Ronay Investments Pty Ltd v Pinnacle V R B Pty Ltd [2000] VSC 333

5. The plaintiffs in this proceeding in effect claim that the terms of acceptance of offer in the Prospectus were complied with and that acceptances were received within the meaning of the Prospectus by the nominated time and date (5 p.m. 6th December 1999). They also contend that if the receipt by the defendant or its agent Computershare Registry was delayed beyond the specified time and date that that occurred because of the un-notified position by the defendant or its agent of a method of collection of mailed acceptances which caused the delay in the known receipt of acceptances by the defendant or its agent. This was also used to found an argument that the Prospectus contained an implied term that accepting shareholders and option holders could not be prejudiced in their acceptance by delay caused by such a change in the normal mail collection receipt procedures by the defendant or its agents. The plaintiff also contended that in any event the so-called postal acceptance rule applied in this case with the consequence that the proved posting of the acceptances on behalf of each plaintiff on 3rd December by Express Post mail constituted an acceptance of the defendant's offer within the terms of the Prospectus.

8. Upon the plaintiffs discovering that the cheques accompanying the acceptances had not been debited, they initiated inquiries through the agent of the plaintiff companies Mr David Pethard who, upon discovering the alleged late receipt, called upon the defendant to recognize the plaintiffs' acceptance of the offer, and to issue shares and options. The defendant refused to do this in circumstances which I will address in my summary of the evidence in my findings.

11. Finally, the plaintiffs' case was that the defendant, by refusing to allot to each of the plaintiffs the shares and options applied for pursuant to the issue, even if the applications were late, acted oppressively and in an unfairly prejudicial and discriminatory manner against the plaintiffs as members of the defendant company. This was, it was said, due to personal animosity and bias against the companies associated with Pethard. Paragraph 40 of the plaintiffs' amended statement of claim asserts a myriad of facts, many of which were not in dispute or were established by the evidence, which included reference to what became a key part of the evidence before me as to the arrangements made between the defendant's agent Computershare Registry and Australia Post about the retention and re-direction of mail received by Australia Post in the Central Business District. The plaintiffs claimed that Computershare Registry entered into an agreement with Australia Post not to deliver its mail in the ordinary way but to retain it at the General Post Office in Elizabeth Street Post Office to be picked up three times daily. Ultimately, the evidence which was adduced more pointedly addressed a further question, namely whether or not the rejection of the applications of the plaintiffs and the refusal to allot the shares and options, whilst knowing that they had been posted on Friday 3rd, was done with a want of good faith, the refusal being driven by the defendants' desire to limit the potency of the Pethard interests, Mr Pethard being regarded as a non-compliant nuisance to Pinnacle's Board's activities. The principal argument on behalf of the defendant was simple, namely that the proper construction of the terms of the offer and the acceptance instructions, involved a necessary receipt by Computershare no later than 5 p.m. on 6th December of the acceptance form and the accompanying cheque. The balance of the defence was concerned with denying as a matter of fact and law the arguments advanced.

14. The plaintiffs obtained interim relief and undertakings restraining the defendants from otherwise allotting or dealing with the shares and options claimed by the plaintiffs to be entitled to be allotted to them.

17. I proceed to address the evidence and articulate my findings of fact. Most of the evidence was by way of affidavit, but four deponents gave oral evidence, namely Mr Pethard, Mr Baker from Australia Post, a former Pinnacle director Mr Revelins and an executive from Computershare Registry Mr Robinson. Pinnacle is a listed company specializing in the development and commercialisation of Vanadium battery technology. Pinnacle had announced to the Australian Stock Exchange on 6th November 1999, the issue to which I have already referred.

20. The Prospectus provided a corporate directory of Pinnacle. The directors were Bryan John Frost, Malcolm Thomas Jacques, Richard Revelins, John Walter Sheard and Richard Sharp. The secretary was the director Richard Revelins. The share registry of Pinnacle was stated to be at Computershare Registry Services Pty. Ltd., Level 12, 565 Bourke Street, Melbourne. This issue was underwritten by William Noall Limited. Of the important dates specified one was "Acceptances close (unless otherwise extended) 6th December 1999." The Prospectus did not state any criteria or conditions of possible extension of the date of the close of acceptances. However, it was clear enough from the evidence of both Mr Pethard and Mr Revelins that it is a not infrequent occurrence that acceptances arriving after the close of acceptances are accepted by companies. Mr Pethard stated that in his belief and experience companies did this frequently because they wanted your money and were prepared to overlook lateness to get it. Mr Revelins agreed that it occurred from time to time if the circumstances justified it. Everyone agreed that the date did not apply to institutional clients or other brokers. In this case, it appeared on the evidence that there was at least an additional three days for those fortunate enough to be the beneficiary of this privilege. It did not, apparently, include Mr Pethard's companies nor, (depending on what part of the evidence was accepted) up to 185 other "late acceptors". I will have something to say about that aspect later. The Lodgement Instructions were in the following form:

"1. Acceptance of your entitlement in full or in part: If you are accepting your entitlement in full or in part please: Complete the form overleaf. Forward it together with your cheque for the application monies at 35 cents per share subscribed for so as to reach:

Computershare Registry Services Pty Limited Level 12, 565 Bourke Street Melbourne Victoria 3000

by no later than 5:00pm Melbourne time on 6 December 1999.

