Paringa Mining & Exploration Company Plc v North Flinders Mines Limited
[1988] HCATrans 250
IN THE_HIGH COURT OF AUSTRALIA
Registry No Cl7 of 1988 B e t w e e n -
PARINGA MINING & EXPLORATION
COMPANY PLC
Applicant
and
NORTH FLINDERS MINES LIMITED,
C.L. MAY MELLOR LAING &
CRUICKSHANK LIMITED,
GEOFFREY HUGH STEWART,
JOHN- JOSEPH den DRYVER,
CLEMENS FREDERICK WEGENER,
PETER RICHARD MITCHELL,
DEAN WILFRED HOSKING
Respondents
and
AUSTRALIAN DEVELOPMENT LTD
Intervener
Paringa(2) Application for special leave to
appeal
MASON CJ
BRENNAN JGAUDRON J
TRANSCRIPT OF PROCEEDINGS
AT SYDNEY ON MONDAY, 17 OCTOBER 1988, AT 10.21 AM
(Continued from 14/10/88)
Copyright in the High Court of Australia
SITl/1/SDL 22 17/10/88
MASON CJ: Yes, Mr Gray. MR GRAY: May it please the Court, on the adjournment I had just started to take the Court to what we said
were the errors of principle made by the learned
primary judge at the various interlocutory stages.
MASON CJ: Yes. Could I ask you one question about a comment
that you made towards the end of the proceedingson Friday. It is recorded at page 19. You said, towards the top of that page: The present injunctive order stops the
part C going ahead. There is evidence that
in an hour and a half last week, when the
injunctive umbrella was not available, 4.4
per cent of the company changed hands. There were 1.6 million acceptances in an hour and
a half.
Where is the evidence of that?
MR GRAY: I am instructed that I may have the percentage wrong. The number of 1.6 million is right. There
is an affidavit, if the Court pleases, of Cathro that the Court will find in the application book
at page 100. Does the Court have page 100?
MASON CJ: It is paragraph 4, is it, on that page?
MR GRAY: Yes, it is. The time may be a little out; it may have been trading for an hour and a half rather
than half an hour, in fact. The number of shares, I am instructed, is as shown and the witness deposes as to the percentage.
MASON CJ: Mr Gray, I do not seem to have page 101. Indeed,
my application book appears to miss the pages
· between 96 and 104.
MR GRAY: I apologize for that, if the Court pleases. These
matters were prepared under very extreme circumstances. MASON CJ: Yes, I realize that. MR GRAY: Can I pass to the Court a - - - MASON CJ: I have been supplied with another copy of the application book which has page 101 in it.
MR GRAY: I apologize to the Court in that regard. The short point is that there was a period of about one
and a half hours between Justice Legoe discharging
Justice Von Doussa's order and the plaintiff being
able to get before this Court, before Justice Wilson,
and obtain an interim order. That allowed for
SITl/2/SDL 23 17 /10/88 Paringa(2) a short period of time's trading on the exchange
in which short time, when the market was able
to trade these shares, there was obviously an
enormous demand in respect of acceptances. 4
and 5 on page 101, as Your Honour the Chief Justice
has mentioned, pick up those essential matters.
If the Court pleases, it is also a fact as
deposed to that approximately 54 per cent of the
ADL company is owned by the one shareholder,
Poseidon, and so thus, if Poseidon were to instruct its broker to accept if the market were open,
it is obvious in that one phone call the Part C
could take effect.
MASON CJ: Yes, thank you. MR GRAY: If the Court pleases, could I pass to the Court
the outline of argument we prepared in regard
to the matters of complaint as to the substantiveerrors of principle we say that Justice Legoe
made in respect of each of the matters under
consideration. I have a copy for my friends. If the Court pleases, the outline of argument
starts with, we say, a relevant extract of principle
in regard to an appellate court intervening in
regard to a matter of discretion. Then number 2 deals with the order of 30 September; 3 deals with the order of 3 October and number 4 deals with
the order of 11 October and, when that applicationwas sought to be renewed, the 12th as well.
MASON CJ: Just tell me, where did His Honour deal with the
question of balance of convenience and hold that
it did not favour the grant of interlocutory
relief?
MR GRAY: If the Court pleases, that appears in the application
book at about pages 50 through to 52. We have the entire transcript available if the Court wishes
to see it, but His Honour's remarks pertaining to his refusal of interlocutory relief on
30 September are there set out. Essentially,
apart from simply reciting the fact that there
is a balance of convenience matter, His Honour
remarks do not elucidate or explain His Honour's
reasoning at all. If the Court starts reading
at the foot of page 51, about line 32 on page 51
of the application book, 316 of the transcript
before Justice Legoe, His Honour says:
I believe that I have been referred to the
important cases in this regard and the principles
which are to be extracted from those cases.
I simply wish to say that having given serious
consideration to the main factual matters
and the principles in the cases I have come
SITl/3/SDL 24 17/10/88 Paringa(2) to the conclusion that I should not grant
the interlocutory injunction. It has beena difficult decision to make because there
are a number of aspects about the case which
have caused me or given me cause rather to
give considerable thought as to how the
serious issue is to be analysed and thus
articulating for the purposes of the application
for an interlocutory injunction. When one considers the issue or issues and there are
issue or issues between the parties, certainly,it seems to me that the approach of the Chief
Justice of the High Court in the QUEENSLAND
V COMMONWEALTH case - - -
MASON CJ: Yes, I have read it. MR GRAY: And then he goes on in the next paragraph, and that is where he deals with balance of convenience.
MASON CJ: Yes. I must say for my part I should have thought that if one came to the conclusion that there
was a serious issue to be tried, one could come
to only one conclusion on the balance of convenience,
namely that you would have preserved the status
quo.
MR GRAY: Yes, indeed, that is our submission. If the Court
pleases, we say that the facts here are so strong
that the failure to grant an order holding the status
quo at the same time as ordering an early trial
in a case like this, is an incongruous result.
It really does spell out there has been some error here. The analogy we would use is that
it is a little like the excessive damages appeal
when it is so large, or so small, and the Lord Deane
test, the "Goodness me" test. "Goodness me, there must be something wrong here." On the one hand
it is incongruous to have such an urgent trial;
on the other hand to refuse the holding of the
status quo in the mean time when all the damage
can be done in half an hour. So, if the Court pleases, we say that Justice Legoe has simply failed to properly address
the question of balance of convenience; His Honour,
when he granted the interim ex parte order, found
there the balance was sufficient to grant that;
on the interlocutory application he gives no reasons;Justice Wilson, when he was dealing with the matter, if the Court pleases, in this Court, found the prejudice to the plaintiff was very clearly made
out. If the Court pleases, it really can be put in this way: that without injunctive protection the plaintiff's substantive rights are gone and
it is a case of the complete destruction of substantive
rights.
SITl/4/SDL 25 17 /10/88 Paringa(2)
MASON CJ: That,you say, takes this case out of the area of a decision affecting a matter of practice or
procedure?MR GRAY: It is, if the Court pleases.
MASON er:- A distinction has to be drawn between the refusal
of an interlocutory injunction in circumstances
where that refusal enables the defendant to defeat
the plaintiff's substantial rights, and a case
where an interlocutory injunction is granted.
MR GRAY: Yes, if the Court pleases. We respectfully adopt that treatment and Justice Toohey, at page 119
of the application book, in his reasons, draws
on a decision of Chief Justice Jordan in the case of GILBERT (DEC) where precisely that distinction
is made. The Court is familiar with that so I will not stay to go over and agitate that authority.
If the Court pleases, we say that this is
a most unusual case in that not only has the learned
primary judge made demonstrable errors of principle,
his decision on the balance of convenience is
extraordinary, but that he continues to labour
under the same misapprehensions as he deals with
further interlocutory applications. If the Court
pleases, what is needed is clear guidance as tothe principles because when we go through, if the Court pleases, the argument, for example,
on 11 October, it is quite clear to see that
His Honour still is requiring a clear and strong
case; His Honour still is treating himself as
having heard all these issues and being, in effect,
functus officio by reason of this order on
30 September. On 11 October we come back repeatedly to His Honour saying, "But where is the new issue;
I have decided this issue. Where is the new issue?"
and we say, "Not so, Your Honour. We are talking about new evidence against which you are to deal
with the issue", and His Honour says, "No, that is not th~ test. I am concerned to find a new issue".
MASON CJ: But, I suppose, if.His Honour had been right in
the view that he took of the question at the
interlocutory stage before it reached the appellate
stage, His Honour would be justified in concluding
that the decision he then reached would be
determinative of the question whether relief
should be granted pending the hearing of the
appeal. If, for example, His Honour was right
in saying, "Well, the plaintiff's rights will
not be defeated by refusal of an interlocutory
injunction", would it not follow that His Honour
would also conclude that the appeal would not
be rendered nugatory if interim relief was
refused pending the appeal?
SITl/5/SDL 26 17/10/88 Paringa(2)
MR GRAY: Yes, If the Court pleases, it is paramount to our case that the refusal of interim relief
pending appeal does render the appeal nugatory.We accept that; our case is that it is demonstrable that it does because if the part C goes ahead
then so too must the rights issue because the part C must be paid for and the money must
be found from somewhere from the company's
resources. It has not got the capital - it
must raise it. So, in one blow, my client's rights to come to the court and say, "There
is oppressive conduct in this case. We want the affairs of the company regulated; we want what is, in effect, injunctive relief to properly
regulate the affairs of this company; our
claim for relief under section 320 of the COMPANIES
CODE is once and for all lost".
So that is why, if the Court pleases,
we say this case is very special. That is
why we are here and that, coupled with thefact that we simply cannot present this argument
to the appeal court in South Australia.
BRENNAN J: Mr Gray, your chronology says that the Chief Justice directed that all interlocutory
applications be made before Mr Justice Legoe,
does that appear in the material that is in
the application book?
MR GRAY: Yes, it does, if the Court pleases. That is found in the affidavit of Williams that appears
in the book. It appears in several places;
the affidavit in its most complete form, as
the matter is developed, commences at page 130
of the application and at page 136, paragraph 1. 16.
BRENNAN J: Thank you.
MR GRAY:
My learned junior, Mr Bagot, in fact, had the administrative officer in the Supreme Court
communication with Mr Bodzioch who is a senior
of South Australia, the deputy registrar, and
the Court will see that Mr Bagot was informed
that Mr Bodzioch:
had spoken to the Honourable the Chief
Justice, who advised him that the Honourable
the Chief Justice was not prepared to
hear an application for an expedited appeal -
BRENNAN J: Is it the practice in South Australia to direct
that applications for an injunction pending
the resolution of an appeal should be heardby the judge appealed from?
SITl/6/SDL 27 17 /10/88 Paringa(2)
MR GRAY: No, there is no practice in the court in that regard. The jurisdiction is there but there is no established
practice in the court that we are aware of,
if the Court pleases. The second refusal, if the Court pleases, is in paragraph 1.24
on page 141 when, on the morning of 12 October,
the day the affidavit was sworn, an approach
was made - and I can inform the Court by a
senior solicitor in South Australia, to the associate
to the Chief Justice - in regard to seeking
an urgent hearing for relief against Justice Legoe's
refusal to hear my client on 11 October, andagain the court was unable to hear the matter
until the November list at the earliest.
