England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr A Mann QC: sitting as a Deputy Judge of the Chancery Divison)

		Royal Courts of Justice Strand London WC2 Friday, 11th May 2001

Friday, 11th May 2001

1. LORD JUSTICE PETER GIBSON: This appeal gives rise to certain questions of construction of the provisions of the Companies Act 1985 as amended by the Financial Services Act 1986 (I shall call the amended Act "the Act"), which allow the offeror of a takeover offer to buy out a minority shareholder. It is an appeal by the claimant, Winpar Holdings Ltd ("Winpar"), a minority shareholder in Joseph Holt Plc ("Holt"), against the order of Mr Anthony Mann QC sitting as a Deputy Judge of the High Court. Winpar by its claim had challenged the validity of a notice served on it purportedly under section 429(1) of the Act by the defendant, Joseph Holt Group Plc, then called Inhoco 1849 Plc ("Group"), for the compulsory acquisition of Winpar's holding in Holt under section 430 of the Act. That followed the acceptance by members holding more than 90% of the issued share capital of Holt of a takeover offer made by Group. The judge dismissed the claim and ordered Winpar to pay three-quarters of the costs of Group. Permission to appeal was refused by the judge but allowed by this court (Chadwick LJ).
2. It is convenient at the outset to set out the relevant statutory provisions in the Act. Part XIIIA relates to takeover offers. A "takeover offer" is defined in section 428(1) as meaning (so far as material):

"...an offer to acquire all the shares, or all the shares of any class or classes, in a company (other than shares which at the date of the offer are already held by the offeror), being an offer on terms which are the same in relation to all the shares to which the offer relates...".

3. By subsection (3):

"The terms offered in relation to any shares shall for the purposes of this section be treated as being the same in relation to all the shares or, as the case may be, all the shares of the class to which the offer relates notwithstanding any variation permitted by subsection (4)."

4. That subsection provides:

"A variation is permitted by this subsection where-

(a) the law of a country or territory outside the United Kingdom precludes an offer of consideration in the form or any of the forms specified in the terms in question or precludes it except after compliance by the offeror with conditions with which he is unable to comply or which he regards as unduly onerous; and

(b) the variation is such that the persons to whom an offer of consideration in that form is precluded are able to receive consideration otherwise than in that form but of substantially equivalent value."

5. Section 429 is headed "Right of offeror to buy out minority shareholders". By subsection (1):

"If, in a case in which a takeover offer does not relate to shares of different classes, the offeror has by virtue of acceptances of the offer acquired or contracted to acquire not less than nine-tenths in value of the shares to which the offer relates he may give notice to the holder of any shares to which the offer relates which the offeror has not acquired or contracted to acquire that he desires to acquire those shares."

6. Subsection (3) precludes an offer under subsection (1) unless the offeror has acquired or contracted to acquire the shares necessary to satisfy that minimum of nine-tenths before the period of four months beginning with the date of the offer, and no notice is to be given after the end of the period of two months beginning with the date on which he has acquired or contracted to acquire shares satisfying that minimum.
7. Section 430 is headed "Effect of notice under section 429". It provides (so far as material):

"(1) The following provisions shall, subject to section 430C, have effect where a notice is given in respect of any shares under section 429.

(2) The offeror shall be entitled and bound to acquire those shares on the terms of the offer.

...

(5) At the end of six weeks from the date of the notice the offeror shall

(a) forthwith send a copy of the notice to the company; and

(b) pay or transfer to the company consideration for the shares to which the notice relates."

8. Section 430A gives a minority shareholder of shares to which the offer relates, when the offeror has acquired not less than nine-tenths in value of all the shares in the company, the right to require the offeror to acquire those shares, and by section 430B the offeror is entitled and bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.
9. Section 430C relates to applications to the court. This provides:

"(1) Where a notice is given under section 429 to the holder of any shares the court may, on an application made by him within six weeks from the date on which the notice was given-

(a) order that the offeror shall not be entitled and bound to acquire the shares; or

(b) specify terms of acquisition different from the terms of the offer.