* Only cheques or bank drafts in Australian dollars and drawn on a bank or financial institution in Australia will be accepted. YOUR CHEQUE MUST BE MADE PAYABLE TO PINNACLE VRB LIMITED AND CROSSED "NOT NEGOTIABLE". Cash will not be accepted.

* Receipts for payment will not be forwarded. ...".

28. At the Annual General Meeting of Pinnacle on 30 November 1999, Pethard had raised a matter concerning the entering into of a licensing arrangement or agreement between Pinnacle and a company called Greenchips PLC. Pethard said that he had raised this because if the agreement went ahead it would be of material value to Pinnacle. The shareholders had not been informed in advance of the meeting that the Chairman Frost and another director intended to resign on 30 November. Pethard claimed at the meeting this was sufficient reason to delay the closure of the prospectus by seven to fourteen days. There were some disputes in the evidence before me between Pethard and Revelins as to what occurred. It is clear enough that the managing director Jacques made a statement on that day concerning the announcement by Greenchips of an agreement with Pinnacle to licence Pinnacle's technology in the United Kingdom but as Pinnacle had not entered into any formal agreement with Greenchips there were no enforceable conditions. There were other matters in this statement which are not necessary for me to reproduce. The contention by Pethard was that the matter of the Greenchips arrangement was of sufficient importance for the proposed issue to be postponed and that it was never said that it would not be. Revelins' evidence was that it was stated at the meeting that the directors did not think the issue was sufficiently significant for it to be postponed. I have not formed any concluded opinion as to what was said but I am satisfied that Mr Pethard considered that the matter had not been finalised and that a capacity for some developments that might affect the issue still existed. I accept Mr Pethard's evidence that the reason he took no step towards acceptance until the afternoon of Friday 3 December was to wait as long as was reasonable to await and weigh up late developments that might impact upon the decision to accept or not accept. His affidavit of 17 February indicates that he moved on the matter at 3 p.m. on Friday 3 December because by then it was clear to him that the delay he sought at the AGM on 30 November 1999 was not going to be considered by the Board.

31. I pause to refer to a matter raised on a number of occasions by Mr Mattin, who appeared for the defendant, namely that Mr Pethard, acting for the companies, had unreasonably delayed in moving to accept, that he had had more than a month to take steps to accept and instead he left it until very late and took the risk of something going wrong. The delay by the plaintiffs in not earlier initiating a postal acceptance is in my view irrelevant. I will address the issue of posting an acceptance and the Lodgement Instructions shortly. But acceptance on the last day is no different from acceptance on the first day. Prudent investors are likely to wait until the latest reasonable date to signify acceptance. There might be other and more attractive investments that might arise. Professional investors such as Mr Pethard are not inclined to have their money tied up unnecessarily or suspended for even short periods.

34. What happened next is not in dispute, Mr Pethard was not cross-examined on it. At about 3 p.m. on Friday the 3rd he took steps to initiate acceptance on behalf of all plaintiffs. One of his reasons for accepting by post was that the offer was made by post. His affidavit stated that he believed his acceptance by post would be within the ambit of the conditions of acceptance. As will appear from my later observations, there is no doubt that the acceptance by post was contemplated by the lodgement conditions contained in the prospectus. Pethard acted with great care. He took all of the executed documents and went to an office of Australia Post in St. Kilda Road. In the presence of the post office employee he put all of the documents into an "Express Post" envelope. By this method, Australia Post guarantees delivery by the next business day, that is, by Monday 6 December. Mr Pethard retained his copies of all the relevant documents, including the tags, in order to be able to establish everything that he had done. Thus the envelope was posted shortly after 3 o'clock on Friday afternoon by a method of post, used throughout the whole of Australia, by which Australia Post guarantees delivery by the next working day. The next steps in the sequence of events emerged from the evidence both orally and by way of affidavit of John Desmond Baker, a delivery manager with Australia Post at the general post office at 338 Bourke Street, Melbourne, responsible for the mail room at that address. Mr Baker's affidavit and oral evidence explained the transmission of Express Post articles including the article containing the applications for shares and options, and the accompanying cheques. When a customer posts an Express Post item that is done either by depositing it in the yellow receptacle in the street reserved for Express Post items or over the counter at the post office. From there it travels through the mail stream (the mail centres). In this case, since the Express Post item was posted in St. Kilda Road it went first down to the mail centre at Clayton. It was then sorted out from the Clayton mail centre and sent to the Melbourne Mail Centre which is the City Delivery Centre. The postmen are situated there. Any city mail, wherever posted, travels to the City Delivery Centre first. At the City Delivery Centre primary sorting of central business district mail takes place. Primary sorting is done to divide the mail into various streets, e.g. Bourke Street, Lonsdale Street or into the range of boxes that customers retain. If there is an arrangement between Australia Post and the addressee as to a box (whether or not the box number is on the envelope) the mail will be sent to the box room at the GPO at 338 Bourke Street. According to Baker, it was because of the arrangement between Australia Post and Computershare Registry Service about retention of their mail in their box that it was not delivered to their address but sent to their box situated at the GPO. Some documents sought to be produced on behalf of the defendant in the course of cross-examination of this witness proved to be, although it was all quite unwitting, rather misleading. Ultimately the general Post Guide was produced (that Guide being applicable in December 1999) which deal with the post office box requirements. G4.5.4 states that Australia Post delivers all mail addressed to a post office box to that box, claiming a better standard of service if they ensure that senders address all mail to their post office box, suggesting that the box holder should include the box number on all documents and feature primarily in advertising. It goes on to say:

"From 1st July 1999 an applicant for a post office box may request that Australia Post for the first six months of the box tenancy divert letters addressed to the box holder at their street address to the post office box."

