Attorney-General of the Commonwealth of Australia v Alinta Limited & Ors
[2007] HCATrans 572
•3 October 2007
[2007] HCATrans 572
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S331 of 2007
B e t w e e n -
ATTORNEY‑GENERAL OF THE COMMONWEALTH OF AUSTRALIA
Appellant
and
ALINTA LIMITED
First Respondent
TREWAS PTY LIMITED
Second Respondent
TAKEOVERS PANEL
Third Respondent
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
Fourth Respondent
AUSTRALIAN PIPELINE LIMITED (IN ITS CAPACITY AS RESPONSIBLE ENTITY OF AUSTRALIAN PIPELINE TRUST)
Fifth Respondent
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON WEDNESDAY, 3 OCTOBER 2007, AT 10.17 AM
(Continued from 2/10/07)
Copyright in the High Court of Australia
__________________
GLEESON CJ: Yes, Mr Solicitor.
MR BENNETT: If the Court pleases. Yesterday I dealt with the first two of the four points of distinction relied on by the majority below. There is one short matter I want to add in relation to the first, which was the reference to contravention. Might I just take your Honours back to the concluding words of section 657A(2). Your Honours will see that those concluding words provided that:
The Panel may only make a declaration . . . or only decline to make a declaration -
In other words, it is a mandatory matter ‑
if it considers that doing so is not against the public interest ‑
and “public interest” is not defined, but it then says:
after taking into account any policy considerations that the Panel considers relevant.
One can imagine all sorts of matters of public interest which the Panel might or might not consider to be relevant. One obvious one is the welfare of employees who might lose their employment if a takeover were to succeed. There is a very strong hint in section 636(1)(c)(iii) that that might well be a relevant consideration.
More difficult ones might be foreign takeover considerations or the necessity of a service being continued, for example, if there were a takeover offer involving Telstra and a question about compliance with its obligations in rural and regional Australia. There are all sorts of examples one can think of of matters which the Panel might or might not consider to be relevant in the public interest. That is something very different to what a court looks at when it considers matters of this sort.
GLEESON CJ: I would like to understand a little better than I do at the moment the causative association between unacceptability and contravention in subsection (2)(b). You have made the point that to find a contravention is neither a necessary nor a sufficient condition for concluding unacceptability and you emphasise that point by the words to which you have just been referring.
MR BENNETT: Yes.
GLEESON CJ: But the paragraph says that something may be unacceptable because it constitutes a contravention, not that it constitutes a contravention and is unacceptable or not that it constitutes an unacceptable contravention.
MR BENNETT: Yes.
GLEESON CJ: What is that notion of causation there?
MR BENNETT: Many of the provisions which can be contravened are provisions designed to promote the application of the Eggleston principles and therefore a contravention might well be seen as something which, not because it is a contravention but because of its nature, is unacceptable.
GLEESON CJ: In one of the judgments in the Federal Court, and I forget now which one, a point was made that was the opposite of a point you made yesterday. I understood you to say at one stage yesterday that it is very likely that paragraph (a) unacceptability will be found in the absence of paragraph (b) unacceptability but one of the judgments made an assertion that in practice there will usually be a contravention or an alleged contravention involved.
MR BENNETT: As a practical matter, that may well be so, your Honour, but one can well imagine cases, for example, if there is some notice requirement and the targets officers and vast majority of its shareholders are in a very remote geographical location to which communications are slow. It might well be that giving something just in time was unacceptable because it did not give people a sufficient opportunity.
GLEESON CJ: I do not have any difficulty with the proposition that you put that there may be trivial or technical contraventions about which the Panel decided that nothing ought to be done, but it would be something of a criticism of the legislation, I suppose, if most unacceptable conduct did not involve a contravention.
MR BENNETT: No, your Honour. We would submit not, because the way this legislation works, and indeed the way it worked to a lesser extent under the former Act, is to focus on the subjective considerations always bearing in mind the objectives in the Eggleston principles. It is simply not possible to imagine every situation which can occur in a takeover. One of the cases I will be taking your Honours to is a case where there was an agreement between the offeror and a substantial shareholder in the target that if an offer were made that shareholder would accept it. That is something one may not have thought of before.
GLEESON CJ: Yes. I am just suggesting that a common situation will be that there is a contravention involved in conduct that somebody is asserting to be unacceptable and, therefore, a common problem that will confront the takeover panel will be the need to consider two questions: one, has there been a contravention of the law; two, should anything be done about it?
MR BENNETT: Yes. Alternatively, it may simply look at the conduct and say, well, looking at this conduct itself, irrespective of whether or not it constitutes a contravention, this conduct is unacceptable.
GLEESON CJ: Does paragraph (b) mean that a contravention is prima facie unacceptable? Is this “because” expression there to indicate that a contravention can be unacceptable just because it is a contravention?
MR BENNETT: The only thing it would indicate, your Honour, we would submit, is that it is more likely to be unacceptable if it is a contravention and, I suppose, the Panel might take the view that in maintaining an orderly market and an orderly system for takeovers it is important as a matter of principle that the law be obeyed by everyone and therefore if someone commits a contravention, that is itself something the Panel would be concerned about.
GLEESON CJ: It is the notion of an acceptable contravention of the law that is puzzling me at the moment. I can understand a trivial contravention of the law or a technical contravention of the law but unless you are in the area of saying, look, you cannot make an omelette without breaking some eggs, what are you talking about when you are talking about an acceptable contravention of the law, other than one that is trivial or technical?
MR BENNETT: One could think of many examples, your Honour. A prospective father driving his pregnant wife, who is about to give birth, to a hospital and breaking a speed limit, it might not be a trivial breach but it would certainly be an acceptable breach.
GLEESON CJ: This is something like a judicious breach of trust, is it?
MR BENNETT: Yes, your Honour, and that is one of the reasons we have provisions such as the New South Wales section 556A of the Crimes Act, to enable courts to say “I find the offence proved but in all the circumstances, without proceeding to conviction, I find it inexpedient to impose a penalty and don’t do so”.
GLEESON CJ: Well, then, why is the conduct unacceptable because it is a contravention, rather than unacceptable and a contravention?
CRENNAN J: It might be because of the adverse consequences that flow. That is to say, the scheme is designed for remedial orders to limit the adverse consequences of the conduct.
MR BENNETT: Yes, but it is really because there is a belt and braces approach in this section. There are three or four aspects of it which operate as buffers which may enable the Panel to say there has been a contravention but we do nothing about it.
KIEFEL J: Mr Bennett, if there has been a contravention of, for example, section 606, a Chapter 6A, B or C provision, it falls within the general penalty provisions of section 1311, does it not?
MR BENNETT: Yes.
KIEFEL J: So regardless of the view that the Panel takes, an offence has been committed under the Act?
MR BENNETT: Yes.
KIEFEL J: The Panel’s finding which underlies the making of the declaration might be relevant to that general offence provision.
MR BENNETT: Yes.
KIEFEL J: The statute provides separately for what follows in the case of an offence, it has penalty units and the like.
MR BENNETT: Yes.