...

(4) No order for costs or expenses shall be made against a shareholder making an application under subsection (1) ... unless the court considers-

(a)that the application was unnecessary, improper or vexatious; or

(b)that there has been unreasonable delay in making the application or unreasonable conduct on his part in conducting the proceedings on the application."

10. Subsection (5) allows the court on the application of the offeror, when a takeover offer has not been accepted by nine-tenths in value of the shares to which the offer relates, to make an order authorising the giving of notice under section 429(1), if satisfied (amongst other things):

"(a)that the offeror has after reasonable enquiry been unable to trace one or more of the persons holding shares to which the offer relates..."

11. Holt's issued share capital consisted of 2,567,590 25p Ordinary shares of which Winpar is the holder of 100 shares, representing 0.0039% of that issued share capital. Winpar is a company incorporated in New South Wales, Australia. On 4th March 2000 Group made an offer to acquire all the shares in Holt for cash or shares in Holt. It did so by formal offer documents and by a newspaper advertisement. It did not send the offer document to Winpar nor to any other shareholder resident in the USA, Canada, Australia or Japan. (I shall follow the judge in referring to those countries as "the forbidden territories.")
12. The reason for not sending the offer documents to shareholders in the forbidden territories was explained by Mr Richard Lee, a partner in the firm of solicitors acting for Group:

"The reason for this was that, particularly because the Offer contained a share alternative, the Defendant believed that it could not be made directly or indirectly in or into those foreign territories without contravening the securities laws of such territories and/or without compliance with difficult and costly regulatory requirements. For the past 15 years, I have practised as a solicitor in the area of corporate finance acting for public companies, or otherwise in connection with offers for or transactions affecting public companies, on many occasions involving the preparation and despatch of offers. Over the same period, I have seen a significant number of offers made by others. It is my understanding and belief that, during such period, the subject of overseas shareholders has almost always been handled in this manner in order to avoid the burden of ensuring regulatory compliance in all relevant foreign jurisdictions, particularly where this burden would be disproportionate to the number of shareholders in the relevant jurisdiction. I believe that compliance with the Corporations Law of Australia would in these circumstances (in particular by reference to the share alternative and the fact that the shares in the Defendant to be issued thereunder would not be listed on an approved stock exchange) have been unduly burdensome in the context of there having been at the date of the making of the Offer, as I am informed by Mr T G Page, a director and the Company Secretary of the Company, only four holders of shares in the Company with registered addresses in Australia holding a total of 1,300 shares (representing approximately 0.0051 per cent of the then issued share capital of the Company)."

13. The manner in which the subject of shareholders in the forbidden territories was handled was that the offer documents and the advertisement contained provisions specifically relating to such shareholders, as I shall describe.
14. There is a covering document for the offer documentation, in the form of a letter from the Chairman, drawing attention to the importance of what followed and containing the following:

"The Offer is not being made, directly or indirectly, in or into the [forbidden territories] or by use of mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national securities exchange of, [the forbidden territories] and will not be capable of acceptance by any such use, means or instrumentality or otherwise from within [the forbidden territories]. Accordingly, copies of this document and the Form of Acceptance are not being, will not be, and must not be, mailed or otherwise distributed or sent in, into or from [the forbidden territories] and persons receiving this document or the accompanying Form of Acceptance (including custodians, nominees and trustees) must not distribute or send them in, into or from the [forbidden territories]."

