Redowood Pty Limited v Mongoose Pty Limited

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50045/03 Redowood Pty Limited v Mongoose Pty Limited JUDGMENT The proceedings 1 Redowood Pty Ltd ["Redowood"] brings these proceedings by way of a claim for monies said to be due on its purported acceptance of a public offer by Mongoose Pty Ltd ["Mongoose"] to purchase 55,000,000 renounceable rights issued by Anaconda Nickel Limited ("ANL"). 2 ANL is a publicly listed mining company having a Perth registered office. Mongoose is a wholly owned subsidiary of MatlinPatterson Global Opportunities Partners LP, a global private equity investment fund. 3 The central issue in these proceedings is essentially one of offer and acceptance. However, Redowood also puts its case in estoppel. 4 The critical questions concern the precise terms of the Mongoose rights offer and whether those terms were complied with by Redowood. The facts 5 The facts, although involving a number of documents, amendments to such documents and transmission of the same, are generally not in dispute. Particular conversations are also important. To the extent that a matter is in issue, this is examined below. The plaintiff's original rights holding 6 Prior to the ANL rights issue, Redowood held 6,000,000 shares in ANL registered on ANL's issuer sponsored sub-registry (Computershare). 20 January 2003 - ANL rights issue 7 On 20 January 2003, ANL issued a prospectus for a renounceable rights issue. Pursuant to that prospectus each ANL shareholder [registered as such as at 5.00pm Australian Western Standard Time on 28 January 2003, other than certain foreign shareholders] was entitled to 14 ANL rights for each ANL share held. Each ANL right entitled the holder to subscribe for 1 new ANL share for the payment of $0.05 [the "ANL rights" or "the rights"]. There were 6,461,031,402 rights on issue. 8 ANL issued to each shareholder a rights entitlement and acceptance form, showing for each registered shareholder the number of shares held and the number of rights issued accordingly. 9 The rights issued were renounceable, and a facility was made available to trade the rights on the Australian Stock Exchange Ltd ["ASX"] from 21 January 2003 to 7 February 2003. 10 Rights could be exercised by completing the rights entitlement and acceptance form and sending the form together with payment to reach a sharebroker or ANL's share registry by 5.00pm Perth time on 14 February 2003. ANL's share registry was Computershare Investor Services Pty Ltd ["Computershare"] in Perth. 11 An ANL shareholder thus had a number of alternative courses available: the shareholder could choose to exercise its full entitlement of rights, or to offer to sell them all on the ASX, or to exercise some and sell some. 12 If a shareholder wished to sell all or part of its entitlement, it was instructed to complete a section on the back of the rights entitlement and acceptance form and forward it to its sharebroker. 21 January 2003 13 Trading in ANL rights commenced on 21 January 2003. The Mongoose rights offer 14 On 21 January 2003, Mongoose announced an offer ["the Mongoose rights offer"] to purchase all or any renounceable rights issued under the ANL rights issue. The Mongoose rights offer document, dated 30 January 2003, ["the Mongoose rights offer document"] was lodged with the ASX. 15 The Mongoose rights offer was, principally, an offer to acquire all of the ANL rights for $0.01 cash per ANL right ["Offer alternative 1"]. (There was also offered a facility under which for every 6 ANL rights for which the Mongoose rights offer was accepted, Mongoose would apply the consideration for 5 such rights (i.e. $0.05) in exercising the 6th right in the shareholder's name, who would thus receive one new ANL share ["Offer alternative 2"]). 16 The Mongoose rights offer commenced on 30 January 2003 and closed at midnight (Sydney summer time) on 13 February 2003. Methods of acceptance were set out in section 1.4 of the Mongoose rights offer document. 17 Mongoose appointed ASX Perpetual Registrars Ltd ["ASX Perpetual"] to provide share registry services in respect of the Mongoose rights offer. 18 ASX Perpetual produced a document entitled "Business Rules - Bid for Rights Offer" in respect of the Mongoose rights offer. Provisions within the Mongoose rights offer document 19 Relevant provisions of the Mongoose rights offer document included:

"1.4 How to accept the Offer (a) Accept for all or only some of your ANL Rights You may accept this Offer in respect of all or only some of your ANL Rights. If you accept this Offer for some of your ANL Rights you can still accept the Offer for more or all of your ANL Rights during the Offer Period. You will be taken to have accepted Offer Alternative 1 for all of your ANL Rights if you do not specify a lesser number or you give conflicting instructions on the Acceptance Form… [PX 218] (d) Issuer Sponsored Holdings or unregistered holdings - Choosing either or both Offer Alternatives If your Acceptance Rights are in an Issuer Sponsored Holding or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of your Acceptance Rights, to accept you must complete and sign the Acceptance Form in accordance with the instructions on it. Once completed and signed, you need to return the Acceptance Form together with your Prospectus Entitlement and Acceptance Form and all other documents required by the instructions on it to one of the addresses specified on the form so that they are received before the end of the Offer Period….[PX 219]

8.3 Acceptance (a) Accept for all or only some of your ANL Rights You may accept this Offer in respect of all or only some of your ANL Rights. If you accept this Offer for some of your ANL Rights you can still accept the Offer for more or all of your ANL Rights during the Offer Period. You will be taken to have accepted the Offer for all of your ANL Rights if you do not specify a lesser number on the Acceptance Form…[PX 238] (d) Issuer Sponsored Holdings or unregistered holdings - Choosing either or both Offer Alternatives If your Acceptance Rights are in an Issuer Sponsored Holding or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of your Acceptance Rights, to accept you must complete and sign the Acceptance Form in accordance with the instructions on it. Once completed and signed, you need to return the Acceptance Form together with your Prospectus Entitlement and Acceptance Form and all other documents required by the instructions on the Acceptance Form to one of the addresses specified on the form so that they are received before the end of the Offer Period... [PX 239]

8.4 Your agreement resulting from acceptance (a) Effect of Acceptance Form By completing, signing and returning the Acceptance Form, you will have: (i) accepted the Offer in respect of your Acceptance Rights; (ii) authorised Mongoose and each of its officers and agents to correct any errors in, and complete any omissions from, the Acceptance Form necessary to: (A) make it an effective acceptance of this Offer in relation to your Transfer Rights which are not in a Chess Holding; or (B) enable the registration of the transfer of your Transfer Rights to Mongoose, or both; and… (b) Your agreement By accepting this Offer in accordance with clause 8.3, you: (i) have accepted this Offer in respect of your Acceptance Rights; (ii) represent and warrant to Mongoose that: (A) Mongoose will acquire good title to and beneficial ownership of your Transfer Rights free from encumbrances at the time of their transfer to Mongoose; and (B) you will have good title to and beneficial ownership of your Exercise Rights free from encumbrances at the time of their exercise by Mongoose on your behalf; (iii) if and when the contract resulting from acceptance of this Offer becomes unconditional, have irrevocably appointed Mongoose and each of its officers and agents for the time being as your attorney to: (A) exercise all powers and rights which you have as the registered holder of your Acceptance Rights; (B) do all acts and things necessary to transfer your Transfer Rights to Mongoose, including execute any document; (C) do all acts and things necessary to exercise or otherwise deal with your Transfer Rights and any ANL Shares that are issued as a result of such exercise, without having to account to you for the proceeds derived from any such dealing; and (D) do all acts and things necessary (including execute your Prospectus Entitlement and Acceptance Form or any other document on your behalf) to exercise your Exercise Rights on your behalf; (iv) have agreed not to exercise, or to purport to exercise (in person, by proxy or otherwise) any of the powers conferred on Mongoose and each of its officers and agents by subparagraph (iii) above; (v) have agreed that Mongoose may exercise or otherwise deal with your Transfer Rights and any ANL Shares that are issued as a result of such exercise before you receive the consideration for your ANL Rights; and

