Australian Securities and Investments Commission v Yandal Gold Holdings Pty Limited

[1999] FCA 567

FEDERAL COURT OF AUSTRALIA

Australian Securities & Investments Commission V Yandal Gold Holdings Pty Limited [1999] FCA 567

PRACTICE AND PROCEDURE – Application to amend statement of claim – introduction of new causes of action – relevance of whether claims likely to succeed where facts sought to be raised form part of the existing controversy before the Court – whether appropriate to grant leave to add a cause of action under s 52 of the Trade Practices Act 1974 (Cth) to ensure Federal Court has jurisdiction in the matter if High Court overrules Gould v Brown (1998) 72 ALJR 375

Corporations Law s 995

Trade Practices Act 1974 (Cth) s 52
Australian Securities and Investments Commission Act 1989 (Cth) s 12DA

Wickstead v Browne (1993) 10 Leg Rep SL 2 – applied
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 – cited

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v YANDAL GOLD HOLDINGS PTY LIMITED
V 3094 OF 1999

JUDGE:         MERKEL J
DATE:           27 APRIL 1999
PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 3094 OF 1999

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Applicant

AND:

YANDAL GOLD HOLDINGS PTY LIMITED
(ACN 085 189 671)
First Respondent

YANDAL GOLD HOLDINGS PTY LTD
(ACN 085 602 213)
Second Respondent

EDENSOR NOMINEES PTY LTD
(ACN 005 168 516)
Third Respondent

NORMANDY MINING LIMITED
(ACN 009 295 765)
Fourth Respondent

NORMANDY MINING FINANCE LIMITED
(ACN 058 419 604)
Fifth Respondent

NORMANDY CONSOLIDATED GOLD HOLDINGS PTY LTD
(ACN 008 671 252)
Sixth Respondent

NORMANDY MINING HOLDING PTY LTD
(ACN 007 544 112)
Seventh Respondent

JUDGE:

MERKEL J

DATE OF ORDER:

27 APRIL 1999

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.(a)   The applicant have leave to amend the application and statement of claim as sought in the applicant’s motion of 23 April 1999.

(b)Direct delivery, by facsimile if desired, of the amended application and statement of claim on 27 April 1999.

(c)Direct that an amended defence be delivered by 4.00 pm on Friday, 30 April 1999.

2.   Any further affidavit or report upon which ASIC wishes to rely be filed and delivered by 5.00 pm on 29 April 1999.

3.   Extend the date for delivery of the respondent’s affidavits and material to 5.00 pm on 7 May 1999.

4.   Extend the times for the outline and statement of facts and contentions of the applicant to 4.00 pm on 10 May 1999 and of the respondent to noon on 12 May 1999.

5.   ASIC pay the taxed costs of the respondents of and incidental to the motion of 23 April 1999 and any costs thrown away by reason of the amendments.

6.   Reserve liberty to apply.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 3094 OF 1999

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Applicant

AND:

YANDAL GOLD HOLDINGS PTY LIMITED
(ACN 085 189 671)
First Respondent

YANDAL GOLD HOLDINGS PTY LTD
(ACN 085 602 213)
Second Respondent

EDENSOR NOMINEES PTY LTD
(ACN 005 168 516)
Third Respondent

NORMANDY MINING LIMITED
(ACN 009 295 765)
Fourth Respondent

NORMANDY MINING FINANCE LIMITED
(ACN 058 671 604)
Fifth Respondent

NORMANDY CONSOLIDATED GOLD HOLDINGS PTY LTD
(ACN 008 671 252)
Sixth Respondent

NORMANDY MINING HOLDING PTY LTD
(ACN 007 544 112)
Seventh Respondent

JUDGE:	MERKEL J
DATE:	27 APRIL 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. On 11 January 1999 the third respondent (“Edensor”) held approximately 12.6% of the shares on issue in Great Central Mines Limited (“Great Central Mines”) a company listed on the Australian Stock Exchange.  On the same day the seventh respondent (“Normandy”) held 27.8% of shares on issue in Great Central Mines.  The Normandy Group and Edensor held all of the issued shares in the second respondent which in turn owned all of the issued shares in the first respondent (“Yandal Gold”).

2. The controversy in the present case between the applicant (“ASIC”) and the respondents relates to the legal consequences of a Shareholders Agreement, entered into between Edensor, Normandy and the other respondents on 11 January 1999 for the purposes of a takeover by Yandal Gold of Great Central Mines, and a Pt A Statement of the same date in relation to offers proposed to be made by Yandal Gold for all of the shares in Great Central Mines. ASIC claims that as a result of the Agreement and other arrangements made between the respondents they have contravened s 615 of the Corporations Law (“the CL”).

3. The matter has been set down for trial on 13 May 1999.  By a motion dated 23 April 1999 ASIC sought leave to amend its application and its statement of claim.  The amendments sought to be made fall into three categories.

   (a)An allegation that Edensor and Normandy entered into, what has been referred to as a “non-acceptance agreement”, whereby each is said to have agreed or understood that it would not accept Yandal Gold’s takeover offers in respect of the shares it held in Great Central Mines with the consequence that each obtained power to exercise control over the disposition of shares of the other and therefore acquired a “relevant interest” in those shares. If the amendment is permitted it would afford an additional basis for ASIC to contend that the takeover arrangements between the parties constituted a breach of s 615 of the CL.

