Case: Capricorn Diamonds Investments Pty Ltd v Catto [2002] VSC 105 ; (2002) 5 VR 61
Outcome: discussed
There may also be an equitable set off available to the acquirer arising from a distribution, in the case of units, or payment of a dividend in the case of shares, such that the consideration paid at settlement is less than the cash sum in the Notice: Capricorn Diamonds Investments Pty Ltd v Catto [2002] VSC 105 ; (2002) 5 VR 61 at [99] - [100] . See also Brierley v Dextran Pty Ltd (1990) 9 ACLC 30, although the adjustment at settlement there, arose not in equity or under any statutory provision but by reason of the terms of the offer referrable to accretions, accruing for whatever reason, directly or indirectly to the shares. The offer in that case was to acquire the shares, with accretions for a cash sum. Where the offerees prior to settlement received benefits by way of accretions to the shares (an interim dividend), there was a set-off available to the offeror to that extent. There was no issue as to what was the "cash sum", or whether the offer was for a "cash sum". The "cash sum" was $2.30 per share. The question was whether at settlement, the amount payable was the cash sum less the interim dividend paid on the shares to the offerees prior to settlement. 39 Capricorn was in similar vein. The cash sum offered in the notice of compulsory acquisition was $2 for each unit. The benefit of distributions undeclared at the time of a compulsory acquisition notice accrues to an acquirer under s 664A of the Act : Capricorn at [92]. The question in that case was whether at settlement the acquirer was liable to set off against the cash sum of $2 the amount of benefit by way of distributions paid to the offerees between the date of the notice of compulsory acquisition and settlement. Neither Brierley nor Capricorn , in my opinion, assists the construction of "cash sum". 60 I have had regard to the provisions of s 664B(2) and the cases of Brierley and Capricorn relied upon by Mitsui, but for reasons which I have already explained, these do not inform the meaning of "cash sum" in s 664C(1)(a) of the Act. Rather, they are concerned with the amounts paid in due course for the securities. 61 I have so concluded because where the Court is required to evaluate whether the terms set out in a notice of compulsory acquisition give a fair value for the securities, it must determine this at or about the date that the notice was lodged with ASIC and the notice was despatched to shareholders: Capricorn at [88]-[90]. This statutory evaluation by the Court necessarily requires that the "cash sum" be ascertainable as at the date of the notice. It would be an extraordinary result if this could be evaluated by the Court by reference to information not known or capable of being ascertained as at the date of the notice. Likewise the recipient of a notice of compulsory acquisition ought be able to calculate the definite cash sum in order, importantly, to decide whether or not to object. 62 A formula or mechanism which is incapable of ascertaining a precise dollar amount for each of the shares in question at or about the date of a notice of compulsory acquisition does not, in my opinion, constitute a "cash sum", within the meaning of s 664C(1)(a) of the Act. 63 It is not sufficient that at some indeterminate date in the future, if at all, a determinate amount of money may be calculated as the "cash sum" for the purpose of the Notice. This is a different matter from any statutory adjustment under s 664B(2) or equitable or contractual set offs to be applied to the cash amount offered in a notice of compulsory acquisition: Brierley and Capricorn.