Redowood Pty Ltd v Mongoose Pty Ltd [2005] HCATrans 660 (2 September 2005)

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Redowood Pty Ltd v Mongoose Pty Ltd [2005] HCATrans 660 (2 September 2005)

Last Updated: 14 September 2005

[2005] HCATrans 660

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S125 of 2005

B e t w e e n -

REDOWOOD PTY LIMITED

Applicant

and

MONGOOSE PTY LIMITED

Respondent

Application for special leave to appeal

McHUGH ACJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 SEPTEMBER 2005, AT 11.01 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR V.R.W. GRAY, for the applicant. (instructed by Gye Associates)

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR A.G. DIETHELM, for the respondent. (instructed by Blake Dawson Waldron)

McHUGH ACJ: Yes, Mr Jackson.

MR JACKSON: Your Honours, this application relates to a common situation when takeovers for securities direct that inquiries in relation to the offer should be directed to a specified agent and where communication with the agent make it apparent that acceptance relates to that offer even though there is some misdescription in the acceptance. Your Honours, may I come back to that in just one moment, but say that there are, in our submission, two relevant errors in the reasoning of the majority against us, and could I take your Honours to those first? One is in Chief Justice Spigelman’s reasons at page 68, paragraph 5 where he speaks of a situation introducing:

an unintended level of uncertainty . . . in the course of dealing with thousands of pieces of paper in a short period of time –

Well, your Honours, whatever that might be in a declamatory sense, it is not quite the position in this case. We are talking about a number of documents that all together were less than a thousand and you will see that in the supplementary application book at page 16 – I am sorry, a little over a thousand, page 16, paragraph 3 where 808 CHESS acceptances and 254 were Issuer Sponsored ones. The second thing, your Honours, is that the reasons of Justice Bryson at paragraph 153, page 128 of the application book refer to the SRN number as being the correct SRN number – this is about the fourth line from the bottom of the page:

for 55 million rights which were not the rights which [they] in fact intended to sell –

Well, your Honours, that, with respect, is not quite correct. There was a zero missing from that number and the number simply was not the same. So, your Honours, what we would say as a starting matter is that the factual foundations of the reasoning of the majority judges are not, with respect, quite correct. Could I come back to the main argument? The approach taken by the majority in the Court of Appeal - - -

McHUGH ACJ: That passage at 128 is dealing with the question of ambiguity, is it not? What his Honour was saying, its terms raise no conceivable ambiguity.

MR JACKSON: Your Honour, what he is saying is really that it was not ambiguous. That is certainly so in the next paragraph. But he is also saying that this is a case where there was simply no acceptance. Your Honours, what we would seek to say is that the approach which the Court of Appeal took treated the question of correspondence of offer and acceptance as an entirely formal issue and they did not approach the question in the right way. The question in reality was whether the approaches being accepted in terms which assent to the offer and which do not seek to add terms or leave matters to be negotiated later. Could I refer your Honours in that regard to page 113 of the application book and there is a quotation there adopted from Carter on Contract at both levels where it said:

“The offer and acceptance must precisely correspond and any departure from the offer will result in the purported acceptance being ineffective . . .

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 –

One sees the cases referred to over the top of the page.

Now, your Honours, could I just say, if one goes to the leading decisions – and I will come to those in just a moment, your Honours – what they tend to demonstrate is that unless it makes it apparent that the offer that is being made is not being accepted, then the issue that arises from a misdescription of any kind will simply be whether it is seeking to add to or vary the terms of the contract, or make the contract something different from the offer.

Your Honours, that is something in relation to which there was no basis on which it could be said, in our submission, that we were attempting to add a further term or in any way to vary the offer, or not to accept it in any way. I said I would take your Honours to leading cases. May I go in that regard to the small book of two authorities we have given your Honours with Carter v Hyde and Quadling v Robinson. I wanted to take your Honours, if I may, to the way in which the test is expressed in those cases. Could I go, your Honours, using the numbers at the top of the page that we have put in, to Carter v Hyde page 7 about line 37. This is Chief Justice Knox:

The second objection depends on the meaning to be given the document . . . The appellant contends that the reference to the inventory contained in that document imports a condition into the alleged acceptance and so converts it into a counter-offer.

Your Honours will see the same the next page, the last four lines on the first continuing over paragraph and then, if one goes to Justice Isaacs, page 12, the top of that page:

The second question is whether the option was properly exercised . . . the appropriate question is . . . “Now, what would anybody when he received that letter fairly understand to be the meaning of it?” . . . His own attitude shows that he understood it, and I think reasonably understood it, as adding nothing to the conditions.