KIEFEL J: If we return to the Panel’s position, and what I am suggesting is that there is a distinction between a contravention connected to a declaration and a finding of unacceptable conduct which gives rise to orders, if we just focus for the moment on the orders that the Panel might make, the orders unlike the offence become a matter of strict liability which might be enforced to an extent by a court.
So when we are talking about enforcement we are really talking about the enforcement of the Panel’s orders which give effect or require conduct, and when we are talking about contraventions we are not talking about a declaration of a contravention being enforced in that way, the Act takes that up itself. The critical thing from the point of view – I am sorry this is so long – the critical thing it would seem to me in relation to the declaration concerning the contravention as a totally separate strand is the finding that the Panel makes which gives rise itself to a liability, or a penalty, under the Act.
MR BENNETT: Yes, and, your Honour, here the reference to “unacceptable because” is in a sense a further filter. There can be a contravention which is not unacceptable.
KIEFEL J: But what I am positing is – unless I am wrong about the offence provisions of the Act, I do not see any role for - the unacceptability that has been put into section 657A is something of a gloss. Once the finding underlying the declaration is made that there is a contravention there is nothing left to be said, the Act takes over and deems it to be an offence, unless I am misreading the offence provisions.
MR BENNETT: Section 658B I am reminded – it says that a finding of fact is conclusive, but ‑ ‑ ‑
KIEFEL J: But a finding of a contravention is both fact and law, is it not?
MR BENNETT: No, your Honour. The court is not bound by the Panel’s finding that there has been a contravention as such, but the ‑ ‑ ‑
KIEFEL J: But it might be effective if it is the statute saying that it has the power, in effect, to make a finding of a contravention which has the result that a penalty comes into force. What I am saying is two things. There might be a judicial function in that process in itself viewed on its own but given what the statute says is the consequence of a contravention being found, I suppose so long as there is the judicial character necessary to find it, there would seem to be nothing left to be said about whether it is unacceptable. Read in that way subsection (2) might be thought to simply be adding a gloss on the finding in an attempt to put something between the finding and the function of the Panel.
MR BENNETT: Your Honour, one can think of many examples of contraventions that might not be unacceptable although they are contraventions. One example might be if one was in a company with a million shares, one share over the 20 per cent because someone made a miscalculation. Another example might be a case where one of the links which flow through determining whether or not people are associates and whether or not they are deemed to have an interest in shares and so on is so remote that, although it is established, there may be some doubt about it. It would be easy to work out examples of cases where there might be an extremely remote connection which gives rise to a technical breach of the 20 per cent rule.
This is likely to be important in practice, bearing in mind that many offerors will get themselves to 19.9 per cent intentionally and deliberately stop short at the 20 per cent and might easily make a mistake of law or mistake of fact or mistake of mathematics in achieving that objective and one might well say in such a situation there was a contravention, but it is not an unacceptable contravention.
HAYNE J: Let me take you away from the trivial and the like breaches that you focus upon. If you go to 638 of the Act, that prescribes the content of the target statement. A fertile subject for litigation in times past was to be found in provisions like 638(1). The Panel may not be able to reach any view about whether contravention of the requirement of 638(1) had a relevant effect on the matters described in 657A(2)(a). The Panel may be unable to determine whether the incompleteness in the target’s statement had any relevant effect on potential control acquisition, proposed acquisition, et cetera, but ensuring the purity of target’s statements may itself give that causal connection of which (2)(b) speaks, may it not? If it does, the Panel becomes the body which, in its exercise of powers under (2)(b), is at least the first port of call in ensuring compliance with what might be called the major elements of the Chapter 6 scheme for takeovers, does it not? Now, where that leads us to?
MR BENNETT: Section 638 itself involves a high degree of subjectivity.
HAYNE J: Just so. What I am putting to you, Mr Solicitor, is this. I understand you wish to put (2)(b) aside for the minor breach and the like and that really it is all subsumed in (2)(a). What I am putting to you so that you may deal with it is that (2)(b) may have real and substantial work to do because the Panel cannot draw the conclusion that (2)(a) would require it to make before engaging a (2)(a) analysis of events.
MR BENNETT: The problem, I suppose, is that in most situations involving omission from the Part A statement the question one would ask under (a) would be very similar to the question one would ask under (b). That is the problem with the example.
HAYNE J: It may be, but as a matter of Realpolitik, when the Panel is confronted with an application which has to be dealt with now, now, now, the availability of reasoning which goes from breach – breach of a provision which lies at the heart of the Chapter 6 regulation, breach itself gives rise to the circumstance of unacceptability - we need not consider whether, in the world of the market it will affect acceptances by one, is evident, is it not?
MR BENNETT: Yes, and the Panel in that situation could act under (a) or (b). The real questions, ultimately, would be the same subjective questions in that example as they would under the following paragraph and, indeed, under subsection (3). The matters would all involve very much the same sorts of issues, but those issues are highly subjective issues. There are matters, for example, which some investors might consider important and others would consider totally unimportant.
For example, on the one side predictions as to future share price by chartists; on the other hand predictions of future share prices by astrologers. The Panel might well take a different view of the need to disclose the one or the other. They might or might not be relevant matters. These are for the investors and advisers to take into account. That emphasises – in the real world it is often going to be convenient, as your Honour says, to use the label of a contravention as the primary inquiry, but that is not something the Panel needs to do. As I submitted, it is neither necessary nor sufficient.
I wanted to remind your Honours of a passage in Visnic v ASIC (2007) 81 ALJR 1175. That, of course, was a professional disciplinary case about company directors. Your Honours will note on page 1178 in the first column that:
In determining whether disqualification is justified, ASIC . . .
(b)may have regard to . . .
(ii)whether the disqualification would be in the public interest; and
(iii)any other matters that ASIC considers appropriate.
That is fairly analogous to 657A, it includes the public interest. Your Honours see the reference to “public interest” in the section is italicised in the judgment, and the words “emphasis added” follow. In the next column, the second column on that page, at the end of paragraph [13] just adjacent to the letter E in the judgment of the majority, your Honours say:
Second, in any event, the criteria stipulated for the exercise of power by ASIC and by the courts differ and do so to a significant degree. Earlier in these reasons –
ie, in the first column –
reference has been made to the regard ASIC may have to the public interest in a disqualification and to the absence of any reference to the public interest in the other sections conferring curial power.
There is then a reference to Precision Data, and the concluding part of that passage are the words which are the essential part of the ratio of that case, just below the letter B:
However, where, as here, the function of making orders creating new rights and obligations is reposed in a tribunal which is not a court and considerations of policy have an important part to play in the determination to be made by the tribunal, there is no acceptable foundation for the contention that the tribunal, in this case the Panel, is entrusted with the exercise of judicial power.
In deciding whether something is unacceptable because there is a contravention, that itself, even without all the other provisions making it more subjective, clearly requires a determination of something far beyond whether there is actually a contravention and, as I say, paragraph (a) makes that determination unnecessary in any event. Unless I have indicated, the Panel still has to decide public interest and the other matters I have referred to. That is all I wanted to add in relation to the first of the four matters.