If the Court pleases, if we go right back
through the argument with Justice Legoe, the
Court will see how on 3 October Justice Legoe
is being informed of the fact that he is to
deal with this matter by the Chief Justice .....
communication and he, in fact, has this rather
complicated commerical cause given on very
short notice and he is to deal with it.
MASON CJ: I must say what I said on friday, Mr Gray, that I should have thought, in the circumstances,
the appropriate procedure to adopt would be
to take out a motion for an order expediting
the hearing of the appeal. But you say thatis not the procedure in South Australia? MR GRAY: That is not the practice in South Australia and it is not as though this particular matter
is the first occasion on which it has been
impossible to get a Full Court to sit on appeal
in regard to an interlocutory matter in a commercial
cause. If the Court pleases, the practice
of the Court is that the approach for an urgent
expedited matter is made to the Chief Justicethrough his deputy registrar - the inquiry
is made there and it is not possible to get before the court. So, short of literally walking into the Full Court sittings and seeking to
make a motion from the bar table - which is,
again, not the practice in South Australia -
MASON CJ: Perhaps that is what should be done.
MR GRAY: Yes. It has not been the practice in South Australia, if the Court pleases, and in those
circumstances, because of what was seen to
be the absolutely catastrophic consequences
for the plaintiff, rather than doing that,
the course was taken of coming here. It had
been made clear that if we had attempted to
do that we would not be heard.
SITl/7/SDL 28 17/10/88 Paringa(2) If the Court pleases, Justice Legoe dealt with
the information that had been conveyed to him from the Chief Justice on 3 October at
page 329 of the transcript. I do not know
if Your Honours have that particular part
of the transcript but I can make it available
to the Court if the Court wishes to be taken
through it. At the top of page 329 of the transcript before the primary judge at interlocutory
level, His Honour there sets out, from lines 2 to 20,
the communication he had had from the Chief Justice
that the appeal court could not sit to hear
appeals until the November sittings.
MASON CJ: That is extraordinary.
MR GRAY: Yes, it is an extraordinary case and, if the Court pleases, there comes a time when, having had the intimation that the Full Court in South
Australia did not wish to hear the plaintiff
and time is absolutely pressing and literally
it is a question of having to arrange for private
aircraft travel to get before this Court insufficient time to get a holding order rather
than, with respect, pursue the barren exercise
in South Australia, elections have to be made
and, in the light of the intimations that had
been received; in the light of the prior practice
of the court, the extraordinary jurisdiction
of this Court has been sought to be invoked.
GAUDRON J: Has the appeal in fact been instituted, Mr Gray?
MR GRAY: Yes. I am instructed that all the relevant appeals have been instituted. I think the final
one was lodged this morning at 8 am.
MASON CJ: What do you mean by "the final one"? MR GRAY: There have been appeals lodged from the orders
of 30 September, 3 October and 11 October in the South Australian Full Supreme Court. But those appeals cannot come on and in those circumstances, because we cannot be heard, we have come to this Court seeking special leave in respect of the same matters. Essentially,
matters have now come to a head with the order
of 11 October and renewed on the 12th whenthe trial judge says, "I will not hear you
on an application for interlocutory relief".
The Chief Justice has directed that the trial judge is the judge to hear interlocutory
applications; we cannot get before the Full Court; we are in the situation where if we lose our injunctive umbrella our substantive
rights are lost and gone forever and, in those
circumstances, we come to this Court and say
29
SITl/8/SDL 17/10/88 Paringa(2) we seek from this Court in these extraordinary
circumstances, special leave, and if Your Honours are sympathetic to that approach, the prosecution of the appeals as soon as the Court is able
to hear us. We, of course, are ready to proceed as soon as the Court can hear the matter.
If the Court pleases, to put it another
way, we could go back to the trial judge today
or tomorrow and say to the trial judge, "You
have this jurisdiction, please exercise it
anew", but we would be met with the problem
that the judge says, "I am only hearing what
I have been told before" - - -
MASON CJ: Yes. I do not think you need labour that point, Mr Gray.
MR GRAY: If the Court pleases, that is why we are here.
We would, obviously, prefer to be arguing the
matter in the Full Court of South Australia -
MASON CJ: I think you have explained to us adequately why you are here so you had better pursue the line of your argument and persuade us that, now that you are here, you ought to receive something from us. MR GRAY: If the Court pleases. Could I take the Court then to the outline of argument and take up
what we say are the demonstrable errors ofprinciple on the face of the learned primary
judge's treatment of the matter.
The first relates to His Honour's treatment of the matter on 30 September when he refused
interlocutory relief. In the transcript at
pages 315 to 317, which this Court will find
in the application book, pages 50 through to 52,
His Honour's conclusions - with respect they
are barely reasons - in regard to that matter, are set out. I took the Court briefly to this on Friday and I just touch on it again to remind
Your Honours of it. At page 52 of the application book, what has happened is that Justice Legoe
has required the plaintiff to show a strong and
clear case rather than asking himself the question,
"Is there a serious question to be tried?"
We say, of course, that there is a triable
issue demonstrated by the fact that this case
has now been at trial for a week and we are
in the process of calling evidence. We plainly have a triable issue. But, what His Honour
did was that His Honour said that what tipped
the balance was Your Honour the Chief Justice's
approach in QUEENSLAND V THE COMMONWEALTH.
SITl/9/SDL .30 17/10/88 Paringa(2)
MASON CJ: Mr Gray, it seems, if you look down five lines
below the reference to QUEENSLAND V THE COMMONWEALTH,
His Honour identified the two issues for determination
correctly: was there a serious question to be tried and what did the balance of convenience
dictate? Now, where do you say, as a result
of identification of these two issues, that
His Honour identified the wrong issue?
MR GRAY: If the Court pleases, it is demonstrated by
his reference to the approach in QUEENSLAND
V THE COMMONWEALTH tipping the balance because
if he has, if the Court pleases - he has correctly
enunciated the words - our respectful submission
is that His Honour, although saying the right
words, in fact, in his mind, has been applying
the wrong test. Because when it comes to tipping
the balance he goes to Your Honour _the
Chief Justice's words, "a clear and strong
case".
MASON CJ: Where does he mention those words? MR GRAY: One has to go back to Mr Morcombe's submission, if the Court pleases, and if I can pass to
the Court that part of the transcript before
Justice Legoe on 30 September, the Court will
see Mr Morcombe's submission was perfectly
plain.
MASON CJ: This is not a permissible way of interpreting
a judgment, is it, to go to what counsel submitted
to the Court and then interpret the judgment
in the light of that submission?
MR GRAY: No, the difficulty, if the Court pleases, is that His Honour Justice Legoe' s !remarks, as the
Court can see, are brief and he does link his reference to that case in the way in which
Mr Morcombe referred to it. We start there, if the Court pleases, because Mr Morcombe's submission is that you must find a clear and
strong case.
His Honour, in his later remarks, on
11 October, makes it quite plain that that
is what he was about. So, when one puts the
threads together, there can be no doubt that
His Honour was referring to that part of QUEENSLAND
V THE COMMONWEALTH.
MASON CJ: Where do we find Mr Morcombe's submission? What page? MR GRAY: At page 295, line 12, Mr Morcombe says: SITl/10/SDL 17/10/88 Paringa(2) I have referred in my list of authorities
to the case of QUEENSLAND V THE CO:MMONWEALTH.
I do not wish to take Your Honour to that
decision in detail but I do suggest to
you that it is support for a number of
propositions first, that in certain cases
it is necessary for the person applying
for the injunction to make out a very
clear and strong case on the facts before
one looks at the balance of convenience.
And he then seeks to equate the treaty obligations of the Commonwealth Government with an obligation of the take-overs Code.
MASON CJ: That is a ludicrous submission.
MR GRAY: If the Court pleases, that is the submission
that Mr Justice Legoe found to be particularly
helpful and, if I can take the Court to the
end of the chronology. On 11 October, during argument, we were then saying to His Honour:
"We have a difference with Your Honour.
Your Honour says it is a clear and strong test;
we say that is not right. We must abide "
Your Honour's ruling and address Your Honour
on that basis", but in the course of that interchange,
Justice Legoe makes it quite plain that that is the way in which he treated QUEENSLAND V
THE COMMONWEALTH as being relevant.
MASON CJ: What is the reference to that? MR GRAY: That is at page 22 of the trial transcript which Your Honours will find in the transcript we
handed up on Friday. On page 22, in addressing argument to His Honour, at line 5, it was put:
Your Honour reached the point where your
Honour indicated that a certain matter
tipped the balance in your Honour's, the case of QUEENSLAND V THE COMMONWEALTH and as your Honour knows we have a different
view about that -reasoning and your Honour referred to
it had been all dealt with on 3 October in
great deatail -
but I simply abide your Honour's ruling
and just look at the reasoning for the
purposes of the present debate.
Because, we were arguing that even if you call
for a clear and strong case, we make that out -
we wil1 meet any test - although that is not
the right test.
SITl /11 /SDL 32 17/10/88 Paringa(2) MASON CJ: It is important, is it not, to look at the bottom
of the page where His Honour seems to be explaining
or endeavouring to explain, . the basis of his earlier decision?
MR GRAY: That is so. And on the very last line, said: So, it wasn't just a serious question to be tried -
MASON CJ: Before you get to that, he said:
I relied on what had been said in the
transcript both :in relation to •the
serious question to be tried and the balance
of convenience and the question of damages
as an alternative remedy.
MR GRAY: Yes. MASON CJ: So, it wasn't just a serious question to be tried and admittedly the ~UEENSLAND case was with a particular reference to
the serious question to be tried.
MR GRAY: So theEe can be no doubt that His Honour was picking up the remarks from QUEENSLAND V THE
COMMONWEALTH and in~erlinking that in some way
with the serious question to be tried.
MASON CJ: So it is possible His Honour was saying, "Well, the test is: is there a serious question :to
be tried but, in addition, that has to be glossed
by the requirement that there needs to be aclear and strong case."?
(Continued on page 34)
SITl/12/SDL 33 Paringa(2) MR GRAY: Yes, that is, we say, the interpretation or the
conclusion one is driven to and he then says:And that principle -
because he refers to it as a principle -
tips the balance -
MASON CJ: Because what the QUEENSLAND-V THE COMMONWEALTH said was'clear, if not strong, in relation to
cases of that particular category.
