Glencore International AG & Anor v Ramsay & Ors

[2005] HCATrans 458

[2005] HCATrans 458

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S358 of 2005

B e t w e e n -

GLENCORE INTERNATIONAL AG

First Plaintiff

FORNAX INVESTMENTS LTD

Second Plaintiff

and

IAN RAMSAY NORMAN O’BRYAN AND DAVID GONSKI IN THEIR CAPACITY AS MEMBERS OF THE TAKEOVERS PANEL

First Defendants

CENTENNIAL COAL COMPANY LIMITED

Second Defendant

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Third Defendant

AUSTRAL COAL LIMITED

Fourth Defendant

CREDIT SUISSE FIRST BOSTON INTERNATIONAL

Fifth Defendant

ABN AMRO BANK NV

Sixth Defendant

Application to show cause with a summons

HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 29 JULY 2005, AT 9.16 AM

Copyright in the High Court of Australia

__________________

MR T.F. BATHURST, QC:   If the Court pleases, I appear with my learned friend, MR M.J. LEEMING, for the plaintiffs.  (instructed by Atanaskovic Hartnell)

MR S.J. GAGELER, SC:   If the Court pleases, I appear with MR C. BOVA, for the first defendants.  (instructed by Arnold Bloch Leibler)

MR J.E. GRIFFITHS, SC:   If the Court pleases, I appear with MR J.K. KIRK, for the second defendant.  (instructed by Blake Dawson Waldron)

MS K.N. CUNEO:   I appear as solicitor for the third defendant.  (instructed by Australian Securities and Investments Commission)

MR R.P.L. LANCASTER:   May it please your Honour, I appear for the fifth defendant.  (instructed by Mallesons Stephen Jaques)

MS M.F.C. O’BRIEN:   May it please the Court, I appear as solicitor for the sixth defendant.  Your Honour, there should be a submitting appearance in respect of the sixth defendant, in which case I ask that I be excused.  (instructed by Baker & McKenzie)

HIS HONOUR:   You may go.  In that connection I note that the sixth defendant has filed a document submitting to any order that the Court may make except as to costs.  Mr Bathurst, do you move on the affidavit of Larissa Jane ‑ ‑ ‑

MR BATHURST:   Larissa Jane Pickford sworn on 27 July 2005.

HIS HONOUR:   I have read that, is there any objection to it by any of the defendants?  No one wants to cross-examine Ms Pickford, I presume?  Does any defendant have any evidence?  As I understand it, Mr Griffiths, are you the principal adversary to Mr Bathurst, so far as you are an adversary?

MR GRIFFITHS:   Your Honour, because we have not received any written submissions from any of the other defendants, I am not quite sure what their position is, quite frankly.

HIS HONOUR:   Your position is that you do not object to the transfer of the matter to the Federal Court but you do object to the grant of a stay by this Court.

MR GRIFFITHS:   That is correct, your Honour, on the basis that the matter should be remitted with all deliberate speed to the Federal Court and the Federal Court ought to deal with the stay application early next week when it is seized of the matter.

HIS HONOUR:   The main problem I have with that is that no doubt it will move with all deliberate speed but there are only five working days within which to comply with the orders under challenge and one of the things that has to be done within those five working days is to work out the terms of the advertisements in which the offer will be made, or the terms of the offer and the terms of the advertisements, and that has to be done in consultation with the panel and the panel has a duty or at least says it will receive submissions from the parties.  That might not be easy to achieve in five days.  In your written submissions the point was made, I think, to the effect that the Federal Court may be able to dispose of the whole matter next week, which would mean there would not have to be a stay.

MR GRIFFITHS:   Yes, that is our primary position, that this is a matter which would appear on its face to lend itself to a very early final determination.

HIS HONOUR:   It does, but the trouble is we do not know exactly what all the Federal Court judges are doing next week.

MR GRIFFITHS:   No, we do not.  That would be a matter obviously for the duty judge in the corporations list.  Can I also indicate, your Honour, very briefly that another reason why, in our respectful submission, the matter ought to go over for the Federal Court to hear and determine whether there should be a stay and what the conditions of any such stay are is that the order that is sought by the plaintiff in these proceedings would have the effect of suspending all the orders that have been made by the Takeover Panel which, if your Honour has a copy of Ms Pickford’s affidavit handy – this will only take a minute for me to make this point ‑ ‑ ‑

HIS HONOUR:   You mean the exhibit to it?

MR GRIFFITHS:   The exhibits at page 484, your Honour.

HIS HONOUR:   Which I should have said that the exhibit LJP1 to Ms Pickford’s affidavit will be received as an exhibit with those letters and that number.  Page 484.

