Metalicity Ltd v Allen - [2022] WASC 291

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   METALICITY LTD -v- ALLEN [2022] WASC 291
CORAM:   HILL J
HEARD:   29 AUGUST 2022
DELIVERED          :   31 AUGUST 2022
FILE NO/S:   COR 140 of 2022
BETWEEN:   METALICITY LTD
Plaintiff
AND
KENNETH MALCOLME ALLEN
First Defendant
KENNETH MALCOLME ALLEN as trustee for THE ALLEN SUPER FUND A/C
LEE KIANG ALLEN as trustee for THE ALLEN SUPER FUND A/C
Second Defendants
THOMAS FRANCIS PERCY
Third Defendant
HOCK HOO CHUA
Fourth Defendant
B3 PROSPECTING PTY LTD
Fifth Defendant
LEE KIANG ALLEN
Sixth Defendant
LEE KIANG ALLEN as trustee for ANDREA K ALEN
Seventh Defendant
LEE KIANG ALLEN as trustee for ROYCE K ALLEN
Eighth Defendant
LEE KIANG ALLEN as trustee for AMELIA V ALLEN
Ninth Defendant
ANDREA KATHLEEN HUANG LING ALLEN
Tenth Defendant
BRETT ROYLE
Eleventh Defendant
PECK CHONG YEO
Twelfth Defendant
HOCK PENG CHUA
Thirteenth Defendant
AGENOR PTY LTD as trustee for THE GLAMUZINA SUPER FUND
Fourteenth Defendant
MATE AUTO ELECTRICAL PTY LTD
Fifteenth Defendant
MATTHEW GUY MAYNE as trustee for THE MAYNE SUPER FUND
LISA MAYNE as trustee for THE MAYNE SUPER FUND
Sixteenth Defendants
TOPRANGE PTY LTD as trustee for THE KEVDEN SUPER FUND
Seventeenth Defendant
JETT HOLDINGS PTY LTD
Eighteenth Defendant
SIANG JOON GOH
Nineteenth Defendant
BARRY LUCAS
Twentieth Defendant
DION GERALD MEREDITH
Twenty First Defendant
PETER VANDA RESOURCES PTY LTD
Twenty Second Defendant
HIGHAM HILL PTY LTD
Twenty Third Defendant
ALIC TRPCEV
Twenty Fourth Defendant
EFFIS PTY LTD
Twenty Fifth Defendant
ROBERT RITCHER as trustee for THE ROBERT RICHTER SUPER FUND NO 2
ANNE LYELL RITCHER as trustee for THE ROBERT RICHTER SUPER FUND NO 2
Twenty Sixth Defendants
NEX METALS EXPLORATIONS LTD
Twenty Seventh Defendant

Catchwords:

Corporations - Application by plaintiff for declarations in relation to votes cast at annual general meeting and extraordinary general meeting of company - Application by plaintiff for orders under s 1325A of the Corporations Act 2001 (Cth) - Where plaintiff has made takeover bid for shares in company - Whether commencement of proceedings precluded by s 659B of Corporations Act 2001 (Cth) - Whether these proceedings are a proceeding 'in relation to a takeover bid' - Whether proceedings are a proceeding to enforce an obligation imposed by ch 6 of Corporations Act 2001 (Cth) - Proper construction of s 659B of the Corporations Act 2001 (Cth)

Legislation:

Acts Interpretation Act 1901 (Cth) s 15AB
Corporations Act 2001 (Cth) s 606, 659AA, 659B, 1325A

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	G D Cobby SC & C C Spencer
First Defendant	:	A Pieniazek
Second Defendants	:	A Pieniazek
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance
Fifth Defendant	:	No appearance
Sixth Defendant	:	A Pieniazek
Seventh Defendant	:	A Pieniazek
Eighth Defendant	:	A Pieniazek
Ninth Defendant	:	A Pieniazek
Tenth Defendant	:	A Pieniazek
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	No appearance
Fourteenth Defendant	:	No appearance
Fifteenth Defendant	:	No appearance
Sixteenth Defendants	:	No appearance
Seventeenth Defendant	:	No appearance
Eighteenth Defendant	:	No appearance
Nineteenth Defendant	:	No appearance
Twentieth Defendant	:	No appearance
Twenty First Defendant	:	No appearance
Twenty Second Defendant	:	L A Tsaknis
Twenty Third Defendant	:	L A Tsaknis
Twenty Fourth Defendant	:	L A Tsaknis
Twenty Fifth Defendant	:	L A Tsaknis
Twenty Sixth Defendants	:	L A Tsaknis
Twenty Seventh Defendant	:	No appearance

Solicitors:

Plaintiff	:	Tottle Partners
First Defendant	:	Dominion Legal
Second Defendants	:	Dominion Legal
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance
Fifth Defendant	:	No appearance
Sixth Defendant	:	Dominion Legal
Seventh Defendant	:	Dominion Legal
Eighth Defendant	:	Dominion Legal
Ninth Defendant	:	Dominion Legal
Tenth Defendant	:	Dominion Legal
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	No appearance
Fourteenth Defendant	:	No appearance
Fifteenth Defendant	:	No appearance
Sixteenth Defendants	:	No appearance
Seventeenth Defendant	:	No appearance
Eighteenth Defendant	:	No appearance
Nineteenth Defendant	:	No appearance
Twentieth Defendant	:	No appearance
Twenty First Defendant	:	No appearance
Twenty Second Defendant	:	TGC Lawyers
Twenty Third Defendant	:	TGC Lawyers
Twenty Fourth Defendant	:	TGC Lawyers
Twenty Fifth Defendant	:	TGC Lawyers
Twenty Sixth Defendants	:	TGC Lawyers
Twenty Seventh Defendant	:	No appearance