15. Similar wording is to be found in the offer documentation. Thus in paragraph 10 of a letter dated 4th March 2000 from Grant Thornton Corporate Finance ("Grant Thornton"), acting for Group, to Holt shareholders appeared the following:

"(h) Overseas shareholders

The attention of Holts Shareholders who are citizens or residents of jurisdictions outside the United Kingdom is drawn to paragraph 8 of Part B and paragraph (b) of Part C of Appendix I of this document and to the relevant provisions of the Form of Acceptance. The Offer is not being made, directly or indirectly, in or into the [forbidden territories]. Accordingly, any accepting Holts Shareholder who is unable to give the warranties set out in paragraph (b) of Part C of Appendix I of this document will be deemed not to have validly accepted the Offer."

16. In paragraph 11(b)(iii) of the letter, it was stated that no share certificates arising out of the share alternative would be sent to addresses in the forbidden territories. Paragraph 11 further stated that if the offer was not declared unconditional, the form of acceptance and accompanying documents would be sent by post to addresses outside the forbidden territories.

Part A of Appendix I to Grant Thornton's letter contained the conditions of the offer and Part B further terms of the offer. Paragraph 7(c) stated that no consideration would be sent to addresses in or to residents of the forbidden territories. Paragraph 7(j) provided for the return of documents should the offer not become unconditional, but not to an address in the forbidden territories. Paragraph 7(m) was in this form:

"Each of Inhoco and Grant Thornton ... reserves the right to notify any matter (including the making of the Offer) to any or all Holts Shareholder(s) with (a) registered address(es) outside the United Kingdom or whom Inhoco or Grant Thornton knows to be a nominee, trustee or custodian holding Holts Shares for such persons who are citizens, residents or nationals of jurisdictions outside the United Kingdom by announcement or by paid advertisement in a daily newspaper published and circulated in the United Kingdom ... in which case such notice shall be deemed to have been insufficiently given notwithstanding any failure by any such Holt Shareholder(s) to receive or see such notice. All references in this document to notice or informing in writing by or on behalf of Inhoco shall be construed accordingly."

17. Paragraph 7(p) of Appendix I provided that the offer was made by means of that document and of an advertisement inserted in the Financial Times (UK edition) and that copies of the relevant documents were available from Lloyds TSB Registrars at a specified address.
18. Paragraph 8 stated that the making of the offer to certain persons not resident in the UK might be prohibited by local laws. Overseas shareholders were advised to satisfy themselves as to the observance of the laws of the relevant jurisdiction. Paragraph 8(b) stated that the offer was not being made, directly or indirectly, in or into, or by use of mails of or by any means or instrumentality of interstate or foreign commerce of, or any facilities of a national securities exchange of, any of the forbidden territories and the offer would not be capable of acceptance by any such use, means or instrumentality or from within the forbidden territories. There were other provisions to the like effect in that paragraph.
19. Paragraph 8(c) provided that "A Holts Shareholder will be deemed not to have validly accepted the Offer if", amongst other things, he put "No" in box 6 of the form of acceptance and thereby indicated that he was not giving the representations and warranties set out in paragraph (b) of Part C.
20. Paragraph 8(d) of Part B of Appendix I was in this form:

"The provisions of this paragraph 8 and/or any other terms of the Offer relating to overseas shareholders may be waived, varied or modified as regards specific Holts Shareholders or on a general basis by Inhoco, in any such case in Inhoco's sole discretion. In particular, notwithstanding the provisions of this paragraph 8, Inhoco reserves the right, in its sole discretion, to treat as valid acceptances received from (a) person(s) who is/are unable to give the representations and warranties set out in paragraph (b) of Part C of this Appendix I."

Part C, relating to the form of acceptance, contained certain warranties to be given by the accepting shareholder. It included in particular this warranty:

"(b) unless `No' is put in Box 6 of the Form of Acceptance such Holts Shareholder ... (iv) in respect of the Holts Shares to which the Form of Acceptance relates, is not an agent or fiduciary acting on a non- discretionary basis for a principal who has given any instructions with respect to the Offer from within the [forbidden territories] and the Form of Acceptance has not been mailed or otherwise sent in, into or from the [forbidden territories] and such Holts Shareholder is accepting the offer from outside the [forbidden territories]."