The only thing I wanted to add in relation to the second was in emphasising that courts may have a narrow list of eligible applicants. The most obvious example, of course, is at the core of judicial power where, for virtually all purposes today, the eligible applicant in relation to criminal proceedings is the Executive, in the form of the police or the Director of Public Prosecutions or the Attorney-General or some other governmental body. While we still have private prosecutions, they are really an anomaly which have virtually no significance today, particularly as the Attorney has power, as we saw in Sankey v Whitlam, to take over private prosecutions and discontinue them.
So for practical purposes one might well say that that is an area where there is a very limited class of eligible applicants at the core of judicial power. So the proposition implicit in the majority’s selection of the second point of distinction, that if you have a wider class of applicants it is more likely to be judicial and a smaller class, it is more likely to be administrative, is, we would submit with respect, not one which is helpful.
GLEESON CJ: Under the legislation as it stood at the time of Precision Data, was it the case that somebody seeking to move the Panel into activity, a target, for example, could allege conduct which amounted to a contravention although the fact that it was a contravention or the circumstance that it was a contravention was not the ground on which the Panel might move?
MR BENNETT: Your Honour, I will just have to find the provision.
GLEESON CJ: I have in mind what I mentioned earlier, that is there is something wrong with the Code itself if serious unacceptability does not happen to be a contravention. You would expect it. To take the example Justice Hayne gave, if the target has been gilding the lily in its response to the offer or, conversely, if the Part A statement has given misleading information, then you would expect that serious unacceptability would happen to reflect a contravention.
MR BENNETT: Your Honour, it normally would, but with this qualification that, as in the case of the Income Tax Assessment Act, ingenious minds will always work out new ways of achieving results which the policy of the Act may not wish to be achieved without contravening existing provisions. It is largely to deal with that that one has these broad provisions.
GLEESON CJ: How does section 52 of the Trade Practices Act relate to these takeovers?
HAYNE J: Chapter 6B of the Corporations Act, I think, deals with it, does it not, rather than the Trade Practices Act?
MR BENNETT: Yes, I think there are separate provisions about misleading or deceptive conduct in the course of takeover offers which may well express a partial implied repeal of the trade practices provisions in that context. I can have the sections turned up for your Honour if your Honour wishes.
GLEESON CJ: Thank you.
MR BENNETT: My recollection is that there are specific provisions dealing with misleading and deceptive statements in Part A or Part B statements.
HAYNE J: Section 670A.
MR BENNETT: Yes, section 670 seems to be the key provision which provides that, “A person must not give” a number of documents if there is “a misleading or deceptive statement in the document” and there are extended provisions about future forecasts. Then there is a specific provision about recovery of damages resulting from a contravention of that section.
GLEESON CJ: Much allegedly unacceptable conduct in a takeover would be of that character, would it not?
MR BENNETT: It might well be, your Honour, yes.
CRENNAN J: Was not unacceptable conduct more narrowly defined in the legislation which is the subject matter of Precision Data?
MR BENNETT: It was defined, your Honour, by reference to the Eggleston principles specifically, whereas they are of course ‑ ‑ ‑
CRENNAN J: There was no general provision in relation to it, I do not think, was there?
MR BENNETT: There was a provision defining unacceptable conduct by reference to the Eggleston principles. That is the old section 732 which said:
(1)For the purposes of the Part, unacceptable circumstances shall be taken to have occurred if, and only if:
and then in slightly different words are the four Eggleston principles.
GLEESON CJ: If there is that kind of argument, somebody says, “Look, this is a fraudulent Part A statement or the target has misstated its future prospects” or whatever, a flesh and blood takeover argument, and the tribunal looks at it and says, “Yes, and that is a contravention and that is unacceptable and we want it remedied by withdrawing the offer”, or whatever the case may be, what effect does that have on the liability to prosecution or to penalties of the persons who were found to have engaged in those contraventions?
MR BENNETT: Under the new Act or the old Act, your Honour?
GLEESON CJ: This Act.
MR BENNETT: Under this Act, under the new Act, one has the provisions of section 659B which limit the commencement of court proceedings until the end of the bid period, although not proceedings by ASIC or a Minister or the DPP or persons of that sort. The words in bold at the beginning of 659B indicate very clearly the effect of the subsection, there is a delay imposed in the commencement of court proceedings until the end of the bid period. Under section 659C there is a more limited limit of the court’s powers after the end of the bid period, but ‑ ‑ ‑
GUMMOW J: Small “c” court as defined in section 58AA includes any court, does it not?
MR BENNETT: Yes, your Honour. Under section 659C(1)(c), if a Panel has refused to make a declaration but:
a Court finds after the end of the bid period that the conduct contravenes this Act;
the Court’s powers are limited to determining if “a person is guilty of an offence”, imposing “a penalty” or doing certain types of compensation.
GUMMOW J: That is a capital “C” Court.
MR BENNETT: That is a capital “C” Court, yes.
GLEESON CJ: What happens if the Panel does make a declaration and the person says, “They are just wrong. These people experienced in business and accounting and so forth have just made a mistake”?
MR BENNETT: First of all, the Panel decision is subject to prerogative control under the AD(JR) Act or the Judiciary Act. There is nothing in the Act which gives determinations of the Panel a conclusive character which would prevent collateral challenge and it is interesting to compare that. Section 658B provides that:
A finding of fact recorded in an order by the Panel . . . is proof of the fact in the absence of evidence in the contrary.
So, so far as facts are concerned, there is no restriction against giving evidence to the contrary.
To contrast that with what happens in relation to a court, under section 1317E:
If a Court is satisfied that a person has contravened 1 of the following provisions, it must make a declaration of contravention –
and under 1317F:
A declaration of contravention is conclusive evidence of the matters referred to in subsection 1317E(2).
So a distinction is drawn as to conclusivity between the Panel and the court.
GLEESON CJ: So does that mean that if the Panel finds a contravention and makes a declaration, when it comes to the question of whether you are exposed to a penalty, apart from whatever might be the adverse consequences of the remedial orders made by the Takeovers Panel, it is all considered afresh?
MR BENNETT: Except that the facts found by the Panel are proof of the fact in the absence of evidence to the contrary.
GLEESON CJ: Rather as if you were struck off the roll of solicitors on the ground that you had misapplied trust funds that you were later prosecuted for fraudulent misappropriation. Is that the way it works?
MR BENNETT: Yes, your Honour. In that example, of course, the fact that you had been struck off would be irrelevant except perhaps on penalty.
GLEESON CJ: Yes.
MR BENNETT: Findings of fact by a tribunal would not be as such even admissible as evidence before the court. Here the findings of fact might be admissible, but one can bring contrary evidence and not conclusive.
GLEESON CJ: What Justice Finkelstein regarded – and this was a major point of departure between the majority and the minority – what he regarded as a key to the absence of judicial power here was that the orders made by the tribunal could only be enforced by the decision of an independent body.