Case(s) referred to in decision(s):

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27
Attorney-General (Cth) v Alinta Limited [2008] HCA 2; (2008) 233 CLR 542
Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd [2020] FCA 1492
Director General of Department of Transport v McKenzie [2016] WASCA 147; (2006) 77 MVR 306
Glencore International AG v Takeovers Panel [2006] FCA 274; (2006) 151 FCR 77
Lionsgate Australia v Macquarie Private Portfolio [2007] NSWSC 318
McKerlie v Drillsearch Energy Ltd [2009] NSWSC 497
Metalicity Ltd v Nex Metals Explorations Ltd [2022] WASC 234
Project Blue Sky Inc v Australian Broadcasting Authority [1988] HCA 28; (1998) 194 CLR 355
Re Application by the Chief Commissioner of Police (Victoria) [2005] HCA 18; 214 ALR 422
Re Venturex Resources Ltd [2009] FCA 677
St Barbara Mines Ltd v Australian Securities and Investments Commission [2001] FCA 119; (2001) 110 FCR 550

HILL J:

By originating process dated 27 July 2022, the plaintiff, Metalicity Limited (Metalicity), seeks relief in respect of votes cast by the first to twenty‑sixth defendants at two meetings of Nex Metals Explorations Ltd (Nex): its annual general meeting held on 31 March 2022 (AGM) and an extraordinary general meeting held on 25 July 2022 (EGM). Specifically, the plaintiff seeks declaratory relief as well as orders under s 1325A of the Corporations Act 2001 (Cth) (Act).
The originating process has been brought in the context of a series of disputes between the plaintiff and Nex. These disputes range from disputes concerning a joint venture agreement between these parties or their subsidiaries,[1] matters concerning general meetings of Nex,[2] as well an off-market takeover offer that has been made by Metalicity for all shares in Nex (Takeover). The evidence before me is that the Takeover has been the subject of six separate applications to the Takeovers Panel.[3]
[1] Affidavit of Robert Hartley Downey filed 19 August 2022 'RAD1'.
[2] Metalicity Ltd v Nex Metals Explorations Ltd [2022] WASC 234.
[3] Affidavit of Robert Hartley Downey filed 19 August 2022 [4], 'RDH03' - 'RDH13'.
The Takeover was announced on 14 September 2021[4] and closed at 5.00 pm on 29 August 2022,[5] the day this application was heard.
[4] Affidavit of Robert Hartley Downey filed 19 August 2022 'RHD01'.
[5] Affidavit of Audrey Pieterse filed 29 August 2022 'AP1'.
Initially, the jurisdiction of the court was challenged by the first, second, and sixth to tenth defendants (the Allen parties) (who sought a stay of the proceedings) as well as the twenty‑second to twenty‑sixth defendants (the Effis parties). On the morning of the hearing, given the announcement by Metalicity on 29 August 2022 that the Takeover would close that day, the Allen parties did not proceed with their application and did not make submissions on the application.
The Effis parties maintained their application on the basis of their contention that Metalicity was prevented from commencing these proceedings by reason of s 659B of the Act until after the close of its takeover bid for Nex and that, accordingly, these proceedings were a nullity and should be dismissed.
In support of their application, the Effis parties relied on the following affidavits:
(a)an affidavit of Robert Hartley Downey filed 19 August 2022;
(b)an affidavit of Mark Andrew Desa filed 24 August 2022; and
(c)an affidavit of Justin Charles Barton filed 27 July 2022.
For the reasons that follow, I do not consider these proceedings are 'court proceedings in relation to a takeover bid, or proposed takeover bid'. As a consequence, I do not consider these proceedings fall within s 659B of the Act and find the court has jurisdiction to hear these proceedings. As a result, the application should be dismissed with costs.

Factual background

The proposed Takeover by Metalicity for Nex was announced on 14 September 2021 and has been open since 14 October 2021.[6] It has been extended on a number of occasions and closed at 5.00 pm on 29 August 2022.
[6] Affidavit of Robert Hartley Downey filed 19 August 2022 'RHD01' - 'RDH02'.
As at 4 May 2022, Metalicity held a relevant interest in 34.21% of the issued capital of Nex.[7]
[7] Affidavit of Robert Hartley Downey filed 19 August 2022 'RDH17'.
During the bid period, Metalicity nominated three people to be appointed as directors of Nex. Resolutions for the appointment of these directors were put to both the AGM and the EGM but were not passed. At the AGM, a resolution to re‑appoint Mr Percy, the chair of Nex, was passed. At the EGM, resolutions were also put to remove each of the current directors of Nex but failed to pass.[8]
[8] Affidavit of Robert Hartley Downey filed 19 August 2022 'RDH18' - 'RDH19'.
Metalicity contends that the proxies lodged by the second to twenty‑sixth defendants for the AGM were invalid and their votes should be declared to be invalid. In addition, Metalicity alleges that Mr Allen has acquired a relevant interest in the shares of each of the second to twenty‑sixth defendants, in breach of the prohibition in s 606 of the Act and that, as a result, the votes of each of these shareholders at the AGM and EGM should be disregarded and orders should be made to vest these shares in the Australian Securities and Investments Commission (ASIC) for sale.[9]
[9] Originating process filed 27 July 2022.
The commencement of these proceedings was the subject of an announcement by Metalicity on 2 August 2022. The heading of the announcement was 'Metalicity launches court action seeking 22.28% of Nex Metals Shares to be vested in ASIC and sold'.[10]
[10] Affidavit of Robert Hartley Downey filed 19 August 2022 'RDH20'.

