Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd

[2006] HCATrans 266

[2006] HCATrans 266

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A55 of 2005

B e t w e e n -

LION NATHAN AUSTRALIA PTY LTD

Applicant

and

COOPERS BREWERY LTD

Respondent

Application for special leave to appeal

HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 2 JUNE 2006, AT 9.42 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear for the applicant with my learned friend, MR R.D. STRONG.  (instructed by Mallesons Stephen Jaques)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR D.J. BLIGHT, for the respondent.  (instructed by Piper Alderman)

HAYNE J:   Yes, Mr Walker.

MR WALKER:   Your Honours, this is an application for special leave for this Court to consider the meaning of one article in a memorandum of articles of association of just one company.  It is accepted that in order for this to be an appropriate case for special leave it needs to appear that there are sufficiently important matters for the case to transcend simply that of the interests of the shareholders and the interest of my client who, of course, has a very special and, we accept, peculiar relationship by reason of those articles.

HAYNE J:   Before we come to those general issues which may arise, do I find the article conveniently at page 6 of the application book?

MR WALKER:   Your Honour will find it there and also at 74.  It is better, perhaps, at 74 because at 74, within the operation of the articles themselves, there is a reference to when no change in control will be deemed.

HAYNE J:   I understand that.  The critical expression is found in the last three lines of the first paragraph of the article, is it, “if any person acquires”, et cetera?

MR WALKER:   Yes.  Your Honour calls it the first paragraph, it is in fact the second paragraph, but, yes, that is the paragraph.  They are the critical words, yes, your Honour. 

HAYNE J:   What is that term?

MR WALKER:   That term is relevant interest used in the expression “acquires a relevant interest”.  That is not in abstract or in isolation but relevant…..something which a person may acquire.

HAYNE J:   No doubt, but why is it anything other than that which is defined in section 9?

MR WALKER:   First, we accept that that is the proper question and that the burden of persuasion must be on somebody in our position suggesting to the contrary.  Second, it is because when one comes to the incorporated provisions, for example, of section 33, conveniently set out at page 48 of the application book ‑ ‑ ‑

HAYNE J:   No, you talk of incorporated provision.

MR WALKER:   Yes.

HAYNE J:   We begin with section 9, do we not?

MR WALKER:   Unquestionably we do. 

HAYNE J:   And there we find, do we not, that it has the meaning given by Division 5?

MR WALKER:   Which includes section 32 and section 33, unquestionably.

HAYNE J:   Yes.

MR WALKER:   Your Honour is asking me, why is that not the end of the game?

HAYNE J:   Exactly.

MR WALKER:   We accept that it always was and always will be, were anything to continue after a few minutes from now, that would be the burden placed upon us.  If your Honours will forgive me a very small excursion, first of all, this is the point of general importance.  This is a technique which, in our submission, is not one that ought to be looked at askance or should be discouraged and therefore it is important in techniques involving the constitution of companies ‑ ‑ ‑

HAYNE J:   Every set of memorandum and articles or constitution you pick up has some provision incorporating language from the statute.  I understand that, yes.

MR WALKER:   That is my point.  That is why it transcends the interests of this particular dispute.

HAYNE J:   That is the easy part of the argument, Mr Walker.  The hard part is why it does not just mean what it says.

MR WALKER:   Your Honour, it is perhaps not even part of the argument.  It is setting up for it.  This is the first step of the argument.  It appears to be common ground, certainly the Full Court held so and we would respectfully urge, that one checks to see that there is not something contradictory or inconsistent so as to produce, to use the old language, an insensible result.  That is insensible either in the sense that it is dumb, it cannot possibly be doing any work of the kind suggested, or else it does not make sense. 

Now, that means, not that one asks, can these parties be left to deal with whatever anomalies or problems are created by a holus‑bolus incorporation, but it means, in the familiar way of construing a contract in order to make sense of it rather than to put the parties’ evident intention to bind themselves into a relationship at nought, requires asking the question whether the inclusion of an aspect or other of the reference which has been incorporated has that result. 

Here, in our submission, bearing in mind the defined term is a term used in the expression “acquires an interest”, one needs to see, in our submission, that from the context, that is referring to something which is actual as opposed to non‑actual, acquisition as opposed to non-acquisition.  That can be seen, in particular, from the contractual context to which we have drawn attention as having been quoted correctly.  For example, at page 41, line 5, the end of the third paragraph of the article, notes that in a case where what has happened is simply that a permitted transferee has become the person whose transaction would otherwise represent a change of control, then these articles do not care about that because there has not been a practical difference of a kind that the articles are concerned with. 