MR GRAY: Which was, of course, we would say, a case totally distinguishable from the facts of the case at bar.and of no relevance to His Honour's inquiry
in a commercial cause of this nature. So whathas happened is that His Honour has allowed an extraneous principle to intrude into his reasoning which has led his astray. That is our short point in regard to that, if the Court pleases, and just so tDat there can be no doubt about the matter, on 3 Octobe~ at page 345 of the interlocutory transcript, in the ~mall book we handed to Your Honours a short while ago, Mr Grieve,;. who then appeared for the plaintiff, took up the matter of His Honour's reasoning, at page 345, lines 28 and thereafter, and put the argument that we now put to the Court that
it is a totally dissimilar case. I read from line 27: Th~ next question which his Lordship
remarks tosses up for consideration and
we are taking this from 268. Is there any
basis upon which it could be said the appealwould be frivolous. Is there any basis
upon which it may be said that to grant
the holding injunction would inflict greater
hardship than it would avoid. The first of those questions presents something of an embarrassing dilemma. One rarely wishes to suggest to a judge that he has made an
error, we would respectfully submit that
your Honour in invoking the approach of
the Chief Justice in the QUEENSLAND AND COMMONWEALTH case really did impose the
wrong test. A test that was a little too high in the circumstances and the point
of distinction between that case and others
is ·that that case. involved an attempt to
interfere with the actions of governmentand as the Chief Justice pointed out in
that case any citizen who attempts to
interfere with the actions of government
by definition has assumed for himself a
very heavy burden.
SlT2/l/ND ·_34 17/10/88 Paringa(2) But that is to take the test out of context that doesn't apply here. That would be
the first matter that would be agitated
on appeal.
HIS HONOUR: It could be said that your
application was an attempt to interfere
with the market place and the Stock Exchange
and the rights of the company to raise capital
on the non-renounceable rights.-
issue.
So His Honour is saying, "I am fully justified
1n doing that because of that interpretation
of the facts." There can be no doubt that
His Honour has taken on board the test from the
QUEENSLAND V THE COMMONWEALTH.and, in our respectful
submission, applied that to an entirely inappropriate
case. And, if the Court pleases, the learned primary judge, with respect, would be advantaged
by guidance as to the correct principle to be
applied in this regard.
If the Court pleases, in a sketchy form,
we puil tqgether those threads to demonstrate
that that=was, in fact, His Honour's line of
reasoning and we say when those threads are pulled
together, demonstrably erroneous.
If the Court pleases, we say that in respect
to that decision on 30 September His Honour's
treatment of balance of convenience must have
in some way been afflicted by error; the balance
is so clear, the results are so catastrophic
to the plaintiff that to find - if he has impliedly
found the balance was the other way, fhat he
must have fallen into error in the exercise of
his discretion.
BRENNAN J: How long was the part C offer to be open? MR GRAY: After the announcement of the part C, there 1s
a 14 day period before the offer starts to run
and in that 14 day period the offeror has to
stand to the market-place at the price to be
offered. The offer then takes effect 14 days after announcement and then remains open for
28 days. In this case, it comes to an end on
4 November but there is, of course, power under
the Code for it to be extended in appropriate
cases.
BRENNAN J: And who must exercise that power? MR GRAY: The commission has that power reposed into it
and it is a common matter to be exercised.
SlT2/2/ND 35 17/10/88 Paringa(2) But, of course, it does require an application
by the offeror - of course, it is our case that
this offeror is not going to apply for an
extension. This offeror, as part of its defensive
strategy - the whole object of this manoeuvre
was to produce a manoeuvre that had immediate
--effect, the practical consequences of which would
occur and the whole matter would be a fait
accompli. And so that it would just be too
late; North Flinders would have committed itself
and the other moneys would have to be found.
BRENNAN J: I appreciate that but let us assume that, contrary to your submission, this is a proposal which
the company's board has resolved upon in good
faith in the interests of the company as a whole,the procedure which you are seeking to have adopted
and which thus far has been adopted is· one which
puts an end to the prospects of that proposal
being brought to fruition.
MR GRAY: We say ''No", if the Court pleases, because of the abi'lity to obtain an extension of time which - and one would say this was a very clear case
for an extension. The offeror would say, "Well, we wish to proceed with the offer; there is a
d i s put e of fa c ts ; we are subjected to an in j u n ct i on ; we wish to have the time extended to enable us to pursue the matter once the court has dealt
with the case."BRENNAN J: Are there any market forces which might indicate that not to be a practicable course to follow?
MR GRAY: That is a possibility, if the Court pleases,
but that is where there must be, we say, anappreciation of the background material and we say that when taken through the evidence now available the case is overwhelming. BRENNAN J:
Was the case on the balance of convenience along the lines that I have just indicated agitated
before Mr Justice Legoe? MR GRAY:
I would have to accept that it was in a general way. The question of the offer not going ahead
and prejudice. to ADL shareholders was certainly
raised in a general way.MASON CJ: But it always .is raised, is it not, in interlocutory applications of this kind?
MR GRAY: Yes, I was - I was trying to put my mind to the question as to the extension of the offer and the market forces as to just how far that was agitated before His Honour but no - that issue was certainly raised, that is of the consequences to the defendants of the offer being held up
S1T2/3/ND 36 17/10/88 Paringa(2) pending a trial but, if the Court pleases, when
we have come back on 11 October we have comeback to the court saying, "We have new evidence.
On the last occasion we asked you to infer certain
matters, we now have hard evidence on discovery
previously deliberately withheld from you in
--a falsified exhibit which shows that we have
here a very clear plan put in place to avoid
a changing control such as prima facie to bring
the case fairly and squarely within the WHITEHOUSE
principles.
Short of taking the Court through that material,
one cannot demonstrate the strength of that point
but, if the Court pleases, we are dealing with,
for example, minutes of a meeting put forward
which leave out se~en pages in which there is
a crucial matter being discussed.
BRENNAN J: But it is quite clear that so far as the initial application is concerned for an injunction, that
is 3 October application, the order made on
3 October?
MR GRAY: No, 30 September. BRENNAN J: Sorry, 30 September.- if this Court were to
grant special leave against that decision, then
it would be incumbent upon this Court to evaluate
for itself the various considerations which bear
upon the balance of convenience.
MR GRAY: Yes. BRENNAN J: That is something which obviously this Court
would be most unwilling to do and in practical
terms could not do today.
MR GRAY: If the Court pleases, we are mindful of that.
We, of course, stand ready to address the Court
on that matter and we would welcome the opportunity to do so but we are mindful of the difficulties
that that course presents. But the other alternative, of course, is to remit the matter to the Supreme
Court of South Australia with appropriate guidancein regard to the relevant principles. That is
the other alternative. We are a little concerned that Justice Legoe, in that passage I took the
Court to on Friday, in our submission, demonstrateda closed mind to hearing us.
MASON CJ: That may be, but does it not emerge that this
Court should be looking at it from the point
of view of a pending appeal in the Full Court
of the Supreme Court and the question whether
the refusal of interim relief pending the hearing
of that appeal is a matter that warrants specialleave from this Court?
SlT2/4/ND 37 17/10/88 Paringa(2)
MR GRAY: Yes, that is the second of the points we have
raised. We would put that the real gravamen of the matter at the moment is the refusal of
a judge in South Australia to hear our ·application
for an interlocutory relief on the basis of theevidence now available. That is a third point. MASON CJ: It is either the second or the third stage that
appears .to be critical at the present time on
which this Court should be focusing its attention.
MR GRAY: Yes, and we seek both. We accept that, in a sense, the 30 September matter has run its course
in the events that have transpired. History
has overtaken that point except that the error
that the learned trial judge made still permeates
his thinking. And so, if the Court please, without
some guidance in regard to that matter we are
very concerned that if Justice Legoe were to
deal with the matter without further guidancehe would simply, in our submission, commit the
same error.
MASON CJ: I think you have made that point.
MR GRAY: Thank you. So there is a permeation of that error through his present thinking -
MASON CJ: Yes, we have received that message. MR GRAY: But we do take up Your Honour the Chief Justice's comment that, as far as the second point is concerned, we are needing interim relief pending getting before the South Australian Full Court in early November. As I understand it from something in the transcript, that sitting starts on
31 October and the moment that we have some form of interim protection pending that procedure we will be urging the court to hear that matter on 31 October.
BRENNAN J: Has the plaintiff's case yet closed before Mr Justice Legoe?
MR GRAY:
No, we start the second witness at the moment, if the Court pleases.- just started the second
witness this morning. The first witness has been completed, he was cross-examined for a day
and the second witness is in the box. I think some 10 witnesses have been opened but it really is a d~fficult case to predict the length of
trial. It is a very complicated commercial cause.There is a valuation question of the ADL company. The plaintiff's case is that the part Coffer is more than double the value of the ADL company
and so one of the issues before the trial willbe: is that right or not? And there will have to be expert valuation evidence given on that issue.
SlT2/5/ND 38 17/10/88 Paringa(2) BRENNAN J: I suppose that evidence, itself, provides
some fuel for_ the market-place, does it not?
MR GRAY: If the Court pleases, there is a lot of evidence
through the interlocutory material that makes
. that a prima facie case of overvalue. There --are at least three experts in the area who have deposed to the value being excessive. It does
not appear to be a great deal of difference in
regard to the net present asset value and the
question is: what, if any, loading can be added
to that? But, of course, we are not concerned
with a person buying these shares to trade them,
we are concerned with a company acquiring assets.
We are not concerned with a share trader.
MASON CJ: Mr Gray, you have probably covered the entirety of your point 2, have you not?
MR GRAY: Yes, we have, if the Court pleases, except for one matter and that was His Honour's treatment of balance of convenience. In a sense we have
touched on that but could we provide one further
reference to Your Honours. In the small book
we handed up this morning, dealing with the events
of 3 October, this is dealing with the application
for injunction pending appeal, His Honour made,
we say, a very pertinent observation that
demonstrates his misapprehension on the balancepoint. MASON CJ: Where do we find it? MR GRAY: At 366 and 367 of the interlocutory process,
3 October hearing. It is small book marked 11 3D" passed up to Your Honours this morning. His Honour, at page 366, was giving his reasons as to why he was dissolving the injunction and he made his order that he dissolved the injunction
at the top of 367. Then Mr Grieve said this:
Could your Honour hear me before giving effect to that order? Would your Honour
be disposed to defer giving effect to that
order and I imagine one can do that by
directing it not be entered until a time
later than now for this reason; it would
appear with respect, your Honour's reasoning
has been influenced, if not decisively,
at least substantially, by the pendency
of trial. We would wish to consider our position in regard to that matter and without
wishing to be cryptic about it it may well
be that our instructions would be to move
to vacate the hearing date with a view to
endeavouring to press our appeal at theearliest possible time. We take the view
rightly or wrongly, that the overwhelming
SlT2/6/ND 39 17/10/88 Paringa(2) probability is that if we are not in some
way protected on this interim basis, that
the battle will be over in one form or
another adverse to us, well prior to the
time the court can intervene to give us
the finding of relief we are seeking.
HIS HONOUR: But how will the withholding of the order I have just pronounced, namely
the dissolving of the injunction ofSaturday, either assist or hinder, or in
any way further your interests in the matter?
I am not sure that I am clear on that.
We say that that paragraph by His Honour betrays
a total misapprehension on the balance of
convenience. His Honour, having made the order,
cannot see that in the absence of injunctive
relief that our client's substantive rights are
in jeopardy - will be destroyed.