Parties' submissions

The Effis parties submit that these proceedings fall within s 659B of the Act for two primary reasons. First, it is apparent from the announcement made by Metalicity on 2 August 2022 that the primary purpose of the proceedings is to seek orders for the vesting and sale of the first to twenty-sixth defendants' shares which will have an impact on the Takeover. Second, if the votes of the first to twenty-sixth defendants at the AGM and the EGM are declared invalid, the result at each of these meetings would have been different. If this occurs, the directors nominated by Metalicity would have been appointed and the current directors removed. Counsel for the Effis parties contends that the directors are critical to the target's response to the Takeover and that, as such, these proceedings are 'court proceedings in relation to a takeover bid'.
Metalicity disputes each of these contentions and denies these proceedings fall within the definition contained in s 659B(4) of the Act. Counsel for Metalicity submitted that in these proceedings, it was seeking to enforce its rights as a shareholder (as opposed to a bidder) in circumstances where it alleges these defendants have breached the provisions of the Act. In addition, it contends that its Takeover would not be advanced by the removal of the current directors or the appointment of new directors. Counsel emphasised that the submissions of the Effis parties assumed that a change in the board of Metalicity would change what the target did in relation to the Takeover, when there was no evidence this was or would be the case.

Legislative provisions

Section 659B appears in ch 6 of the Act, which is titled 'Takeovers'. As was stated by Gleeson CJ in Attorney-General (Cth) v Alinta Ltd:[11]
Chapter 6 of the Corporations Act 2001 (Cth), in regulating takeovers, seeks to preserve an efficient, competitive and informed capital market, and to protect the legitimate interests of investors in that market. The purposes of the Chapter are declared in s 602, in terms that define the nature of the considerations at work in reaching a conclusion that circumstances in relation to the affairs of a company are unacceptable and that the public interest requires a certain form of regulatory intervention in the market.
[11] Attorney-General (Cth) v Alinta Limited [2008] HCA 2; (2008) 233 CLR 542 [6].
Part 6.10 of the Act is titled 'Review and intervention'. It contains s 659B within div 3 which is titled 'Court powers'.
Section 659AA sets out the object of both s 659B and s 659C, namely that the Takeovers Panel is the main forum to resolve disputes about a takeover bid until the bid period has ended.
Section 659B of the Act provides:
659B Court proceedings before end of bid period
Delay in commencing court proceedings until after end of bid period.
(1) Only the following may commence court proceedings in relation to a takeover bid, or proposed takeover bid, before the end of the bid period:
(a) ASIC;
(b) a Minister of the Commonwealth;
(c) a Minister of a State or Territory in this jurisdiction;
(d) the holder of an office established by a law of:
(i) the Commonwealth; or
(ii) a State or Territory in this jurisdiction;
(e) a body corporate incorporated for a public purpose by a law of:
(i) the Commonwealth; or
(ii) a State or Territory in this jurisdiction;
to the extent to which it is exercising a power conferred by a law of the Commonwealth or a State or Territory in this jurisdiction.
Court power to stay proceedings that have already commenced.
(2) A court may stay:
(a) court proceedings in relation to a takeover bid or proposed takeover bid; or
(b) court proceedings that would have a significant effect on the progress of a takeover bid;
until the end of the bid period.
(3) In deciding whether to exercise its powers under subsection (2), the court is to have regard to:
(a) the purposes of this Chapter; and
(b) the availability of review by the Panel under Division 2.
(4) For the purposes of this section:
court proceedings in relation to a takeover bid or proposed takeover bid:
(a) means any proceedings before a court in relation to:
(i) an action taken or to be taken as part of, or for the purposes of, the bid or the target's response to the bid; or
(ii) a document prepared or to be prepared, or a notice given or to be given, under this Chapter; and
(b) includes:
(i) proceedings to enforce an obligation imposed by this Chapter; or
(ii) proceedings for the review of a decision, or the exercise of a power or discretion, under this Chapter; or
(iii) proceedings for the review of a decision, or the exercise of a power or discretion, under Chapter 6C in relation to securities of the target of a takeover bid during the bid period; and
(iv) proceedings under Part 2F.1A for leave to bring, or to intervene in, proceedings referred to in paragraph (a) or subparagraph (b)(i), (ii) or (iii).
This is not limited to proceedings brought under this Chapter or this Act but includes proceedings under other Commonwealth and State or Territory laws (including the general law).
(5) Nothing in this section is intended to affect the jurisdiction of the High Court under section 75 of the Constitution.
Section 659C of the Act sets out the limitations on the court's powers after the end of the bid period, if proceedings are commenced at that stage. In these circumstances, the court's powers are limited to determining whether a person is guilty of an offence and to impose a penalty (s 659C(1)(d)) or to make an order for the payment of money from one person to another (s 659C(1)(e)).