MR BENNETT: Yes, I will get to that when I come to the Brandy point, but, yes, that is an important distinction, whereas under the Brandy legislation one simply took the order of the Commission and registered it in the Federal Court and the registrar had to accept it and there were no discretions involved. Here the court has power to make orders for the enforcement of an order of the Panel, but the power of the court is preceded by the word “may” and the range of remedies are such that it could not be a Julius v Lord Bishop of Oxford situation where “may” means “must”. It is one of those situations where “may” has its prima facie meaning of “may”.
So there is in this case, we will be submitting – and I will come to the Brandy point – a very much weaker process of enforcement than there was in Brandy, and we will be submitting that there was an error in the majority judgment where they use the word “stronger” method. It is in fact a weaker method, and I will demonstrate that when I deal with Brandy.
KIEFEL J: Mr Bennett, section 1317E does not deal with all contraventions, does it?
MR BENNETT: No, your Honour, though it deals with some.
KIEFEL J: So a number of the contraventions that the Panel would be concerned with are not subject to court‑made declarations of contravention?
MR BENNETT: Some are not.
KIEFEL J: What follows from that? Nothing?
MR BENNETT: Well, no, your Honour. Subject to the limitations in section 659B and C, the court can simply deal with them after the relevant time. Yes, I am grateful to my friend and the court’s friend, section 1325A of the Act which is ‑ ‑ ‑
KIEFEL J: So the Panel’s implicit finding of the contravention, you would say, goes nowhere really. It is not really necessary to a declaration because it does not take effect as a declaration; it has no effect in relation to penalty. So that all that the provision would seem to do would be to prevent access to the court during the bid period, is that really all it is about? Is that what it comes down to?
MR BENNETT: Yes, your Honour. Substantially yes, your Honour. The Panel’s finding of a contravention, as I have shown, is merely one step along one of two alternative routes. It is by no means the whole of that step and it may well be involved in any event in the other step.
GUMMOW J: Mr Solicitor, I need to understand the connection between the activities of the Panel and firstly the AD(JR) Act and, secondly, the AAT Act. Looking first to the AD(JR) Act, the decisions of the Panel do not seem to be within the exclusion zone set up in the AD(JR) Act. Is that right?
MR BENNETT: No, your Honour and, indeed, these proceedings I think, like most proceedings ‑ ‑ ‑
GUMMOW J: It started that way ‑ ‑ ‑
MR BENNETT: ‑ ‑ ‑ are done in the alternative under the Judiciary Act and the AD(JR) Act.
GUMMOW J: But there is no attachment to the AAT system, is there?
MR BENNETT: No, there is not, your Honour. Now, the third of the matters relied on by their Honours in the majority at page 246 in the paragraph numbered (3) on the third line of that page, your Honours see that they say the provisions have:
significantly restricted the role of the courts during and after the bid period and, in particular, has removed the power to grant positive and negative orders to remedy a breach of the law other than orders for the payment of money.
We make a number of points about that. The first is that ex hypothesi in any situation where one has a power which can be part of a set of judicial powers conferred on a court or administrative powers conferred on a tribunal, if one has such a power – and using the colloquial word “chameleon” – then ex hypothesi, one can give it to a court, give it to a tribunal or move it from a court to a tribunal or vice versa by legislation. The mere fact that one has done that is nothing more than an illustration that the power may have the two possible characterisations.
KIEFEL J: Mr Bennett, I thought it would follow from what you said before that whilst the power to deal with contraventions has been removed from the court for that period, given that it is really no part of the Panel’s function to deal with contraventions, it is really in limbo. No one can do anything about a contravention in this period.
MR BENNETT: No, your Honour. If your Honour looks at section 659B ‑ ‑ ‑
KIEFEL J: You mean ASIC can bring proceedings?
MR BENNETT: That is the first thing, ASIC or the Minister or the DPP or any similar public body.
HAYNE J: The proposition in point 3 of paragraph 399 cast as it is about the court’s power may, as I would understand your submission, be cast too broadly. What is cut down is who may apply to the court.
MR BENNETT: Yes, and when.
HAYNE J: Not what the court can do, but who may apply.
MR BENNETT: Yes, and when, your Honour.
GUMMOW J: That is not quite right though, is it, because what is excluded are general law rights which are not vindicated by ASIC anyway.
MR BENNETT: Yes, although ‑ ‑ ‑
GUMMOW J: The private rights of private citizens.
MR BENNETT: As I will demonstrate, there are not many in that category.
GUMMOW J: It does not matter whether there are many or few. That is what the concluding words say. That raises a Re Tracey problem, does it not?
MR BENNETT: That section is not challenged. There is a decision called Lionsgate Australia v Macquarie (2007) 62 ACSR 178, a decision of Justice Austin in the Supreme Court. That was a case – I mentioned it briefly earlier in a different context – where the conduct was that the offeror had made a prior agreement with a major shareholder that that shareholder would accept any takeover offer that was made. There was a discussion. There was an attempt to commence proceedings for specific performance of that agreement and the question whether those proceedings were covered.
His Honour held that the words of section 659(b) were not wide enough to cover an action for specific performance, so the action could still be brought. His Honour also said in the course of it that the Panel could not have heard an action for specific performance – that is fairly obvious, I suppose, but that, in considering whether circumstances were unacceptable, the Panel was perfectly entitled to look at this agreement and find, if it chose, that these were unacceptable circumstances – that the agreement constituted unacceptable circumstances. But there was no relevant ouster of the court’s ability to deal with the specific performance application and indeed to have an injunction in the meantime.
GLEESON CJ: That was because the specific performance application was not proceedings in relation to a takeover bid.
MR BENNETT: Yes, although involving very much the same subject matter, not the same relief but the subject matter was clearly very closely related to it. But the court’s jurisdiction was not excluded. I simply use the case to demonstrate that the exclusion in section 659 is not as wide as might otherwise be suggested. I am not aware if there has been any appeal against this decision. I certainly have not heard of any ‑ ‑ ‑
GLEESON CJ: To return to Justice Gummow’s question, a litigant – a target cannot say, for example, the takeover offer is fraudulent and the court ought to restrain further publication of the offer of further proceedings on the offer.
MR BENNETT: It cannot do that, your Honour, during the takeover period. That is part of the overall policy of reducing the use of takeover litigation as a weapon in takeover battles.
GLEESON CJ: Yes, and the bodies referred to in section 659B(1)(a) to (e) are all bodies with limited resources who have to ration their resources and make a judgment about priorities in terms of litigation.
MR BENNETT: No doubt, private individuals can offer undertakings as to indemnification. There may be some questions about that in some cases but that certainly occurs in relation to liquidations and they will occur in this area as well. Also, of course, there is nothing to stop a offeror or target company going to ASIC and saying this is a case where you ought to do something about it, and, as I say, if necessary offering an indemnity as to costs.
GUMMOW J: There is a section 51(xxxi) problem, is there not, in the light of Georgiadis? It is all very well having these policies, the question is, how does the Constitution fit them? I know you say it is not challenged but the only reason why I flag it is that any declaratory relief that you obtained in your favour seems to me would have to be fairly narrowly expressed so that any further debate on these matters we are now talking about would not be seen to have been foreclosed.