So His Honour made that order without being
sure about how His Honour's order of an injuction
would assist or hinder or in any way further
the interests in the matter. Shortly put, we
say His Honour, for some reason, has simply
totally misapprehended the case.
If the Court pleases, I move on to point 3
1n the outline of argument if that is convenient
to the Court and we take up the misconception
of principle by His Honour in respect to the
granting of interlocutory relief pending appeal.
In the transcript, and we touched on it briefly
on Friday, His Honour said that the issues before
him were synonymous with those considered and
extensively canvassed in the applications for
interlocutory injunctions on 30 October. And, if the Court pleases, that appears in the
application book proper at page 61.through to 63.
At the foot of page 61 of the application book,
page 364 of the interlocutory arguments, His Honour says, at line 34:
In my judgment the matters that are
appropriate to consider for the purpose
of extending or granting an injunction until
the hearing of the appear are synonymous
with the matters that were extensively
canvassed and upon which very erudite
submissions were made for the whole of last
Friday.
And thenhe talks about the limited time available on the Friday. He restricted counsel in the
time they could assist him in the matter and
then, at line 13:
SlT2/7/ND 40 17/10/88 Paringa(2) As I consider the issues to be synonymous,
I accordingly indicate that in my view I
have exhausted my functions for the purpose
of determining whether I should exercise
a discretion to extend the injunction.
--In regard to that matter, we respectfully adopt
Justice Toohey's treatment of that, that
His Honour fell into error and Justice Toohey's
treatment of that is at page 121 of the application
book. And Justice Toohey says, at the foot of page 121, line 10 of his reasons:
If, as seems to have been the case, his
Honour thought that he was then functus officio he was, I think, in error: ERINFORD -
So, although His Honour spoke about the ERINFORD
principle as though he had taken it fully into
his mind, he had not because, having been addressed
on ERINFORD, he then came back and said, "But
this is no different from 30 September", whereas,
in fact, of course, the ERINFORD case makes it
very plain that there is an entirely different
approach. On the application for interim relief the question is - pending appeal.- the question
is: if relief is not granted, will the appeal
be rendered nugatory? If the answer is: it
will be rendered nugatory, as it will ih this
case, then one asks the question: can the appeal
be said to be frivolous? And this, with respect,
cannot be so in this case. Alternatively: is
there a compelling reason that dictates the
refusal of the interim order because of matters
of convenience - hardship, to pick up
Justice Megarry's approach in the ERINFORD case?
MASON CJ: The real problem, of course, is that you had
the same judge determining the two q.uestions, interlocutory relief and interim relief pending
appeal. If you have the same judge and he has
formed a view at the first stage, it is almost inevitable that he is going to carry over his
view into the second stage.
MR GRAY: Yes, it is but, unfortunately, he should not
do so because he should be addressing different
issues. But this judge has - - -
MASON CJ: But I endeavoured to explain to you before why, in the circumstances here, it was understandable
that the judge would see an identity between
the issues. If he came to the conclusion that
preservation of the status quo was not necessaryin order to preserve the plaintiff's alleged
rights, it was almost inevitable that he was
going to hold that the plaintiff's rights,
SlT2/8/ND 41 17/10/88 Paringa(2) subject to the appeal, did not require protection
by interim relief.
MR GRAY: Yes, we accept that, if Your Honour pleases, but we say, of course, his decision on the balance question is demonstrably wrong. Justice van Doussa who heard the matter -
the transcript is not available before
Justice van Doussa but he was prepared to grant
the interim relief in very strange circumstances
on a Saturday evening but then the matter came
back before Justice Legoe.
BRENNAN J: I take it from the fact that Justice van Doussa did make an order that there is jurisdiction
in a single judge of the Supreme Court of SouthAustralia to make an order in the nature of an
interim or interlocutory injunction pending an
appeal to the Full Court?
MR GRAY: Yes, Justice van Doussa was taken to the ERINFORD case and the other cases and found that jurisdiciton. on the close of 30 September, we sought to obtain
a short interim order from His Honour to allow the appeal papers to be prepared and then come back before the court to get a further order. And His Honour said that he would not hear that and we said, "Well, we would like a short adjournment to get the authorities" to address His Honour, and His Honour refused us to leave court to get the authorities to come and address His Honour on that point. That was on the Friday and on the Saturday, as again appears in the transcript, Justice Legoe apparently was approached by the registrar to hear the matter but was not available due to some personal commitments and Justice van Doussa heard it on Saturday night. the cases mentioned in the precis: WILSON V CHURCH
NO 2, ERINFORD PROPERTIES V CHESHIRE CITY COUNCIL and Justice Toohey's decision when a member of
the Federal Court in BERCOVE V HERMES, all to
the same effect, but the principle is if onehas an appeal as of right, which is so in the case at bar, the appeal court ought to ensure
the appeal, if successful, is not rendered nugatoryand to that end should grant an interim order, save for a frivolous appeal or an extraordinary
case on balance.And then, it was on the night that Justice Legoe
refused that matter on 3 October the Chief Justice
said we could only go back to Justice Legoe.
So that, really, is the predicament the plaintiff
is in and which it seeks to have corrected.
SlT2/9/ND 42 17/10/88 Paringa(2)
BRENNAN J: But is there any jurisdiction created by the SUPREME COURT ACT or by other legislation in
a single judge of the Supreme Court of South
Australia to exercise jurisdiction ancillary
to the appellate jurisdiciton of the Full Court?
MR GRAY:-If the Court pleases, we cannot answer that question
specifically other than to say that normally
we would say that any single justice in South
Australia would have the jurisdiction to grant
equitable relief in circumstances such as this.
But in practical terms, short of literally
approaching every single justice in turn until
one will hear us, and making clear theChief Justice's direction - - -
BRENNAN J:
I am not concerned about that, I was concerned about the question of jurisdiction only.
MR GRAY: We accept that Justice von Doussa had jurisdiction. That was our argument to him, thus, we would say, for any other single justice of the court.
That was the effect of - if the Court pleases,
I will not go to those authorities unless theCourt wishes. MASON CJ: No, there is no occasion to do that;
MR GRAY: Thank you. If the Court pleases, one matter that did seem to exercise Justice Legoe's mind was that he faced the prospect of the possibility of the appeal process not coming on until the
trial was finalised and we address that on page 5 of the outline of argument, paragraph 3(c). jurisdiction is to prevent the appeal from being rendered nugatory, the commencement of the trial
before the hearing of the appeal is irrelevant. It is not sufficient that the appeal might be futile when heard. The court should wait and
an unsuccessful plaintiff would have to apply see, giving liberty to apply, in the event of judgment at trial before the appeal is heard for relief pending appeal in the substantive action. So otherwise there would be a lacuna, there
would be a gap when protection would not be
available. But if the ERINFORD injunction was
granted, and it in fact was the case the trial finished before the appeal could be heard, and that appears unlikely in the present case now,
but if that were the case, then the ERINFORD
injunction would run its course and end with
a judgment and the plaintiff would then lodgehis substantive appeal if he was so advised and
seek then an interim order pending that appeal
to protect him so that there would be no gap.
SlT2/10/ND 43 17/10/88 Paringa(2) But His Honour has taken up there was a
possibility that the trial would start, he has
not really contemplated its conclusion as to the date of the appeal and he said, 11 Well, because the trial is going to start, therefore no relief. 11 , and we say, by so doing, he is demonstrably in
--error. And that appears in the appeal book at page 63 - yes, 63 of the application book, in
the lines 20 through to 28.
If the Court pleases, the Court has our
points in regard to interim relief pending appeal
and if it is convenient to the Court I will move
on to point 4. If the Court takes up the transcript that we handed to the Court on Friday,
being the trial transcript, and turns to pages 34
and 35, the Court has the judgment that we complain
about. This is the passage that I took the Court to earlier so if I could stay with it shortly.
Page 34 of the trial transcript.
We are now dealing with the application
so there a threshold question, 'Will he even to be heard for an interlocutor6 injunction hear an application for interlocutory injunction?" and, in the course of that argument and before it is completed, in a number of material respects, His Honour says, at line 13: I cannot see that any of these points
justifies me in allowing this application
for yet another interlocutory injunction
to be canvassed at this stage in the light
of ihe orders that have already been made ..
And in the light of the fact in particular
that this trial was due to start at 10.15
this morning, and I don't think I shouldreally be called upon to give any further
reasons other than those that I have
mentioned in the course of discussion, and
I think I should rule here and now that
after lunch you should open your case. MR GRAY: I haven't finished ..... HIS HONOUR: But I have heard sufficient .....
ls Your Honour saying:
your Honour won't hear -
now. 11 , and then he then rules, at the foot of us. And His Honour says, 11 1 am going to rule the page: I understand what you are getting at -
S1T2/ll/ND 44 17/10/88 Paringa(2) I understand your point - that, of course, begs
the question, he has not heard us out. He then
demonstrates the error:
I am not satisfied they raise new issues -
--which we say is not the test, it is a question of:
is there new material, new evidence, that is
relevant, not a new issue? Of course, the issues
remain the same, there was new material, wilful
misleading of the court and other new material
to be agitated. And then His Honour says: That is my ruling.
(Continued on page46)
S1T2/12/ND 17/10/88 Paringa(2) MASON CJ: Was His Honour's attention drawn to the comments of Justice Toohey?
MR GRAY: At that stage, Justice Toohey's reasons were not
available. We are now talking about 1.35 on Tuesday morning and Justice Toohey delivered his reasons that afternoon. His Honour had been advised
-- that judgment was expected that afternoon;
His Honour was advised of what had taken place between counsel before Justice Toohey, when counsel
for the defendants had said, "Your Honour should not
allow an interim order in the High Court because the
proper course is to apply to the judge at trial for injunction." That was counsel's submission to the High GJurt in argument before Justice Toohey, and I will take the Court to that because, with respect, it is of importance, and then, having said that a few days earlier, when we sought to invoke that jurisdiction, the same counsel said to Justice Legoe, "This is mischievous; it is a delaying tactic; a suggestion af impertinence to the Court; you should not hear it." Then, if the Court pleases, Justice Toohey's
reasons came down and this application that was
refused at page 34, was renewed. Justice Toohey'sreasons were delivered to all parties and and at 10.15 when the trial commenced, Mr Lander,
who was then dealing with the matter, sought to
renew the application that had been made on the
earlier day, and Justice Toohey's reasons were put
before him and His Honour for assistance.
Mr Lander sought to develop his submissions about
being heard and there came a time when he was
interrupted, on this occasion by Mr Archibalq,who
said 'Ito Justice Legoe, this application is but a
repeat of yesterday's application. It is but a
delaying tactic; it is but an impertinence to this
court and to the High Court."
So that, on the one hand, we have Justice Toohey
saying, "I don't give interim relief because there is
matter; let him deal with it. 11 And the defendants a jursdiction in Justice Legoe to deal with this acquiesce in those statements in the High Court, come before Justice Legoe and their attitude changes. "Don't hear the plaintiff, it is a delay, it is an impertinence, it is mischievous." And Justice Legoe
succumbs to those submissions.BRENNAN J: That is on 12 October. Have we got the transcriot
which contains that part? •
MR GRAY: Yes, that transcript is now available, if the Court
pleases. The Court has it in that book.