This is clearly what happened in this case with the consequence that the postman who would otherwise have taken this Express Post delivery direct to Computershare's post box at their address was not called upon to deliver it because Computershare had arranged a box at the GPO with three pick-ups at 5.30, 6.30 and 7.30 a.m. The evidence also established that the agent used by Computershare Registry was one of the emanations of Australia Post (Mail Room Solutions) which picked up the mail in the box (it was actually a bag) at 338 Bourke Street at the three times referred to and took it down to Southgate where it was stamped and resorted for delivery to or pick-up by Computershare Registry. All of this procedure was put in place, one presumes, because of the substantial volume of mail that is received on a daily basis by Computershare Registry which acts as a share registry for a number of companies. Mr Baker specifically stated in his evidence if the mail had not been diverted by reason of this arrangement to the GPO, the postman would have delivered the acceptances to Computershare Registry's address prior to 5 o'clock on that day. The evidence from Baker also established that when the mail came into the loading dock on the truck from the City Delivery Centre, Express Post is sent up to the first floor and scanned by a scanner which downloads the identifying code into a computer. Once the scanning is complete, it is sent back to be sorted into the relevant GPO box. The evidence established and it was not contested, that this item was scanned at 6.59 am on 6 December, that is, the item was already in the GPO to be put into the Computershare Registry box as soon as it reasonably could. It could not be immediately taken down to the box. The evidence was that the latest time in the morning of which it would be put in the box would be 8.30 in the morning. The process of scanning and sorting into the boxes takes at least one hour and so accordingly in Mr Baker's judgment it would have been put in the Computershare box between 8 o'clock and 8.30. However, under the arrangements that Computershare had put in place, there were only three collections and the last of them was at 7.30. It was capable of being picked up after 7.30 by any agent of Computershare, that is, by a courier, on an employee of Computershare or by arrangement Australia Post Solutions. No such arrangement had been put in place by Computershare. It became apparent from the evidence later of Mr Graham Robinson that this event had revealed the inadequacy of their pick-up process so that since it there has been put in place a further pick-up at 9 a.m. This covered all of the Express Post deliveries. It was also given in evidence that Australia Post worked six days a week so that some of the processing probably took place on the Saturday but not the delivery to the GPO on Monday morning. My impression was that Mr Baker thought it would be unusual if this item was not in the box by 8 o'clock. All of the Computershare mail is sorted into four foot canvas bags which are picked up by Mail Room Solutions. Mr Baker stated that many customers used couriers with appropriate authority to collect mail from the boxes and that, although the guaranteed time of delivery was by the end of the business day, his expectation for the Central Business District was that, had the mail been delivered direct by the postman, it would have been delivered between 11 a.m to midday.

39. The defence called the deponent George James Robinson, a manager at Computershare Registry at the relevant time. I have already indicated that it was Mr Robinson who referred to the change in the Computershare Registry system to avoid the failure to pick up applications that arrived in the box or bag after 7.30 a.m. Mr Robinson "was not able to deny" that Computershare had arranged the redirection of its mail from delivery to its own office to the post office box number. However, I note that his affidavit sworn 14th February referred to a contract with provision of mail room services provided by Australia Post to Computershare pursuant to an agreement between them and the production of a schedule as to that. His affidavit clearly stated that, however the mail was addressed to Computershare, that is, to its actual address or its post office box, all mail was delivered to the GPO in Elizabeth Street. According to that affidavit after the mail was taken by the Computershare Registry's agent Mail Room Solutions to Southbank, the mail is taken from Southbank and delivered at about 9 o'clock to the offices of Computershare. I conclude from this and the other evidence that under the Computershare arrangements then in place it was inevitable that an Express Post item not scanned until nearly 7 o'clock or any time thereafter would not be delivered to Computershare or collected by Computershare until the following day. The alteration in the arrangements for the receipt of express mail by Computershare Registry speak with an unmistakably clear voice that this comedy of errors is to be laid squarely at the door of Computershare Registry. It was by no means difficult for one of its employees to have gone to the GPO once or twice in the course of the final day of acceptances, described by Robinson as extremely busy in terms of the receipt of acceptances, to see whether there any mail had arrived into the mail box in the course of the day prior to 5.00 p.m.

