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Attorney-General (Cth) v Alinta Ltd

Attorney-General (Cth) v Alinta Ltd

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HIGH COURT OF AUSTRALIA
GLEESON CJ,
GUMMOW, KIRBY, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ
ATTORNEY-GENERAL OF THE COMMONWEALTH
OF AUSTRALIA  APPELLANT
AND
ALINTA LIMITED & ORS  RESPONDENTS
Attorney-General (Cth) v Alinta Limited
[2008] HCA 2
Date of order: 13 December 2007
Date of publication of reasons: 31 January 2008
S331/2007
ORDER
1.        Appeal allowed.
2.Set aside so much of paragraph 2 of the orders of the Full Court of the Federal Court of Australia made on 30 April 2007 as ordered that there be a declaration that s 657A(2)(b) of the Corporations Act 2001 (Cth) is invalid and, in its place, order that there be a declaration that s 657A(2)(b) of the Corporations Act 2001 (Cth) is not invalid on the ground that it purports to confer the judicial power of the Commonwealth on the Takeovers Panel.

On appeal from the Federal Court of Australia
Representation
D M J Bennett QC, Solicitor-General of the Commonwealth with M A Perry QC and E A Collins for the appellant (instructed by Australian Government Solicitor)
J R J Lockhart for the first and second respondents (instructed by Blake Dawson Waldron)
D M J Bennett QC, Solicitor-General of the Commonwealth for the third respondent (instructed by Australian Government Solicitor)
Submitting appearance for the fourth and fifth respondents
P J Hanks QC with S P Donaghue and F I Gordon appearing as amici curiae
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

GLEESON CJ. I joined in the order allowing the appeal in this matter. My reasons were substantially the same as those that have been given by Hayne J, and Crennan and Kiefel JJ. My reasons for joining in the order concerning the limiting of the grant of special leave, the amendment of the notice of appeal, and leave to counsel to appear as amici curiae were substantially the same as those stated by Hayne J. I would add the following comments on the principal issue before the Court.
There are two features of the statutory scheme which, in combination, strongly support a conclusion that the Takeovers Panel ("the Panel") does not exercise judicial power. The first is that, in deciding whether to make a declaration of unacceptable circumstances, and remedial orders, the Panel is required to take account of considerations and interests to which the judicial process is ill-adapted. The second is that a decision of the Panel creates new rights and obligations, and provision is made for their enforcement by a court in the independent exercise of judicial power.
In Precision Data Holdings Ltd v Wills[1], this Court said:
"In some situations, the fact that the object of the determination is to bring into existence by that determination a new set of rights and obligations is not an answer to the claim that the function is one which entails the exercise of judicial power … However, where, as here, the function of making orders creating new rights…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] HCA 2
Decision Date: 31 January 2008

CaseChat Overview and Summary

The High Court of Australia heard an appeal from the Full Court of the Federal Court of Australia concerning the constitutional validity of section 657A(2)(b) of the *Corporations Act 2001* (Cth). The dispute centred on whether this provision, which empowers the Takeovers Panel to declare circumstances unacceptable if they constitute a contravention of specific chapters of the Act, involved an unlawful exercise of the judicial power of the Commonwealth by the Panel. The Full Court had found the provision invalid on this ground, reversing a decision of a single judge.

The primary legal issue before the High Court was whether section 657A(2)(b) of the *Corporations Act* purported to confer the judicial power of the Commonwealth on the Takeovers Panel, thereby contravening Chapter III of the Constitution. This required the Court to consider the nature of the Panel's functions, particularly whether they involved the resolution of existing rights and obligations or the creation of new ones, and the relevance of the scope of its remedial powers and the requirement to consider public interest and policy considerations.

The High Court reasoned that the impugned provision did not confer the judicial power of the Commonwealth on the Takeovers Panel. While acknowledging that the Panel's powers had been expanded and that its orders could resemble judicial remedies, the Court found that the Panel's function was not to adjudicate on existing legal rights in the manner of a court. The Court noted that the Panel's power to make declarations was contingent on its assessment of whether circumstances were "unacceptable" having regard to statutory criteria and public interest considerations, rather than a determination of a contravention in the traditional judicial sense. Furthermore, the Court observed that the Panel's orders were not directly enforceable without recourse to the courts, distinguishing its role from that of a judicial body.