21. The form of acceptance, consistently with the documents to which I have referred, repeated that the offer was not being made in or into the forbidden territories, and in the box for the insertion of the name and address of the registered holder the instruction specified that if the address was in the forbidden territories an alternative address outside those territories must be provided to which the consideration would be sent. Any accepting shareholder was directed to put in box 6 "No" if unable to give the warranty under paragraph (b) of Part C.
22. Also on 4th March 2000 an advertisement appeared in the United Kingdom edition of the Financial Times. This announced that Group was making an offer to acquire all the shares in Holt. It stated:

"The Offer is, by means of this advertisement, extended to all persons to whom the Offer Document may not be despatched who hold, or who are entitled to have allotted or issued to them, Holts Shares. Such persons are informed that copies of the Offer Document and the Form of Acceptance are available for collection from Lloyds TSB Registrars ... .

The Offer is not being made, directly or indirectly, in or into [the forbidden territories] or by use of mails of, or by any means or instrumentality (including, without limitation, facsimile transmissions, telex or telephone) of interstate or foreign commerce of, or any facility of a national securities exchange of [the forbidden territories] and will not be capable of acceptance by any such mails, means or instrumentality or otherwise from within [the forbidden territories]. Accordingly copies of this announcement are not being, and will not be, and must not be, mailed or otherwise distributed or sent in, into or from [the forbidden territories]."

23. After the holders of 91.48% of the issued share capital of Holt had accepted the offer, Group on 4th April 2000 posted to Winpar the purported section 429(1) notice. That notice was sent to Winpar's address in Australia, where it was received, according to Winpar, probably on 10th April but possibly on 7th April 2000. The number of acceptances subsequently increased to 98.45%.
24. On 17th May 2000, that is to say within six weeks of the receipt of the notice but more than six weeks after it was posted, Winpar commenced these proceedings. In the claim it was stated that the application was made under section 430C of the Act. By it Winpar sought a declaration that Group was neither entitled nor bound to acquire Winpar's shares in Holt.
25. That application was heard by the judge. He held that the offer was a takeover offer within the meaning of section 428(1) of the Act, that the mere fact that the offer was not communicated to a particular shareholder was not fatal to there being a takeover offer, that the offer made by Group was for all the shares including those held by shareholders resident in the forbidden territories, that shareholders so resident could accept the offer and that the notice under section 429(1) was valid. The judge further held that the application made by Winpar was not an application under section 430C, that point, he said, being in substance conceded by Winpar, but was an application under the general law. He therefore did not find it necessary to decide whether, if it was an application under section 430C, it was out of time. Accordingly, he dismissed the application.
26. Before us today Mr Adair for Winpar challenges the decision of the judge as being erroneous on the following grounds:

(1) there was no takeover offer within the meaning of 428(1);

(2) the offer excluded Winpar's shares;

(3) the offer was not practically capable of acceptance by Winpar; and

(4) the offer should have been communicated to Winpar if its holding was to be acquired compulsorily.

27. On costs Mr Adair criticises the judge for treating Winpar's application as not made under section 430C. He submits that it was so made and that Winpar is entitled to the protection against costs afforded by subsection (4) of that section. I shall consider those submissions in turn.