42. Computershare followed a practice of advising the company of the applications received following the close of an offer, banking the money and recording acceptances. It was said that the company held a meeting to authorise by resolution the allotment of shares and then provide instructions to Computershare. Robinson's evidence was that over 100 applications for shares were received after 5.00 pm on 6 December although his account manager had said it was 185. Although records of the late acceptances would be retained he did not know of the detail. It was commonplace for applications to arrive after the time. Applicants arriving late often sought to explain what went wrong but Computershare Registry left it to the client company to evaluate those excuses, as it did in this case. No Express Post mail is delivered direct to Computershare level 12, he said. Mr Robinson, under cross-examination, said he was not responsible for Pinnacle's account and the person who would know about the matter, one Peter Vaughan, was based in Melbourne and available. Mr Vaughan was the writer of letters on behalf of Computershare. He said the date stamp, 7/12/99, was put on by Australia Post although it had a Computershare name on the date stamp. He stated he could not recall any Express Post envelope, or any envelope, coming to the offices other than through the collection agent. There were no exceptions to the redirection of mail to the GPO, later delivered to Computershare after the steps taken. He stated that it was not normal to have any special arrangement to ensure that the box at the GPO was cleared before closure but "there would have been some occasions where that may have been the case at the direction of the appropriate account manager". He accepted that it was purely a matter of commercial arrangement that Australia Post, rather than some other courier company, do the collecting or for that matter instead of an employee of Computershare. He agreed that there was nothing to prevent a Computershare employee going down to the GPO at 3 o'clock to see whether all the mail had been collected. He agreed that it was possible that these applications had been taken from the GPO box on the 6th but not opened until the 7th but did not think it was likely, because it was highly unlikely to get them from the scanning area to the GPO box in time, that is, by 7.30 am. Mr Robinson said the final day was something of a stampede. Many people applied on the last day. He accepted that his expectation, (the same as that of Pethard) was that an acceptance posted on Friday by Express Post it would clearly reach them by 5 o'clock on Monday. His view was based upon previous Express mail. Mr Robinson stated that the "vast majority" of acceptances were received by post rather than by hand delivery or by courier. The personal deliveries were very much towards the close of an offer, particularly from those watching the market closely, making their move at five to five.

45. The plaintiffs did not become aware that the express-posted acceptances had not been received at the offices of Computershare Registry before 5 00pm on the 6th until Mr Pethard checked his accounts to see whether the cheques included had been paid in and debited. On finding on 16 December they had not he immediately made contact with Computershare Registry and with Pinnacle. He was told that the acceptances were late and were refused and the cheques had been posted back and in fact they did arrive on the following day.

49. Before setting out some of the events which transpired after its discovery, it is necessary to mention some other matters**.** I have already indicated that this offer was underwritten by the brokers, William Noall Ltd and there was some evidence about the underwriting, although naturally it was not explored in depth. One of the aspects which was relied on by the defendant with respect to the issue raised as to why the plaintiffs' application to have the shares late allotted, having regard to the whole of the circumstances, was refused was that to let them in late would have diminished or diluted the rights of the underwriter to take up the balance of the shares or options not accepted. There was some hearsay written material that none of the underwriters had said that they would have insisted upon their rights with respect to the untaken shares or options. I note, however, that the defendant failed to call, as one might have perhaps have expected, anyone from the underwriters to give evidence on oath about this aspect. The defendant relied upon the fact that a substantial number of other late accepters were not late-accepted by the directors to nullify the suggestion that the rejection of these plaintiffs' applications to have their acceptances treated as valid was driven by animosity against Pethard for being a thorn in the side of the board by persistently raising challenges to the proposals. However no details concerning the other failed acceptors were ever put before the court. The account manager, Vaughan was conspicuously absent from the witness box. I regard the failure to discover this material has having some significance and will refer to it later.