(vi) if and when the contract resulting from your acceptance of this Rights Offer becomes unconditional (even though Mongoose has not yet paid or provided the consideration due to you), have authorised Mongoose to transmit a message to SCH in accordance with rule 16.6.1 of the SCH Business Rules so as to enter those of your Transfer Rights which are in a CHESS Holding into a Takeover Transferee Holding…[PX 240 - 241] (d) Validation of otherwise ineffective acceptances Except in relation to ANL Rights which are in a CHESS Holding, Mongoose may in its absolute discretion (but is not obliged to) treat the receipt by it of the Acceptance Form as a valid acceptance although it does not receive the other documents required by the instructions on the Acceptance Form or any of the other requirements for acceptance have not been complied with, but if it does so, subject to clause 8.5(a), Mongoose will not be obliged to make the consideration available to you until Mongoose receives all those documents and all of the requirements for your acceptance referred to in clause 8.3 and in the Acceptance Form have been met…[PX 242]

8.5 Mongoose's obligations to provide consideration (c) Acceptance Form requires additional documents Where documents are required to be given with your acceptance to enable Mongoose to become the holder of your Transfer Rights (such as a power of attorney); (i) if the documents are given with your acceptance, Mongoose will pay you in accordance with clause 8.5(a); (ii) if the documents are given after your acceptance and before the end of the Offer Period while the Offer is subject to the Condition, Mongoose will pay you the consideration by the end of whichever of the following periods ends first: (A) 1 month after the contract resulting from your acceptance becomes unconditional; and (B) 21 days after the end of the Offer Period; (iii) if the documents are given after your acceptance and before the end of the Offer Period while the Offer is no longer subject to the Condition, Mongoose will pay you the consideration by the end of whichever of the following periods ends first;

(B) 21 days after the end of the Offer Period; or (iv) if the documents are not given before the end of the Offer Period, your acceptance will be invalid and any contract arising from your purported acceptance of the Offer will be void…[PX 243] 8.7 Offerees (a) Registered holders Mongoose is making an offer in the form of this Offer to holders of ANL Rights on the Register Date. Accordingly, this Offer and copies of this Rights Offer Document will be sent to holders of ANL Rights on the Register Date. A person who is able during the Offer Period to give good title to a parcel of ANL Rights may accept as if an Offer had been made to that person in relation to those ANL Rights... [PX 245]

9.1 Definitions … Means the rights issue prospectus lodged by ANL with ASIC on 20 January 2003…[PX 248] ANL Rights Issue Prospectus

Prospectus Entitlement and Means an Entitlement and Acceptance Form accompanying the ANL Rights Issue Prospectus. [PX 251] Acceptance Form

Mongoose share offer 20 On 22 January 2003, Mongoose lodged with the ASIC an offer to purchase all the shares in ANL on issue as at 28 January 2003 for $0.12 per share. 28 January 2003 ANL sends rights entitlement and acceptance form 21 Pursuant to the ANL rights issue, ANL sent Redowood a rights entitlement and acceptance form dated 28 January 2003, indicating its entitlement of 84,000,000 ANL rights [PX 138]. 22 28 January 2003 was the date for determining entitlements to ANL rights. 29 January 2003 23 On 29 January 2003, ASX Perpetual received a copy of the ANL share register [including ANL rights entitlements as at 28 January 2003]. 31 January 2003 24 The Mongoose rights offer [with all registry services to be provided by ASX Perpetual in (inter alia) Sydney] opened on 31 January 2003. First rights acceptance form 25 Pursuant to the Mongoose rights offer, a double sided rights acceptance form ["the first rights acceptance form"] was issued by Mongoose to Redowood offering to purchase its holding of 84,000,000 ANL rights [PX 320 excluding handwritten changes]. This form was addressed to:

"Redowood Pty Ltd Suite 13A 35 - 37 Railway Parade Engadine NSW 2233" 26 The first rights acceptance form included the following information: "SRN/HIN I00030002997 Sub-register Issuer Sponsored Number of your ANL Rights 84,000,000"

27 Mr Grant of Redowood received this form on 8 February 2003. 28 On that form "Step 3 - For Issuer Sponsored Holdings", gave the following instruction:

"If your ANL Rights are held on the issuer sponsored sub-register (shown above) or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of your ANL Rights, to accept the Offer you must sign in the box below and return this form …" 29 The reverse side, entitled "How to accept the offer", included the following:

If your ANL Rights are in an Issuer Sponsored Holding, or if you are not yet registered as the holder of your ANL Rights, then to accept the Offer, you must fill out this Acceptance Form overleaf and return it to the one of the addresses shown below. You must return your Entitlement and Acceptance Form from the ANL Rights Issue Prospectus with this Acceptance Form…

3. Bought or sold any ANL Rights? - if you have recently bought or sold any ANL Rights, your holding may differ from that shown on the front of this form. If so, please alter the number of ANL Rights shown as your registered holding on the front of this form to the number of ANL Rights you now hold (including any ANL Rights of which you are entitled to become registered as holder), initial the alteration and indicate the name of the stockbroker who acted for you." [PX 316] 30 One of the addressees specified on the first rights acceptance form was ASX Perpetual, Level 8, 580 George Street, Sydney, NSW. 21 January 2003 to 22 January 2003 - Redowood sales 31 Between 21 January 2003 and 22 January 2003, Redowood sold, on the ASX, 18,913,000 of its original entitlement of 84,000,000 ANL rights, leaving it with a balance of 65,087,000 ANL rights. 6 February 2003 - plaintiff's purchase of further rights 32 On 6 February 2003, Redowood purchased, on the ASX, a further 55,000,000 ANL rights through its stockbroker, Salamon Smith Barney, with settlement of that purchase due on 11 February 2003. In respect of this purchase, Redowood's stockbroker issued a buy contract note ("the buy contract note") [PX 334] in the name of:

"Redowood Pty Limited c/- Mr Bruce Grant PO Box 22 Engadine NSW 2233" 33 The buy contract note did not include a Shareholder Reference Number (SRN) on it for the parcel of 55,000,000 ANL rights. 34 The buy contract note bears a stamp "Received 10 February 2003". 7 February 2003 35 On 7 February 2003, trading in ANL rights on the ASX ceased. 36 On 7 February 2003, ASX Perpetual received an update of the ANL share register [including ANL rights entitlements] from ANL as at 6 February 2003. Plaintiff's dealings with rights 10 February 2003 - plaintiff returns the first rights acceptance form 37 On 10 February 2003, Mr Grant sent the first rights acceptance form by mail to ASX Perpetual. [PX 320] 38 Prior to doing so, he amended by hand the number of ANL rights on the form to "65,087,000", and initialled the amendment. He then ticked the box to indicate that Redowood wished to accept the Mongoose rights offer [Offer alternative 1] for all of the 65,087,000 ANL rights. 39 Mr Grant and a director of Redowood signed the form under the common seal of Redowood and dated the form "9/02/03".

Plaintiff requests issue of a further rights acceptance form 40 On 10 February 2003, Mr Grant telephoned the ASX Perpetual Question Line ["the Question Line"]. The Question Line was operated by Georgeson Shareholder Australia ["Georgeson"]. 41 Mr Grant spoke with an officer of Georgeson, and told him that he had accepted for his ANL rights, but had just received in the mail a buy contract note for an additional purchase of ANL rights he had made in the previous week. Mr Grant asked what he should do given that his original rights acceptance form [the first rights acceptance form] did not include the newly purchased rights. The Georgeson officer informed Mr Grant that someone would call him back. 11 February 2003 42 On 11 February 2003, Redowood settled the purchase of the 55,000,000 ANL rights it had purchased on 7 February. Redowood's brokers sent notice of this purchase to ANL. 43 At approximately 9.15am on 11 February 2003, Mr Grant again called the Question Line and spoke with a different Georgeson officer. That officer, after speaking with Mr Grant about his circumstances, arranged for somebody to call Mr Grant back. 44 Mr Grant then received a call from Ms Nicole Ooi of ASX Perpetual. 45 Mr Grant gave evidence that he told Ms Ooi that he had mailed a rights acceptance form for 65,087,000 ANL rights, and that he needed to complete another form for an additional 55,000,000 ANL rights which Redowood had purchased on market. 46 On the evidence of Mr Grant, Ms Ooi told him that he would need to fax the buy contract note to ASX Perpetual showing the purchase of the 55,000,000 ANL rights, and ASX Perpetual would then fax a rights acceptance form to Redowood. Ms Ooi denies that there was any mention of a brokers contract note. On her evidence she said to Mr Grant:

"In order to accept the Mongoose rights offer for rights purchased on market, you need to fax to ASX Perpetual your Appendix E form in respect of that holding of rights and we will then fax you a rights acceptance form. You will also need to send your originals to us." [Statement paragraph 9] 47 For reasons dealt with in detail below, Mr Grant's evidence is accepted as reliable. 48 At approximately 9.38am on 11 February 2003, Mr Grant sent a fax to Ms Ooi at ASX Perpetual which said (in part):

"Attached please find copy of the buy contract note for 55 million ANL rights acquired by the company last week. As explained to Ryan Wade [the Georgeson officer], I omitted to add these onto our holding before returning the original form. It would be appreciated if an additional form could be faxed to my office as above. I also attach here the ANL entitlement form, the original I will return with this new acceptance form. " 49 Attached to that fax was: · the buy contract note; and · a copy of the ANL rights entitlement and acceptance form in respect of 84,000,000 ANL rights, SRN I0030002997 50 At approximately 1.48pm on 11 February 2003, Mr Grant sent a further fax to Ms Ooi. That fax said (in part):

"Further to my fax this morning as instructed by Ryan Wade, I have not yet received the new Anaconda Rights Acceptance Form to cover the additional purchase by our company Redowood Pty Ltd. My fax is (02) 9520 1099, phone (02) 9520 1188. Appreciate your early assistance." The second rights acceptance form 51 At approximately 3.40pm on 11 February 2003, ASX Perpetual sent to Mr Grant a fax which said (in part):

"Thank you for your recent enquiry in the above offer.

Please find following a replacement Rights Acceptance Form as requested.

Please kindly note that the Rights Offer closes Thursday, 13th February at 12:00am (Australian Eastern Standard Time).

To participate in the offer, the Rights Acceptance Form must be returned to our office, before the closing date." 52 The fax attached a rights acceptance form ["the second rights acceptance form"]. [PX 342] That form did not include the reverse side page entitled "How to accept the Offer", received as part of the hard copy first rights acceptance form previously referred to. 53 ASX Perpetual had completed certain details on the second rights acceptance form. The name and address of the rights holder was:

"Mr Bruce Grant PO Box 22 Engadine NSW 2233" 54 The space on the second rights acceptance form in which the "SRN/HIN" was to be specified was not filled in by ASX Perpetual. In the space for "Number of your ANL rights", ASX Perpetual had filled in "55,000,000". Plaintiff returns the second rights acceptance form 55 At approximately 4.00pm on 11 February 2003, Mr Grant sent a fax to Ms Ooi. That fax said (in part):

"Attached please find the signed Rights Acceptance form faxed through this afternoon, together with copy of the Entitlement for sent to Redowood by Anaconda.

Both these forms will be in the mail this afternoon to your offices as requested." 56 The fax attached the following documents: · the second rights acceptance form with the following handwritten entries made by Mr Grant: - the name and address of the rights holder was changed to: "Redowood Pty Ltd PO Box 22 Engadine NSW 2233 (Suite 13A 35-37 Railway Parade Engadine NSW 2233)"; - in the section designated for "SRN/HIN", Mr Grant had written "I003002997";

• in the section designated for "Subregister", Mr Grant had written "Issuer sponsored";

• Mr Grant and a director of Redowood signed the form under the common seal of Redowood and dated it "11/02/03";

• in the section at the bottom of the form designated "Please provide a business hours telephone number so that we can contact you if necessary", Mr Grant had written a telephone number. · another copy of the ANL rights entitlement and acceptance form in respect of 84,000,000 ANL Rights, SRN I0030002997. 57 On the same day, Mr Grant also sent both of those forms by express post to ASX Perpetual.

ASX Perpetual's dealing with the second rights acceptance form 58 The copy ANL register available to ASX Perpetual on 11 February 2003 was the register up-to-date as at 6 February, which had been sent to ASX Perpetual by Computershare on 7 February. 59 The Court's findings are that, upon the balance of probabilities, on receipt of Mr Grant's 4.00pm fax of 11 February, ASX Perpetual: · first, checked the holding against the copy ANL share register under the SRN provided, namely I003002997 and found no corresponding holding; · second, checked the copy register under the name provided of Redowood, and found the SRN I0030002997; and · ascertained from the copy register that the rights holding under that SRN had been fully accepted. 60 Ms Cross, whose position had been Senior Manager, Corporate Actions, of ASX Perpetual, herself had no role in the processing of those particular acceptance forms at the relevant time. However, she gave the following evidence:

"Q. Now, in this case, as far as these 55 million rights were concerned, if by chance you had received the 55 million rights acceptance form at page 343 after you received the update on the share register on 13 February and made that comparison then-- A. Yes.

Q. --that would have been accepted as a valid acceptance, wouldn't it? A. Yes." [Transcript 75] 61 Her own conclusion, albeit after the event, was that the reason why the second rights acceptance form was not accepted as a valid acceptance was not because it was compared with an obsolete share register but because it was compared to the rights acceptance form that had been completed [the first rights acceptance form]. [Transcript 75] 62 As a consequence of the fact that the rights holding corresponding to SRN I0030002997 had already been fully accepted, no further action was taken by ASX Perpetual in respect of the second rights acceptance form which was not processed. The evidence as to the lack of communication with Ms Ooi is examined below. 63 ASX Perpetual did not inform Redowood of ASX Perpetual having declined to process the second rights acceptance form and the 55,000,000 ANL rights the subject of that form then lapsed at the expiry of the exercise time on 14 February 2003. 64 At some time following 6 February 2003 and prior to or on 12 February, a SRN was allocated by Computershare for Redowood's holding of the 55,000,000 ANL Rights, being I30005244, with a registered address of PO Box 22, Engadine, NSW, 2233. That SRN appears on the copy ANL register up-to-date as at 12 February 2003, sent to ASX Perpetual on 13 February. 13 February 2003 65 At midnight [Sydney summer time] on 13 February 2003 the Mongoose rights offer closed. 14 February 2003 66 At 5.00pm [Perth time] on 14 February 2003, the ANL rights offer closed. That was the last day for off-market trading in ANL rights.

Shortcomings in the use of issuer sponsored sub-registers 67 It is necessary to now consider the shortcomings in the use of issuer sponsored sub-registers and, in particular, the problem which, because such sub-registers are electronic registers, means that acceptance of a bid/offer in respect of shares issued on an issue sponsored sub-register relies upon a paper-based transaction CHESS and issuer sponsored sub-registers 68 Trading in securities on the ASX is cleared and settled through a system known as CHESS (Clearing House Electronic Subregister System). In addition to its functions of clearing and settlement of trades, CHESS performs a share registry function. 69 Each company listed on the ASX (an Issuer) must (under the ASX rules) provide two sub-registers for its securities: a CHESS sub-register, maintained within the CHESS computer system, and an issuer sponsored sub-register, managed by the Issuer itself or (more commonly) by a specialised share registry firm acting on behalf of the Issuer. The Issuer's share register consists of the entries made on the two sub-registers, and the Issuer has the responsibility of reconciling where necessary the two sub-registers. 70 A holder of listed securities has the choice whether to have that holding registered on the CHESS sub-register, or on the Issuer's issuer sponsored sub-register. 71 The CHESS sub-register can be accessed only by clearing house participants (in effect, stockbrokers and certain institutions). A client of a participant who wishes to have its holdings of a particular security recorded on the CHESS sub-register must enter into a "sponsorship agreement" with the participant which authorises the participant to record holdings for that client on CHESS. 72 On the CHESS sub-register each client of a participant has an identifying number known as a HIN (Holder Identification Number), under which holdings of securities issued by any number of Issuers can be recorded. A HIN is unique to the client, not to any particular holding of securities. A HIN is generated by CHESS each time a participant enters a new client into the CHESS system. 73 Upon settlement of a trade in securities, entries on the CHESS sub-register (removal of the securities from a seller's HIN and/or recording of the securities on the buyer's HIN) are made by CHESS upon electronic communication from participants. 74 Each holding of securities on an issuer sponsored sub-register is also given an identifying number, called in this case an SRN. Unlike a HIN, a SRN is unique to the client's shareholding in the particular Issuer concerned. A SRN is produced by the Issuer's share registry upon being notified of a transfer of securities or issue of new securities. Takeovers on CHESS 75 If a takeover offeror uses a facility offered by the ASX to become a non-broker participant in CHESS for the purposes of the takeover, an offeree who holds the relevant securities on the CHESS sub-register can, through its broker, accept the offer electronically. This provides an efficient and secure system for acceptances. 76 Where the offeree holds its securities on an issuer sponsored sub-register, methods for electronic acceptance are not available and the offer must be accepted by a paper-based communication to the offeror or its agent. Exercise of rights acquired on market - "Appendix E" 77 Evidence was adduced by Mongoose that, in a renounceable rights issue, where rights are traded on-market during the exercise period, a buyer of rights who wishes to exercise them will not generally have a rights entitlement form issued by the Issuer in the buyer's name, and, accordingly, there is a need for a mechanism for the buyer to provide evidence to the Issuer of the rights that the buyer is entitled to exercise. The evidence was that this is done in the Australian securities market by means of a document known as an "Appendix E" [PX 372], which is filled out by the purchaser's broker at settlement of the purchase so that it can then be sent to the Issuer (or its share registry) for the purpose of exercising the rights. Methods of acceptance of the Mongoose rights offer 78 Clause 1.4 of the Mongoose rights offer document (pages 11-12 of that document) states how the Mongoose rights offer could have been accepted. The methods of acceptance varied according to whether the offeree (the ANL rights holder) held its rights on CHESS or on the issuer sponsored sub-register (ANL's share registry being Computershare). 79 Acceptance for CHESS holdings are dealt with in paragraphs (b) and (c) of clause 1.4. Acceptance of Offer alternative 1 for CHESS Holdings [paragraph (b)] required the offeree to instruct its controlling participant (usually a broker) to initiate acceptance on the offeree's behalf. Acceptance of Offer alternative 2 for CHESS Holdings [paragraph (c)] required the offeree to complete the rights acceptance form and return it together with other documents to ASX Perpetual. 80 Paragraph (d) of clause 1.4 deals with means of acceptance where the offeree's rights were held on the issuer sponsored sub-register or were unregistered. Paragraph (d) reads:

"If your Acceptance Rights are in an Issuer Sponsored Holding or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of your Acceptance Rights, to accept you must complete and sign the Acceptance Form in accordance with the instructions on it. Once completed and signed, you need to return the Acceptance Form together with your Prospectus Entitlement and Acceptance Form and all other documents required by the instructions on it to one of the addresses specified on the form so that they are received before the end of the Offer Period. " Updated share register provided to ASX Perpetual 81 As already observed, the share register of ANL was provided to ASX Perpetual in electronic form on (relevantly) three occasions: updated as at 28 January, 6 February and 13 February 2003. Actions required of ASX Perpetual upon receipt of acceptances 82 In the present case, because there was on foot the Mongoose rights offer to acquire all, or any, of the ANL rights, which offer expired at midnight [Sydney summer time] on 13 February 2003, when the ANL rights issue itself expired at 5.00pm [Perth time] on 14 February, it was necessary for Mongoose's agent, ASX Perpetual, to make arrangements to process all acceptances received for the Mongoose rights offer in time for Mongoose to exercise the rights it had acquired prior to the close of the ANL rights issue. This involved staff working after midnight on 13 February and documentation being collected and flown to Perth during the day on 14 February.

Dealing with the case 83 There are a number of disparate areas which arise for examination. It is convenient to commence with basic offer and acceptance principle. Correspondence of offer and acceptance 84 The matter is put as follows in Carter on Contract [at 8246-8247]: "The offer and acceptance must precisely correspond and any departure from the offer will result in the purported acceptance being ineffective. The position is obvious in relation to a counter offer. However, the rule is a strict one, and is not limited to material deviations from the terms of the offer.

Even if it is worded as an acceptance, an acceptance which does not correspond to the offer will normally amount to a counter offer…

Acceptance must be unequivocal. This means that the language used by the offeree must be such as would convey to a reasonable person in the position of the offeror a clear and definite decision by the offeree to be bound by the terms of the offer, leaving nothing further to be negotiated [ Appleby v Johnson (1874) LR 9 CP 158; Spencer's Pictures Ltd v Spencer Cosens (1918) 18 SR (NSW) 102; Ballas v Theophilos (No 2) (1957) 98 CLR 193]." 85 To the same effect, Anson's Law of Contract, 27th edition, puts the matter as follows at 38:

"If a contract is to be made, the intention of the offeree to accept must be expressed without leaving room for doubt as to the fact of acceptance or as to the coincidence of the terms of the acceptance proposed and those of the offer. These requirements may be summed up in a general rule sometimes called the mirror image rule." 86 These principles have been treated with many times by the courts; see, for example: Carter v Hyde (1923) 33 CLR 115; Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20; Quadling v Robinson (1976) 137 CLR 192; Parbury Henty & Co Pty Ltd v General Engineering & Agencies Pty Ltd (1973) 47 ALJR 336; George Hudson Holdings Ltd v Rudder (1973) 128 CLR 387 at 395 per Menzies J. Proper construction of the Mongoose rights offer 87 A number of the submissions advanced by the plaintiff are adopted as correct in what follows. 88 The question of the proper construction of the Mongoose rights offer is all important. A number of relevant provisions require consideration in this respect. Most critically, it is necessary to closely examine the provisions in the Mongoose rights offer document dealing with how offers may be accepted. 89 The Mongoose rights offer document is to be construed as a whole, not merely by reference to one section in it, and against the background of the commercial environment (a hostile on-market takeover within a very tight time frame) against which it was written and in which it was intended to operate. 90 As the Mongoose rights offer document itself states: "This Rights Offer Document relates to the Offer. You should read this Rights Offer Document in its entirety." 91 The provisions of the Mongoose rights offer document which relate to Redowood's acceptance of the Mongoose rights offer in respect of the 55,000,000 ANL rights are clause 8.3(d) and other clauses of the offer which bear upon the construction of clause 8.3(d). 92 It is convenient to commence with the considerations bearing upon the proper construction of clause 8.3(d). Clause 8.3(d) 93 An ANL rights holder was entitled to accept the Mongoose rights offer for all or only some of his rights. If he accepted for some only of his rights, he was entitled subsequently, while the offer was still open, to accept the offer for some or all of the balance of his rights in respect of which he had not previously accepted the offer. [Clause 8.3(a)]. 94 It follows that such a rights holder holding, for example, 1 million rights, could accept the Mongoose rights offer for 500,000 rights on 12 February 2003 and accept the offer for the remaining 500,000 rights on 13 February. 95 In such an event the Mongoose rights offer requires to be construed in a manner which recognises that: · that rights holder would have received only one rights entitlement and acceptance form for the 1 million rights; and · if that rights holder delivered that rights entitlement and acceptance form to ASX Perpetual with his first acceptance in respect of 500,000 rights, he could not deliver it again with his second acceptance. 96 It also follows that Redowood (or anyone else) could purchase 55,000,000 ANL rights at any time up to 11.59pm on 13 February 2003 and deliver an acceptance of the Mongoose rights offer to ASX Perpetual at 12.00 midnight on 13 February 2003. So much was accepted by Mr Diethelm, the defendant's counsel [transcript 160]. The same unexceptional proposition negates any suggestion that it was a term of the Mongoose rights offer that a holder of ANL rights who was entitled to be, but was not for the time being, registered on the ANL share register must establish that it was entitled to be the holder of those ANL rights. 97 In such an event the Mongoose rights offer requires to be construed in a manner which recognises that: · there would be no record of the name of the accepting ANL rights holder on the ANL rights sub-register; · it would be impossible for ASX Perpetual to have any means of verifying the entitlement of that rights holder to accept the Mongoose rights offer; and · that rights holder would not have or be able to deliver a rights entitlement and acceptance form in respect of those rights to ASX Perpetual. 98 These contingencies were plainly anticipated by Mongoose in its offer. Thus, clause 8.4(a) stipulates the consequence of an ANL rights holder "completing, signing and returning" the rights acceptance form to Mongoose (i.e. delivering it to ASX Perpetual) is that the rights holder "will have accepted the offer" [clause 8.4(a)(i)]. 99 The Mongoose rights offer then provides for correction and completion of incorrect and uncompleted rights acceptance forms and for subsequent delivery to Mongoose of any required documents outstanding [clauses 8.4(a)(ii), 8.4(d), 8.5(c)]. 100 There are two possible constructions of clause 8.3(d): · an ANL rights holder who is entitled to be registered but is not registered at the time he accepts the Mongoose rights offer (and who therefore does not have a rights entitlement and acceptance form) can accept the offer by completing signing and returning the rights acceptance form so that clause 8.4(a) of the Mongoose rights offer will apply to his acceptance; or · an ANL rights holder who is entitled to be registered but is not registered at the time he purports to accept the Mongoose rights offer cannot accept the offer because he does not have a rights entitlement and acceptance form and therefore acts in vain by attempting to accept the offer. 101 The second alternative construction of clause 8.3(d) is plainly inconsistent with the provisions of clause 8.4(a) and clause 8.4(d) so far as they apply to unregistered ANL rights holders. Hence, the second alternative construction of clause 8.3(d) cannot be correct. 102 For this reason the correct construction of clause 8.3(d) is to read the phrase "your Prospectus Entitlement and Acceptance Form" as applicable only in those cases to which the clause applies where an ANL rights holder has a rights entitlement and acceptance form, i.e. a rights holder whose rights are already registered "in an issuer sponsored holding". 103 This construction: · gives a sensible meaning to the clause; · gives substantive meaning to every word in the clause; · accords with the express provisions of the Mongoose rights offer in that if ANL rights holders who were entitled to be registered but were not in fact registered (and who therefore had no rights entitlement and acceptance form in relation to their rights) were ineligible to accept the Mongoose rights offer, such ineligibility would be stated in clear terms in the offer - they would not be classified together with ANL rights holders registered in issuer sponsored holdings who clearly were able to accept the offer in a provision dealing with how the rights holders in those categories could accept the Mongoose rights offer. (cf the express and explicit exclusion of certain ANL rights holders in clause 8.3(e), foreshadowed at clause 1.4(e)). Hide & Skin Trading v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313 - 31, per Kirby P; and