Justice Higgins, your Honours, at page 19 of that book, the second new paragraph on the page, and your Honours will see, first five lines of that paragraph and then about line 27:

But they do not occur in the acceptance of the option, as a qualification or condition thereto; they are a mere misdescription of an option which is otherwise clearly identifiable and identified.

Your Honours, the other case, Quadling v Robinson, is in the same book. Could I go in that regard to page 30 and at the end of the long paragraph on that page, about line 28, in Justice Gibbs:

It must of course depend upon the proper construction of the document by which the grantee purports to exercise an option whether it amounts to an absolute and unqualified acceptance of the rights and liabilities conditionally created by the option.

At the bottom of page 32, the last four lines and going over to the first four lines on page 33 and then again, your Honours – I have nearly come to the end of this your Honours – page 34, about lines 15 to 19 with reference to the alteration of terms. On the same page Justice Jacobs, lines 27 to 30 and Justice Murphy, page 35, about lines 27 to 33. The point we would seek to make about it, your Honours, is this, that there was no basis in this case upon which it could be said that we were attempting to add a further term or vary the offer.

McHUGH ACJ: Well, that may be, but the question is whether you accepted the offer that was put to you. I mean, Mr Grant made a number of significant errors, did he not? First of all, he omitted two zeros.

MR JACKSON: I think some of the zeros were not compulsory, as it were, your Honour.

McHUGH ACJ: ANL did not record the applicant as the holder of the 55 million rights until 12 February, and then the SRN that was given was a completely different one.

MR JACKSON: Well, your Honour, it really comes - - -

McHUGH ACJ: I mean, it was not merely a question of an offer accepting as to the number of rights, but also as to the identity of the rights.

MR JACKSON: Well, your Honour, it goes a little beyond that, with respect, because the position - - -

McHUGH ACJ: And can I put this to you?

MR JACKSON: Yes.

McHUGH ACJ: Is this not just a fact question?

MR JACKSON: Well, your Honour, it is just a fact question in the sense that every contract case starts that way. There is more to it than that though and, your Honours, I want to say two things. The first is that it seemed to be accepted that the only flaw in the documents are – and it was known that we were intending to accept the offer, the only flaw in the documents was that a number was put there for the SRN number which was not the right number. That is what the case ultimately came down to.

Now, that being so, your Honours, if it was known that we were going to accept the offer, we send in the document which has 55 million of these things and, your Honours, in those circumstances that is really the starting point. Now, where it differs from the ordinary case, if I might say, just the application of the principles, is that the approach taken by the majority in the Court of Appeal, in our submission, was to skew the issue raised in cases of this kind.

Now, undoubtedly there has to be an acceptance, but where you have something which is a purported acceptance known to be coming and accepts them and where it does not seek to change anything in the offer, then the issue one is looking at is really the question whether there has been any attempt on our side to change, vary the terms and conditions of the offer or not accept them. Now, that approach, your Honours, was not taken. That is where the Court of Appeal trimmed down and narrowed the approach to be taken in cases of this kind and that is the point which we seek to make in paragraph 28 of our written submissions.

McHUGH ACJ: You just used the expression “which they knew to be coming”, but that really requires you to have resort to extrinsic evidence, does it not? Did not Justice Bryson say that there was no ambiguity in the second rights acceptance form?

MR JACKSON: Well, what he was putting down when he was saying that was the approach that had been taken by Justice Tobias, I think that is right to say.

McHUGH ACJ: Yes.

MR JACKSON: But, your Honours, that itself is a question because if it be right to see the meaning of “provisions” – see what the meaning of “provisions” is by reference to the circumstances in which they are made, to put it shortly, then there seems no very good reason why in determining whether a contract has been arrived at one looks to see the circumstances in which they took place. Your Honours, it seems, with respect, a rather bizarre situation if, offers of this kind, one has the contact that is given to discuss the offer. What is said to them is to be treated as absolutely masked from the remainder of the transactions that took place.

Your Honours, I think, in paragraphs 28 to 30 of our submissions at page 128 we seek to make that point together with paragraph 31. Could I also say if one goes to page 146 of our submissions, paragraph 25 what you will see is that a question does arise in relation to the provisions of clause 8.4(a) and the meaning of 8.4(a)(i) and 8.4(a)(ii)(A). Your Honours, those are our submissions.

McHUGH ACJ: Yes, thank you. The Court need not hear you, Mr Walker.

We are of an opinion that, notwithstanding the dissenting judgment in the Court of Appeal, the case has insufficient prospects of success to warrant the grant of special leave. In addition, the matters raised are factual matters. Accordingly, special leave to appeal is refused with costs.

AT 11.15 AM THE MATTER WAS CONCLUDED