52. I return to some of the events which occurred after 6 December 1999. According to Revelins, the company was aware by 7 December that the plaintiffs' applications had been received after 5.00 p.m. on the 6th. Revelins was informed of that by Jacques. Revelins, however, was very vague about other late acceptances. I have already referred to the failure to produce documents in respect of this issue, notwithstanding there was a specific order by Master Kings that they be provided. Indeed, Revelins (who had left Pinnacle in July 2000) said on oath that he had asked the company for the records for the purpose of giving evidence and he had not been provided with the information. Revelins clearly stated that it was not uncommon for companies to accept late applications but it depended upon the circumstances. These were board decisions and he stated that the board must take into account the position of the underwriter. There was a meeting (Jacques, Frost and Revelins) held to consider the plaintiffs' request for late entry but, according to Revelins, this was not a specific board meeting. It was never put into minutes, according to him, but it was simply a discussion between directors. Revelins confirmed, in his evidence, that Pethard's evidence was true, namely, that Jacques had instructed Revelins to use all his efforts to see that Ronay did not get any shares, but Revelins said that there was a discretion on the part of the company to extend the closing date, that is, to waive the invalidity and that it chose not to do so. This decision appears to have been taken without considering the circumstances which occasioned the lateness. Mr Revelins appeared to suggest that at the meeting "they had to take into consideration what the underwriters and the sub-underwriters might require". Both Revelins and Pethard were sub-underwriters as well, that is, to the extent that Pethard and any other late-comers were given the rights then the underwriters and sub-underwriters' capacity to sop-up the untaken rights was diminished. However, after Mr Pethard contacted both Computershare and the underwriter seeking to have his acceptance included because he had posted his Express Post acceptances on Friday the 3rd (although he then knew nothing of Computershare's box arrangements), the correspondence indicates that Pinnacle asked Computershare to inquire into the matter. It would seem to follow from that that Computershare must have informed Pinnacle of what had occurred but passed the decision as to the admittance of the late acceptances to the rights, to Pinnacle. Pinnacle, doubtless driven on this aspect by the managing director, Jacques, declined the formal request, although it appears to me on Revelins' evidence that that decision may have been taken as early as 7 December, in anticipation of the Pethard companies seeking to have their acceptances validated. On the evidence which I have heard, it is impossible to conclude that any objective, fair-minded consideration of the plaintiffs' applications was ever entertained or took place. Revelins' evidence, particularly candid on this point, made it absolutely clear that all the companies connected with Pethard had their applications rejected because the board regarded Pethard as a thorn in their side and a nuisance, although this appears to have been no more than a case of a substantial shareholder persisting in seeking out the basis upon which decisions were being made. Revelins was asked the following question in cross-examination by Mr Corbett, counsel for the plaintiffs, "The reason why this application was rejected and you did not approach William Noall about Pethard's particular situation was because there had been a deliberate decision by you and Dr Jacques to ensure that he did not get his shares? ... To which he replied, "I think that is a reasonable thing to say, yes." The witness had earlier said that Pethard had been a trouble to the board in the past and they were not going to do anything specifically favourable to Pethard. I have already noted that Revelins was a sub-underwriter and as such had a stake in rejecting Pethard's application. Notwithstanding that, I doubt whether this aspect was very influential on Revelins' thinking at the time. It would seem likely that Dr Jacques and Frost, the recently resigned chairman, made the decisions about this matter. No correspondence with William Noall about this aspect (other than letters between 17-21 December), or any notes of any conversation had by any director with them, have ever been produced. I note that the underwriter's position in relation to this proceeding, as ascertained by the defendant, was that they are prepared to abide the outcome of what happens here. There were no notes produced or minutes of any meeting of the directors of the company in relation to the decision to reject whether on 7 December or at any time between 17 and 21 December. In many respects, that matters little, because the letter from Computershare to Pinnacle made it clear that the Pethard companies' applications were, in fact, in the post office at 7.00 am on the morning of 6 December. At one point of time Mr Revelins in his evidence appeared to be suggesting that the point was simply that once they were not received by 5.00 p.m. that was the end of the matter. However, this ran contrary to other parts of his evidence that it was by no means uncommon for a company to late-admit acceptances and the subsequent informal meetings. This was a matter which Pethard had said frequently happened to him and which he believed was a common occurrence. Moreover, the underwriting Agreement in this case provided that if the company at the end of three days after the Final Closing Date (a phrase used in that Agreement but not used in the Prospectus) notified the shortfall to the underwriter, the underwriter had five days to lodge an application to subscribe for the underwritten shares and options. No documentation concerning what occurred about these matters was ever put before the court.