Legislative history

Section 659B of the Act was introduced as part of the reforms enacted in the Corporate Law Economic Reform Program Act 1999 (Cth). The Explanatory Memorandum (CLERP Explanatory Memorandum) that accompanied the Bill stated, at 7.2 ‑ 7.3:
Target companies often resort to litigation in hostile takeover bids, sometimes for tactical reasons. This can result in bids being delayed and, where a final hearing cannot be held within the bid period, the courts having to decide between disrupting the bid by granting an injunction without the benefit of full evidence and allowing the bid to proceed even though it may later be found to be defective.
To meet these concerns, a reconstituted Panel will take the place of the courts as the principal forum for resolving takeover disputes under the Corporations Law, with the exception of civil claims after a takeover has occurred and criminal prosecutions. This will allow takeover disputes to be resolved as quickly and efficiently as possible by a specialist body largely comprised of takeover experts, so that the outcome of the bid can be resolved by the target shareholders on the basis of its commercial merits. Other benefits of an effective panel for dispute resolution include the minimisation of tactical litigation and the freeing up of court resources to attend to other priorities.

Relevant cases

St Barbara Mines Ltd v ASIC

The first substantive consideration of the meaning of s 659B was a ex tempore decision of Hill J in St Barbara Mines Ltd v Australian Securities and Investments Commission.[12] In that case, the plaintiff brought an application to review a decision of ASIC to refuse to accept bid documents for registration in connection with a proposed takeover offer. After noting that s 656A(1) of the Corporations Law (which was in identical terms to s 656A of the Act) gave the Panel jurisdiction to review this decision, Hill J stated that:[13]
The terms of s659B(1) of the Corporations Law are very broad. That section speaks of proceedings "in relation to a takeover bid". As the cases clearly show and counsel for St Barbara accepts, the words "in relation to" must take colour from the context in which they appear. In some cases they have been said to be so broad as to comprehend any relationship at all that may exist between two subject matters. In other cases, because of the context, a more narrow view has been accepted.
Queens Counsel for St Barbara submits that the present proceedings should not be seen to be proceedings in relation to a bid but rather proceedings relating to the act of non acceptance of bid documents by the Commission. With respect, that seems to me rather too narrow a view of the relationship to which s659B(1) refers having regard to the legislative policy underlying the law.
The legislative policy of s659B, and taking into account the object of the section as set out in s659AA, is clear enough. If it be necessary, reference can be made to the explanatory memorandum which makes the legislative policy quite explicit. It is that the Panel take the place of the courts as the principal forum for resolving takeover disputes until the bid period has ended. However wide or narrow s659B(1) may be, and it is not necessary in this case to explore the width of it, it clearly comprehends a proceeding which relates to a bid in the sense also that it is within the jurisdiction of the Panel to determine.
The present is an obvious example of such a case. As things stand at the moment, and indeed prior to the application made to the Court, St Barbara has a right to seek to have the Commission's decision on the modification of the Corporations Law reviewed by the Panel. It seems to me that this is the kind of case which parliament contemplated should not be determined by the courts until such time at least as the bid period has terminated. On this view of the matter, the Court would have no jurisdiction at all to deal with the proceedings at this stage.
In saying this, I note the position of St Barbara that in its view there is nothing for the Commission to modify because the law should be interpreted as it suggests with the consequence that there could be nothing for the Panel to review. While I understand that is a respectable argument, the issue ultimately comes back to whether the present proceedings could be said to be in relation to a bid and although it is no doubt true in a very direct sense that the proceedings relate to the acceptance or non acceptance by the Commission of documents, one has only to ask the question of documents about what. The answer is clearly enough documents which relate to the takeover bid and in my view s659B(1) operates to exclude jurisdiction. (citations omitted)
[12] St Barbara Mines Ltd v Australian Securities and Investments Commission [2001] FCA 119; (2001) 110 FCR 550.
[13] St Barbara Mines Ltd v Australian Securities and Investments Commission [10] - [14].

In that case, his Honour concluded he did not have jurisdiction to deal with the application.