(1) Takeover offer

28. Mr Adair submits that in the light of the statutory definition of a takeover offer in section 428(1) and the terms of the offer made by Group, the judge was wrong to conclude that there was a takeover offer. He argues that in accordance with the definition, the terms of an offer must be the same in respect of all the shares of the same class which the offeror seeks to acquire. He points out that the Act provides only a limited right to vary the terms as between offerees in section 428 (see section 428(3)), and that is confined to permitting a variation of the consideration offered to shareholders (see section 428(4)). The provision upon which he relies in the offer documentation as indicating that the terms of the offer are not the same in relation to all the shares to which the offer relates is paragraph 8(d) of Part B of Appendix I which I have already cited. He says that it is clear from that provision that the terms of the offer for shares belonging to persons resident outside the UK were different from the terms upon which the offer was made for shares belonging to persons resident in the United Kingdom. He also points to the fact that the consideration payable to shareholders within the forbidden territories would be sent not to them at their addresses shown in the register of shareholders but to a different address outside the forbidden territories; and he again submitted that that showed that the offer was not the same to all the shareholders.
29. This is an argument not directly advanced before the judge. It is inconsistent with Winpar's grounds of appeal, most of which proceed on the premise that there was a takeover offer. But, in any event, I cannot accept the submission. Its validity seems me to depend on the proposition that the terms of the offer, which, it is not in dispute, must be the same for all offerees, include provisions as to the mechanics of the offer and of the acceptance of the offer. The special provisions relating to overseas shareholders all relate to such mechanics. They do not relate to primary contractual terms such as the consideration offered, which I accept must be the same for all shareholders subject only to section 428(4). Mr Adair accepts that, carried to its logical conclusion, his argument means that if local securities laws require particular matters to be complied with, any provision giving effect to such requirement in the offer documents would mean that those shareholders to whom those particular provisions are limited to apply would be receiving a different offer from that which other shareholders would receive, and accordingly that there was no takeover offer within the meaning of section 428(1). Thus, if there were a requirement in one country that takeover offers made to persons resident in that country had to allow for acceptances to be delivered to an address in that country and the offer so provided, there would be a material difference between the offer made to shareholders in that country and all other offers which provided for the delivery of acceptances elsewhere. For my part, I can see no statutory purpose served by treating any such variation relating only to the mechanics of the offer or acceptance as taking the case out of the statutory definition. On the contrary, it would seem to me that if Mr Adair were right it would run counter to the evident statutory purpose of providing for takeover offers to be effective and of enabling an offeror to acquire a minority shareholding when the vast majority of the shareholders have accepted the terms of the offer.

(2) Exclusion of Winpar's holding

30. Mr Adair submits that Winpar's shares were expressly or impliedly excluded by the terms of offer. He says that the judge erred in focusing on the subject matter of the offer rather than the identity of the offeree. He drew our attention to Chitty on Contracts, 28th edition (1999), paragraph 2-002, in which an offer is defined as

"...an expression of willingness to contract made with the intention (actual or apparent) that it is to become binding on the person making it as soon as it is accepted by the person to whom it is addressed."

31. Mr Adair rightly says that the offer had to be addressed to someone. The contractual documents, he stresses, make clear that geographical limits are imposed on the persons to whom the offer is addressed; and because the offer was not made in or into the forbidden territories, he says that the offer was not addressed to Winpar by virtue of its geographical situation. Its shares therefore were not shares to which the offer related and the requirements of section 429(1) were not satisfied when the notice was purportedly served under that section.
32. In my judgment it is plain from the terms of each of the documents relating to the offer as well as from the advertisement that the offer extended to all the shares in Holt. Each of the letters from the Chairman of Holt and from Grant Thornton dated 4th March 2000 were addressed to "Holts Shareholders" and expressly stated that the offer was for all the issued share capital. Grant Thornton expressly offered to acquire all of the shares in Holt. Similarly, the advertisement made clear that the offer was to acquire all the shares in Holt in issue on 4th March 2000. Further, the advertisement specifically stated that the offer was, by means of that advertisement, extended to all persons to whom the offer document might not be despatched who held shares in Holt. There can be no doubt but that the intention of the offeror, as ascertained objectively from the documents, was that the offer was made for the shares of (amongst others) shareholders in the forbidden territories and that the offer was addressed to shareholders there like Winpar. The fact that the offer was not made in or into the forbidden territories does not mean that the terms of the offer excluded the shareholders resident there.
33. A shareholder in the forbidden territories may have a valid complaint about the fairness of the mechanics of the offer made to them by means such as were adopted in the present case. But that is a different point. As a matter of construction of the documents, including the advertisement, in agreement with the judge I have no doubt but that the shares held by Winpar were not excluded from the offer, nor was Winpar itself so excluded. As Mr Gillyon for Group pointed out, the matter can be tested by asking what would have happened if Group had received a valid acceptance from a shareholder resident in the forbidden territories. I cannot see how Group could avoid being bound by that acceptance.