46
SlT3/l/VH 17/10/88 Paringa(2) BRENNAN J: What page? MR GRAY: It starts, if the Court pleases, at page 61 of the
trial transcript in that book. Mr Myers, leading for the director defendants, parties against whom injunctive relief is not sought, is to his feet firts; -_-':begs. indllgence to interrupt his friend's opening:
Has Your Honour been informed of the decision
of Justice Toohey yesterday?
And His Honour there says:
I have had the opportunity of reading it.
And then, if the Court pleases, there is some
procedural debate about a statement of claim in
defence being - -
MASON CJ: Whereabouts do we find the critical passage?
MR GRAY: Yes. If the Court pleases - - -
MASON CJ: About page 11, is it?
MR GRAY: No, Your Honour. On 12 October, we are dealing with page 63 forward; but the matters comes to 64 line 12,
Mr Lander says that he is:
instructed to make applications in the same
terms as Mr Gray made to you yesterday
morning.
Then there is more interchange and, if the Court
pleases, on page 80, in the course of Mr Lander
seeking to put the same submissions or pursue the
same application that had been made before, there
came a time when His Honour had strayed into thequestion of damages as an adequate remedy, and at
line 6 His Honour says to Mr Lander - Mr Lander
had put the submission that it is up to the
defendants to say they have got the money to meet a claim for something like $60 million, His Honour
says:
What is your authority that they have to
say, yes, we have got a lot of defendants
who have got an enormous piggy bank of
six on million dollars and that piggy bank
is available for the plaintiffs damages.
His Honour is saying to the plaintiff, "You must
prove that these _ . . . . . have not got the means." Then while Mr Lander is taking instructions
on that, Mr Myers says:
SlT3/2/VH 47 17/10/88 Paringa(2)
While my learned frie1i js taking instructions may I enquire of Your Honour whether my learned friend is making an application that he should be able to make an application for an interlocutory injunction or is he making the application
for the interlocutory injunction.His Honour says:
I must admit I understood on this occasion
Mr Lander was doing the latter, namely
making the application but I will ask him
Mr Myers.
MR MYERS: Because Your Honour, we would want to say that we object, as we did yesterday, to
the making of an application at this time
because it simply delays the trial and we
draw Your Honour's attention again the
circumstances that suggest our friends at the
other end of the bar table do not wish thismatter to proceed to a proper orderly trial.
et cetera. Then, over the _page, page 82, my learned friend, Mr~Archibald-said, Iine 21:
We wish to support Mr Myers submission - and at line 21 -
There is an element of farce in what is
occurring before Your Honour because in one way or another, Your Honour is asked to sit upon appeal of Your Honour's decision yesterday.
Now, if the Court pleases, there was an application to renew the matter in the light of Justice Toohey's
reasons. The very matter that Justice Toohey, with respect, in his reasons and during argument, had
in effect, encouraged:
There is an element of abuse -
said Mr Archibald to Justice Legoe -
There is an element of abuse in it because
the likelihood is that similar arguments
are being put today in the High Court at the
moment, to the same effect based on circumstances
that occurred yesterday, and on any view
tYour Honour, all that is being put before
Your Honour is a repetition of what Your Honour
has heard on a number of occasions without
any suggestion that new elements or new
circumstances have arisen beyond what has been
put to Your Honour before, or that some matter
wasn't put that should have been put.
S1T3/3/VH 48 17/10/88 Paringa(2) Well, of course, Justice Toohey' s reasons .were the
new matter, the imputation to tell His Honour,
"You have a jurisdiction, exercise it.":
Your Honour has heard these submissions at length
before and all that is happening now is
that the same arguments are being trotted
out before Your Honour again. It is in our submission an impertinence to the court to
have these matters put again and again and
again and again without any foundation being
advanced as to why Your Honour should hear
the same argument. In our submission, the
opening should proceed and the plaintiff
should call its evidence.
Now, His Honour then says, "What are you doing, Mr Lander?"
and Lander says, "I am seeking to renew the application
made yesterday, the same matter." His Honour says:
I refuse the application.
at line 33 on page 83. Now, if the Court pleases, we say that something is very wrong when, on the one
hand, we can have matters before this Court with
Justice Toohey, through his reaons and his comments
during the argument, in effect, saying to the trial
judge, "You have a jurisdiction, exercise it," being
invited by defendant's counsel to do just that, but,
back in Adelaide when that application is sought to
be made, being left with the argument, "This ismischievous, an impertinence and a delaying tactic,"
in circumstances where the plaintiff had said,
"Providing we have interim relief, we will argue the
matter at night. The trial can proceed, we do not want to delay the trial."
His Honour then accedes to all of the defendants'
submission in that regard. So the very thing that Justice Toohey, with respect, is wanting to happen,nan:ely
the trial judge exercising jurisdiction, is being
avoided by His Honour specifically on the defendants' encouragement.
BRENNAN J:
Mr Gray, we really have to keep distinct in our minds, do we not, ·1:he
difference between
proceedings before His Honour originally to grant
an injunction in the exercise of his original
jurisdiction and a similar application before him
at the commencement of the trial and an application
to maintain the status quo pending the appeal.
MR GRAY: Yes. BRENNAN J: Now, in relation to the original jursidiction matters, in any case that you would seek to bring here,
it would be necessary for this Court to examine the
S1T3/4/VH 49 17/10/88 Paringa(2)
factual material pro and con; is that not right?
MR GRAY: Yes, it would be necessary, if the Court pleases. BRENNAN J: Now, if the Court were to undertake that function
it clearly could not undertake it today and, indeed,
having regard to the course which proceedings arefollowing in Adelaide, I imagine the factual basis
is changing moment by moment.
MR GRAY: Yes, well, that is happening as the trial proceeds. BRENNAN J: The point that you make, I take it, about the proceedings once the trial connnenced on 10 October,
is that you then had new material obtained by way
of discovery.
MR GRAY: Yes. BRENNAN J: And that was not sufficient to convince His Honour?
MR GRAY: Well, His Honour would not hear us. BRENNAN J: Well, he heard you for an hour and a half.
MR GRAY: If the Court pleases, we have not taken the Court
through that.BRENNAN J: No, I appreciate that.
MR GRAY: If the Court goes through it, the Court will see
His Honour is not hearing us at all. What His Honourdoes - His Honour says, "Tell me why I should hear
the appl.ication," and we say, "New material," andas we come to each point of it separately, His Honour
says, "Well, that is not a new issue, that is nota new issue." His Honour dismisses each in turn, then does not allow us to even finish even identifying to him
the new material, does not allow us to finish our submissions and says, "I won't hear you." So
His Honour has never fairly put his mind to the new
material. BRENNAN J: But the point I would like to draw your attention to
is the relief which you seek from this Court. If this Court were going to entertain an appeal itself
from the exercise of those original jurisdictions
by His Honour, we would have to evaluate the material,would we not?
MR GRAY: Yes, if the Court pleasess sav.e this: that if the Court were satisfied that His Honour had made an
error of principle, then it would be quite appropriate
for this Court to say, "There has been an error ofprinciple, therefore the discretion needs to be
exercised anew. This Court declines to do so, in the
circumstances, and remits the matter to the Supreme
SlT3/5/VH 17/10/88 Paringa(2) Court of South Australia for the exercise of
the discretion, according to law, and grant an interii."11
order to hold the position until the matter can be argued." That, of course, would include the IIRtter
pending appeal. Now, unless the High Court, with
respect, corrects the errors of principle, we are
simply caught in a vicious circle. We will go back before Justice Legoe -
MASON CJ: I think you have made that point on a number of occasions, Mr Gray.
MR GRAY: If the Court pleases, well, that is the answer we
put to Your Honour Justice Brennan. That is the way we would deal with that. BRENNAN J: Yes.
MR GRAY: Now, we respectfully adopt - we might move to 4.1 of the outline of argument - t:1.e words of Justice Wilson in the High Court transcript in matter Cl7 at page 58, that: The applicant is confronted with a situation
in which ..... it was unable to prosecute its
application for interim relief before the
learned trial judge.
There speaking of the events of 11 October at the
start of the trial and, if the Court pleases, we
there have made reference to the transcript ofthe 11th, the pages are 5 to 35, and we mark up
the particular pages where we say we were unable
to prosecute the matter successfully. Now, if the
Court pleases, it might of assistance to the Court if we briefly touch those matters to demonstrate
that we simply were frustrated in our attempt to
prosecute that application; therefore were denied
natural justice. Does the Court have the High Court
transcript in Cl6?
MASON CJ: No. But what is the point of taking us to the
High Court transcript? This was an ex parte application before Justice Wilson.
MR GRAY: No, this was an inter partes application before Justice - - - MASON CJ: But presumably all it does is record submissions of counsel and some views that His Honour expressed.
MR GRAY: Yes. Well, it is in respect of - well, we simply seek to adopt that conclusion and say that, on a reading of pages 5 to 35 of the transcript, that is when put in context - His Honour certainly heard us talk for a little over an hour - but His Honour did not in any way allow us to prosecute the application for interim relief, and that was the
SlT3/6/VH 51 17/10/88 Paringa(2) conclusion that Justice Wilson came to and it
is the conclusion we invite this Court to cometo on a reading of that transcript. So we are
not in a situation where the learned trial judge has
heard and considered properly the new evidence.
MASON ci~ Well, you have recorded in your notes the conclusion
that the judge came to. That is good enough for
your purpose.
MR GRAY: Yes, if the Court pleases. Now, I move on. We say that the refusal to hear and determine the we pick up from this Court's joint judgment in the application was a denial of natural justice and case of STEAD V SGIC that the Court is well familiar
with; the failure to hear a party is one of theprimary denials of natural justice. If the Court pleases,we have had the various cases we rely on
copied and put into books and we provide those
books for Your Honours' use.His Honour, at transcript page 28, demonstrated
that he had prejudged the matter and in particular
failed to bring an open mind bear upon it. The
Court has that in the trial transcript in the book
provided on Friday, when counsel sought at line 33
to turn to the other material and His Honour replied:
It still doesn't change my view.
Indicating, if the Court pleases, that he had, in
would not hear the plaintiff and would not brmg an open fact, prejudged the matter before submission.and mind to bear upon it. If the Court pleases, His Honour made the error of principle in regard to 11 October in deciding that a party could not
re-apply unless he could identify a new issue, rather than new facts or circumstances upon which such
relief could be granted. There the transcriptreference is shown where His Honour repeatedly comes back and says - in fact, he comes back and says,
"Well, I accept it is new evidence, it is new material, I see your point, but how does it raise a new issue?" His Honour has, with respect, a fixed view that there must be a new issue and, in doing so, he has demonstrably erred and in that regard, we invite attention to Kerr on Injunctions, 6th edition, and also volume 24 of Halsbury, where the learned
authors make the point that you have the right tore-apply on new material, on new evidence, particularly
when we were saying to His Honour that His Honour
was misled by the defendants deliberately on theprevious occasion by withholding material. When that matter is put .to His Honour,
His Honour said, "Well, that is a matter you can
agitate on the trial; it is not a ground for re-opening,
SlT3/7/VH 52 17/10/88 Paringa(2) it is not a ground for hearing you on interlocutory
relief." Can I pass to the Court copies from Kerr
on Injunctions, and the relevant part of Halsbury?