Lionsgate Australia v Macquarie Private Portfolio

The next decision considering the proper construction of s 659B of the Act was the decision of Austin J in Lionsgate Australia v Macquarie Private Portfolio.[14] In that case, his Honour considered whether a bidder could commence court proceedings for specific performance of a contract with a substantial shareholder of the target under which the shareholder had undertaken to sell into the bid.
[14] Lionsgate Australia v Macquarie Private Portfolio [2007] NSWSC 318.
In considering the proper construction of s 695B, his Honour stated that:[15]
Section 659B(1) has the effect of preventing a person, other than those listed, from commencing "court proceedings in relation to a takeover bid, or proposed takeover bid", before the end of the bid period. The quoted words are defined in subsection (4) in two steps: first, in subparagraph (a) there is what appears ex facie to be a definition of the scope of the quoted words; and secondly, there is in subparagraph (b) a list of things included (or, perhaps, deemed to be included) in the definition. The last sentence of subsection (4) is introduced by the highly ambiguous word "This", but in its context the word "This" probably refers to subparagraph (a), or both subparagraphs (a) and (b), rather than to subparagraph (b) alone. So construed, the last sentence operates to require that the definition as a whole be read so as to encompass court proceedings under the general law or any statutory provisions.
None of the inclusory provisions of subparagraph (b) is applicable here. The question is whether the present proceeding falls within subparagraph (a). Some of the submissions made on behalf of Macquarie, particularly the written submissions, suggest that s 659B(1) raises a broad question as to whether the present proceeding is "in relation to" the pending takeover bid. But in my view that misunderstands the effect of s 659B(4)(a), which is an exhaustive definition of the words "court proceedings in relation to a takeover bid or proposed takeover bid". If subsection (4) does not apply, then the present proceeding is not a court proceeding "in relation to a takeover bid or proposed takeover bid" for the purposes of s 659B(1), and consequently there is no restriction on the plaintiff commencing or continuing the proceeding, even if in some more general sense the proceeding relates to the bid.
[15] Lionsgate Australia v Macquarie Private Portfolio [29] - [30].
Austin J accepted that the words 'in relation to' are wide but considered their meaning was impacted by two considerations. First, that broad words must take 'colour from the context in which they appear' and second, that the words 'relate to' require a connection or association between the matters.[16] In that case, his Honour concluded that the proceedings did not fall within the terms of s 659B(4) of the Act as there was no relevant connection between the bid and the proceedings as they were proceedings for the enforcement of contractual obligations.
[16] Lionsgate Australia v Macquarie Private Portfolio [32] - [33].
Austin J expressed the view that:[17]
[W]hile I accept that the words "in relation to" are words of very broad connotation when considered in isolation, here they are combined (in subparagraphs (a)(i) and (ii)) with words of a more specific kind which are not apt to apply to the present situation.
In my view, the thrust of the definition in subsection (4) is to identify court proceedings that raise the sorts of issues typically invoked in the tactical takeover litigation of the 1980s and 1990s, to do with such matters as misleading Bidders' Statements and Targets' Statements, whether the litigation was based on the provisions of corporations legislation, or other statutory provisions (such as s 52 of the Trade Practices Act) or general law matters (such as the law of deceit).
My construction of subsection (4) in its application to the present case is reinforced by the observations I have made to the effect that a case such as the present falls outside the mischief, identified in the Explanatory Memorandum, which was to be addressed by s 659B. My construction of the statutory wording also reflects the presumptions of construction of legislation interfering with fundamental rights and restricting the court's powers, to which I have referred.

McKerlie v Drillsearch Energy Ltd

[17] Lionsgate Australia v Macquarie Private Portfolio [40] - [42].

In McKerlie v Drillsearch Energy Ltd,[18] the dispute concerned an upcoming meeting of shareholders of Drillsearch at which the removal of its directors was sought. At the time, Beach Petroleum had made a takeover offer for Drillsearch. Beach Petroleum applied to become a party to the existing proceedings and to file separate proceedings with the intention of the proceedings being consolidated. The relief it sought included an injunction restraining the holding of proposed meeting of members until the Takeovers Panel had determined an outstanding application which Beach Petroleum had commenced. In the proceedings before the Takeovers Panel, Beach Petroleum raised complaints about the material sent to shareholders in the lead up to the meeting of shareholders which were said to be misleading and deceptive.
[18] McKerlie v Drillsearch Energy Ltd [2009] NSWSC 497.
The question in these proceedings was whether s 659B(1) precluded Beach Petroleum from commencing proceedings and being joined to the existing proceedings. Barrett J, after referring to Austin J's decision in Lionsgate, held that:[19]
Beach Petroleum has seen fit to invoke the jurisdiction of the Takeovers Panel in relation to the matters that it would wish to agitate in its proposed proceedings in this court, including by way of its becoming a party to the proceeding now before me. Having chosen that forum and decided to seek the assistance of the Takeovers Panel, according to the broad remedial jurisdiction that the Panel possesses, Beach Petroleum has clearly accepted that the matters in respect of which it wishes to obtain redress are really matters within the Panel's province. Indeed, by seeking orders here imposing certain restraints until its application to the Takeovers Panel has been determined and until any remedial action the Panel may order has been taken, Beach seeks, in a real sense, to make its court proceedings an adjunct to its Panel application.
The controversy that Beach Petroleum wishes to air in court has already been put before the Takeovers Panel by Beach. That controversy has clearly arisen “in relation to” the takeover bid now on foot. The proposed court proceedings therefore involve matters in respect of which s 659B displaces the jurisdiction of the court until such time as the bid period has ended.

Re Venturex Resources Ltd[20]

[19] McKerlie v Drillsearch Energy Ltd [18] - [19].

[20] Re Venturex Resources Ltd [2009] FCA 677.