(3) Practical impossibility of acceptance

34. Mr Adair submits that in view of the various warranties required of any shareholder accepting the offer, for all practical purposes it would have been impossible for Winpar or any company incorporated in the forbidden territories to have accepted the offer. He contends that Winpar, as an Australian company, had never been outside Australia and that whilst an agent of Winpar could go outside the forbidden territories, it could not give the warranty required in sub-paragraph (iv) of paragraph (b) Part C of Appendix I. Mr Gillyon does not dispute that acceptance for a shareholder resident in the forbidden territories is more difficult than it is for a shareholder resident outside those territories, but he submits that it is not impossible. So long as an officer of Winpar was generally authorised to act on a discretionary basis, as most managing directors, I apprehend, would be, that officer could accept on behalf of Winpar if he did so outside the forbidden territories and could give the warranty required by sub-paragraph (iv) of paragraph (b) of Part C of Appendix I. Further, in my judgment, even if such warranty could not be given together with the acceptance, paragraph 8(d) of Part B allows Group to treat as valid that acceptance.
35. Mr Adair argued that that was not correct. He submitted that if Group were to choose to exercise its right under paragraph 8(d), it would be making a counter-offer to Winpar which would require a further acceptance by Winpar, and that acceptance would not be of the offer made to the other shareholders. Thus, he said that paragraph 8(d) did not provide a practical way of enabling Winpar, or indeed any other resident in the forbidden territories, to accept the original offer. He further submitted that the common form provision, whereby an offeror gives a deadline for acceptance of the offer but reserves the right to extend the time for acceptance, gives rise to a similar position as a matter of analysis of contract law if and when that right was exercised, that is to say the offeror again thereby makes a counter-offer when it decides to extend time. I have to say that this argument seems to me to fly in the face of reality and commonsense. The offeror who by his offer has reserved the right to waive a requirement of a warranty or to extend time for acceptance cannot, in my judgment, be said to be making a counter-offer when he exercises that reserved right. He does not thereby do anything inconsistent with what he has promised by his offer. He is merely enabling the acceptance by the shareholder to be effective. The shareholder has to do nothing more to complete his acceptance of the offer. In my judgment therefore, an acceptance by Winpar communicated from outside the forbidden territories, even if not accompanied by the required warranties, can by reason of paragraph 8(d) be rendered fully effective.
36. The judge was rightly concerned that there should be practical ways in which a person in the position of Winpar could accept the offer even though a shareholder is resident in the forbidden territories. If the judge had found that the acceptance could only be given in some theoretical, fanciful or unrealistic way, he might have been prepared to find for Winpar. But the judge was satisfied that there were practical ways in which Winpar could give its acceptance, and I agree with him. If Winpar had accepted the offer in one of the ways such as I have described, Group would either have been bound to accept Winpar's holding or, by exercising its right of waiver, would thereby render itself so bound.