(d) was accepted by the defendant's counsel during argument [transcript 151]. 104 The principle of contra proferentem construction of ambiguous documents also supports the above analysis as to the correct construction of clause 8.3(d). The "[h]ow to accept the offer" reverse side of the rights acceptance form 105 Precisely the same approach requires to be taken to the second sentence under the heading "Issuer Sponsored Holdings" on the "How to accept the offer" reverse side of the rights acceptance form, which it will be recalled reads:

"If your ANL Rights are in an Issuer Sponsored Holding, or if you are not yet registered as the holder of your ANL Rights, then to accept the Offer, you must fill out this Acceptance Form overleaf and return it to the one of the addresses shown below. You must return your Entitlement and Acceptance Form from the ANL Rights Issue Prospectus with this Acceptance Form ." [emphasis added] 106 This sentence was applicable only in those cases where the rights holder had a rights entitlement and acceptance form: vide a rights holder whose rights are already registered "in an issuer sponsored holding". Requirement to complete the rights acceptance form 107 However, clearly the first sentence was of general application. 108 The "[a]dditional [n]otes" section of the "[h]ow to accept the offer" reverse page required a person seeking to accept the Mongoose rights offer who had recently bought or sold ANL rights [so that his holding differed from that shown on the front of the form] to do the following: · to alter the number of ANL rights shown as such person's registered holding appearing on the front of the form, to the number of ANL rights which that person then held (including rights in respect of which that person was entitled to become registered as holder); · to initial the alteration; and · to indicate the name of the stockbroker who had acted for such person. 109 On the evidence it is plain that the name of the stockbroker who had so acted was not written onto the front of the second rights acceptance form. 110 The "[h]ow to accept the offer" page also stated:

"Information you supply on this Acceptance Form will be used by Mongoose and ASX Perpetual… for the primary purpose of processing your acceptance of the Offer and to provide you with the consideration payable under the Offer... If you do not supply this information, your acceptance may not be processed and you may not receive the consideration payable". [emphasis added] Diametrically opposed approaches 111 The question which arises is one of diametrically opposed approaches: · the basal proposition for which the plaintiff contends is that in the circumstances its action in returning the second rights acceptance form constituted an acceptance of the Mongoose rights offer; · the basal proposition for which the defendant contends is that its receipt of the second rights acceptance form did not constitute any such acceptance of its offer. 112 There is of course a necessity to have a correspondence of offer and acceptance. The defendant lights upon the following matters: · the second rights acceptance form was filled in by Mr Grant stating an SRN which was not that allocated by the ANL share registry to the holding of ANL rights purchased. [The proposition is that either no SRN had been generated at the precise time that the plaintiff faxed the form, or if the SRN had been generated by that time, it was not the SRN which Mr Grant wrote on the form]

· nor did Mr Grant write the name of the stockbroker on the form, as required by additional note 3. 113 Accordingly, the defendant asserts that: · "the acceptance form purported to accept in respect of rights which were not the parcel of 55,000,000 rights; · the acceptance, on the objective interpretation of the form, purported to be for the previous holding of rights, which had already been accepted;