This case was heard and determined only shortly after McKerlie v Drillsearch Energy Ltd and does not refer to this decision.
The applicant in this case applied for remedial orders pursuant to s 1325A(2) of the Act. At the time of the application, Venturex had made an off market takeover bid for CMG Gold Limited. No party, including ASIC, raised the question of the court's jurisdiction although it was drawn to the attention of the court at the commencement of the hearing.
McKerracher J expressed the view that:[21]
Section 1325A [of the Act] does not suggest that the power of the Court to make remedial orders, a power which should be exercised liberally, can only be exercised after the end of a takeover bid. Particularly in relation to s 1325A(2) [of the Act], it is a power to be considered in a very limited circumstance.
In Tower Software Engineering Pty Limited; Pendant Software Pty Limited v Harwood(2006) 154 FCR 150, Goldberg J considered a comparable situation in connection with remedial orders sought under s 1071F [of the Act]. His Honour held that s 659B [of the Act] was a general provision whereas s 1071 [of the Act] was a specific provision in relation to a specific remedy and the Court would not be precluded from considering the specific relief. That approach was also summarised, obiter, by Austin J (at [18]) in Lionsgate Australia v Macquarie Private Portfolio (2007) 210 FLR 106.
The same process of reasoning would apply, perhaps even more obviously, in the case of s 1325A [of the Act] which is a very specific provision dealing with a specific deficiency and one that will almost inevitably arise only during a takeover bid.
[21] Re Venturex Resources Ltd [15] - [15].
His Honour went on to state that:[22]
Given the objectives of Ch 6 of the [Act] and the purpose to which the remedial power of s 1325A(2) [of the Act] is directed, the absence of any express provision that the power may only be exercised after completion of a takeover bid suggests that in the specific situation there considered, the general prohibition against issuing proceedings during a takeover period (which is directed to a completely different objective) should give way to the specific power.
In my view, the very specific provisions of s 1325A(2) [of the Act] do override the general provision in s 659B [of the Act]. Parliament could not be taken to have overlooked the very important and fundamental provision in s 659B [of the Act] in drafting s 1325A(2) [of the Act]. Also to be noted is that s 1325A(3) [of the Act] lists a broader range of people who may seek the remedial relief under that section than the range of public officers including ASIC under s 659B(1) [of the Act].
Further, given the matters to which I have given consideration below, it would be inappropriate to exercise any power under s 659B(2) [of the Act] to stay this application (and no such application has been made), as the Takeovers Panel would not be able to exercise the jurisdiction conferred under s 1325A [of the Act]. This is an express consideration required under s 659B(3)(b). The Takeovers Panel does not exercise judicial power (Attorney-General Cth) v Alinta Limited (2008) 233 CLR 542 (at [174]-[175])). Further, for the purposes of s 659B(3)(a), to stay the proceeding would, in my view, frustrate the purposes of Ch 6 [of the Act] if orders could not be made under s 1325A [of the Act] before the end of the bid period.

Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd[23]

[22] Re Venturex Resources Ltd [22] - [24].

[23] Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd [2020] FCA 1492.

The most recent consideration of s 695B was in Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd. The applicant in these proceedings sought orders for pre-action discovery under r 7.23 of the Federal Court Rules 2011 (Cth). Shortly prior to the commencement of proceedings, ARA Real Estate Investors 28 Ltd (ARA) made a proportional takeover offer for Cromwell and lodged a bidder's statement with ASIC.
After discussing the previous authorities in relation to s 659B of the Act, Anderson J held that the proceedings were not a proceeding 'in relation to a takeover bid' but were proceedings seeking preliminary discovery which arose under the Federal Court Rules. His Honour held that the proceedings were about the provision of documents and not whether the takeover bid should be allowed to proceed.[24] Relevantly, his Honour rejected the submission that the proceedings were 'in relation to' the takeover bid because it might enable the commencement of future proceedings in which orders will be sought to divest ARA of Cromwell securities it had obtained as part of the bid. His Honour expressed the view that whether the proceedings were 'in relation to a takeover bid' must be tested at the date of the application and not by reference to any future possibilities or hypothetical scenarios.[25]
[24] Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd [63].
[25] Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd [53].