(4) Communication of the offer

37. Mr Adair submits that the takeover offer must be communicated to all shareholders. He watered down that submission in an alternative version, that is to say that there must be some effort to communicate the offer to the shareholder, such as by sending the offer documents to the address shown in the register of shareholders for that shareholder. He says that it is implicit in section 428(3) and (4) that Parliament envisaged that takeover offers would be communicated to shareholders even when they were resident in jurisdictions precluding offers of consideration in a particular form, as provision is made for a limited departure from the requirement for the terms of an offer to be the same in relation to all the shares to which it relates. He argues that such provision would have been unnecessary if Parliament had envisaged merely that the offer in question need not be communicated to such shareholders. He contended that because the offer was a precursor to the compulsory acquisition of shares, it was essential that such offer was brought to the attention of the shareholders and that all reasonable efforts were made to that end. He complained that instead Group had made every effort to ensure that the offer did not come to Winpar's attention. He referred us to Re Chez Nico Restaurants Ltd [1991] BCC 736, and said that it was implicit in the judgment of Sir Nicolas Browne-Wilkinson, Vice-Chancellor, that every shareholder should receive the offer. Mr Adair went so far as to say that it would be discriminatory and contrary to public policy (as encapsulated in the City Code on Takeovers and Mergers) and contrary to the law if there was no necessity to communicate a takeover offer to all shareholders. He argued that what was done in this case offended against the principle of equal treatment enshrined in the Code.
38. In the light of Mr Lee's unchallenged evidence that what was done in this case accorded with common practice, it is very surprising that the fundamental objections taken by Mr Adair appears not to have been taken before, if they have any validity. In my judgment those objections go too far. It cannot be right that the validity of a takeover offer depends on its communication to every single shareholder. If that were essential, should an offer letter go astray in the post, or otherwise not be received -- an example given by Mr Gillyon was that of the shareholder who changes his address without informing the company -- there would be no takeover offer and no possibility of a compulsory acquisition of any of the shares of a non-assenting shareholder. Mr Adair is not able to point to any provision of the Act or any other provision to the effect that it is sufficient for a company to send a notice to the address shown for a shareholder in the register. In my judgment Mr Adair's objections, if correct, would serve to frustrate the object of the compulsory acquisition provisions in Part XIIIA of the Act; the successful offeror would be unable to acquire a small minority holding in the target company where the company has lost contact with a member and the offer is not communicated to the member.
39. In the present case Winpar knew of the offer on 7th or 10th April 2000 when it received the section 429(1) notice at a time when the offer remained open for acceptance; but it chose not to accept it. Earlier communication is not likely to have made any difference to Winpar. Section 428(3) and (4) does not assist Mr Adair. Those provisions have nothing to do with communication of the offer but merely give power to vary the consideration offered to shareholders in the limited circumstances specified in those subsections. That was the judge's view too. The judge pointed out that section 430C(5)(a) indicates that there may be a takeover offer notwithstanding that some shareholders cannot be traced and so could not have received the communication of the offer. Chez Nico does not assist. As Mr Gillyon rightly said, that case was concerned with the question whether approaches made to members by the majority shareholders were offers to acquire their shares or, as the Vice-Chancellor held, invitations to treat. It was not concerned with the question whether communication of the offer to every shareholder was essential. Nor can I accept that public policy, in the sense that lawyers normally use that term, is involved here. The Code provides what is good practice in the City in relation to takeover offers, and it prescribes that equality of information, as nearly as possible, should be given to shareholders (see rule 20.1). The offer documents were available to Winpar if it arranged for the collection of those documents from Lloyds TSB Registrars, as the advertisement pointed out. I cannot see that there has been a breach of the Code.
40. For these reasons, therefore I reject Winpar's argument under this head. I would not accept any of the grounds advanced by Winpar for challenging what Group did in this case.
41. However, I would add this caveat. I have some unease as to the practice, which appears to have become standard in the City, of not directly communicating a takeover offer to persons in the forbidden territories, understandable though that practice is in view of the difficulty and cost of complying with local securities regulations. This judgment should not be taken as blessing that practice whatever the circumstances. It is possible that in other circumstances a minority shareholder would be able to persuade a court on an application under section 430C that the court should exercise its discretion to make an order under that section. But in this particular case, having regard to the extremely small holding of Winpar, to the terms of the offer, including the consideration which represents a substantial improvement on the market price prevailing immediately before the offer, to the fact that Cazenove & Co as independent financial advisers had certified that the offer was fair and reasonable, to the fact that the holders of over 50% of the issued shares were committed to accepting the offer even before it was made, and to the substantial acceptance of the offer by, in the event, over 98% of the shareholders, such an application, even if it had been made in time, could have had little prospect of success in this case.