MR BENNETT: There is a number of reasons, your Honour, why they would not be a Georgiadis problem. The first is that in an area where regulation ‑ ‑ ‑
GUMMOW J: That itself is a controversial area in section 51(xxxi). You may be right but I am saying it is a controversial area. It is one I have never subscribed to I suspect.
MR BENNETT: It is coming before your Honours in a few weeks in the Telstra Case to some extent.
GUMMOW J: Indeed, yes.
MR BENNETT: That is one reason. Another reason is that it merely defers the ability to commence the proceedings rather than ‑ ‑ ‑
GUMMOW J: It may be critical, you see, the specific performance suit is a good example. But the value of the right may have a very concentrated temporal span.
MR BENNETT: Yes, and, your Honour, under section 659C after the period the court can make an order in relation to compensation under 659C(1)(e)(ii). The substitution of rights in that sort of area is far less than has ‑ ‑ ‑
GUMMOW J: You may be right in the long run. All I am saying is any declaratory relief you succeeded in extracting from us in your favour seems to me would have to be fairly narrowly expressed to make it quite plain to others that these debates were not foreclosed by this case.
MR BENNETT: Your Honour, we are not seeking declaratory relief in relation to section 659B.
GUMMOW J: You want declaratory relief as to ‑ ‑ ‑
MR BENNETT: Section 657A, I think.
GUMMOW J: Section 657A(2)(b), is it not?
MR BENNETT: That is what has been done against us.
GUMMOW J: And that is all Mr Hanks is here to talk about.
MR BENNETT: We have sought, by way of, if one likes ‑ ‑ ‑
GUMMOW J: Your appetite has grown, I think.
MR BENNETT: Yes, we seek declaration in relation to 657A as such.
HEYDON J: You want the whole of it to be declared valid.
MR BENNETT: Yes, your Honour.
GUMMOW J: The question would be is not invalid on any ground but it involves contravention of Chapter III by investing purported judicial power.
MR BENNETT: I would be content with that limitation, your Honour.
GUMMOW J: You would be content with that?
MR BENNETT: Yes.
GUMMOW J: It would be useful if your phalanx of assistants at some stage could formulate the declaration in that way.
MR BENNETT: Yes, I will have that done, your Honour. The fourth of the matters relied on by their Honours at page 246, paragraph (4), a third of the way down the page, that matter is that section 657D(2), dealing with remedies, is more specific in relation to the kind of orders than the previous provision in 734. I start by the simple answer to that proposition, with respect to their Honours, is that it is wrong because it ignores the definition provision in section 657D(2) which confers power to make “a remedial order” and “remedial order” is defined in section 9 of the Act in a very broad way which includes virtually all the matters listed in the provision in the old Act.
HAYNE J: It adds to them, does it not? It adds divestiture?
MR BENNETT: Yes, remedial order includes divestiture, your Honour.
HAYNE J: And that is not in the old Act, I think?
MR BENNETT: It was, your Honour.
HAYNE J: Was it?
MR BENNETT: Yes. The lists are remarkably similar when one compares them. I can have them typed out or photocopied and the comparison handed to your Honours. The point is that their Honours have omitted to refer to the fact that it picks out ‑ ‑ ‑
HAYNE J: I would be helped by a reference to the power under the old Act to vest shares in ASIC. You can order sale.
MR BENNETT: Yes. Your Honour, it is section 734(2)(b)(v).
HAYNE J: Direct disposal, I understand that. I am talking about vesting in ASIC. That is new. What I am comparing is paragraph (g) of the definition of “remedial order” to what is found in 733. I mean, you may be right. It may be just repetition, but I could not find it.
MR BENNETT: Yes. The old one, in a sense, is broader ‑ ‑ ‑
HAYNE J: I can understand orders for sale. Orders for sale have certain commercial consequences. Orders vesting shares in ASIC seem to have rather radically different commercial consequences.
MR BENNETT: Yes. Paragraph (c) refers to “an order directing a person to do, or to refrain from doing, a specified act”, which is fairly broad. The specific procedure in relation to vesting in ASIC does not appear to be there, but the criticism seems to be that it is narrower rather than it is wider. The criticism seems to be that it is more specific in relation to the kind of orders than under the old Act. Now, that is rather the opposite of the example your Honour gives. Then their Honours say it can make remedial orders now, as I have shown there is that power, but it can make orders as to costs. There is a decision we have provided a copy of to your Honours in a case called GS Technology Pty Ltd v Secretary of the Copyright Tribunal (1999) 90 FCR 571.
GUMMOW J: This is the one on costs, is it not?
MR BENNETT: Yes, your Honour. There the Copyright Tribunal had power to order costs in relation to matters coming before it. The secretary of the tribunal had a power to tax the costs and give a certificate and it all looked very much like taxation in a court. That was upheld unanimously by the Full Federal Court and the ‑ ‑ ‑
GUMMOW J: It might have been upheld on more direct grounds, it seems to me. In Knight v FP Special Assets we explained at some length common law courts only got cost powers by statute.
MR BENNETT: Yes.
KIRBY J: Not many instances ever get struck down on the separation of powers theory, do they?
MR BENNETT: Your Honour, the clearest example in recent years is Re Yanner, a case I have referred to in this Court before. That was the same person but not the same case as came before this Court. Mr Yanner was elected to ATSIC, the Aboriginal and Torres Strait Islanders Council, and he had a number of convictions for assaults and crimes of violence. Under the legislation, convictions carrying a certain degree of sentence, disqualified one from being elected to ATSIC. Then the Act had the words “unless the Federal Court otherwise orders”. Mr Yanner applied to the Federal Court for an order and the court then took the point that the section was invalid.
It was a case where there was no contradictor supporting that viewpoint because Mr Yanner’s counsel, the application being ex parte, Mr Jackson, of course, argued for validity and the Commonwealth intervening argued for validity. So although the court had no contradictor, but without a contradictor at all, the Full Federal Court by majority held the provision to be invalid under Boilermakers on the basis that no criteria having been provided, it was simply disqualified unless the court otherwise ordered. It required the court to go into areas of policy and political considerations and so on and saying what offences ought or not to disqualify a person from being a member of ATSIC and that was contrary to Boilermakers.
That is a fairly extreme example, and I can give your Honours the reference. It is a case I have cited in this Court before but I will have reference found for your Honours.
KIRBY J: It would be interesting if it is readily available to you to give us a list of any recent cases where the judicial power has been held to be offended.
MR BENNETT: Two members of this Court so found in Thomas, of course.
KIRBY J: Yes, I am talking about decisions of the court, orders of the court.
MR BENNETT: Yes. I am not aware of other recent examples.
KIRBY J: Of course, you told us in Thomas it does not really matter very much, which led to a certain reaction in at least one quarter.
MR BENNETT: Your Honour, I know that is cited against us, your Honour. What I said, if I can construe my words, was that in ‑ ‑ ‑
HAYNE J: Never explain, never resign.