Now, it is to be recalled, of course, that this is a double incorporation by reference, though that does not actually advance our argument at all.  On page 41 your Honours will see that it is regulation 8 at line 33 or so which is the second incorporation by reference.  That is the thing that introduces the anomalies of the kind that were argued below and which have been rejected by the Full Court as mattering.  For the purposes of our argument, we rather focus upon the way in which section 33, introduced as part of that which section 9 requires to be regarded, operates in the circumstances which obtained in this case. 

May I, for convenience, take your Honours to page 48 where Justice Bleby sets it out in the course of the argument which is then considered and rejected.  It is important to note that the preface to the deeming which is at the heart of the exercise by which the Kirin transaction had the effect in question is introduced by a set of circumstances which come as a pair of alternatives.  See the beginning of section 32, page 48, about line 24:

Where a body corporate has –

actually has –

or is by this Division deemed to have –

meaning does not have but is to be treated fictitiously as having – and one immediately has a concern triggered because Article 44, as the written submissions make clear and seems to be common ground, is clearly for all the rest of it concerned with actual power.  Then one sees in section 33 again the same notion “has, or is . . . deemed to have” and then a fiction is piled on that at about line 47 on page 48:

a person shall be deemed . . . to have . . . the same power as the body or associate has, or is deemed to have –

So that by this part of the statutory definition, which has the alternative of fact and fiction contained in it, one can see that more than one person has the degree of relationship or interest which is relevant for ascertaining control. 

Now, that, in our submission, represents the signal departure from the context of Article 44 which is clearly concerned with the exercise of control, is concerned with actuality rather than fiction.  That is why, in our submission, it is of significance.  If one uses for convenience Justice Bleby’s transcription for clarity on page 44 of the application book and uses his convenient label (d), one sees that those words, which were the words upon which we foundered below, are words which talk about actuality.  The word in the article is “acquires”; it is not “is deemed to have acquired” and it is not fictitiously, that is, did not actually acquire.

HAYNE J:   Acquired what?

MR WALKER:   A relevant interest, and the relevant interest, in our submission, is one which you can either have or be deemed to have.  Now, that is the language of the statute.  Because the language of the statute in the incorporated definition explicitly exposes that you either have it or you do not have it but you are going to be deemed to have it, the incorporated definition itself points out that part of it does not apply for the purposes of Article 44 because Article 44 uses the expression to be refined by incorporation in a phrase which refers to something actual, namely, “acquires a relevant interest”. 

It is for those reasons, in our submission, that there has been a failure to follow that which it is common ground was the proper approach to the interpretation of these kinds of provisions with their very significant and useful incorporation of statutory definitions.  Statutory definitions do enjoy the possibility, by reason of parliamentary power, of treating that which is not fact as if it were fact.  When that is done by a technique which continues

to distinguish that, as your Honours have seen by the language to which I have drawn attention in the pivotal provisions of sections 32 and 33, then that is a verbal and thus contextual indication that the fictitious aspect cannot apply for the purposes of the private bargain, the articles of association, that talks about the case of a person who acquires.  It is a redundancy but it is an appropriate emphasis to say that acquisition involves property or interest passing.  Deemed acquisition does no such thing. 

It is for those reasons, in our submission, that there is a serious, indeed, we would submit a fundamental error in the way in which the convenient technique of incorporate a statutory definition has been applied in this case.  It is, as your Honours have seen, a very straightforward and short matter in relation to the compass of material to be attended to.  It is of surpassing importance to the commercial relations of the parties involved in the case and, in our submission, it presents the Court with an opportunity at the level of this Court to apply the appropriate and purposive and commercially reasonable approach to the spotting of inconsistencies which defeat the evident purpose chosen by the parties for the incorporation of a definition.  It is for those reasons, in our submission, that there ought to be special leave.

HAYNE J:   Thank you, Mr Walker.  We need not trouble you, Mr Jackson.

In our opinion an appeal in this matter would enjoy insufficient prospects of success to warrant a grant of special leave to appeal.  Special leave is refused and must be refused with costs.

AT 9.56 AM THE MATTER WAS CONCLUDED