of) [2000] NSWSC 408 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 5131/99; 5132/99 HEARING DATE(S) : 03/05/00, 04/05/00, 05/05/00, 09/05/00, 10/05/00 JUDGMENT DATE : 18 May 2000

David Lewis Parker (in person) Albert Date (in person) William Snodgrass (in person) COUNSEL : Warren Lewis (in person) Harry Crosby (in person) M J Manson (in person) John Hughes (in person) Terry Gallagher (in person) John Thurston (in person) Erle Robinson (in person) Mrs F Murrell (in person) Laurence Julian Toltz (in person) Ian Scandrett (in person) Corrs Chambers Westgarth (NRMA Limited) Freehill Hollingdale & Page (NRMA Insurance Limited) SOLICITORS : Mallesons Stephen Jaques (the Proposal) Constantine Gionis (ASIC) Camilleri Barristers & Solicitors (for Richard Talbot) CATCHWORDS : CORPORATIONS - Schemes of arrangement - Approval hearing and role of court - Conditions for approval and/or undertakings or representations to ASIC or the Court - Scope of misleading or deceptive conduct in relation to information memorandum disclosure - Applicable legislation - Representations by silence on matters of opinion - Relevance of complexity of scheme - Future events, matters of opinion and onus - Any need to disclose contrary expert opinion - Differences between company's and expert's opinion - Integrity and reliability of voting procedures - Extent of appraisal of fairness - Application of Gambotto principles to scheme and to subsequent demutualisation steps governed by Pt 2B.7 of Corporations Law - Prior asset transfers not breach of fiduciary duty or oppressive. Australian Securities and Investments Commission Act 1989; Division 2 of Part 2, s12BA(1), s12BB, s12DA(1A) LEGISLATION CITED : Company Law Review Bill 1997 Corporations Law; s163, s`164(4), s166(2), s167, s411(4)(b), s411(6), s765, s995, s1317B Trade Practices Act, 1974 (Cth); s51A, s52 Bulfin v Bebarfald's Ltd (1938) 38 SR(NSW) 423 Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 Gambotto v WCP Ltd (1995) 182 CLR 432 NRMA Ltd & Ors v Morgan (1999) 31 ACSR 435 R.M. Eastmond Pty Ltd (1972) 4 ACLR 801 CASES CITED : Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213 Re BTS Bearings Pty Ltd v Transmission Supplies Pty Ltd (1983) 1 ACLC 923 Re Glendale Land Development Ltd (No. 2) (1982) 2 NSWLR 563 In Re Hudson Conway Limited [2000] VSC 21 (Victorian Supreme Court, Beach J, 21 January 2000, unreported) Re NRMA Limited and Re NRMA Insurance Limited (2000) 33 ACSR 595 at 609 Re Pheon Pty Ltd (1987) 47 SASR 427 Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 DECISION : Scheme approved.

The voting result 20 I should at this point give a broad overview of the voting result. Leaving aside any question of whether the voting result could be vitiated by any misleading or deceptive statement or manipulation, and assuming reliability of the voting figures, it can be said in broad terms that between 82% and 83% of those who voted were in favour of the scheme and that approximately 51% of the total eligible population of voters did in fact vote. This latter is a substantial number in the context of approximately 1.2 million eligible to vote members of Insurance and approximately 1.8 million eligible to vote members of Association. While that high participation may in part have been influenced by a campaign urging members to vote, it is nonetheless indubitably the case that the vote was a substantial majority in favour. The majority effectively required was 75% of those present and voting, having regard to the inter-dependent alterations to the relevant constitutions of Association and Insurance. Otherwise for approval of a scheme in relation to a company like Association or Insurance without share capital only a simple majority would be required. 21 Finally, I should record again what I said in my earlier judgment regarding the Court's task at the approval stage. First, the Court must be satisfied that there has been no misleading or deceptive conduct in contravention of s995 of the Corporations Law which is of such materiality as to vitiate the vote. The Court's discretion to give or withhold approval at the approval hearing remains unfettered by what has occurred at the convening hearing. That approval may be given or withheld, or given on conditions. It will take account of what has been revealed or transpired since the convening hearing, as well as any matters properly raised at the approval hearing. As regards the scheme proxy, my earlier provisional conclusion not precluding its use needs now to be reviewed following the scheme meetings and in light of the voting at those meetings on the scheme and on those associated resolutions already passed. The intention is for the demutualisation special resolution to be held reasonably soon after the scheme, this having, as my earlier judgment makes clear, direct relevance to the legitimacy of the scheme proxy. So too does the very strong support for the scheme at around 80% or more assuming reliable voting figures; see paras 72 and 73 of my earlier judgment. 22 At para 41 of my earlier judgment I conclude: "41. Once the approval stage is reached, the court's task is well settled, and accurately set out in I A Renard and J G Santamaria in Butterworths "Takeovers and Reconstructions in Australia", looseleaf at 15,061: "… the court will determine: (1) whether all the conditions required by CLs411 have been complied with; (2) whether the majority of members or creditors, though acting regularly, have acted in good faith and not in pursuit of some illegitimate purpose; and (3) whether the proposal was 'at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class, and acting alone in respect of his interest as such member, might approve it'.10 Fundamentally, the jurisdiction is supervisory; the court is concerned to be satisfied that there has been an absence of oppression and that the compromise or arrangement is one which is capable of being accepted: see Re Dorman Long & Co Ltd [1934] Ch 635; Scottish Insurance Corp Ltd v Wilsons and Clyde Coal Co Ltd [1949] AC 462 at 486. 10 Per Fry LJ in Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213 at 247. [Footnote abbreviated.]" 23 When it comes to appraising the fairness of a scheme, the Court does not determine that the scheme is intrinsically in the members' interest or otherwise. As White J said in Re Pheon Pty Ltd (1987) 47 SASR 427 at 435 in dealing with a creditors' scheme of arrangement but equally applicable to a members' scheme: "The court must leave it to the commercial sense of the creditors to judge what is reasonable in their interests. After all, it is their money which is at stake." 24 That limited supervisory role of the court in a share scheme was again affirmed in a recent Victorian case: In Re Hudson Conway Limited [2000] VSC 21 (Victorian Supreme Court, Beach J, 21 January 2000, unreported). 25 I turn now to consider the particular matters raised by the various objectors, insofar as those matters raise matters relevant to the Court's consideration of whether or not to approve the arrangements and have not already been adequately dealt with in my earlier judgment. I set these matters out under subject headings, referring to each objector and any source documents for what he or she said. I then set out my conclusion on each objection, generally with brief reasons. Thereafter I deal with Mr Talbot's objections, as they straddle a number of topics. Finally, I deal with any remaining issues, and then set out my overall conclusion.

(2000) 156 FLR 412

(1995) 55 FCR 452

(1995) 182 CLR 432

(1982) 2 NSWLR 563

(1987) 47 SASR 427

(1972) 3 SASR 21

(1991) 23 NSWLR 84

(1992) 39 FCR 31

(1993) 41 FCR 399

(1984) 2 FCR 82

(1987) 71 ALR 553