The High Court allowed the appeal, setting aside the declaration of invalidity made by the Full Court. It substituted an order declaring that section 657A(2)(b) of the *Corporations Act 2001* (Cth) is not invalid on the ground that it purports to confer the judicial power of the Commonwealth on the Takeovers Panel.

Orders

Orders of the court

1. Appeal allowed;

2. Set aside so much of paragraph 2 of the orders of the Full Court of the Federal Court of Australia made on 30 April 2007 as ordered that there be a declaration that s 657A(2)(b) of the Corporations Act 2001 (Cth) is invalid and, in its place, order that there be a declaration that s 657A(2)(b) of the Corporations Act 2001 (Cth) is not invalid on the ground that it purports to confer the judicial power of the Commonwealth on the Takeovers Panel.

Background

Background to the litigation

This appeal arises from a divided decision of the Full Court of the Federal Court of Australia[10]. That Court declared that s 657A(2)(b) of the Corporations Act 2001 (Cth) ("the Act") was invalid on the ground that it purported to confer on the Takeovers Panel ("the Panel") powers that Ch III of the Constitution reserves to the courts.[10]Australian Pipeline Ltd v Alinta Ltd (2007) 159 FCR 301 (Gyles and Lander JJ; Finkelstein J dissenting) reversing Australian Pipeline Ltd v Alinta Ltd (2006) 237 ALR 158 (Emmett J).The facts, legislation and issues The facts and circumstances, and the relevant provisions of the Act, are set out in other reasons[11]. Some 16 years ago, an earlier manifestation of the Panel survived a challenge in this Court for reasons explained in Precision Data Holdings Ltd v Wills[12]. The primary question which divided the Full Court in the present case was whether subsequent alterations to the Panel's powers meant that the holding in Precision Data continued to sustain the operations of the Panel as constitutionally valid.[11]See reasons of Hayne J at [51]-[62]; reasons of Crennan and Kiefel JJ at [106]-[110], [129]-[140].[12](1991) 173 CLR 167. See reasons of Hayne J at [69]-[71]. The majority in the Full Court cited four principal intervening changes to the legislation as critical to the negative conclusion that they reached on this question:.the empowerment of the Panel to make a declaration of "unacceptable circumstances" based upon a relevant contravention of the Act[13];.the introduction of an entitlement on the part of any interested person to apply to the Panel for relief[14];.the imposition of limitations on the powers of the courts to afford judicial remedies during the takeover bid period and, in particular, removal of their power to grant orders to remedy a breach of the law other than orders for the payment of money[15]; and. the enlargement of the remedial orders which the Panel could make, rendering its orders similar to those that a court might make pursuant to Pt 9.5 of the Act and under the general law[16].[13](2007) 159 FCR 301 at 385 [399(1)] referring to s 657A(1) of the Act.[14](2007) 159 FCR 301 at 385 [399(2)] referring to s 657C(2) of the Act.[15](2007) 159 FCR 301 at 386 [399(3)] referring to Div 3 of Pt 6.10 of the Act.[16](2007) 159 FCR 301 at 386 [399(4)] referring to s 657D(2) of the Act.Vigilance over filling a "judicial vacuum" The reason given for the enhancement of the powers of the new Takeovers Panel was to facilitate the diversion of disputes about company takeovers from the courts to the speedier and more commercially sensitive decision-making of an administrative body[17]. However, the majority in the Full Court were concerned that the enlargement of the Panel's function was designed to fill what they described as the "judicial vacuum"[18] created by the limitations placed by the legislation on access to the courts. They said[19]:"It is one thing to remove the courts from the enforcement of prohibitions created by statute. It is quite another to transfer that function to a body which is not a court. It is also another thing to preclude courts from exercising jurisdiction under the general law as is provided expressly in s 659B(4) and impliedly in s 659C of the [Act]. … The orders made in this case are a good illustration of the identity of Panel orders with orders that might have been made by a court. ...The effect of s 659B is that, leaving aside any possible operation of s 75 of the Constitution, the Panel is the sole forum for resolving the defined disputes during the bid period between private parties, notwithstanding that such disputes might otherwise be within the jurisdiction of Federal, State and Territory courts. … [T]he powers of courts having jurisdiction over a dispute to grant remedies for a contravention of the Act are significantly curtailed. As already noted, in particular, there is no power to make positive or negative injunctions. … [Section] 659C authorises exercise of the powers of the Court only where the Panel refuses to make a declaration of unacceptable circumstances".[17]Takeovers – Corporate Control: A Better Environment for Productive Investment, Corporate Law Economic Reform Program – Proposals for Reform: Paper No 4, (1997) at 36-37. See also Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) at 38 [7.16]; cf Armson, "Attorney-General (Commonwealth) v Alinta Limited: Will the Takeovers Panel Survive Constitutional Challenge?", (2007) 29 Sydney Law Review 495 at 497.[18](2007) 159 FCR 301 at 387 [403].[19](2007) 159 FCR 301 at 386-387 [401]-[402].