55. I turn to consider my conclusions based upon the oral and written evidence put before me. I first consider the language of the Lodgement Instructions, already reproduced in these reasons. I first note that neither in the Lodgement Instructions or anywhere in the Prospectus is it stated that 5.00 p.m. Melbourne time on 6 December 1999 is the final closing date. I note, further, that the instructions do not address actual delivery in person or by courier at Computershare Registry offices at Level 12, 565 Bourke Street. The language used is "forward it together with you cheque... so as to reach" Computershare Registry by no later than 5.00 p.m. on 6 December. This language conveys instructions as to what should be done. It clearly comprehends the use of mail posting and it was not suggested that it did not. All witnesses said that the use of the mail was expected. The evidence of Robinson from Computershare Registry was that the great majority of persons used the mail and personal deliveries were more common on the final day. More significantly the language is "forward it... so as to reach". This wording, when applied to the use of the mails, clearly instructs that acceptance can be constituted by posting it so as to reach the Computershare Registry destination by a specified date and time. Since the person posting the acceptance cannot control the delivery activity, the instruction must be addressing the reasonable expectation of the person posting as to the time that will be taken, having regard to the form of posting employed. In this case the expectation (guaranteed by Australia Post) was delivery on the business day following. In this case that meant Monday the 6th, prior to 5.00 p.m.. Every witness in the case stated that the expectation was that acceptances posted by Express Post on Friday the 3rd would be delivered to the addressee before 5.00 p.m. on Monday the 6th. Thus, there was no failure to comply by the plaintiffs on this construction of the Lodgement Instructions. That is, they did comply because they posted the acceptances, so as to reach by 5.00 p.m. on 6 December. But, if 5.00 p.m. on that day was the deadline, the evidence makes it clear that it could not be met because of the offeror's agent's own conduct disclosed by the evidence. I will shortly address submissions concerning the postal acceptance aspect. However, I have formed the view that delivery of the acceptances into the post box of Computershare Registry at the GPO at Melbourne at 6.59 am on 6 December constituted delivery within the meaning of the prospectus. The defendant's argument was that the words in the Lodgement Instructions had to be literally construed so that failure to deliver to the Computershare multi-storey address meant failure to comply with the instructions. This construction of the clause, which I reject, would mean that in the cases of, for example, a closing of the relevant building due to some public emergency, or an unnotified alteration of the address between 3 November and 3 December, or a deliverer being trapped in the lift on the final day unable to deliver, would all lead to non-compliance. It may be that situations such as that account for the practice described in some of the evidence of companies exercising discretion on ill-defined criteria to admit late acceptances as valid. If that were the case, then clearly the plaintiffs' posting ought to have fallen within the ambit of that discretion. But it is not necessary for me at this point to address that aspect because I am of the view that the effect of the arrangements made by Computershare with Australia Post were such that delivery to its box was delivery to it for all purposes. Computershare's agent Mail Box Solutions, and Computershare itself had a right of access to the box throughout the whole of the day. It was Computershare's own arranged collection times that produced the consequence that properly posted and received Express mail was not collected by Computershare or its agents after 7.30 am. The fallacy in this system was exposed by the circumstances of this case and corrected. However, the innocent acceptors are argued to be the ones to bear the consequences, rather than Pinnacle itself. I have no doubt that this decision was made because the Pinnacle Board resented Pethard's questioning of their decisions. It is not necessary for me to revisit my summary of the evidence concerning the stream along which the applications flowed in the mail system comprehended by Express Post. But it cannot be doubted that Computershare made the arrangement with Australia Post which had the effect of warping the normal postal delivery. Baker stated that had the box system not been in place the plaintiffs' acceptances would have been delivered by mid-day on 6 December. It is not necessary for me to have resort to the failure of Pinnacle to take responsibility for its undisclosed and unnotified box arrangements, clumsy as they were, in order to conclude that compliance with the Lodgement Instructions had occurred. I simply conclude that the defendant's agent had put in place a method by which delivery to its postal box constituted delivery to its place of business. It was impossible to post direct to its place of business; all postal deliveries had to go through the box. In those circumstances, since the time at which the mail would be collected, taken, acknowledged and transferred to South Bank was wholly a consequence of arrangements made between Computershare and its agents, I have no difficulty in concluding that once the article was scanned, taken down stairs and put into Computershare's box it was delivered to and received by Computershare Registry for the purposes within the meaning of the prospectus.

58. This conclusion is sufficient to dispose of this proceeding in favour of the plaintiffs but I propose to give some consideration to other arguments which were advanced not least as an acknowledgment of the arguments advanced in respect to them.

61. I turn then to the question of the postal acceptance rule.

64. The plaintiffs contended that the so-called postal acceptance rule applies to the offer made by the Prospectus, that is, that acceptance of it was complete upon the posting by Mr Pethard of the acceptances, by Express Post, on the afternoon of 3rd December 1999. Neither party suggested in argument that the 'offer' in the Prospectus was, as a matter of law, an invitation to treat, and they both proceeded on the basis that it was an offer, capable of acceptance by the plaintiffs so as to create the binding obligations. In my view, in the case of a non-renounceable rights issue, this is correct. Moreover, the acceptance had to be accompanied by a cheque.

67. I do not find it necessary to re-visit the well-known principles of this rule which have been the subject of judicial exposition since the 19th century and, in more recent times, the subject of some criticism. It may be that its utility and purpose have been diminished in a world of facsimiles and e-mail transmission of information, but it cannot be doubted that the use of the postal service still accounts for the bulk of written communications. Mr Robinson of Computershare gave evidence that by far the majority of acceptances of offers of this kind are conveyed by post. The principle was stated in Henthorn v. Fraser (1892) 2 Ch. 27 at 33 by Lord Herschell in these terms:

"Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted."

71. In Nunin Holdings Pty. Ltd. v. Tullamarine Estates Pty. Ltd. [1994] VicRp 3; [1994] 1 V.R. 74, I considered the issue of the application of the postal acceptance rule in the context of an exchange of contracts in a transaction involving the sale of land, concluding that the parties to it intended that the exchange of contracts would not be completed until the counterpart-executed contract was actually received, that is, that the postal acceptance rule did not apply in the circumstances of that case in which revocation by the vendor of the offer to sell occurred prior to the actual receipt by the purchaser of the vendor-signed counterpart. In my reasons in that case, I stated as follows:

"The so-called postal acceptance rule has had a long but by no means uneventful history. Its genesis is probably to be found in Adams v. Lindsell (1818) 1 B & Ald. 681 but it was not until Household Fire and Carriage Accident Insurance Co. (Ltd.) v. Grant (1879) L.R. Ex.D 216 that the rule was itself finally accepted. It had, however, already been applied in Australia: Tooth v. Fleming (1859) Legge 1152. Even in quite recent cases in the United States, the rule was still being called "the rule in Adams v. Lindsell". But once more firmly established (Henthorn v. Fraser (1892) 2 Ch.27), the rule became an important exception to the central principle that acceptance of an offer was not effective until actually communicated to the offeror. Moreover, although the postal system of the late nineteenth century was by all accounts sufficiently reliable and prompt to justify such a gloss on the fundamental principle, the application of the exception was limited to cases in which by reason of general usage or the particular relations between the parties or the terms of the offer itself, the acceptance of an offer by posting was authorised. Further, the letter of acceptance had to be pre-paid and properly posted in order to attract the operation of the rule that, in the case in which use of the post was specified or contemplated, acceptance was complete upon posting. Notwithstanding that we live in the electronic age of telephones, telexes, facsimile transmissions, courier services and document exchange facilities, the use of the post, perhaps less reliable and speedy for all its modern equipment, is still commonplace. The rule has not been expanded but it has not been abandoned either. Nor must it be overlooked that the offeror may prescribe the method of acceptance. If that is done in clear terms then compliance with the method laid down is necessary to make the putative acceptance effective."