   (b)An allegation that certain statements made in the Pt A Statement were incorrect by reason of the relevant interests acquired by Edensor and Normandy pursuant to the alleged non-acceptance agreement and by reason of the other matters which were previously said to constitute a contravention of s 615 of the CL. The incorrect statements are said to give rise to a claim under s 52 of the Trade Practices Act 1974 (Cth) and s 995 of the CL;

   (c)Proposed additional particulars under para 16 of the statement of claim which are said to relate to matters arising from the reports of the expert witness proposed to be called by ASIC.

4. The respondents oppose the first and second categories of amendments on the basis that the matters relied upon are without merit or legal substance and will add to the scope of the trial.  Consequently, so it is said, it is appropriate to disallow the amendments rather than embarrass or delay the proper conduct of the proceeding.  The third category is also opposed on the basis it is not supported by the evidence.

5. ASIC disputed the contentions of the respondents and submitted that the amendments arise out of facts that are already in issue and will be required to be considered by the Court in the existing proceeding and merely add additional legal bases for the relief sought.  In particular it is said that:

   ·    the non-acceptance agreement is based on uncontroverted facts and establishes an additional legal ground for the relief presently sought;

   · the claims under s 52 of the Trade Practices Act 1974 (Cth) and s 995 of the CL may apply concurrently in a given set of circumstances: see Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 464; and ASIC is entitled to rely on either;

   ·    ASIC desires to ensure that the Federal Court has jurisdiction to resolve the dispute in the event that the High Court overrules the Gould v Brown (1998) 72 ALJR 375 and holds that the jurisdiction which the States have attempted to confer on the Federal Court by their respective Corporations Acts is invalidly conferred;

   ·    ASIC proposes to file further material to support the additional particulars.

6. Ultimately, ASIC contends that the amendments proposed are clearly arguable, that no prejudice has been advanced to support the respondents’ opposition to the amendments and that it would suffer an injustice if it was not able to litigate arguable causes of action which are part of the controversy to be heard and determined by the Court.

7. In my view the submissions of ASIC ought to be accepted.  I am satisfied that the matters sought to be raised form part of the existing controversy or matter, will substantially arise out of the evidence that will be adduced by the parties as presently pleaded and are appropriate for resolution as part of the existing proceeding.  The fact that the amendments might expand the evidence is not, in my view, a basis for refusing the leave sought.

8. I am also of the view that in such circumstances it is no answer to the amendments sought to contend that they face serious legal difficulties.  Whilst that ground may have greater force in respect of a cause of action which raises a new matter or controversy which is separate from that already before the Court, a different situation applies in respect of an amendment claiming an additional basis for relief arising substantially out of the evidence which will be adduced as part of the existing matter.  In Wickstead v Browne decided by the High Court on 30 April 1993 (1993 10 Leg Rep SL 2) the High Court upheld the minority judgment of Kirby P at first instance (1992) 30 NSWLR at 5-7 but, in particular, his Honour’s decision that it was inappropriate for a court to preclude a party from relying on a cause of action notwithstanding that it may have considerable legal difficulties in its path where the facts, upon which the cause of action is based, are substantially the same facts as would be adduced in evidence in respect of the other causes of action before the court. In my view, similar circumstances exist in the present case.

9. One additional ground upon which leave was sought by ASIC was to ensure there was a proper jurisdictional basis for the matter presently before the Court. It would, to say the least, be surprising to many that some one hundred years after the founding fathers determined that it was appropriate for s 51(xx) of the Constitution to confer plenary power on the Commonwealth Parliament to make laws with respect to the conduct engaged in by corporations and their officers after the formation of a corporation, that no Commonwealth Corporations Law has been enacted. As a consequence, the Federal Court is dependent for its jurisdiction in Corporation Law matters upon the jurisdiction conferred upon the Court under State and Territorial Corporations legislation. The Court’s jurisdiction is currently the subject of challenge in the High Court and awaiting a decision of that court. In those circumstances it is appropriate for ASIC to raise its proposed additional cause of action under s 52 of the Trade Practices Act (and if it arises, under s 12DA of the Australian Securities and Investments Commission Act 1989 (Cth) to the extent that the claim for misleading and deceptive conduct might relate to “financial services” as defined in s 12BA of that Act) in order to found jurisdiction in the matter in the Court if the challenge in the High Court to Gould v Brown is successful.

10. It is unnecessary for me to consider for the purposes of the present application, whether ASIC’s additional categories of claims are likely to succeed.  It is sufficient for me to be satisfied that it is proper for ASIC to raise those matters; their success is a matter for argument at trial.

11. For the above reasons it is appropriate to grant leave to amend the Application and the Statement of Claim in the manner sought by ASIC on in its motion.

12. ASIC has sought an indulgence in respect of the amendments which arise primarily out of documents which have been in its possession for some time.  In those circumstances it is appropriate that ASIC pay the taxed costs of the respondents of and incidental to the motion and any costs thrown away by reason of the amendments.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.

Associate:

Dated:             27 April 1999

Counsel for the Applicant:	Mr S Rares SC with Mr RD Strong
Solicitor for the Applicant:	Australian Securities and Investments Commission
Counsel for the first and second Respondent:	Mr A Archibald QC with Mr L Glick
Solicitor for the first and second Respondent:	Clayton Utz
Counsel for the third Respondent:	Mr B Ross
Solicitor for the third Respondent:	Clayton Utz
Counsel for the Fourth to Seventh Respondent:	Mr M Garner
Solicitors for the Fourth to Seventh Respondent:	Freehill Hollingdale & Page
Date of Hearing:	27 April 1999
Date of Judgment:	27 April 1999