hi phil
i believe you are correct re it being a 3rd Div ASC patch and is worn horozontal with the blue on top.
i always believed there were never any borders on ww1 colour patches. well certainly not like the grey of ww2 however heres an interesting patch on a ww1 uniform in the war memorial collection.
what are your thoughts
http://www.awm.gov.au/collection/REL28771/
bc