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GLEESON CJ GUMMOW J (dissent) KIRBY J (dissent) HAYNE J (dissent)

Care needs to be taken in suggesting that identifying exclusively judicial functions involves substantially an historical inquiry[60]. History can be a useful guide in this respect; but it is not a straitjacket. Clearly, the Constitution created an integrated Judicature that was intended to endure and adapt over time, as the governmental needs of the Commonwealth required. A conclusion that a particular activity is not a classical or traditional or historical function of the courts (as for example criminal trials have long been) might militate against acceptance of the argument that an invasion of the judicial power of the Commonwealth has occurred. But it is not determinative of that conclusion. Of its nature, a constitutional doctrine is not ossified by history.[60]Reasons of Gummow J at [11] by reference to White (2007) 81 ALJR 1259 at 1272-1273 [45]-[49]; 235 ALR 455 at 468-469.Conclusion and orders In all of the circumstances, the better view of the arguments is that s 657A(2)(b) of the Act does not confer the judicial power of the Commonwealth on the Panel. It is not, therefore, invalid as offensive to Ch III of the Constitution. The majority in the Full Court were correct in identifying a real question to be decided between the parties in this dispute. However, they erred in deciding, and declaring, constitutional invalidity. Given the orders of the Court reconstituting the "parties" to the appeal, this Court should now correct the orders of the Full Court in the exercise of its own appellate powers in the matter. For these reasons, I agree in the orders proposed by Hayne J. Chapter 6 of the Corporations Act 2001 (Cth) ("the Corporations Act") regulates takeovers. It applies to the acquisition of relevant interests in listed companies, unlisted companies with more than 50 members[61], some listed bodies that are not companies[62] and listed managed investment schemes[63].[61]Corporations Act 2001 (Cth) ("the Corporations Act"), s 602(a)(i).[62]s 603.[63]s 604. Chapter 6 of the Corporations Act gives certain powers and functions to the Takeovers Panel ("the Panel")[64]. The only issue in this appeal concerns the validity of one of the provisions of Ch 6 which deals with the Panel's powers: s 657A(2)(b). At the times relevant to this matter, s 657A(1), (2) and (3) provided:[64]A body established, as the Corporations and Securities Panel, by s 171 of the Australian Securities Commission Act 1989 (Cth), continued in existence by s 261 of the Australian Securities and Investments Commission Act 2001 (Cth) and renamed by the Financial Services Reform Act 2001 (Cth), Sched 3."657A Declaration of unacceptable circumstances(1)The Panel may declare circumstances in relation to the affairs of a company to be unacceptable circumstances. Without limiting this, the Panel may declare circumstances to be unacceptable circumstances whether or not the circumstances constitute a contravention of a provision of this Act.Note:Sections 659B and 659C deal with court proceedings during and after a takeover bid.(2)The Panel may only declare circumstances to be unacceptable circumstances if it appears to the Panel that the circumstances:(a)are unacceptable having regard to the effect of the circumstances on:(i)the control, or potential control, of the company or another company; or(ii)the acquisition, or proposed acquisition, by a person of a substantial interest in the company or another company; or(b)are unacceptable because they constitute, or give rise to, a contravention of a provision of this Chapter or of Chapter 6A, 6B or 6C.The Panel may only make a declaration under this subsection, or only decline to make a declaration under this subsection, if it considers that doing so is not against the public interest after taking into account any policy considerations that the Panel considers relevant.(3)In exercising its powers under this section, the Panel:(a)must have regard to:(i)the purposes of this Chapter set out in section 602; and(ii)the other provisions of this Chapter; and(iii)the rules made under section 658C; and(iv)the matters specified in regulations made for the purposes of paragraph 195(3)(c) of the [Australian Securities and Investments Commission Act 2001 (Cth)]; and(b)may have regard to any other matters it considers relevant.In having regard to the purpose set out in paragraph 602(c) in relation to an acquisition, or proposed acquisition, of a substantial interest in a company, body or scheme, the Panel must take into account the actions of the directors of the company or body or the responsible entity for a scheme (including actions that caused the acquisition or proposed acquisition not to proceed or contributed to it not proceeding)."

Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ,

Chapter 6 of the Corporations Act gives certain powers and functions to the Takeovers Panel ("the Panel")[64]. The only issue in this appeal concerns the validity of one of the provisions of Ch 6 which deals with the Panel's powers: s 657A(2)(b). At the times relevant to this matter, s 657A(1), (2) and (3) provided:[64]A body established, as the Corporations and Securities Panel, by s 171 of the Australian Securities Commission Act 1989 (Cth), continued in existence by s 261 of the Australian Securities and Investments Commission Act 2001 (Cth) and renamed by the Financial Services Reform Act 2001 (Cth), Sched 3."657A Declaration of unacceptable circumstances(1)The Panel may declare circumstances in relation to the affairs of a company to be unacceptable circumstances. Without limiting this, the Panel may declare circumstances to be unacceptable circumstances whether or not the circumstances constitute a contravention of a provision of this Act.Note:Sections 659B and 659C deal with court proceedings during and after a takeover bid.(2)The Panel may only declare circumstances to be unacceptable circumstances if it appears to the Panel that the circumstances:(a)are unacceptable having regard to the effect of the circumstances on:(i)the control, or potential control, of the company or another company; or(ii)the acquisition, or proposed acquisition, by a person of a substantial interest in the company or another company; or(b)are unacceptable because they constitute, or give rise to, a contravention of a provision of this Chapter or of Chapter 6A, 6B or 6C.The Panel may only make a declaration under this subsection, or only decline to make a declaration under this subsection, if it considers that doing so is not against the public interest after taking into account any policy considerations that the Panel considers relevant.(3)In exercising its powers under this section, the Panel:(a)must have regard to:(i)the purposes of this Chapter set out in section 602; and(ii)the other provisions of this Chapter; and(iii)the rules made under section 658C; and(iv)the matters specified in regulations made for the purposes of paragraph 195(3)(c) of the [Australian Securities and Investments Commission Act 2001 (Cth)]; and(b)may have regard to any other matters it considers relevant.In having regard to the purpose set out in paragraph 602(c) in relation to an acquisition, or proposed acquisition, of a substantial interest in a company, body or scheme, the Panel must take into account the actions of the directors of the company or body or the responsible entity for a scheme (including actions that caused the acquisition or proposed acquisition not to proceed or contributed to it not proceeding)." The focus of this appeal is the provision, in s 657A(2)(b), that the Panel may declare circumstances to be unacceptable circumstances, if it appears to the Panel that the circumstances are unacceptable because they constitute a contravention of a provision of Chs 6, 6A, 6B or 6C. The Full Court of the Federal Court of Australia (Gyles and Lander JJ, Finkelstein J dissenting) held[65] that s 657A(2)(b) is invalid because it purports to confer on the Panel the judicial power of the Commonwealth. These reasons will show that the impugned provision does not purport to confer on the Panel the judicial power of the Commonwealth. The appeal should be allowed.[65]Australian Pipeline Ltd v Alinta Ltd (2007) 159 FCR 301.The facts