Pre-emptive rights and notices

Articles Written by Philip Laity, Kerry Morrow

JWS's drafting of pre-emptive rights provisions was tested in a recent NSW Supreme Court decision - APT SEA Gas Holdings Pty Ltd v ANP SEA Gas Holdings Pty Ltd and Anor [2010] NSWSC 1221 and on subsequent appeal [2010] NSW CA 296. The case involved the exercise of pre-emptive rights concerning the project vehicle for the SEA gas pipeline (running from Iona in Victoria to Adelaide in South Australia).

The facts relate to whether one of the parties successfully accepted an offer made under the pre-emptive rights provisions. However, two key points came out of the reasons for decision:

  • The Court found that a business day does not end at the close of business. Rather a business day ends at the end of the calendar day on the business day. Hence, an offer period under the pre-emptive rights expressed in business days closed according to the judge at "23.59" on the last day of the period (strictly 23.59.59, but that's a little pedantic).
  • The deeming provisions in the notices clause - stating that a facsimile received after 4.00 pm on a business day was deemed to be received at 10.00am on the following business day - did not operate where actual receipt could be proven. Hence, a notice given after 4.00 pm accepting an offer under the pre-emptive rights provision would be valid provided it was actually received. In any event, the deeming provisions could not operate in relation to service on the Chair of the Partnership Committee, not being a party for whom notice details were specified in the document.

The case underlines the importance of careful drafting (and interpretation) of procedural provisions such as pre-emptive rights and notice provisions, and the importance of taking advice when drafting and giving formal notices (especially in the context of the exercise of pre-emptive rights).

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).