MR GRIFFITHS:   This may not have been the intended effect of the stay that is sought by the first plaintiff, but on our reading of it, if the stay were to be granted in the terms that are sought, paragraphs 10 and 13 would also be suspended and consideration would need to be given, plainly, to preserving the ongoing operation of those orders or else the stay itself would, if you like, possibly defeat the utility of the proceedings.  There are also issues, your Honour, about undertaking as to damages and so on that would need to be dealt with.

HIS HONOUR:   Why should it be necessary that there be an undertaking as to damages?

MR GRIFFITHS:   We should have thought that it would be an appropriate condition of the grant of a stay that the plaintiff give the usual undertaking that be given in the circumstance of an interim injunction to pay the damages not only of any party to the proceedings but of any third party including any shareholder who is not a party to these proceedings.

HIS HONOUR:   The problem is that it is not an interlocutory injunction, is it?

MR GRIFFITHS:   No, but stays can be granted on conditions or on terms, of course.

HIS HONOUR:   They can, but it is not normal or as of course.  Can I just interrupt to go back to your earlier point.  Mr Bathurst, what do you say about Mr Griffiths’ observations in relation to paragraphs 10 and 13 on page 484?

MR BATHURST:   He is right and it was not an intended effect.  The stay should be a stay of orders 1, 2, 3 and 4.  The other orders are purely ancillary. 

HIS HONOUR:   For example, if you took 6, you would say there is no need for a stay of that because if orders 1 to 4 are stayed, there is nothing for 6 to bite on, is there?

MR BATHURST:   There is nothing for 6 to ‑ ‑ ‑

HIS HONOUR:   Well, if you are content with a stay of orders 1 to 4, that narrows the ambit of debate.

MR BATHURST:   Yes.

HIS HONOUR:   Now, I interrupted Mr Griffiths.  Was there some additional point?

MR GRIFFITHS:   There was nothing further that I wished to say in respect of the terms of the stay but it is those sorts of matters that we thought, in our respectful submission, ought more properly be dealt with perhaps in a more leisurely environment in the Federal Court early next week, but your Honour has heard me on that.  The only other final thing I should say is your Honour did ask whether there was any appearance for the fourth defendant, Austral.  Austral, I am instructed, are aware of the proceedings and consideration is currently being given to their legal representation but there may be an issue of conflict in terms of my instructing solicitor’s capacity to act for Austral as well.

HIS HONOUR:   Because you are an offeror and it is the target?

MR GRIFFITHS:   Indeed. 

HIS HONOUR:   But I think their absence today does not really affect ‑ ‑ ‑

MR GRIFFITHS:   Not at all, no, your Honour, it does not.

HIS HONOUR:   Perhaps before I ask Mr Bathurst a question, is there any other defendant who wants to say anything in addition to what Mr Griffiths has said?  So may we take it that all defendants who are here agree that the matter can go to the Federal Court and no one wishes to say anything against the grant of a stay?  Mr Bathurst, if the matter is remitted to the Federal Court, do your clients undertake to the Court to prosecute the matter with urgency?

MR BATHURST:   Yes.

HIS HONOUR:   On the basis that if the defendants are dissatisfied with the vigour employed they can apply for the stay to be lifted.

MR BATHURST:   Yes.

HIS HONOUR:   Very well.  I do not think I need trouble you further, Mr Bathurst.

On 27 July 2005 the plaintiffs filed an application for an order to show cause challenging a decision of the review panel made on 20 July 2005 and orders made pursuant to it on 25 July 2005. The application is made in the original jurisdiction of the Court pursuant to section 75(v) of the Constitution. This Court is the only court with jurisdiction to grant the relief because of section 659B of the Corporations Act 2001 (Cth).

The affidavit of 27 July 2005 sworn by Larissa Jane Pickford, who is an employee of the solicitors for the plaintiffs, establishes the following.  On 23 February 2005 the second defendant announced a takeover bid for the fourth defendant.  As at 25 July it had a relevant interest of 85.6 per cent.  On 3 June the second defendant made an application to the Takeovers Panel for a declaration of unacceptable circumstances in relation to certain matters, and that gave rise to Takeovers Panel proceedings numbered 13 of 2005.  On 28 June the Takeovers Panel published a decision in those proceedings. 

On 30 June the first plaintiff applied to the review panel of the Takeovers Panel for a review of that decision. That gave rise to proceedings numbered 14 of 2005. On 20 July the review panel delivered its decision and made a declaration that certain conduct of the plaintiffs amounted to unacceptable circumstances within the meaning of section 657A of the Corporations Act.  The review panel foreshadowed certain orders which, after considering various submissions, it made on 25 July 2005. 

The essential problem is that in the period 22 March to 5 April 2005 over 35 million Austral shares were sold on the Australian Stock Exchange.  The second plaintiff continues to hold more than 22 million Austral shares. 