· there was thus no "correspondence" of the acceptance with the offer in the sense required by law." 114 The defendant put these submissions in the suggested following context: · "There were at least two ways that the plaintiff could have avoided the situation of attempting to accept not knowing the registration number of the rights which it had purchased, and at least two ways that it could have accepted once it found itself in that situation. · The situation could have been avoided, firstly by having the rights placed on the CHESS subregistry (which would have required a sponsorship agreement to have been entered into between the plaintiff and SSB). This would have been the safest way, as a HIN would have been generated immediately, and acceptance of the Mongoose offer would have taken place through CHESS. Alternatively, the broker could have taken steps to ensure that the rights were placed by ANL's share registry on the SRN already allocated. The broker ought to have advised the plaintiff on these options, and on the risk of not taking them. · Even so, given the situation in which the plaintiff found itself, it could have effected a valid acceptance in one of two ways: firstly, and preferably, it should have been given an Appendix E by its broker, and sent it with the acceptance form, as required by the participant bulletin. Alternatively, if it had simply left the SRN field blank and inserted the name of SSB as stockbroker, it would have complied with the instructions of the form and the acceptance would have been effective. · The evidence is that Appendix E is the standard method used for exercising rights purchased on-market during the exercise period. From this, it may be inferred, it is regarded as evidence that the person named therein has the entitlement to the rights, and that is why the participant bulletin requires it to accompany the acceptance form. In this regard the Appendix E has information not contained in a buy contract note, in particular the CHESS Transaction IDs, which would permit validation by those with access to CHESS. If an Appendix E had been sent with a rights acceptance form, then, as the bulletin stated, the communication would be treated by Mongoose's agent as a valid acceptance. · The one thing which the plaintiff could not do to effect a valid acceptance, in the defendant's submission, was the precise thing which it did, namely insert the identifying number for a parcel of rights for which it had already accepted. On the objective interpretation required by contract law, the plaintiff was attempting to accept an offer which was no longer open because it had already been accepted. · The objective interpretation requires an interpretation from the standpoint of a reasonable person in the position of the offeror, or as in the case, in the position of an agent appointed by the offeror to receive acceptances. That agent was a share registry with a number of staff which received about 800 acceptances. A person wishing to accept was required to comply with rules which were necessary to allow the registry staff to "process" forms - meaning, to make a decision in each case as to whether the acceptance was valid, or defective in such a way as to be returned to the rightsholder to be fixed, or invalid. It appears that there were instances of rightsholders sending in duplicate acceptance forms - presumably to make sure that their form had reached its destination. ASX Perpetual adopted a practice whereby if a form purported to accept for holding under an SRN which had already been accepted, it was treated as a duplicate. That was a reasonable practice to adopt in the circumstances. · The plaintiff made a number of mistakes throughout. Mr Grant failed to include the ANL entitlement form with the first rights acceptance form which he posted on 10 February, which was a breach of acceptance instructions. He included a copy of that ANL entitlement form for the previous holding with his fax of 11 February enclosing the buy contract note for the 55,000,000 rights, (TB pages 335-337), implying that those two documents related to the same parcel, which they did not. Ms Ooi's evidence is that she asked him to fax an Appendix E form, which he did not do. He wrote an SRN on the second acceptance form which related to the rights for which he had accepted the previous day by posting the first acceptance form. · In the defendant's submission there was no contract formed in these circumstances. " 115 Clearly enough it is true to say that what was returned by Redowood by way of its second rights acceptance form, although signed, did not conform with the "[h]ow to accept the offer" instructions [received with the first rights acceptance form] for two reasons: · the name of the stockbroker who had acted for Redowood upon its recent purchase of the 55,000,000 rights parcel was not included-an omission; and · the form as completed gave an incorrect SRN number - an error. 116 It cannot be suggested that the failure to forward another copy of the "[h]ow to accept the offer" reverse side with the facsimile second rights acceptance form is of any materiality. 117 My own reading of clause 8.4 (a) (i) and (ii) of the Mongoose rights offer document is that it deals with two different situations as follows: Situation 1 The circumstance where the offeree has completed (ie completed correctly, without omission and without error) the rights acceptance form and has signed and returned it to the offeror. In this situation the offeree has accepted the offer in respect of its ANL rights; Situation 2 The circumstance where the offeree has signed and returned the rights acceptance form which contains errors and/or omissions. In this situation the offeree has not accepted the offer in respect of its ANL rights. 118 A further question is as to whether in situation 2, the offeree can be said to have become a party to a separate contract with the offeror imposing any, and if so what form of, obligations upon the offeror, which obligations flow [whether by a construction or implied term route] from the offeree having, in these particular circumstances, authorised the offeror to correct errors in, and to complete omissions from, the rights acceptance form necessary to make it an effective acceptance of the offer or to enable the registration of the transfer of the rights to the offeror. The field of discourse is akin to that which has given rise to the principle that, in a competitive tender context, the person calling for tenders may be contractually obliged to follow the rules set out in the call for tenders. In short, this is where the tender process itself can constitute a discrete contract even if there is no promise to accept the most favourable tender: cf Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151; Carter on Contract [03-080]. 119 There are two possible answers to the question posed in the previous paragraph: · Answer 1 Such a contract has been entered into: - it was entered into because the proper construction of the Mongoose rights offer [clause 8.4 (a) (i) and (ii)] is that, if Redowood delivered to Mongoose a rights acceptance form which required correction of errors in, and/or completion of omissions from, the form [which correction/completion was necessary to make it an effective acceptance of the offer or to enable the registration of the transfer of ANL rights to the offeror] Mongoose would take such steps as were reasonably able to be taken by it to correct such errors and to complete such omissions; and - that offer was accepted, and the consideration supplied, by Redowood when it submitted the second rights acceptance form requiring correction of errors and/or completion of omissions; or · Answer 2 No such contract has been entered into - no such contract was entered into because all that Redowood has done is to authorise the correction of errors and/or the completion of omissions. 120 The question is one of real difficulty. However, the matter albeit addressed in part [defendants submissions paragraphs 3 and 4] was not pleaded in terms of any such separate contract. Any such pleading would have required to plead causation and to claim damages for breach. Questions of implication would have had to be the subject of detailed submissions. Notwithstanding these matters, it has to be said that a conclusion may well have been reached in terms of answer 1. Certainly it is the case that it is plain on the evidence that had Mongoose taken the steps which were reasonably able to be taken by it to correct the errors in, and to complete the omissions from, the second rights acceptance form, by reference to and clearly aided by the contract buy note, it would have been in a position to process that form. It would clearly, by reference to the copy ANL register up-to-date as at 12 February 2003, received by it on 13 February 2003, have been able to authenticate the subject rights holding. 121 The offer and acceptance case fails because what was returned by Redowood by way of its second rights acceptance form simply did not conform with the Mongoose rights offer document. It failed to furnish the name of the stockbroker who had acted for Redowood upon its recent purchase. Further, it gave an incorrect SRN number. The materiality of the proper supply of the necessary information had been pointed up in the "[h]ow to accept the offer" instructions:

"Information you supply on this Acceptance Form will be used by Mongoose and ASX Perpetual… for the primary purpose of processing your acceptance of the Offer and to provide you with the consideration payable under the Offer… If you do not supply this information, your acceptance may not be processed and you may not receive the consideration payable". [emphasis added] 122 Subject to the estoppel issue which is examined below, it follows that in terms of the pleaded situation 2 case, the finding [applying strict offer and acceptance principles] is that there was no contract entered into upon the receipt by Mongoose of the second rights acceptance form. The case in estoppel Estoppel - the principles 123 It seems unnecessary to launch into a detailed examination of the principles which underpin and inform the doctrine of equitable estoppel. Suffice it to say that the following propositions are clearly established: · prevention of unconscionable conduct has been identified as the driving force behind equitable estoppel: The Commonwealth v Verwayen (1990) 170 CLR 394 at 407 per Mason CJ, citing Waltons Stores (Interstate) v Maher (1988) 164 CLR 387 at 404, 419, 450; · "… equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt [v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 675]…. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption." [ Waltons Stores at 404 per Mason CJ, Wilson J]; · "… a court of common law or equity may do what is required, but no more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness." [ Verwayen at 413 per Mason CJ]; · "A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid" [ Verwayen at 413 per Mason CJ]; · one sub-species of what is now regarded as the overarching doctrine of estoppel is sometimes referred to as estoppel by convention, which requires an assumption of fact or law adopted by the parties as the conventional basis of their relationship. 124 The case in estoppel is put in three segments as follows:

Proposition 1 In the Mongoose rights offer document Mongoose nominated specific telephone numbers as "Mongoose offer Information lines" for persons enquiring about the rights offer to use.

Proposition 2 On 10 February 2003, on behalf of Redowood, Bruce Grant telephoned the number specified for calls within Australia. Proposition 3 The persons who responded to Mr Grant's telephone enquiry to the Mongoose offer Information line were clothed by Mongoose with ostensible authority to give answers to questions in connection with the procedures for acceptance of the Mongoose rights offer which would be binding on Mongoose if the circumstances were in doubt and the answers given were prima facie reasonable. [This conclusion is said to arise by operation of law]. Proposition 4 As a result of Mr Grant's telephone enquiry to the Mongoose offer Information line, Mr Grant came into telephone communication and then communication by means of facsimile transmissions with Ms Nicola Ooi of ASX Perpetual. Proposition 5 Mr Grant's enquiries of and dealings with Ms Ooi of ASX Perpetual were in connection with the procedure to be followed by Redowood to accept the Mongoose rights offer in respect of the 55,000,000 ANL rights and the answers given to his enquiries by Ms Ooi were prima facie reasonable and such as to entitle Mr Grant to act upon them. Particulars Ms Ooi told Mr Grant that for Redowood to accept the Mongoose rights offer in respect of the 55,000,000 ANL rights, Mr Grant should forward to ASX Perpetual before expiry of the offer period: (a) a copy of the contract note for the 55,000,000 rights (b) a rights acceptance form duly completed in respect of those rights and, by implication, no other document.

Proposition 6 The effect of the aforesaid advice and information given by Ms Ooi to Mr Grant was that, if Mr Grant acted in accordance with that advice and information, Mongoose would conduct its dealings with Redowood on the conventional basis that Redowood had done all it had to do to accept the Mongoose rights offer in respect of the 55,000,000 ANL rights. [This conclusion is said to arise by operation of law.] Segment 2

Proposition 7 Alternatively, Mr Grant relied upon the advice and information given to him by Ms Ooi to act as he did and by so doing he acted to the detriment of Redowood in that Mr Grant was led to believe that there was no other requirement for Redowood to accept the Mongoose rights offer in respect of the 55,000,000 ANL rights.

Proposition 8 By reason of these facts and matters Mongoose is now estopped from denying that the actions taken by Mr Grant were effectual to constitute a valid acceptance by Redowood of the Mongoose rights offer in respect of the 55,000,000 ANL rights.