Disposition

It is not in doubt that where a real question is raised as to the court's jurisdiction and powers (or as to the exercise of these), the court must satisfy itself that it has jurisdiction and that the powers may be exercised.[26] The question as to whether the court has jurisdiction to hear this application depends on the proper construction of s 659B of the Act.
[26] Re Application by the Chief Commissioner of Police (Victoria) [2005] HCA 18; 214 ALR 422 (Gleeson CJ, McHugh, Gummow, Hayne & Heydon JJ) [68].
Two issues of statutory construction arise in this case: first, whether these proceedings are 'court proceedings in relation to a takeover bid or proposed takeover bid'; and second, if it is, whether the court has power to order a stay or whether they are a nullity.
The principles of statutory construction are well known. The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all provisions of the statute.[27] This requires consideration of the ordinary and grammatical sense of the statutory words to be interpreted, having regard to their context and legislative purpose.[28]
[27] Director General of Department of Transport v McKenzie [2016] WASCA 147; (2006) 77 MVR 306 [46] (Buss P, Murphy JA & Beech J agreeing).
[28] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 [4].
Another statutory presumption that is relevant to the proper construction of s 659B of the Act is that the court should be reluctant to interpret a statutory provision as an ouster of the court's jurisdiction.[29] As was noted by Austin J in Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd:[30]
The combined effect of these two presumptions is that the court should not hold s 659B to be applicable in the present case unless the statutory words clearly and unambiguously apply.
[29] Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [26] - [28].
[30] Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [28].
The proper construction of s 659B has been considered by single judges of various courts on a relatively limited number of occasions. To date, there has been no consideration by any Court of Appeal or the High Court of this issue. However, there are some obiter statements of the High Court in their consideration of the validity of s 657A(2)(b) of the Act (in relation to the constitutional validity of the Takeovers Panel) as to the purpose of the Takeovers Panel and ch 6 of the Act in Attorney‑General (Cth) v Alinta Limited.[31]
[31] Attorney-General (Cth) v Alinta Limited.
In Attorney‑General (Cth) v Alinta Limited, Hayne J stated that:[32]
The statutory limitation upon the bringing of "court proceedings in relation to a takeover bid or proposed takeover bid" must be understood in the light of the Panel's powers to make a declaration of unacceptable circumstances. The limitation on the taking of such proceedings may prevent a person from instituting proceedings alleging that there has been a contravention of a provision of Chs 6, 6A, 6B or 6C. The limitation is, however, temporary, not permanent. (emphasis added)
[32] Attorney-General (Cth) v Alinta Limited [87].
His Honour went on to state that:[33]
Delaying the institution or prosecution of proceedings in which a private party affected by an actual or proposed takeover bid alleges that there has been a contravention of a provision of one of the specified Chapters of the Corporations Act is at least consistent with the Panel's task under s 657A being the task of creating new rights and obligations as between those affected by the bid. And as explained earlier, the requirement that the Panel take into account any policy considerations that it considers relevant, in deciding whether to make or not make a declaration, coupled with the obligation to have regard to the matters identified in s 657A(3)(a) and the power to have regard to any other matters it considers relevant reinforce the view that the Panel's task is better described as the creating of new rights and obligations rather than the quelling of a controversy about contravention of the Corporations Act. (emphasis added)
[33] Attorney-General (Cth) v Alinta Limited [88].
In my view, the proper construction of s 659B of the Act was accurately summarised by Austin J in Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd. This is as follows:
(a)unless the statutory words clearly and unambiguously apply, the court should not hold that s 659B prevents the commencement of proceedings by a party;
(b)the effect of s 659B(1) of the Act is to prevent any party, other than those listed in that section, from commencing 'court proceedings in relation to a takeover bid, or proposed takeover bid' before the end of the bid period;
(c)s 659B(4) is an exhaustive definition of 'court proceedings in relation to a takeover bid, or proposed takeover bid' which encompasses two steps. First, in subparagraph (a), a definition of the scope of the phrase and second, in subparagraph (b), by listing some specific matters that fall within or are deemed to be within the definition;
(d)while the words 'in relation to' are very wide, they are combined in s 659B(4)(a)(i) and (ii) with more specific words which, by their context, limit their meaning;
(e)if the proceedings do not fall within the definition in s 659B(4), there is no restriction on a party commencing or continuing with the proceedings.
None of the text of s 659B nor its context or purpose support this section being given the expansive meaning contended by counsel for the Effis parties. Each of the text, context and purpose of the section support a construction that limits the exclusion of the court's jurisdiction to proceedings in relation to a takeover, which concern the takeover offer or which may impact the progress or outcome of the bid. That is, the section does not prevent the commencement of any proceedings (other than by those specified in s 659B(1) of the Act) during the bid period, but only certain types of proceedings.
The Effis parties contend that these proceedings fall within s 659B(4)(b)(i) (namely proceedings to enforce an obligation imposed by this Chapter), as well as s 659B(4)(a)(i) as proceedings 'in relation to an action taken … as part of … the target's response to the bid'. The basis for these contentions is that Metalicity alleges the first to twenty-sixth defendants have breached s 606 of the Act and seek to change the board of directors of Nex which may impact Nex's response to the bid.
For the following reasons, I do not accept these submissions and do not consider these proceedings are 'court proceedings in relation to a takeover bid or proposed takeover bid'.
First, as was set out by the plurality in Project Blue Sky Inc v Australian Broadcasting Authority,[34] the words 'relates to' require the existence of a connection or association between the matters to which a relationship is required by the statute. The association or connection must be a relevant one and cannot be accidental or so remote.[35]
[34] Project Blue Sky Inc v Australian Broadcasting Authority [1988] HCA 28; (1998) 194 CLR 355.
[35] Project Blue Sky Inc v Australian Broadcasting Authority [87].
In this case, I accept that Metalicity has taken an 'action' as part of its bid by making a takeover offer for the shares in Nex and issuing a bidder's statement. I also accept that Nex has taken an 'action' as part of the target's response to that bid by issuing a target statement. It is clear that each of these actions fall within the terms of s 659B(4) of the Act. All disputes in relation to these matters have been the subject of proceedings before the Takeovers Panel.