If it becomes necessary for the High Court to go
into the detail of the matter, as Your Honour
Justice Brennan has suggested, then we would seek
to do so. Alternatively, if the Court pleases, we
suggest that there should be correction of the errors
of principle and the matter remitted to theSouth Australian Supreme Court with interim relief pending the hearing and pending the appeal from the
various orders of Justice Legoe.
If the Court pleases, the passage in Kerr
is at page 663 at the foot:
But the dismissal of the action does not
prevent the plaintiff from bringing another
for the same purpose under a different set
of circumstances, or upon new facts,
a fortiori an interlocutory application within the
same action, and the two cases cited in support.
GAUDRON J: Could I just ask you, Mr Gray, did you say that the appropriate relief to be granted was interlocutory
relief pending the hearing and pending the appeal?
MR GRAY: Yes, if the Court pleases, pending the hearing of the interlocutory application and pending the hearing of the appeal. GAUDRON J: Thank you, I thought you meant pending the trial. MR GRAY: No, if the Court is remitting the matter it would be left either to a single justice of the court to
deal with the interlocutory application anew or,
alternatively, the Full Court to deal with it,
hopefully on 31 October or so soon as it can be heard
in the November sittings of the Court. May it please
the Court.
MASON CJ: Thank you, Mr Gray. Yes, Mr Castan? MR CASTAN: May it please the Court, we have prepared some written submissions - we hand the copies to the Court.
What I will say will not, I think, follow necessarily
the pattern of what is set out there and, hopefully,
as Your Honour indicated on Friday, it may be a little
shorter for that. It is our respectful submission
that the whole of what has been said by our learned
friend is permeated by a fundamental,logical, and
legal and factual defects and it affects everything that
he addresses concerning what has occurred in these
unusual proceedings. It assumes that there is
irreparable harm been established and it assumes
that an appeal would be rendered nugatory if the part C
SlT3/8/VH 53. 17/10/88 Paringa(2) went on. It ignores the fact that the judge had
lengthy argument before him concerning substantial
interest of 4500, third, fourth, up to 4500th
parties, whose interests are vitally affected by
this and that this is not just one of those cases
where a judge can sit back and say, "Well, here is
the convenience for the plaintiff, he says he will
lose so much or have this effect, and here is the
defendants and they say they cannot do this, and now
I will weigh· it up having decided separately the
issue of a triable issue, the question of a triable
issue." There are 4 500 people there and for allthe loss that my learned friend says, and that is
what lies behind his case, "There is this enormous
loss that North Flinders will suffer and we are
Paringa, we are a shareholder and so we will, ..
consequentially, in effect, suffer that loss, oecause they
are paying $2. 75 for shares and we say they are only
worth $1.00"
He does not tell Yours Honours in the course of address, even in the sununary way in which it has
been done,that the market currentlYis $2.40 to $2.50
which is a critical fact. So that this enormous and catastrophic loss that he has been telling
Your Honours about of course depends on what the market price is. If it is $1.00, what the real value
is, if it is $1.00, as he says, well it might be a
terrible over-price, but if the market is correct - - -
BRENNAN J: Mr Castan, the market price at the moment must surely pay some attention to the fact that there is
a $2.75 part Coffer.
MR CASTAN: But the market price prior to the offer was $2.35 to $2.40.
BRENNAN J: What was it two weeks before the offer?
MR CASTAN: Around that price, I understand, Your Honour. It
is not the case that suddenly this market has jumped
from the dollar that my learned friend has made his
catastrophe calculation on, up to meet the something around the offer. It is the other way round, the
offer is pitched somewhere just above the market
price, as one might have expected. Now that is highly relevant because everything my learned friend
says about the great catastrophe, the irremediable
harm turns on that, in our respectful submission.
He says nothing about the possibilities that have been contemplated and argued at great length about
the irremediable harm of exactly the same dollar
amount,. it must follow, as a matter of logic, that
flows to those people who are denied the money that has
in effect, now, under the code been offered them.
The harm must be the same because a person willing
to accept that offer is being denied that money of
exactly the same amount, and if there is a windfall
S1T3/9/VH 54 17/10/88 Paringa(2) for them, if he is right, well then they are being
denied the money in their hands, and perhaps
forever. So whatever the loss he says supposedly flows, holding the position and not permitting a
part C to go ahead inflicts that loss on someone else
when someone has made a viable part Coffer that,
as I understand it, in substance is not itself in
terms of the code the subject of attack. It is the internal aspects of the management of the company that
is the subject of attack. It is not suggested here that there is enormous range of failure to comply
with the code and that the whole code provisions are
not complied with;that is not what this case is, in
substance, about. So that there is, in code terms,a valid matter raised standing there in the market with code provisions carefully designed over 10 years ago with a whole national system based on State/federal co-operation designed to achieve
certain things to protect the interests of the public.4500 shareholders out there waiting to collect - on my learned friend's case, he says it is a massive
windfall. On our case we say it is a proper price,
but either way, waiting to get the money. If they are denied it, they suffer precisely the economic loss my learned friend says the company suffers if it was to pay it.
BRENNAN J: The assumption is, of course, that they suffer what
can properly be described as a loss.
MR CASTAN: Or an absence of gain; they do not get the money that otherwise was available to them, that they
are legally entitled to come along and collect
without doing anything except coming to a broker
standing in the market. The part C is designed to operate automatically. They simply turn up at the market and tender their shares. Now, nothing is said by my learned friend, and these matters were
all canvassed before Mr Justice Legoe, and that,
of course, is what underlies the,admittedly somewhat obscure in the context, the reference to
COMMONWEALTH V QUEENSLAND. The point that is being referred to, of course, is not the one
essentially made in COMMONWEALTH V QUEENSLAND, it
is the point made in the CASTLEMAINE TOOHEY case in the judgment of Your Honour the Chief Justice dealing with issues where there are outside or
third party interests, or public interestsaffected
and where a judge does have to take into account
another entire set of principles.
In the CASTLE11A.INETOOHEY case, that is
(1986)161 CLR 148, Your Honour the Chief Justice
there expounded a, test of a different kind, the
probability,even a distinct probability of success,
SlT3/10/VH 55 17/10/88 Paringa(2) where there was that larger public interest to
be addressed. And that is what has been debated;
that is preci_sely what Mr Mor combe, back on
30 September, in relation to it, was getting it.
MASON CJ: That was a case, was it not, in which an injunction
was sought in relation to action under a statute?
MR CASTAN: Yes. MASON CJ: Well, again, that seems a somewhat different case
from this case.
MR CASTAN:
Each of the cases is different, Your Honour, but the point that was relevant was that the public
interest would be adversely affected by the grant
of an injunction. That was the way in which it appears. At pagesl53 to 154 Your Honour deals with the general run of tests and, of course, discusses
the distinction between public law and private law cases and sets out what might be called the general tests, just below half-way on page 153 and towards the bottom of page 153 refers to the -
"serious question to be tried,"
as:
the correct test to be applied .....
in the majority of cases.
And goes on at the top of page 154 to say:
However, it may". be that in some cases where
the public interest would be adversely
affected by the grant of an injunction the
plaintiff may need to show aprobability,
even a distinct probability of success, in
order to obtain an interlocutory injunction.
The degree of likelihood of success in the
action is a factor that is related to the
balance of convenience in a way shortly to
be mentioned. BRENNAN J: What is the analogy you draw here?
MR CASTAN: Here, Your Honour, we have a scheme under the
COMPANIES CODE for the protection of the interests
of the shareholding public. Iri this case, as it transpires, 4500 people.
BRENNAN J: That is the ADL shareholders.
MR CASTAN: They are the shareholders in ADL. We have a scheme which provides for what are called part C
offers by which an announcement is made that a
party will, in effect, stand in the market at a
price.
SlT3/ll/VH 56 17/10/88 Paringa(2) BRENNAN J: Is that not for the protectien. of the shareholders
inter se? To protect one as against the other from getting preferential treatment?
MR CASTAN: Yes, Your Honour. BRENNAN J: Well, this is an inj1.unction designed to ensure
-- that none gets preferential treatment.
MR CASTAN: I am sorry, Your Honour. BRENNAN J: This is an injunction which is applied for to
ensure that none gets preferential treatment.
MR CASTAN: In my respectful submission, that assumes that, yes,
that none gets preferential treatment, but each of
them - - -
BRENNAN J: Well, where is the analogy?
MR CASTAN: Because, Your:Honour, the analogy is that the scheme is designed to protect the public interest.
It is designed to make available a system so that
persons out there, all of them, all of them together
who are to get equal interests between them, are
dealt with in accordance with that scheme. There is
a statutory Oode; there is a whole framework;
the part C is one of the aspects of that. It has been set up. There are other sorts of offers as
well. The whole ode was set up in order to put
an end to some of the kinds of unfair practices
that have gone on: selective placements and the
like, selective offers to purchase and the like.
BRENNAN J: But is it not public interest that the part C legislation is designed to protect the public
interest in ensuring that the shareholders in thetarget corporation are treated amongst themselves
equally?
(Continued on page. 5·8 )
S1T3/12/VH 5 7. 17/10/88 Paringa(2)
MR CASTAN: Yes, that is a component of the relevant public interest.
BRENNAN J: Is there any other component?
MR CASTAN: Your Honour, the part C is a part of an entire
code. The whole of the 9ode is designed to regulate the interests of the public and one
concerning code breaches; it is a case which
is affecting the operation of the code here.
involves allegations of directors' duties, and
yet the code system, which has been set up there
and which operates of its own force, is frustrated
in its operation. That affects the interests
of all of those 4500 people. All of their interests
are affected; that third party group.One cannot simply set them aside and say, "Well, I do not take any notice of what effect
it has." They aDe the relevant .public whose
interest is affected and, in our respectful
submission, one cannot escape the implications
of the way in which they are affected and that
permeates what went on before Mr Justice Legoe.
My learned friend, Mr Archibald, is ,here £or
ADL and presumably all of its shareholders.
Those matters are much canvassed and Mr Morcombe
was putting .that. The authority was not well chosen but the point has substance, in our
respectful submission; the point is of considerable
substance. What weight - how does a judge deal
with the interests of all of those shareholders
who, as we point out, will suffer preciselythe prejudice that my learned friend canvasses
his client will suffer ,conversely; they will
not receive the moneys that otherwise are there
and to which they are entitled by law and which
is only held from them by the injunction.
BRENNAN J: Is this the basis, do you say, in fact, on
which Mr Justice Legoe proceeded?
