FEDERAL COURT OF AUSTRALIA
CEMEX Australia Pty Ltd v Takeovers Panel [2008] FCA 1572
JUDICIAL REVIEW – Takeovers Panel – review of Panel’s declaration that applicant’s announcement of a final dividend payment departed from its best and final offer – whether “unacceptable circumstances” – whether contravention of the Corporations Act 2001 (Cth) is a mandatory consideration in deciding to make a declaration of unacceptable circumstances
JUDICIAL REVIEW – Takeovers Panel – review of Panel’s orders following declaration of unacceptable circumstances – whether orders were authorised by s 657D of the Corporations Act 2001 (Cth) – whether improper exercise of power – whether error of law
CORPORATIONS – Takeovers Panel – orders under s 657D of the Corporations Act 2001 (Cth) – whether Panel had power to make order for payment to affected shareholders in the absence of evidence as to individual loss by shareholders – whether orders involved an impermissible delegation of power to the Australian Securities & Investments Commission – whether orders protected rights or interests that no longer exist
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 16
Australian Securities and Investments Commission Act 2001 (Cth) ss 172, 195, 261
Corporations Act 2001 (Cth) ss 602, 657A, 657C, 657D, 657E, 657EA, 659AA, 1478
Corporations Amendment (Takeovers) Act 2007 (Cth)
Financial Services Reform Act 2001 (Cth)
Judiciary Act 1903 (Cth) s 39BAustralian Securities and Investments Commission Regulations 2001 (Cth)
Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223 cited
Attorney General (Cth) v Alinta Ltd (2008) 242 ALR 1 referred to
Australian Securities & Investments Commission v Yandal Gold Pty Ltd (1999) 32 ASCR 317 discussed
Glencore International AG v Takeovers Panel (2005) 54 ACSR 708 discussed
Glencore International AG v Takeovers Panel (2006) 151 FCR 77 discussed
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 cited
Queen v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13 citedCEMEX AUSTRALIA PTY LTD v SIMON MCKEON, ELIZABETH ALEXANDER AND JOHN O'SULLIVAN IN THEIR CAPACITY AS MEMBERS OF THE TAKEOVERS PANEL and AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
NSD 1932 OF 2007
STONE J
23 OCTOBER 2008
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1932 OF 2007
BETWEEN:
CEMEX AUSTRALIA PTY LTD
Applicant
AND:
SIMON MCKEON, ELIZABETH ALEXANDER AND JOHN O'SULLIVAN IN THEIR CAPACITY AS MEMBERS OF THE TAKEOVERS PANEL
First RespondentAUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
Second Respondent
JUDGE:
STONE J
DATE OF ORDER:
23 OCTOBER 2008
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The applicant has leave to file and serve short submissions as to costs no later than 31 October 2008.
3.The respondents each have leave to file and serve short submissions as to costs no later than 7 November 2008.
4.The applicant has leave to file and serve short submissions in reply no later than 14 November 2008.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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- Case
- [2008] FCA 1572
- Decision Date
CaseChat Overview and Summary
The court found that the Panel was not required to consider whether CEMEX's conduct constituted a contravention of the Act, as the question of whether unacceptable circumstances had arisen was the primary consideration. The court held that the Panel's decision to declare unacceptable circumstances was not an improper exercise of power, as it was not necessary for the Panel to consider if there had been a contravention. The court also found that the Panel had considered all relevant matters, and that its failure to consider whether there had been a contravention was not so unreasonable as to amount to an improper exercise of power.
The court dismissed CEMEX's application for judicial review, and granted leave for the parties to file and serve short submissions as to costs. The court held that the Panel's decision to declare unacceptable circumstances and order compensation to shareholders was lawful and reasonable, and that the Panel had properly exercised its power under the Corporations Act.
Orders
Orders of the court
1. The application be dismissed.
2. The applicant has leave to file and serve short submissions as to costs no later than 31 October 2008.
3. The respondents each have leave to file and serve short submissions as to costs no later than 7 November 2008.
4. The applicant has leave to file and serve short submissions in reply no later than 14 November 2008.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: STONE J
CEMEX seeks review of the declaration and orders of the review Panel on a number of grounds. I shall deal with each ground of review in turn. Declaration CEMEX's first ground of review is that making the declaration of unacceptable circumstances was, within the meaning of s 5(1)(e) of the ADJR Act, an improper exercise of the power conferred by s 657A of the Corporations Act. CEMEX alleged that the Panel failed to take into account:(i)whether, and if so the extent to which, CEMEX’s conduct constituted or gave rise to a contravention of Chapters 6, 6A, 6B or 6C of the Corporations Act;(ii)the extent to which any person was misled or confused or suffered loss by any conduct of CEMEX;(iii)the matters referred to in s 657A(3) of the Corporations Act; … Moreover, it was alleged that the failure in (a) above, and the failure to consider the specific effect of the unacceptable circumstances, was so unreasonable an exercise of the power conferred by s 657A that no reasonable person could have so exercised the power. The ADJR Act provides that an improper exercise of power includes, inter alia, taking an irrelevant consideration into account in the exercise of the power and failing to take a relevant consideration into account: s 5(2). CEMEX submitted that in declining to have regard to whether its conduct gave rise to a contravention of Chapters 6, 6A, 6B, or 6C of the Corporations Act or was otherwise contrary to law, the Panel ignored a consideration that it was bound to take into account in making the decision: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40. It is not in dispute that the Panel expressly declined to consider this question. Therefore the only issue for me to decide on this point is whether the Panel was required to have regard to it. Section 657A(3)(a)(ii) imposes an obligation on the Panel, when contemplating a declaration of unacceptable circumstances, to have regard to “the other provisions of this Chapter [6]”. CEMEX submitted that, because of the express reference in s 657A(2)(c) to Chapters 6A, 6B and 6C, the obligation extends also to those chapters. It accepted that a declaration of unacceptable circumstances may be made even if the circumstances do not give rise to a contravention of the Act; s 657A(1). It submitted, however, that a consideration need not be determinative to render it relevant. CEMEX referred to the Panel's observation that forming a view about whether a contravention had occurred would only be one aspect of considering whether the circumstances were unacceptable. It argued that it did not follow that the issue could be ignored. CEMEX’s submissions advocate a mechanistic approach to the interpretation of s 657A(3)(a). This is not what the section requires. An obligation to have regard to Chapter 6 does not require the decision maker to consider whether there has been a contravention of each and every applicable provision. The task of the Panel was to consider whether, as ASIC alleged, unacceptable circumstances had arisen. Section 657A(3)(a) sets out the matters that it is mandatory for the Panel to consider. The question of whether there has been a contravention of Chapters 6, 6A, 6B, 6C is not included as a mandatory matter. The fact that s 657A(1) specifically provides that it is not necessary for there to be a contravention of a provision of the Act, indicates that if the Panel considered CEMEX's conduct resulted in unacceptable circumstances irrespective of there being a contravention, it was not necessary for it to consider if there had been a contravention. It is clear that the fact of a contravention would be highly relevant to the question of whether the circumstances should be characterised as “unacceptable”. If, however, such circumstances exist irrespective of a contravention, it is not necessary for the Panel to consider that issue.