75. I also reiterated the well-established principle that the general rule is that a contract is not completed until acceptance of the offer is actually communicated to the offeror, or its authorized agent. I also stated that a finding that a contract is completed by the posting of a letter of acceptance cannot be justified unless it is to be inferred that the offeror contemplated and intended that the offer might be accepted by the doing of that act. Counsel before me referred to many cases to which I referred in Nunin including Henthorn v. Fraser and Bressan v. Squires (1974) 2 N.S.W.L.R. 460, (Bowen, C.J.) a case of purported exercise of an option, his Honour concluding that actual notice on or before the named date was required to exercise effectively the option, rather than simple posting.

78. There may be good policy reasons in many cases of various offers of share and option entitlements that the acceptance be actually received. I was not assisted by any admissible evidence as to this aspect (I declined to consider the affidavit of Karen Anastakakis), and even evidence concerning the practice or custom of companies accepting late-received acceptances lacked specifics and did not address the principles, if they exist, that inform the practice. The language of the Lodgment Instructions addressed forwarding of the acceptance, but did not state that non-receipt by the time and date specified would invalidate the acceptance. It would have been a simple matter to have stated that any acceptance received after the specified time and date would not be deemed to be or considered as an acceptance of the offer comprised by the acceptance. The plaintiffs argued that the application of the postal acceptance rule (and it was conceded in the course of the defendant's own evidence that acceptance by post as a method was in contemplation) had not been excluded by the language in the instructions. Mr Revelins said in his evidence that the company was not concerned about receipt. I do not overlook two other features raised by the evidence. First, the offer was fully underwritten. Both Revelins and Pethard were co-underwriters. In Pethard's case, this mattered little. He was seeking to increase his holdings but this was not a breach of any duty. Although Ronay was his company, the third plaintiff Amecoy was merely using him as an agent for the exercise of their rights. In Revelins's situation, the fact that he was a sub-underwriter has a significance in relation to another aspect which I will later address. It did not matter to Pinnacle whether an acceptance was actually received or not, because of the underwriting. An examination of the underwriting agreement clearly shows that the underwriter had to pick up the unaccepted rights. In those circumstances, it is not as difficult to infer that the parties intended posting to constitute an acceptance and that the date and time specified was for administrative convenience only. The second matter is that the offer would not close prior to the elapsing of at least another three days to enable institutional investors and brokers to come in. Moreover the company was still considering applications from ordinary late-comers (at the very least, these plaintiffs) as late as 21st December. The failure of the defendant Pinnacle to produce any documents concerning other late acceptances has not been explained and would permit the inference to be drawn that their production was not likely to assist the defendants.

81. In those circumstances it must be said there is a persuasive case for the application of the postal acceptance rule, based on the language used and the parties' intentions. On the other hand, Pethard himself used Express Post, which might be thought to point to his belief that receipt by 5 p.m. on 6th December was required. If it were necessary for me to decide it in order to dispose of this proceeding, I would be inclined towards the view that, given the whole of the circumstances, particularly including the language of the Lodgment Instructions, that acceptance by posting was sufficient. However, for reasons which I will later address, it is not necessary for me to make that decision, although logically speaking it would precede the conclusion which I have reached and will shortly develop that the acceptance was received "in time" within the meaning of the Prospectus in this case. In the absence of the necessity of making such a finding, I am cautious about embarking upon any judicial statement that might be thought to apply to other cases. The circumstances of the individual case ordinarily dominate matters concerning the application of the postal acceptance rule. It is not desirable to extend that rule further in the modern communications world. Within the range of corporate dealings such as share allotments, reductions and increase of capital, the offer of rights and the other methods of raising capital, the employment of language in prospectuses will frequently be critical, in conjunction with other prevailing facts. Because of the view that I have formed about other aspects of this case, prompted by evidence of post-acceptance corporate impropriety in this case, I prefer to ground my decision in a different way. I do not think it inappropriate to say that even the non-decisive expression of opinion that it is likely that acceptance by post prevailed in this case should not stand as a precedent for other and different prospectuses, which may be much more specific in their language, or deal with methods of acceptance and the consequences of non-compliance more clearly.