MR CASTAN: As we understand it. Can I take Your Honour to - - -
BRENNAN J: If it be so, Mr Castan, then as at present
advised, it seems to ire that there is a tangible error
of principle. The error of principle being a misconception of where the part C public interest
is intended to be protected and in looking to
the interests of ADL shareholders as susceptible
of sustaining a loss being other than the lossof their right to sell in a market unaffected
by the impugned offer. I only mention that because, as at present advised, that seems to
me to be the situation,if what you say is right.
58
SIT4/l /SDL 17 /10/88 Paringa(2) MR CASTAN: But, Your Honour, they are the persons who are
adversely affected. One cannot escape that, with respect. They are another adversely affected party; their interest must be taken into account;
it is not simply a case of balancing the convenience
as between these two litigants; there is that
party out there entitled under the code, under
law, in the absence of the injunction to a certain
consequence and they are denied it by the injunction.
That was the real question about what the testthen is to be applied by a judge who has litigation
between two parties and, in the course of an
application for interlocutory injunction, is
asked to do something that changes the legal
entitlements under a scheme- a structure set
out in relation to those third parties.
One could pose the question in the absence
of a statutory scheme of that kind and ask how
would it have affected - assume that there was
no part C and there would still be the same
kind of issue. How does a judge bring to bear - - -
GAUDRON J: This issue only arises, I take it, because of the
time at which the injunction was applied for? That is to say, if it had been known earlier
of the intention and the injunction were applied
for at that earlier time, this issue could not
arise?
MR CASTAN: The legal rights of the third parties would not arise; their interests may still arise
in the same way if it were as clear cut as
Your Honour has put it to me in the hypothetical -
the interests would also arise. They would not have legal rights that they would be able to complain
of being impeded by the injunction because the
legal rights would not have commenced if the
part Chad.not actually commenced but - - -
GAUDRON J:
Then the rights of shareholders vis-a-vis directors must be different depending upon whether
the directors have acted or have not acted?
MR CASTAN: Your Honour is perhaps addressing a different question: if we are talking about questions
of injunction by the shareholders in North Flinders
concerning a proposed part C take-over bid for
ADL then it is the shareholders in ADL who are
adversely affected by a proposed part C; they
are adversely affected if it is stopped andby a part C already under way their legal rights
are affected as well as their interests. That
is the distinction as we would put it. It does
not affect the rights of shareholders as against
directors. The shareholders of North Flinders
have their rights to complain about misconduct
,59
SIT4/2/SDL 17/10/88 Paringa(2) on the part of the directors of North Flinders
if they can demonstrate it and that is what
the case is about but that is not the issue
of the injunction. The correct response to
Your Honour is that the right to an injunction
or the likelihood of obtaining an injunction
will vary according to the time because the
circumstances will be different and, yes, it
may be different if there is merely an intention
to initiate a part C as distinct from a part C
under way. It may be different; there may
be a variety of circumstances that affect that
but it does not affect the rights of shareholdersas against directors, in our respectful submission.
BRENNAN J: Mr Castan, is there anything at the moment to stop the shareholders of ADL going and selling their shares in the market? MR CASTAN: In the market generally? BRENNAN J: Yes. MR CASTAN: No, nothing to stop them in the market. BRENNAN J: The market is perfectly informed? MR CASTAN: Yes, I think that is right. BRENNAN J: Then where is their loss? MR CASTAN: Their loss is the difference between what the market is offering and what this part Coffers.
My learned friend says - we would agree with
Your Honour; we would agree that our offer is a fair and proper offer and that it is marginally
above the market and so they have a relatively
small loss - there is a relatively, in proportion,
small loss - but otherwise none. But,· the point
that my learned friend seeks to make is that
the real value of the shares is $1 .00 or some such figure. The reason we put that there is a loss is because it follows from his argument that
there is a loss; if he is right then they have
something that is really only worth, as he says,
$1.00 and they are being denied $2. 75 for it.
BRENNAN J: I understand your argument. MR CASTAN:
That is how it arises. Of course, yes, they can sell in the market at $2.40 or whatever
it is now at, and that is precisely the point
we say strikes at the heart of the fundamental
question that has been begged by my learned
friend all the way through these proceedings.
He assumes, and puts to Your Honours, with respect,
that there is this _•irreparable harm, catastrophic
SIT4/3/SDL 60 17/10/88 Paringa(2) consequences we hear about,but that is an
assumption that itself is the major issue in
the injunction proceedings and perhaps also
the major issue in the substantive proceedings
currently running. My learned friend seeks to assume it and to have the Court deal with
it on that assumption.
If the Court takes away the assumption
that there is this catastrophic loss and takes
the view that this_ is a perfectly proper valid
and good offer, sensible offer, for an oil company
in proper and sensible circumstances - a good
price - once one assumes that then there is
no catastrophic loss; the shareholders, including
Paringa in North Flinders, are having their
directors do a good job acquiring this oil well
through ADL - a perfectly sensible thing to
do - and they are being given a valuable opportunity
to subscribe equally with all other shareholders.
This is not a selective placement case; it is not a case where they complain that they
are offering the rights to take up shares to
that group over there and shutting us out;
all shareholders have the right to take up the
rights issue. If they do not want to, as they
say they currently think they do not want to,
they will not take them up - so will the other
shareholders. They will decide to either take
them up or not take them up. What on earth has that got to do, we would put rhetorically,
with whether or not the court should grant an
injunction? They have chosen, they apparently say they choose or are not disposed to take
up, I think is the word in one of the affidavits,
"not disposed to take up" the share rights issueto provide the funding for this bid. Well,
so be it.
They complain of that, they come here and
say, "Well, we do not want to put up the money
and so our shareholding will be less than the other people who think it is a good idea and
do put up the money". Of course, if none of
the shareholders think it is a good idea and
they all think it,is not a good propositionat all, they wil ot raise the money and that
will be on the directors' head because the
shareholders will have rejected them and not
put up the money. But, how on earth can that
found that scenario of catastrophe that has
been portrayed? And it is only when one starts
to piece together that that one sees that
His Honour Mr Justice Legoe has had - I think somebody has worked it out - six applications
before him; he has been running in the trial
now for a week in a matter that only first took
off some - I think it is now about three weeks
ago, and he has done almost nothing else, including
SIT4/4/SDL 61 17/10/88 Paringa(2) sitting on some days from 9 am till midnight,
I think, on one occasion. He is familiar with all this; all of this material has been put
to him; he has had it all argued at great length - - -
MASON CJ: But that is one of the points of complaint. It would have been better to get before a judge
subsequently who was not familiar.
MR CASTAN: That may be, Your Honour, and the other element that we say is most significant about this is
the astonishing enthusiasm of my learned friends
to jump into jets in Adelaide and come to Canberraor Sydney or Melbourne - - -
MASON CJ: That really is not helping us, Mr Castan.
MR CASTAN: Your Honour, they have not chosen to do what counsel can always do, which is to stand up
in front of a court, whether it be the Full
Court - - -
MASON CJ: Yes, that point has already been made during the course of argument. MR CASTAN: If Your Honour please. We simply draw attention to the fact that the Full Court is available
to them and it is available in the way that
they - by simply going there; physically going
there and there would then be something to appeal
from to this Court. Because if the Full Court - if they stood up in front of three members of - - -
MASON CJ: Yes, but we know that; that point has been made. MR CASTAN: Then we say that leads us then, accepting that, and if one proceeds on that assumption, one
must then address whether this Court really has jurisdiction to exercise at all because
there can only be jurisdiction if, in effect,
substantive rights are affected and this is not to be treated as an interlocutory matter
affecting practice and procedure.
My learned friend seeks to say that it is substantive by the very question-begging
argument that we have already touched on: that
is to say that there is all the irreparable
harm that will be done that puts an end to the
entire matter. That, in turn, depends on all
of his argument about the loss - and I will
not repeat it. If all of that is wrong, this
is nothing more than a contested injunction
which they have lost. They have not persuaded the judge concerned that there is the irreparable
harm; they have not persuaded him that it
would be, in the case of an appeal, rendered
nugatory because the judge is of the view that
SIT4/5/SDL 62 17/10/88 Paringa(2)
it will not be rendered nugatory. They will have their rights to damages and they will still go ahead
and challenge; the directors' duties will still
be examined by the court and if they find the directors were acting for improper purposes -
all of those matters will be aired and they
will get their remedy. So that the appeal,
in our respectful submission, is not rendered
nugatory and the judge has come to that viewand what they are really complaining about,
in our respectful submission, is the fact that
they have lost.
MASON CJ: That is what most people complain about.
MR CASTAN: Yes, but that does not get them special leave to appeal, in our respectful submission, even
those who are most enthusiastic about the wrongsthat are done to them in the course of losing.
In our respectful submission, it is - and
we say this with all due respect but I put it
with respect as forcefully as I can to Your Honours -
it is dangerous indeed for the Court to venture
into the area of this sort of procedure going
on in a hard-fought commerical contest in a
State supreme court involving these kinds of questions.
MASON CJ: I do not know that "dangerous" is the appropriate word. It may be "imprudent". MR CASTAN: Your Honour, perhaps I used the wrong word but - MASON CJ: But the point is that the Court has always recognized that intervention in cases of this kind must be handled with very considerable caution. You do not need to remind us of that. MR CASTAN: There is an added element, though, Your Honour,
and that is that by the nature of the jurisdiction which Your Honours are exercising under section 73
of the CONSTITUTION or section 53 of the JUDICIARY
ACT, there is a threshold which has to be achieved.
It is only in respect of judgments, orders or
decrees as provided by statute or by the CONSTITUTION.
So that the Court has to, so to speak, examine -
and it is for that reason I have perhaps used
language that is perhaps too colourful - but
the Court must, in our respectful submission,tread with, perhaps can I say, "additional
care" to the ordinary care that any appellate
court in a State supreme court situation might
tread in intervening into these matters becausethere is that additional component.
SIT4/6/SDL 63 17/10/88 Paringa(2) The effect would be that there would then
be a decision dealing with that question of
substance inherent in the Court intervening
in this case and that might raise even more
important issues than any of the importance
that has been addressed to any of the issues
that have been touched on dealing with the substanceof the case. It is for that reason I say that
it has those added elements and I do not need
to pursue that.
BRENNAN J: Mr Castan, could I just mention the thing that
concerns me about the course that these proceedings
have taken; Leaving aside the difficulties
altogether 0f this Court either wishing to intervene
or finding it prudent to intervene in matters
of this kind which are too obvious, I would
have thought, to need repeating,, here we have
a case where the appellate jurisdiction of the
Supreme Court of South Australia was invoked
and an application was made for the maintenance
of the status quo pending the resolution of
an appeal - an appeal, one might think, depending
upon the view which the court ultimately took
of it, which may have great consequences for
one party or the other - and there has been
no independent consideration of the question
of a maintaining order, an injunction pending
that appeal, except by the judge who made it.
MR CASTAN: Yes, Your Honour. BRENNAN J: Now, that seems to me to be a defect in principle and a miscarriage of a kind which is not only
containable, so far as appeals to this Court are concerned, but which seems to indicate a substantial difficulty in the way of the ordinary
processes of justice. Now, that is the proposition
which I put to you because it concerns me very
greatly at the moment and I would be grateful
for whatever observations you have to make about it.