Segment 3 Proposition 9 If and so far as it was otherwise a requirement for Redowood validly to accept the Mongoose rights offer in respect of the 55,000,000 ANL rights that Redowood deliver to ASX Perpetual an Appendix E form applicable to such 55,000,000 ANL rights such requirement was waived by Mongoose, or alternatively, Mongoose acquiesced in the failure of Redowood to fulfil such a requirement, by accepting in lieu of such an Appendix E form a copy of the Salomon Smith Barney buy contract note dated 11 February 2003. Particulars Ms Ooi accepted the copy of the buy contract note as a sufficient substitute for the Appendix E form by causing ASX Perpetual to send to Mr Grant a rights acceptance form in respect of 55,000,000 ANL rights following her receipt of such copy on 11 February 2003.

Dealing with segments 1 and 2. 125 Proposition 1 is clearly proven. [See PX p. 207]. The telephone numbers were 1300 650 230 for calls within Australia and 612 9240 7542 for calls from overseas. 126 Proposition 2 is clearly proven. 127 The ostensible authority the subject of proposition 3 is clearly made good. 128 Proposition 4 is clearly proven: cf Mr Grant's witness statement, paragraphs 19, 20, 21, 22, 23 and 26. 129 Propositions 5, 6 and 7 are dealt with below as they require the Court to treat with the evidence in some little detail. 130 As to segment 3, the Court's holding is that there was never imposed by the Mongoose rights offer document or otherwise any requirement for Redowood to deliver an Appendix E form to ASX Perpetual in order to validly accept the Mongoose rights offer in respect of the 55,000,000 ANL rights. Findings as to the communications between Mr Grant and Ms Ooi 131 The position with respect to the telephone conversation of the morning of 11 February 2003 between Mr Grant and Ms Ooi is as follows:

Mr Grant gave evidence [statement, paragraph 20] that the conversation was to the following effect:

Mr Grant: "Yesterday morning I mailed to ASX an amended Acceptance Form in relation to the Mongoose Takeover Offer for 65,087,000 Rights. However, I need to complete another Acceptance Form for an additional 55,000,000 ANL Rights, which our company, Redowood Pty Limited, has purchased on the market."

Ms Ooi: "I am aware of the Acceptance Form that you sent to us yesterday. However you will need to support your claim by producing a Broker's Contract Note, showing your purchase of the 55,000,000 ANL Rights. Please fax that to me on my fax number which is 02 8280 7473 and when I receive it I will forward to you a new Acceptance form, which will reflect the 55,000,000 ANL Rights."

Ms Ooi gave evidence [statement, paragraphs 8 - 11] as follows:

"I do not recall Mr Grant saying to me the words, or words to the effect of the words, which he alleges in paragraph 20 of his statement to have to said to me.

I recall that in that telephone conversation Mr Grant said to me words to the following effect: "I have purchased an additional 55 million ANL rights on market, and want to know how to accept them." I do not recall saying, or saying words to the effect of: " I am aware of the Acceptance Form that you sent to us yesterday ."

I deny saying, or saying words to the effect of: " However, you will need to support your claim by producing a Broker's Contract Note, showing your purchase of 55,000,000 ANL Rights."

I recall saying to Mr Grant, or saying words to the effect of: "In order to accept the Mongoose rights offer for rights purchased on market, you need to fax to ASX Perpetual your Appendix E form in respect of that holding of rights, and we will then fax you a rights acceptance form. You will also need to send your originals to us." On the morning of 11 February 2003 prior to any telephone conversation with Bruce Grant, Peter Pezzutti provided me with an ASX participant Bulletin [PX 366]. I recall having the ASX participant Bulletin in front of me when I spoke with Mr Grant, and that my instruction to Mr Grant was based on what was outlined in the ASX participant Bulletin. Specifically, I note that the ASX participant Bulletin says, in part: "For Issuer sponsored investors who elect to take up either Alternative 1 or Alternative 2, the broker MUST fax to ASX Perpetual Registrars Limited the signed Mongoose Rights Offer Acceptance Form plus a copy of the Rights Issue Prospectus Entitlement and Acceptance Form or, if the rights have been purchased on-market, a copy of an Appendix E (without the number of acceptance rights filled in)."

I accept that I said words, or words to the effect of, the words attributed to me by Mr Grant in the balance of paragraph 20 of his statement." 132 Each of those witnesses was closely cross-examined on that conversation. In my view, the evidence given by Mr Grant can be accepted as reliable. He was not shaken on his recollection. The matter was of clear significance to him at the time. Ms Ooi, on the other hand, took no note of the conversation and had a number of significant responsibilities at the time. On her evidence the conversation took approximately one minute. And there is no doubt that she had real difficulties in recollecting with precision what had occurred in relation to the movement of the relevant documents. Very importantly also is the undoubted fact that notwithstanding her evidence as to having said that in order to accept the Mongoose rights offer Mr Grant needed to fax in an Appendix E form and "we will then fax you a rights acceptance form" this is not at all what happened. Mr Grant sent in the buy contract note and no Appendix E form and yet he received a rights acceptance form. Her recollection of having based her instruction to Mr Grant on the ASX Perpetual bulletin requires to be tested against her general uncertainties and is rejected as unreliable. 133 An examination of the cross-examination, particularly of Ms Ooi, points up a number of significant circumstances as well as concessions. 134 Ms Ooi's evidence included the following:

"Q. I thought you said, correct me if I am wrong, in your statement that you told Mr Grant that in order to accept the Mongoose rights offer he needed to fax his appendix E form in respect of that holding and you would then fax him a rights acceptance form. That is what you have said in your statement, isn't it? A. That's correct, yes.

Q. But am I correct in my understanding that he didn't send you an appendix E form and yet still you received what you had said he would get after he sent in the appendix E form, namely, a rights acceptance form? A. Yes.

Q. And you, as I suggested to you, did that because you recognised that the information, documentation Mr Grant sent you gave you everything that the appendix E form would give you? A. Yes." [Transcript 120] 135 Ms Ooi accepted that Mr Grant had sent the facsimile which she [transcript 98.45] had received attaching a copy of the buy contract note. She accepted that she then knew that Redowood had purchased a further 55,000,000 ANL rights which were different from and additional to the 84,000,000 ANL rights identified on the ANL rights entitlement and acceptance form, a copy of which Mr Grant had included with his facsimile [transcript 98]. She accepted that there was no question in her mind but that the 55,000,000 rights were over and above the 65,087,000 rights that Redowood already accepted by way of the Mongoose rights offer [transcript 98]. She initially gave evidence that she had on receiving the facsimile transmission sent the documents to the Registry Management Group [transcript 98]. Later she altered this evidence saying that she had not sent those documents to the Registry Management Group yet because there was no rights acceptance form yet received [transcript 99]. 136 Even later her evidence became more confusing and included the following:

"Q. You knew on 11 February that Mr Grant or Redowood had purchased these additional 55 million rights and wanted to accept the Mongoose rights offer in respect of them, didn't you? A. Yes.

Q. And that was the purpose in sending out the second rights acceptance form for completion, wasn't it? A. Yes.

Q. So that when the second rights acceptance form came back from Mr Grant it needed to be connected in some way to the buy contract document, didn't it? A. I believe that it was sent straight to the processing team.

Q. The processing team is your Registry Management Group, isn't it? A. Yes.

Q. You had already sent to the Registry Management Group the buy contract note, hadn't you? A. No, I have to correct myself .

Q. What is wrong? A. No, we would not have sent the buy contract note to processing at that stage .

Q. Did you still have it ? A. Yes.

Q. Did you know that the second rights acceptance form in respect of the 55 million rights had been received at the time that it was received by ASX Perpetual?… A. No, I don't recall receiving the second acceptance form.

Q. When you say you don't recall receiving it, are you saying that you have no recollection of ever seeing it at any stage prior to 13 February 2003? A. Yes.

Q. But you were still holding in your possession the buy contract note. Is that right ? A. Yes .

Q. Did you at any stage ever send the buy contract note to your Registry Management Group? A. I don't recall actually sending it , but all the forms were up in RMG at the close of business.

Q. Now when you say "all the forms", the buy contract note was one piece of paper out of three, wasn't it, that constituted the fax from Mr Grant? A. Yes.

Q. Would "all the forms" include all three of those pieces of paper? A. No, the fax header would probably have been taken off.

Q. Well, that would leave the buy contract note and the renounceable rights issue entitlement form. What would have happened to them? A. At the end of the project all the pieces of paper would have been matched up together because we had to match up appendix Es with the rights acceptance forms.