MR BENNETT: Yes. Where one fell within the intermediate area covered by the chameleon principle, it was of less importance but that it was of importance at the extreme ends, the extreme ends being examples like Yanner one way and, I suppose, criminal conviction and punishment the other way. They are clear examples where the Boilermakers principle would be significant. There were, of course, many earlier cases in this Court where various industrial bodies were struck down under the Boilermakers principle and were replaced by other bodies when the distinction between conciliation and arbitration on the one hand and judicial determination on the other was being developed by the Court. There were many cases in that line.
The concern which I was expressing in Thomas about Boilermakers, for which I seem to have been criticised, was that one should not adopt a strict approach which has the effect that every time one has a borderline situation, the Parliament must get it right and must, on pain of invalidity, give the function to the one side or the other, as opposed to a situation where the distinction is not a bright‑line one but a distinction between the three categories of case, those which are exclusively traditional, those which are exclusively administrative and those which can take their character from the body in which they are opposed.
KIRBY J: Yes, well, that runs into the argument that that is such a view of the chameleon principle that it effectively allows Parliament to decide this matter and that is not the way our Constitution is structured.
MR BENNETT: Your Honour, that depends how broadly one construes the colloquial phrase “borderline situation” or the principle as expressed more in full, but it is a principle that has been affirmed by this Court on many occasions.
KIRBY J: You are not going to tell us about night and day again.
MR BENNETT: Well, your Honour, I will bite my tongue on that subject. But it is a very good example of that type of principle, the dangers of that type of principle, that one can defend a principle very easily without drawing bright lines in borderline cases. That is ultimately the proposition expressed with maximum generality. The case I was referring to was Yanner v Minister for Aboriginal Affairs (2001) 108 FCR 543 and it is cited in footnote 60 in our submissions in-chief in this Court.
KIRBY J: One day an enterprising advocate will come along here and tell us a bit more about what happens in the United States where they seem to have got by without this chameleon principle.
MR BENNETT: Yes, in some respects their separation of powers is more rigid and in some respects it is less rigid than ours. It has, of course, the three, not the twofold division and so on.
GLEESON CJ: Particularly with those Article 1 courts.
MR BENNETT: Yes. The passage I was about to read to your Honours from GS Technology is at page 578, where the Court said this:
GST submits that s 174(1A) is invalid because it vests judicial power of the Commonwealth in a person other than a judge appointed under Ch III of the Constitution.
We reject the submission. The power granted to the Tribunal by s 174(1) and the requirement imposed by s 174(1A) upon the Tribunal or other “settling or taxing person” are administrative not judicial. Neither the Tribunal nor that person is required to exercise powers conferred upon the Federal Court ‑
Then this very useful passage appears:
The fact that the process engaged in by the Tribunal or other person in dealing with the items in a bill of costs may “look like” the process of taxation under O 62 of the Federal Court Rules does not make it that process.
The terms of s 174(1A) themselves acknowledge a distinction between what the Tribunal or other person is required to do on the one hand and an actual taxation of costs under the Court’s Rules . . .
The fact that for convenience, when defining the role of administrative decision‑makers, the legislature adopts concepts relevant to judges, courts or judicial power, does not signify that judicial power is indeed being conferred on these decision‑makers ‑
and Precision Data is referred to. One does not look at trappings to see if Boilermakers has been violated.
GLEESON CJ: The clearest example of that must be the Administrative Appeals Tribunal ‑ ‑ ‑
MR BENNETT: I was about to say that, your Honour.
GLEESON CJ: ‑ ‑ ‑ which consciously adopts for decision‑making by the executive branch of government proceedings with judicial trappings.
MR BENNETT: Precisely, your Honour. A member of the public walking into the Administrative Appeals Tribunal who was not legally trained would no doubt conclude that he or she was in a court and was watching a court process. It is not the trappings that matter. In that case what the provision concerning taxation said on page 575 was:
“(1) The Tribunal may order that the costs of any proceedings…shall be paid by any other party and may tax or settle the amount of the costs to be so paid, or specify the manner in which they are to be taxed.
(1A) In taxing or settling under subsection (1) the amount of the costs…of any proceedings before the Tribunal…or the person or persons taxing…shall allow so much only of the amount…would be allowed if the proceedings were proceedings before the Federal Court of Australia and the costs were taxed under the Federal Court Rules.
So the Federal Court procedure is used as a cap on the costs that the Tribunal can direct, and then:
(2) Costs directed by the Tribunal to be paid to a party may be recovered by that party in any court of component jurisdiction.
I must say the challenge to that failed. The second part of my submissions, which is very short, concerns Brandy (1994-1995) 183 CLR 245. What was said by the majority is in paragraph 408. Before I go to it, if I can just show your Honours what their Honours said about it. At paragraph 408 – page 250 of the appeal book:
It is to be noted that, in the legislation considered in Brandy 183 CLR 245, it was expressly provided that a determination of the Commission was not binding or conclusive between any of the parties to the determination . . . Thus, it was said that it was only because of the enforcement provisions that it could be concluded that there was the exercise of judicial power . . . The relevant provisions of the Corporations Act 2001, (s 657F, making contravention of an order an offence of strict liability and s 657G relating to court orders to secure compliance), provide stronger methods of enforcement ‑
We submit that is not the case because under the Brandy provisions there was a simple administrative procedure, one just took the orders into the registry of the Federal Court and registered them, and that we submit is a much stronger method of enforcement than the present matter where the court has to make an order to secure compliance and the court preceded by the word “may”. So it is weaker, not stronger, and we submit the word “stronger” at the end of paragraph 408 is incorrect.
The only respect in which it might be said to be stronger is that contravention itself in this case is made an offence, whereas before the Commission contravention itself was not an offence in the absence of registration. Registration was such a formal and simple and automatic procedure that we would submit that for all practical purposes it was stronger, not weaker – it is weaker in this case, not stronger.
I do not think I need to take your Honours to any particular parts of Brandy. The important provision in Brandy is the registration provision, and section 25ZAA of the Racial Discrimination Act – your Honours do not have it and do not need it – provided that the commission is required to lodge its determination with the registry. Under subsection (3) the registrar is required to register it, no discretion there, and 25ZAB(1):
Upon registration . . . the determination has effect as if it were an order made by the Federal Court -
Also there was a delay on action in that case because under section 25ZAB(3) no action to enforce the determination could be taken for 28 days, or if a review was sought till the review proceedings were complete. So there was a delay as well on enforcement. Under the present Act by contrast section 657G provides that:
(1)If a person contravenes, or proposes to engage in conduct that would contravene, an order made by the Panel under section 657D or 657E, the Court may make any orders it considers appropriate to secure compliance with the Panel’s order –
not “must”.
GLEESON CJ: Well, this is the point that Justice Finkelstein regarded as decisive. I think in paragraph 95 on page 153 of the appeal book he said that this point was “fatal to the argument that the Panel exercises judicial power”. What do you understand to have been the difference between Justice Finkelstein and the majority on this point?
MR BENNETT: Well, the majority simply erred, we would submit, in saying that it provided stronger methods when it provided weaker methods. In one sense it is not a method of enforcement but using methods of enforcement in the loose sense it is weak and not stronger, and it is simply an erroneous conclusion from the legislation when looked at as a whole, whereas Justice Finkelstein ‑ ‑ ‑
GLEESON CJ: Well, he says “intervention of a court is required for their enforcement”. I thought the majority said that by the force of statute certain consequences follow from the making of orders.