However, in my view, neither proposing to appoint or remove directors of the target, nor seeking to convene a meeting of shareholders to consider the appointment or removal of directors of the target during a bid period are actions that are taken as part of the bid or in response to the bid or 'in relation to the bid'. While it may be the case that the takeover tactics of both sides lie behind these actions (and any subsequent proceedings), what brings the proceedings to court is the actions of parties in relation to contested shareholder meetings of the target.
In this case, the convening of the AGM and the resolutions that were considered at this meeting, rather than being connected to the takeover bid, were done in compliance with the obligations of Nex under s 250N of the Act. Similarly, in relation to the convening of the EGM and the consideration of resolutions at the meeting, this 'action' is done in compliance with s 249F of the Act. Any connection between these matters and the takeover offer is accidental and not a relevant connection for the purposes of s 659B.
Counsel for the Effis parties emphasised that any change in the board of a target company during the bid period could impact the target's response to the bid. Even if this were the case, I do not consider that this means that the appointment or removal of directors during the bid period can be properly characterised as being part of the bid or an action taken for the purposes of the bid. Any connection between the appointment or removal of directors and the target's response to the bid is accidental.
Second, I do not accept that by these proceedings, Metalicity is seeking to enforce an obligation under ch 6. As was submitted by counsel for Metalicity, the obligations of both the bidder and the target are summarised in pt 6.5 div 1 of the Act and set out in more detail in div 2 (the bidder's statement), div 3 (the target's response) and div 4 (supplementary statements). The acquisition of relevant interests in shares that arises as a result of the acceptance of a takeover offer is addressed by pt 6.3 to pt 6.9 of ch 6.
As was noted by Emmett J in Glencore International AG v Takeovers Panel:[36]
The object of s 602(a) is achieved, not by the prohibition in s 606 as such, but by the exemptions from that prohibition contained in Part 6.2. In particular, an acquisition of a relevant interest that results from the acceptance of a takeover bid under Parts 6.3 to 6.9 of Chapter 6. Those provisions are designed to ensure that the acquisition of relevant interests constituting more than 20 per cent take place in an efficient, competitive and informed market.
[36] Glencore International AG v Takeovers Panel [2006] FCA 274; (2006) 151 FCR 77 [33].
Neither the words 'obligation' nor 'prohibition' are defined in the Act. As a result, these words should be given their ordinary and natural meaning. 'Obligation' means 'a binding requirement as to action' or 'the binding power or force of a promise, law, duty, agreement, etc'.[37] In contrast 'prohibition' means 'the act of prohibiting' or a 'law or degree that forbids'.[38] In this regard, it is clear that obligation refers to a positive act that is required to be taken, whereas prohibition prevents an act from occurring.
[37] Macquarie online dictionary.
[38] Macquarie online dictionary.
In this case, the matters of which Metalicity complains in these proceedings are not failures to comply with an obligation under the Act but alleged failures to comply with the prohibition set out in s 606.
Third, counsel for the Effis parties placed particular emphasis on the announcement by Metalicity of these proceedings as supporting an inference that their purpose in commencing these proceedings was to seek orders for the vesting and sale of the defendants' shares and that if these votes were discounted, the results at both the AGM and EGM would have been different. In my view, neither of these matters alter the proper characterisation of the actions which are to be considered as part of these proceedings, or result in these actions coming within the statutory requirement that the proceedings be 'court proceedings in relation to a takeover bid'.
Fourth, in light of the principles of statutory construction that I have referred to above, it is necessary to interpret s 659B which affects the jurisdiction of the court in such a way which has the minimum effect on it. This principle is contrary to the very broad interpretation that the Effis parties sought to ascribe to the words 'in relation to … action taken … as part of … the target's response to the bid'.
Fifth, the underlying policy concerns set out in the CLERP Explanatory Memorandum do not exist in these proceedings. The purpose of s 659B is to avoid tactical litigation being commenced which impacts the progress of bids. In this case, there is no basis to contend that the originating application could result in any delay to the takeover bid. This is evident from the fact that since these proceedings were commenced, the bid has continued without disruption and has now closed.
While I accept that there have been disputes between the parties in respect of the takeover bid by Metalicity, which have been the subject of determinations by the Takeovers Panel, at least one other dispute between these parties (or their related entities) has been the subject of court proceedings. The issue in these proceedings is not about whether the takeover bid should be allowed to proceed, whether any of the documents required by the Act in relation to the takeover bid are misleading or deceptive or whether further information is required to be provided to shareholders by the target or the bidder. In these proceedings, Metalicity challenges the validity of proxies at two general meetings of shareholders on two separate grounds. First, in relation to the proxies at the AGM, whether these complied with the Act, the regulations and the constitution of Nex. Second, whether there is an association between the first to twenty-second respondents in breach of s 606 of the Act and, if so, the consequences of any such breach on the votes cast at these meetings. Even if Metalicity were to succeed in its claims, this would have no impact on the bid. The bid would still proceed (although I note that it has now closed) and shareholders would decide whether or not to accept the offer made by Metalicity.
Sixth, in contrast to some of the other cases which have considered the proper construction of s 659B, it is not in dispute that the Takeovers Panel has jurisdiction to deal with at least part of the claim in these proceedings. I accept that the Panel has jurisdiction to consider allegations of associations between shareholders in breach of ch 6 of the Act and to make declarations of unacceptable conduct. However, in this case, Metalicity has not sought to commence proceedings in the Panel in relation to these matters (in contrast to McKerlie v Drillsearch). Metalicity seeks relief in the form of declarations as to the validity of proxies, orders under s 1325A of the Act and declarations as to the outcome of the AGM and EGM in light of the other orders made. The Panel does not have the power to grant any of the relief sought by Metalicity in these proceedings.
Seventh, as was noted by McKerracher J in Re Venturex Resources Ltd, there is nothing in the text, context or purpose of s 1325A of the Act that supports a construction that the power of the court to make remedial orders where there has been a contravention of ch 6, ch 6A, ch 6B or ch 6C of the Act can only be exercised after the close of a takeover bid.[39] In my view, s 1325A is a specific provision whereas s 659B is a general provision. Consistent with the principle of statutory construction that provisions of general application must give way to specific provisions when they are in conflict,[40] I do not consider that s 659B prevents the court from considering an application for orders under s 1325A of the Act.
[39] Re Venturex Resources Ltd [15].
[40] Re Venturex Resources Ltd [18] and the authorities cited in this paragraph.
In addition, the absence of any express provision in s 1325A of the Act that provides that the power may only be exercised after the close of the takeover offer supports a construction that the general prohibition against issuing proceedings during a takeover period should give way to the specific power.
Given this conclusion, it is unnecessary for me to consider the proper construction of s 659B(1) and s 659B(2) of the Act and I decline to do so. In my view, this is not the appropriate vehicle to resolve the issue of statutory construction raised by the Effis parties. Before doing so, it is my view that ASIC would need to be given the opportunity to file submissions in relation to this issue. Rather than adjourning the application to enable this to occur, given my conclusion, I consider the application should be dismissed.

Conclusion and orders

For these reasons, it is my view that these proceedings are not 'court proceedings in relation to a takeover bid, or proposed takeover bid' and do not fall within s 659B of the Act. On this basis, the court has jurisdiction to hear the originating process.
The Effis parties' application should be dismissed with costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
31 AUGUST 2022