Q. But a buy contract note is not an appendix E form, is it? A. No.

Q. So what happened to that?… A. I'm not sure where it was at that time.

Q. When you said "at the end of the project", I think you said, forms were collected, did you mean after the offer period had expired on whatever day it was, 12 or 13 February? A. Yes.

Q. Now just to be quite clear about this, you had received Mr Grant's fax transmission with these three pieces of paper, your annexure B, on 11 February. Is that right? A. Yes.

Q. You say that it was sent to RMG. Does that mean it was sent on 11 February? A. Yes.

Q. When it was sent, what was the "it"? A. [Buy] contract and the entitlement form.

Q. But not the fax cover sheet itself? A. Well, I don't recall that it was connected or not, but it is general practice just to take off the fax cover sheet and give processing just the documents. Q. So are you now saying that on 11 February at least the buy contract and the third page, the renounceable rights issue, were sent to RMG? A. Yes.

Q. Because I thought you said a few minutes ago that you weren't certain of what happened to the buy contract note, but maybe my recollection of your evidence is faulty. A. I don't remember sending it , but at some stage they would have all been put together.

Q. When you say "at some stage they would have all been put together", first, what would have been put together with what? A. Any documents sent with a name on it would have been put together. Generally we were looking for a rights acceptance form with an entitlement form.

Q. But are you saying that, as you understood it, anything with the name Redowood on it would be put together? A. It should have been. [Transcript 101-103]

Q. But you knew, didn't you, on 11 February from the buy contract note that the settlement date for the purchase of the 55 million rights was 11 February, didn't you? A. Yes.

Q. And you knew on 11 February that therefore there could not be the rights entitlement form in the name of Redowood for those 55 million rights, could there? A. Yes.

Q. So that the only document that would be available to show an entitlement to the rights was the buy contract note, is that so? A. No. There is an appendix E that shows entitlement to the rights.

Q. But the appendix E form is just one other piece of paper that emanates from a broker, isn't it? A. Yes.

Q. It is not in itself some kind of proof of title or anything? A. I believe it is a proof of title - oh a proof of entitlement of rights.

Q. It doesn't in a sense carry any more authority than the broker's contract note, does it? A. Buy contract note is proof of purchase of rights, as I understand it, and appendix E is proof of entitlement to rights.

Q. What is the difference? A. I am not sure what the difference is.

Q. You can't think of a difference, can you? A. No." [Transcript 105-106] [emphasis added] 137 In any event, it is clear from Ms Ooi's evidence that although she knew perfectly well that the buy contract note and the rights entitlement and acceptance form attached to the facsimile transmission related to two quite distinct parcels of rights, she had not told anyone at the Registry Management Group that this was the case [transcript 99.2]. 138 Apparently what she did was to send an e-mail to Ms Lucy Penisini asking her to send a replacement rights acceptance form for the 55,000,000 ANL rights to Redowood [care of] Mr Grant and asking her to leave the SRN blank. The facsimile which went out was sent by ASX Perpetual and mistakenly enclosed a rights acceptance form addressed to Mr Bruce Grant. 139 Ms Ooi gave evidence that she did not see the facsimile which Mr Grant had sent in later on 11 February 2003 enclosing the signed rights acceptance form together with the rights entitlement and acceptance form [and of course including the now incorrect SRN]. Yet that facsimile had been clearly addressed to her. And there was no challenge to Mr Grant's evidence [statement, paragraph 26] that he had also sent both forms by express post addressed to Ms Ooi on the same day! 140 Ms Ooi also gave the following significant evidence:

"Q. In the press release, if that is what it was, annexure A to your statement this morning, the last paragraph named you specifically as the person to whom forms should be faxed? A. Yes.

Q. Why was that? A. So we would know which forms were for the Mongoose offer when they were sent to Corporate Actions.

Q. Does that mean that you were primarily responsible for receiving documents transmitted by fax to ASX Perpetual relating to the Mongoose offer and ensuring that they were correctly dealt with on receipt ? A. Yes.

Q. In the case of the Redowood documents received from Mr Grant, correctly dealt with would include would it not linking the buy contract note with the rights acceptance form for the 55 million rights to which the buy contract note applied ? A. Yes …" [Transcript 114 - 115] [emphasis added] 141 Ms Ooi did know whether the documents were linked together prior to midnight on 13 February 2003. [Transcript 115] 142 Ms Ooi's later evidence included:

"Q. Mr Grant sent to you, in relation to the 55 million rights, initially only the buy contract note, didn't he? A. He also sent an entitlement form.

Q. But not for the 55 million rights? A. Correct.

Q. So for the 55 million rights all he had and all he sent to you was the buy contract note? A. Yes.

Q. As a result of that, you directed Lucy to send him a rights acceptance form? A. Yes.

Q. It is true, isn't it, that you told Lucy to send Mr Grant a rights acceptance form for the 55 million rights because you were satisfied that on the face of it that was the proper thing to do? A. Yes.

Q. And it was the proper thing to do because Mr Grant had produced to you some prima facie plausible evidence that Redowood was able to accept the Mongoose offer for these additional 55 million rights, hadn't he? A. Prima facie I believe that he was entitled to the rights because he had purchased them on market.

Q. And was in a position to accept the Mongoose offer in respect of them? A. Yes.

Q. And the only thing that an appendix E form would do would be to tell you exactly the same thing, wouldn't it? A. An appendix E would confirm entitlement of rights.

Q. In exactly the same way that you accepted that the buy contract note did here? A. Yes." [Transcript 119-120] [emphasis added] 143 As already stated, in my view the evidence given by Ms Ooi in terms of having said that, in order to accept the Mongoose rights offer for rights purchased on market, it was necessary for Mr Grant to fax the Appendix E form cannot be accepted as reliable. No explanation whatever was given by Ms Ooi as to how or why she had come to give the instruction to send out the replacement rights acceptance form for the 55,000,000 ANL rights when she had asked for, but had not received, the Appendix E form. While she may now believe that the conversation was in the form set out in her statement, on the balance of probabilities, and bearing in mind the difficulty she had with her otherwise recollection of events, her version cannot be accepted as the more reliable evidence of the conversation with Mr Grant. 144 The picture which emerges from the evidence is that, quite likely, Ms Ooi held on to the buy contract note facsimile page [or it was somehow somewhere misplaced] and the failure of ASX Perpetual to process the second rights acceptance form was due to its internal failure to connect up the buy contract note with the second rights acceptance form. Clearly, as it seems to me, the effect of the evidence given by Ms Ooi permits the inference that if she had retained control of all the relevant pieces of paper, the second rights acceptance form would have been processed. How it came about that she had not sighted the facsimile copy or hard copy of the incoming signed second rights acceptance form was not satisfactorily explained. What had happened to the copy buy contract note was not satisfactorily explained. Why the second rights acceptance form had been sent out in the teeth of the alleged pre-requirement for the Appendix E form was not satisfactorily explained. Ms Ooi had been put forward as the relevant contact. Had she passed the information she had received on to those processing the applications, the second rights acceptance form [particularly examined against the updated copy register received by ASX Perpetual on 13 February 2003], would clearly have been processed. 145 The matter stands on the need for unequivocal conduct in order to sustain a claim for estoppel. Whilst I readily accept that the relevant conversation with Mr Grant did treat with how Redowood would have to support its claim, and it was said that in order to do so it would have to produce a brokers contract note showing the purchase which, when received, would result in the forwarding to it of a new rights acceptance form to reflect its new rights, I do not see that this unequivocally went outside the parameter of what was necessary to be done to receive the new rights acceptance form. I do not see the communication as unequivocally indicating that, in the case of Redowood, what had been said to it in answer to its query displaced and replaced its anterior otherwise obligations [of the type imposed upon all putative offerees], being the obligations to strictly comply with the terms of the Mongoose rights offer document vis a vis stipulating mode of acceptance. 146 For these reasons the estoppel case requires to be dismissed.

Short minutes of order 147 The parties are to bring in short minutes of order. Costs may be argued. At the same time the Court will make orders in relation to the cross-claim against ASX Perpetual, the hearing of which was deferred by the separate determination order.

I certify that paragraphs 1 - 147 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 3 March 2004

              Susan Piggott
              Associate
      3 March 2004

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