MR BENNETT: Yes, they do, but that aspect is a slightly different aspect and, again, there are many situations where a member of the Executive may do something and that results in an offence. If a person’s driver’s licence is cancelled by the Department of Motor Transport officer, it is an offence of strict liability to continue to drive on the cancelled licence. One could think of numerous examples. Resisting arrest is another. The constable makes a decision to say “I arrest you” and that makes the action of resisting or even not going along with it an offence. There are many situations where to disobey some executive decision may be an offence. That does not mean that making that executive decision, the policeman saying “Move on”, is an exercise of judicial power. The substantive means of enforcement is section 657G and that is the court making orders to secure compliance as a discretionary matter because of the word “may” and the range of orders which can be made.
GLEESON CJ: In paragraph 97 Justice Finkelstein dealt with paragraph 657F. This is related back to his introductory remarks about the history enforcement of court orders, as I understand his reasoning.
MR BENNETT: Yes, and he makes the point, of course, that the maximum penalty is so low that it is hardly going to operate as a sanction in many cases. What is important is the orders which are made to secure compliance, rather than the comparatively small fine.
HAYNE J: There is the intervening judicial step of determining whether there has, in truth, been contravention of the Panel order. That may be self evident in the clearest case. It may not be.
MR BENNETT: Yes, there is that and there is the “may” and there is the range of remedies. There is the three factors which stand between the order and its ultimate enforcement.
GLEESON CJ: What is the legislative policy behind this? I mean, as Justice Finkelstein points out, the maximum penalty of $2,750 in the field of takeovers does seem surprising. That is less than you would pay to get an opinion from a lawyer about whether something would constitute a contravention.
MR BENNETT: Yes. It reflects the legislative policy that the real enforcement comes through section 657G, as has always been the case, in a sense, in relation to takeovers. It also, no doubt, reflects the fact that there may be inadvertent breaches and, for example, the Panel may have ordered something to take place within a particular time and one is a day late, so one can have trivial breaches, and so on. There is always a question which legislature has to consider of whether the criminal law is a blunt instrument for the enforcement of regulatory policy and whether it is more appropriately enforced in the particular case by specific court orders. That is a matter of legislative policy in each case. That concludes what I want to say about Brandy.
The final section of my submissions has three parts. First, to simply remind your Honours of other decisions upholding validity, there is the decision of Justice Emmett in a case called Glencore (2005) 220 ALR 495 which I will not take your Honours to. There is the decision below of Justice Emmett, which is in the appeal book in this case. There is the dissenting judgment of Justice Finkelstein, which is in the appeal book in this case. There is a dictum in a case called Pendant Software v Harwood (2006) 154 FCR 150 where there is a dictum at paragraph 37 simply approving the decision in Glencore as to validity. So I simply refer your Honours to those without further reference.
The second part of my third submission is simply to stress, without wishing to labour it, the central proposition which appears from cases such as Precision Data that where the legislation creates a right and determines the method by which that right can be enforced, one can have a situation where it is not really creating a right at all at the intermediate stage. The creation of the right is mixed up with the remedy in such a way that it is the determination of the administrative body rather than the primary facts which give rise to the legislative consequence. The determination operates as the factum, if one likes.
As was said in the passage I read to your Honours from Precision Data recently, where that is done and the criteria involve general policy considerations, one has very much the creation of a right by the body rather than the enforcement of a right. Indeed, that is stronger here than in the case of the former Act. In the former Act what was said was, in effect, here are the Eggleston principles. If you commit a breach of those, that is unacceptable conduct and certain consequences follow and the tribunal determines that. Here, the tribunal decides something much more subjective for the purpose of creating a right, expressly influenced by policy and by the public interest and the other subjective elements I have referred to. We do stress, this is a case of the creation of a right which then becomes the factum and we stress again that it is subject to both collateral challenge and prerogative challenge.
The third aspect is to deal with Precision Data itself. Your Honour Justice Kirby, I think, yesterday asked for a document which listed the sections and a comparative analysis of the sections. That is useful and if one looks at what was said in Precision Data (1991) 173 CLR 167 and if one looks at the matters set out at the beginning of the judgment as the relevant features of the panel as it then existed, one finds something very similar to what occurs here. It starts at page 182 in the judgment of the Court:
The Panel is to consist of not fewer than five members . . . A member may be appointed as a full-time or part-time member. The Minister is to nominate a person as a member only if the Minister is satisfied that the person is qualified for appointment by virtue of his or her knowledge of, or experience in, one or more of the following fields, namely, business, the administration of companies, the financial markets, law, economics and accounting.
Law is only one of the six and that is similar under section 172 of the present ASIC Act which establishes the Panel. One holds office for five years “but is eligible for re-appointment”. That is I think the same under section 175(1). Over the page the Panel holds hearings and it can direct that it take place in public or private, a member can by summons require things to be produced, it can administer an oath or affirmation. Those matters are all in the new Act. “A hearing shall be conducted with as little formality and technicality, and with as much expedition” as is permitted, that is now regulation 16(2)(c) under the ASIC regulations. It “is not bound by the rules of evidence”, that is section 195(4) and regulation 16 deals with that matter. “Two members form a quorum”, that is section 193. It takes into account submissions by persons who do not wish to appear, that is regulation 16(2)(b). “The Panel may, of its own motion or at a person’s request refer to the Court (the Federal Court or a Supreme Court of a State or Territory) a question of law”, that is section 695A of the Corporations Act.
The immunities are those of your Honours. That is a provision which appears quite commonly in relation to various bodies, and the same provision appears in the current Act. There is:
no power to punish for contempt . . . Contravention of a direction given by the Panel under s.190(1) preventing or restricting the publication of certain material is an offence punishable on summary conviction –
When one takes those together, the submission simply is not available, and the fact that in the explanatory memorandum there may have been a comment suggesting that the words have more importance than they do in the Act does not result in them being construed that way. The words stand by their own force. The explanatory memorandum is merely setting out a political comment, if one likes, on what is being done but it does not assist this Court in deciding the true role of the finding in relation to contravention involved where the Panel proceeds in the route in (b). In my respectful submission, all my friend’s submissions in that regard fail.
GLEESON CJ: It does appear however, does it not, that at some stage during the passage through Parliament in this legislation somebody woke up to the fact that the practical consequence of the qualified prohibition on taking proceedings from the takeover bid was that nobody could complain about contraventions during the period of the takeover bid, and after the period of the takeover bid, as your opponent said, the eggs would be well and truly scrambled.
MR BENNETT: Yes. But, your Honour, it was unnecessary, or largely unnecessary, because paragraph (a) would enable the ‑ ‑ ‑
HAYNE J: No, it would not, 606 would not be engaged and 606 is a substantial part, is it not, of what we are on about?
MR BENNETT: Yes, your Honour, but the 606 ‑ ‑ ‑
HAYNE J: Which does not occur in the context of a bid.