(5) Costs

42. Mr Adair submits that Winpar should have been protected by section 430C(4) against having a costs order made against it. He says that the judge was wrong to hold that the application made by Winpar was only made under the general law. He submits that it was made under section 430C, alternatively, under the general law.
43. That is not the way the judge or Group understood Mr Adair to put his case. Before the judge Group took the point that Winpar in making its application was out of time under section 430C(1), more than six weeks having elapsed from Group sending the section 429 notice, and in the light of that Mr Adair accepted that Winpar's application was made under the general law to which that time limit did not apply. Mr Adair submitted that that was not correct. He said that he did not make any such concession. But he has not put before us material which would enable us to accept his submission. He has today provided a note of the judgment of the judge on costs which he says assists him in that submission. That note was not even shown to Mr Gillyon, still less was it shown to the judge. This is quite contrary to the practice required in this court when notes of judgments are produced to the court. Further, I can see no reason why a transcript of the costs judgment should not have been obtained, if what the judge said was to be relied on. In any event, I do not think that the note of judgment helps him.
44. It is quite plain from the main judgment that the judge received the clear impression that Mr Adair made the concession. Because Mr Adair's complaint was that section 429(1) had not been complied with, he could not have been making the application under subsection (1) of section 430C and by reason of that concession the judge did not deal with the timing point. It is in my judgment too late now to be taking a different point.
45. But, in any event, I have to say that, having heard Mr Adair advance arguments on section 430C(1), I am thoroughly unpersuaded that he could be right in his submissions. He addressed us on the basis that the subsection should be understood as meaning "where a notice is given under section 429(1) or where a notice purportedly is given under section 429 but that notice is invalid". The section is not in those terms, and in my judgment there is no reason whatever to read such words into that provision.
46. Further, Mr Adair submitted that the provisions of subparagraph (a) of section 430C(1) indicated that section 430C was intended to deal with cases where the validity of the section 429 notice was attacked. He says that that is apparent from the use of the words "the offeror shall not be entitled and bound to acquire the shares". He submitted that sub-paragraph (b) of section 430C(1) was intended to deal with the situation where there was a valid notice under section 429 but the court in the exercise of its discretion thought it appropriate to specify terms of acquisition different from those of the offer. Again, that seems to me to be quite unarguable. The whole of section 430C confers a discretion on the court to make an order in terms of sub-paragraph (a) or sub-paragraph (b). It may be that the section 429 notice is valid but the circumstances are such that it would be quite wrong that the offeror should be acquiring shares at all because it was so unfair to the offeree. In those circumstances paragraph (a) plainly ought to apply. In my judgment therefore, Mr Adair was seeking to make bricks without straw. The express premise of Section 430C(1) is that a notice is given under section 429. If there were no valid notice, how can the offeror be entitled or bound to acquire the shares? The essential preliminary to the acquisition would not have been satisfied.
47. I need not say anything about the further difficulties which, as it seems to me, would have faced Mr Adair had he proceeded to argue that Winpar was within time in making the application that it did. We heard no argument on this point in view of the conclusion we had reached on section 430C(1).
48. For these reasons therefore I cannot accept Mr Adair's submissions in relation to costs.
49. I agree with the reasons and conclusions given by the judge in his lucid and careful judgment, and in acceptance of Mr Gillyon's helpful submissions in his skeleton argument, I would dismiss this appeal.
50. LORD JUSTICE BUXTON: I agree.
51. LORD JUSTICE JONATHAN PARKER: I also agree.
Order: Appeal dismissed with costs to be assessed summarily.