On 27 July 2005 the plaintiffs filed a summons in this Court, paragraph 2 of which sought:

An order that these proceedings be remitted to the Federal Court of Australia, pursuant to section 44 of the Judiciary Act 1903.

That is not opposed by the second defendant in particular or by any other defendant. 

The only remaining controversy concerns the first paragraph of the summons which seeks a stay.  In the course of argument it has become clear that a stay in terms as wide as those sought is not now sought and that the stay only relates to paragraphs 1, 2, 3 and 4 of the orders of 25 July 2005.

The reason for the stay arises from the following circumstances to which Ms Pickford has sworn.  The order under challenge requires the plaintiffs to offer to sell Austral shares to each person who sold Austral shares in a transaction reported to the stock exchange during the period from 22 March to 5 April.  That offer must be made within two weeks of the date of that order of 25 July.  That is, it must be made by 8 August 2005, and the offer made will be capable of acceptance from that time.  Ms Pickford expresses the fear that if the offer is made and the Court later quashes the orders of 25 July, people will have traded on the stock exchange on the assumption that the orders were valid and it may be impossible to return the affected persons to the position they would have been in had the restoration orders not been made, and she fears that this may lead to possible disruption to and confusion in the market.

She also points out that the orders require Glencore to make the offer by way of announcement to the stock exchange and by way of advertisements contained in a national newspaper and a newspaper in each Australian State and Territory.  The content of the announcement in the advertisements must be approved by the panel.  She says that as a logistical matter Glencore would have to have completed those steps at least several days prior to 8 August in order to be in a position to comply with the 8 August deadline.  She also says that the orders of 25 July were made in the context of an unconditional bid made by Centennial on 23 March 2005 which is scheduled to close on 1 August and she says that the orders have the capacity to affect the share price both of Centennial shares and Austral shares and that people may well be trading at the moment on the assumption that the restoration orders will be implemented.

The argument for the stay is put as follows by the plaintiffs, that within the next five weeks the subject matter of the proceedings may be lost if the plaintiffs are obliged to sell their shares pursuant to the orders.  They also point out, as Ms Pickford pointed out, that various steps have to be taken in the period ending 8 August.  They point out that the property involved is of considerable value, namely $45 million or $50 million, and they argue that if in due course the Federal Court, as it will be, quashes the decision or the orders under challenge, not only will the steps contemplated by the panel have been taken, as it were, needlessly and involving the incurring of cost, but also the time of the panel will have been needlessly consumed and there may be shareholder inconvenience and market confusion.  That argument has force.

The position of the only defendant who opposes the stay, namely the second defendant, is that its opposition is not, as it were, absolute but it does contend that the matter should be left to the Federal Court to determine once the matter has been remitted.  If it were not for the extreme urgency which attends the proceedings, that proposed course is not unreasonable, but I am troubled by the fact that one knows nothing about whether the Federal Court will be able to move with the utmost speed.  No doubt every effort will be made for it to do so but one simply does not know.  Accordingly, I think it is appropriate to order the narrower stay as requested by the plaintiffs.

I will just put some orders to the parties for their comment.  Order 1 I think would be the order as sought in the summons.  That is to say:

An order that until further order a stay be granted of the Takeovers Panel proceedings instituted on 8 June 2005 numbered 13 of 2005, and any proceedings brought or to be brought for the enforcement of the decision of the Review Panel of the Takeovers Panel delivered on 20 July 2005 or paragraphs 1 to 4 of the orders made pursuant to that decision on 25 July 2005.

Is there any problem with that order?

MR BATHURST:   No, your Honour.

HIS HONOUR:   The next order would in effect be a pro forma order for transfer of the proceedings.  That is to say, it would be:

2.(a)    The further proceedings be remitted to the Federal Court of Australia.

(b)      The application to proceed in that court as if the steps already taken in this Court have been taken in that court.

(c)      The Registrar of this Court forward to the proper officer of that court photocopies of all documents filed in this Court.

(d)      The costs of the summons be costs in the cause.

(e)      The costs of the application to the date of remission, including the costs of this order, are to be according to the scale applicable to proceedings in this Court and thereafter according to the scale applicable to that court and in the discretion of that court.

Any problem with that?

MR BATHURST:   No, your Honour.  Would your Honour certify for counsel?

HIS HONOUR:   Yes, that will be the third order.  I will make those two orders.  Thirdly, I certify that this was a matter appropriate for the attendance of counsel, including senior counsel, in Chambers.  Is there any other order that is wanted?

MR BATHURST:   Not for our part, your Honour.

HIS HONOUR:   Thank you.

AT 9.34 AM THE MATTER WAS CONCLUDED