MR BENNETT: Yes, and a breach of 606 would normally involve a breach of the Eggleston principles and certainly the Panel must, in any event, have regard to the other provisions of the chapter which would include 606. It is, as your Honour correctly indicates, the centrepiece of the takeovers regulation and, no doubt if there were a breach of section 606, that would squarely fall within (a) in most cases unless taken out of it by one of the other matters I have referred to. We stress that to show that while (b) may have a practical function by way of clarification, there would be little difference if it were omitted because the Panel could still determine under (a) factual matters which happen to constitute a contravention which would, in the view of the panel, constitute unacceptable circumstances.
There was mention made in argument about section 51(xxxi) in two contexts. The first context is in relation to divestiture and the reference in the provisions to divestiture. Where shares are vested in ASIC the correct view, in my respectful submission, is that ASIC holds them in effect on trust and the normal result would be that it would sell them and give the proceeds to the true owner.
So the vesting in ASIC is not a forfeiture in the sense of permanent deprivation of an asset, it is a step towards the sale and realisation of the asset. One must remember that one is talking about marketable securities, so although it may make some difference it may not make an enormous difference whether they are disposed of by the owner under a requirement to do so or disposed of by ASIC after a vesting in it. There may be minor differences of timing and differences as to how much is put on the market at once and matters of that sort, but as a matter of substance, the vesting in ASIC is merely a step along the road to a means of providing for divestiture of the shares and their replacement and their sale, and their replacement in the hands of the true owner by money.
There is a case discussing that. I will not take your Honours to it, I will simply give your Honours the reference. It is Australian Securities Commission v Bank Leumi (1996) 14 ACLC 1,576 at pages 1,589 and following where there is a discussion of what in a slightly different context of what ASIC does once shares are vested in it. The procedure normally occurs, of course, where there has been a breach of the substantial shareholder provision, and an owner of shares, typically a Swiss bank, declines to inform ASIC on request who the owner is. That is a classic case for a divestiture order, the shares being vested in ASIC, sold and, no doubt, the proceeds paid to the registered owner, the Swiss bank in question, and that is discussed in the Bank Leumi Case.
The other aspect of the possible section 51(xxxi) problem lies in the taking away of causes of action. In my respectful submission, an Act which merely says that in circumstances where a cause of action might otherwise have been available, it shall not arise or shall not be enforceable, is not an Act divesting – is not an acquisition of property under section 51(xxxi) except in relation to its retrospective application. It is otherwise merely a legislative regulation of the cause of action and of what one can do with it when one gets it. It may be different if there is retrospectivity in the existing causes of action at the time of the legislation, but otherwise there is no section 51(xxxi) – there is no Georgiadis problem where all the Act says is a person who is prospectively injured shall not be entitled to particular damages or shall not be entitled to sue in certain circumstances and so on.
For that reason, this legislation is incapable of giving rise to a problem of acquisition. Even if it did, there are still two other answers that would be available. One is the type of consideration that was involved in Theophanous Case, where one is concerned with the regulation of statutory rights in particular areas and the Telstra Case to come up and so on. More importantly, it is a case where there is clearly just terms both because in lieu of the cause of action one has the slightly different types of remedy before the Panel and, secondly and more importantly, because under section 659C(1)(e) the court may determine whether a person who was involved in the conduct contravened a provision and, if so, order that person to pay a sum of money.
So there is still the remedy which one would be concerned about, if it were taken away, given back. So clearly there would be just terms or, putting it a little differently, no ultimate acquisition. We submit that the appropriate order to be made if I am otherwise successful is a declaration in the terms that have been sought.
My learned friend referred a number of times to quelling controversies. We simply submit that the phrase “quelling a controversy” cannot be an exhaustive test of judicial power. There are many things which are done by administrative bodies which quell controversies in one way or another and there are some things courts do which do not quell controversies which are regarded as exercises of judicial power. In my respectful submission, while it may be one of the elements in classic judicial power, it is certainly not something which one can impose as a test in its own right and say, well, here the controversy is quelled and that is the end of the issue.
GLEESON CJ: How do those privacy commissioners operate? Are they State bodies?
MR BENNETT: I think there is a Federal Privacy Commissioner.
GLEESON CJ: How are the rulings, if I could use that neutral expression, of the Federal Privacy Commission given effect?
MR BENNETT: I would have to check that in the Act, your Honour. It is fairly new legislation. I would have to check that. But there are many people. Ombudsman is another. The Privacy Commission is another. The Human Rights and Equal Opportunity Commission is another.
GLEESON CJ: I think the Press Council quells controversies.
MR BENNETT: It does, your Honour, in one sense.
KIRBY J: That is not a statutory body, I think.
MR BENNETT: No, it is not. Its orders were enforceable only as a matter of contract, rather like an arbitration. An arbitrator does not exercise judicial power although he quells controversies and may have many of the trappings of a court. My learned friend then made some submissions about policy. We are at issue in relation to those matters.
GLEESON CJ: I think you said earlier in relation to that earlier point the Administrative Appeals Tribunal quells controversy and would look a great deal more like a court than the Takeover Panel.
MR BENNETT: Yes, it would, your Honour. It would. My learned friend made the point that there are situations where courts deal with matters of public interest and policy and gave the example of Thomas, but he himself provided the answer when he said that the fact that the body may be properly influenced by matters of policy reaching its decisions is an indicium. It points against it being judicial rather than a conclusive factor. When it becomes a conclusive factor, of course, as was said in Precision Data, is where one creates new rights and does so on the basis of policy considerations and does not oneself enforce them.
Obviously, your Honours, and I think this is probably clear from what I have said, the primary relief we seek is the setting aside of the Federal Court’s declaration given by majority. The secondary relief we seek, and there is of course ample authority in this Court for doing it in appropriate cases, is the counter declaration in the terms which we have sought. May it please the Court.
KIRBY J: In terms of costs, I think in your written submissions you say you neither seek nor do you submit to an order for costs, is that the position? You remember in Marquet I think the amici certainly did not get their costs. There might have been cost orders made against them, I am not sure.
MR BENNETT: There were not cost orders against them I am fairly sure, your Honour, but I may be wrong.
KIRBY J: No, certainly they did not get them even though they were the contradictor which seemed to me at the time a little unfair.
MR BENNETT: Your Honour, I certainly do not seek costs against the contradictors.
KIRBY J: You have your private arrangements – I think it is mentioned in the affidavit that you have filed.
MR BENNETT: The only costs issue is the very minor one raised by Alinta yesterday which I addressed your Honours on at that time and which, we submit, turns on the correspondence. It is an interlocutory issue and ‑ ‑ ‑
GLEESON CJ: We heard argument on that while Mr Lockhart was here.
MR BENNETT: Yes, I will not say any more about that. If the Court pleases.
GLEESON CJ: Thank you, Mr Solicitor.
MR BENNETT: If the Court pleases.
GLEESON CJ: We will reserve our decision in this matter and we will adjourn until 10 o’clock tomorrow morning.
AT 4.08 PM THE MATTER WAS ADJOURNED
0
3
0