84. Counsel for the plaintiff argued that there ought, if necessary to be implied into the terms of the Prospectus, a term of the offer, to this effect, that if any acceptor's capacity to comply with the requirements was prejudiced or affected by un-notified arrangements brought about by the defendant or its agent, so that non-compliance was thereby occasioned, then any acceptance so delayed or affected would be treated as accepted within the conditions. Another way of putting this, it was said, was to imply a term that if any act or acts of compliance with the requirements of notification by delivery to the company's agents' address of the acceptance was prevented or delayed by the conduct of the defendant or its agent, or by failure to give details of possible delays as a consequence of the defendant's agents' arrangements, then the term as to acceptance by 5 p.m. on 6th December 1999 was not to apply and that a reasonable time of extension would be permitted. In my opinion, the implication of a term to this effect would not be contrary to the written conditions expressed by the Lodgment Instructions and would fulfil the criteria as to implication of terms described in the decisions such B.P. Refinery (Westernport) Pty. Ltd. v. Shire of Hastings [1977] HCA 40; (1977) 52 A.L.J.R. 20; Codelfa Construction Pty. Ltd. v. State Rail Authority of NSW [1982] HCA 24; (1982) 149 C.L.R. 337; Con-Stan Industries of Australia Pty. Ltd. v. Norwich Winterthur Insurance (Aust.) Ltd. (1986) 160 C.L.R. 266.

87. Having regard to what I have decided, it is apparent that it is not necessary for me to reach any conclusion about the oppression issue. Both counsel addressed on it, however, and considerable evidence bearing upon it was led. The plaintiffs' case was based upon what they contended was conduct which fell within ss.232 and 233 of the Corporations Law and attracted the remedy sought. Essentially the factual matrix relied on has already been identified by me when summarising the evidence. On the basis of that evidence, there is no doubt in my mind that the plaintiff's application was not fairly considered and was deliberately rejected on the personal grounds to which I have referred. The conclusion that the plaintiff's application to be allotted shares and options was unfairly dealt with by Pinnacle is irresistible. It cannot be doubted, in the light of Revelins' evidence, that Jacques told him to reject the applications, either without knowing the facts (in which case nothing should have been concluded) or, knowing them, with the single intention of relieving the company from the persistent scrutiny of its decisions at company meetings, (at least on what I know) by objections made in an orderly and proper way. Jacques's absence from the witness box was not explained and, to use a phrase I have used in the course of discussion with counsel, constitutes a deafening silence. Coupled with the defendant's failure to call any witness from the underwriter William Noall Co. Pty. Ltd. and its failure to produce documents ordered by the Master and clearly relevant to the issues, the inferences which are open to be drawn that the decisions that were made were made in bad faith with an intention to injure the Pethard-represented interests are all the more confidently to be drawn having regard to the absence of that evidence. Mr Revelins gave evidence that he was a director at the time. He has left the company, and despite requests by him, according to his evidence, he was not provided with documents which he asked for. One would have to be naive indeed to accept that there was no animosity against the plaintiffs at the relevant time. Frost had resigned as chairman and has long since gone. Jacques wanted the Pethard applications to be knocked back. Revelins had a direct stake as a sub-underwriter and should never have participated in the decision. I find that the company did meet, at least informally and without keeping any minute of what transpired, to consider the plaintiffs' request for late allotments. Thus it accepted that it had the power to do so and rejected the applications, notwithstanding its knowledge of the facts of the delayed collection by Computershare of the delivered mail, on insupportable grounds. It is not necessary for me to decide whether or not the plaintiffs have made out their argued case for oppression in rejecting their applications, pursuant to s.232 of the Corporations Law, warranting an order under s.233. The argument was put that there was an omission under s.232(b) and (e), that was unfairly prejudicial to or discriminatory against the plaintiffs, not only on the grounds to which I have referred but also on the basis that (if one accepted the argument that the refusal was made because of the position of the underwriters) that the interest of the underwriters and sub-underwriters was preferred to that of the shareholders. It should not be overlooked that Revelins, who participated in the decision had a stake in it as a sub-underwriter. Frost, the other participating director, was never called either. The failure to call Jacques and Frost, or produce documents about their position, fuels the suspicion that they were also sub-underwriters. It hardly seems likely that Revelins, a junior director, got sub-underwriting privileges but Jacques and Revelins did not. However, I make no findings as to that.

90. The relevant provisions are concerned with commercial unfairness. On the test proposed in Dynasty Pty. Ltd. v. Coombes [1995] FCA 1447; (1995) 59 F.C.R. 122 and Howard Smith Ltd. v. Ampol Petroleum (1974) A.C. 821 at 834, there is evidence that the decision was unfair and was not "bona fide". I note the plaintiffs have paid the subscription price into Court pursuant to the order of Beach, J. on 23rd December 1999. However, in view of my finding that as a matter of law the defendant through its agent Computershare must be deemed to have accepted within time the acceptances, I do not proceed to decide this issue any more than the others. There was some brief exploration by counsel as to whether or not a cause of action existed, independently of the Corporations Law ss.232 and 233, against the directors as to their rejection of the applications. This must have involved other issues, which were not developed. Accordingly I decline to address this aspect.

93. I therefore find for the plaintiffs in this proceeding.

96. Subject to undertakings on behalf of the defendant not to allot the shares and options applied for the plaintiffs to any person or entity including the underwriters of the issue other than the plaintiffs until the allotments are made and payment made, the Court orders that the defendant allot the shares and options applied for by the plaintiffs within 7 days.

99. I will hear counsel on other necessary orders and costs.