ASIC v National Exchange Pty Ltd (2005) 148 FCR 132

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  • National Exchange sends out an unsolicited letter to share holders of Aevum advising they would like to buy shares at a price of $0.30.
  • In the letter, they advise the shares are probably (but not definitely) valued at between $0.90 and $1.20 (approx).
  • 257 shareholders accepted the offer.
  • The share price reaches $1.59 after the offer and so the share holders sue, saying it was unconscionable.


  • What is unconscionable conduct?


  • The offer did not remain open for 1 month as required under the Corporations Act
  • The document clearly indicated that they were not offering what the shares were worth. They were also told to seek their own advice.
  • Most owners of the shares were over 70 years, but the judge did not consider this to be a disadvantage
  • No misleading conduct
  • S12cc refers to unconscionable conduct. This section is not to be read down. (Now 21, 22, 23 of ACL)
  • Unconscionable conduct means doing what would generally  not be regarded in good conscience
  • In a case where the conduct is directed at vulnerable members (people desperate for money, or who misunderstand) it could be considered unconscionable, especially as he made sure to put the info re: valuation on the second page not the front
  • BUT there was no fiduciary relationship, the document was in easy to understand English and contained the valuation
  • Must consider if something is done in good faith (but it wasn’t in this case)
  • So they did participate in unconscionable conduct
  • Where it is trade or commerce – compare wording to ‘domestic services’ etc. However it is not clear enough. It is not in trade or commerce. If they wanted to do this, they would have said it. One off contract with the aim to buy shares.

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