MR CASTAN: The difficulty with it, with respect, Your Honour, is that it also assumes that the absence of
the interim protection necessarily causes the
harm claimed. It is not the case that the ERINFORD
principle or any other principle dealing with
the question of interim relief pending appeal
carries with it the necessary conclusion that
in every case in which a party appeals from
a loss they necessarily must be protected in
the interim. That, in our respectful submission,
would not be the rule.
BRENNAN J: Of course.
SIT4/7/SDL 64. 17/10/88 Paringa(2)
MR CASTAN: So that while acceding to Your Honour's concern about the fact of the absence of independent
review - and that is something we say, obviously,
is desirable and should be available to any
litigant - but it does not flow from that - the
whole of the rest of what Your Honour said does
not, in our respectful submission, flow from
that.
BRENNAN J: It does not flow that there must be an
injunction -
MR CASTAN: Or interim protection. BRENNAN J: Or interim protection but does it not flow from what I have said that there ought to be
some consideration of whether there ought to
be interim protection by some judge other than
the judge whose judgment is the subject of the
appeal? And in this case, of course, the oneoccasion when any other judge did look at it,
Justice Von Doussa, a limited injunction was
granted.
MR CASTAN: Yes, although, perhaps in parenthesis, I should say that our side of the matter was represented
only by a solicitor in attendance.
BRENNAN J: Well, I appreciate also that it was a Saturday
night and, of course, one cannot regard that
as having any significance, perhaps.
MR CASTAN: No, and the instinct, the understandable instinct, in circumstances where one cannot canvass all
of the matter is to say, "Well, we just freeze
everything". But that does not mean that that
instinct necessarily leads to that conclusion
and nor does it mean, in our respectful submission,
that it must follow that there always is protection
though in the ordinary case - I think I would
have to accede this far to Your Honours - if
a judge refused the interim protection pending appeal one would assume that on going to the
appellate court one might be able to then have
the opportunity to seek the interim protection
pending the consideration of the appeal. That,
in turn, may not lead to the interim protection
being granted but if one went off, so to speak,
in the morning after having been denied an injunction
and denied interim protection, and went off
to, say, a Full Court in the afternoon seeking the interim protection pending the appeal, one might lose then and that, presumably, if I could
say in response, Your Honour, would be a perfectly
acceptable result if that was the view of the
relevant courts - both the single judge and
the Full Court.
SIT4/8/SDL 65 17 /10/88 Paringa(2)
BRENNAN J: That did not happen here.MR CASTAN: It did not, Your Honour, and it did not, partially,
we would respectfully submit, because our learned
friends - I do not want to go back over this
again but it is apparent that our learned friends
have not sought to do all that they can do and
should do in order to procure it. It is incumbent,
we would respectfully submit, on our learned
friends to go before the Full Court, notwithstanding
any administrative arrangements, and seek that
interim protection pending appeal. If they
are denied it after curial hearing - if they
are denied a hearing after standing up in frontof a Full Court - then there is a curial process
that this Court can then deal with. They have not engaged in the curial process and we readily
accept that there are some situations where
there is a heavy burden on counsel - and I say
this with due consideration - not to accept
indications given by administrative arrangements,
perhaps, and to confront, if necessary, an unwillingcourt or a hostile court, perhaps, in some instances
one can conceive of, and to make an application.
And, if it be rejected, to be in a position
to say, "I have been curially rejected. The court has not received me", and that has not happened, and has not happened in relation to
the Full Court and until it has happened one could not say that circumstances have arisen of the kind that Your Honour has put to me as
the unacceptable circumstances.
If it did happen there would then be the
circumstances that, of course, would give rise
to the jurisdictional question in the true sense
because this Court would then be dealing with
something coming from a Full Court. The problem for this Court, we would respectfully submit,
is that that has not happened and that the
Court is then placed in this somewhat difficult position of having all these first instance
decisions at various levels and it is entirely
unsatisfactory, we would respectfully submit,for this Court to be placed in that position dependent, so to speak - or its jurisdiction invoked, so to speak - by reason of some
administrative arrangements in a State supreme
court.
MASON CJ: But those administrative arrangements appear to reflect the standard practice of the Supreme Court of South Australia. Therefore, it is understandable that members of the profession
defer to them and it seems extraordinary, on
the face of it, that if a party would have a
right of appeal had he departed from the usual
SIT4/9/SDL 1 66 MR CASTAN, 17 /10/88 Paringa(2) practice, had he departed from the direction given
by the Chief Justice of South Australia, that
he should now be deprived of it merely because
he conformed to the standard practice in that
State.
MR CASTAN-: Your Honour, it is not quite that simple. This Court has said many times in natural justice
cases that one should never underestimate the
effect of advocacy and the opportunity to put
an argument or put a point or put a case. And the method of doing that is to put it to a court,
not to speak to some secretary or to speak through
the agency of an associate or anything else.
It is not possible to predict and treat this
as a case where, if our learned friends had
stood up before the Full Court and said, "We
need protection in these urgent circumstances",
it is simply not possible to say that this Court
should treat it and, we would respectfully submit,inappropriate to say that the Court should treat
it as though that had all gone through and that
would just be going through the motions. One cannot say that and one cannot say that that
underestimates the effectiveness of the matters
that my learned friend seeks to put.
BRENNAN J: Mr Castan, if one fastens upon the order made by Mr Justice Legoe, dissolving the order made
by Mr Justice Von Doussa, that would be an order
which in itself is susceptible of appeal to
this Court and if - is that not so?
MR CASTAN: No, Your Honour. BRENNAN J: Why is it not so? MR CASTAN: Because it is only so if its effect was such that it could be said to be a final order or
it finally dispos~d of rights and in some way,therefore, not to be treated as a matter of
practice and procedure, we would respectfully submit. In other words, that it should be treated
as one of those orders that is no longer - that
is to be treated as the equivalent of a relevant
order, judgment or decree - I think are the
words in section 73 - "judgment;. decree, order
and sentence".
In our respectful submission, it still
is an interlocutory matter though one can imagine,
in circumstances subject, perhaps, to factual
events, might be such that it is final; it
does affect substantive rights. Whether or
not it is may depend not so much on the simple
sequence of the application but on an issue
of substance: that is to say, did it really
SIT4/10/SDL 67 17/10/88 Paringa(2) put these people in the position they say they
are in? Did it really, in fact, leave them
bereft of remedy in relation to the ultimate
matter? Did it dispose of the case?
They say it was of that kind but we say
it was not and the answer to that lies in precisely
the analysis that Your Honour and I were discussing
a few moments ago in relation to ERINFORD-type
cases. In come cases it might be said the refusal
to grant interim protection disposes of the
matter because, in effect, the rights are goneforever and that is what my learned friends
say. But, in other cases, one can say of it,
"Well, it is not so at all; it is just another
step in the interim battle. The war is still to be fo.ught".
BRENNAN J:
Why is that order not an order of the Supreme Court of the State within the meaning of those
terms in section 73 of the CONSTITUTION? MR CASTAN: It is, in our respectful submission, an order
in the sense that every order made - - -
BRENNAN J: I am asking you why is it not an order within the meaning of section 73 of the CONSTITUTION?
MR CASTAN: Because, in our respectful submission, an order finally determines, as it was put in the SWISS
ALUMINIUM case:
finally determine the rights of parties
before it will qualify as an order within
the meaning of s.73 -
that is specifically referred to in SWISS ALUMINIUM
AUSTRALIA LTD V FEDERAL COMMISSIONER OF TAXATION, (1987) 163 CLR 421 - and we have copies available
which we hand up - at page 425, the joint judgment
of a Full Court of this Court expressing the
matter at page 425 in these terms: It is well settled that an order must finally determine the rights of parties before
it will qualify as an order within the meaning of s.73 of the CONSTITUTION and s-35 of the JUDICIARY ACT - and goes on to consider different kinds of stated
cases. Each of those authorities are cases where there is analysis of that kind of problem.
BRENNAN J: Why does this not answer that description?
SIT4/l l /SDL . 68 17/10/88 Paringa(2)
MR CASTAN: Because it does not finally determine the substantive _rights of parties, in our contention.
BRENNAN J: It does not say "substantive", it says "the rights".
MR CASTAN: I am sorry, Your Honour, "the rights of parties". BRENNAN J: Well, why does this not determine them? This
determines that from that moment the injunction
should be dissolved.
MR CASTAN: Yes, Your Honour, but that is true of any injunction order.
BRENNAN J: Quite.
MR CASTAN: An injunction order is merely an interim matter; it is not finally determining rights of parties;
it is simply determining an interim position.
BRENNAN J: Are you saying that under section 73 of the CONSTITUTION there is no jurisdiction to entertain
an appeal from an interlocutory order?
MR CASTAN: Yes, Your Honour. BRENNAN J: That would come as a novel proposition, would
it not?
MASON CJ: The CLRs are full of cases in. which the Court has heard appeals from interlocutory orders. MR CASTAN: Yes, it may depend on the nature of the order and the circumstance of the order; it is just
like stated cases, Your Honour. There may be
cases where, as is discussed in the SWISS ALUMINIUM
case, there may be a case stated which determinesrights; there may be a case stated which does
not; it would depend on the case. The interlocutory order may - - -
BRENNAN J: That is because the form of the case may be such as to give advice only, as distinct from
making an order affecting rights.
MR CASTAN: It is our respectful submission that this is
a case in which there is not an order finally
qetermining the rights because those rights
are still alive; they are still available to
be determined. The question of which way they will go would depend, on one view - on the plaintiff's
view, of course, the plaintiff says, "Well,
this finally disposes of the matter", but that
is resisted by the other party so it does not
affect those rights, in our respectful submission.
SIT4/l 2/SDL 17/10/88 Paringa(2) MR CASTAN (continuing): Can I deal with some of the specific
matters that have been raised by my learned friend.
Could I take Your Honours to the application book, at pages 51 to 52, to the sections of
His Honour's pronouncement of his conclusion
. which - some sections which were not read.by --my learned friend. At page 50, His Honour started off saying:
Last Friday I made an ex parte order for an interim injunction.
I have expressed
or indicated the basis upon which I did
that and the matters that I have referred
to are in the transcript. I do not take any time to elaborate on that except
basically the decision in ZAPEROFALOUS V
THE REGISTRAR GENERAL, in 23 SR contains
the principle upon which I then acted.
On Sunday I agreed to meet counsel for the defendant North Flinders and the
matter was referred to again on Monday morning
in relation to certain undertakings and
proceeded to a lengthy hearing on Monday
night in relation to North Flinders
application for the lifting of the interiminjunction. That matter was dealt with
on Tuesday when I dismissed or rejected
rather the application for North Flinders
to discharge the interim injunction.
So His Honour did preserve the position while
he himself was considering the interlocutory
application.
That all leads to the proceedings which I have heard yesterday and today, which
is the plaintiff's application for an interim
injunction. The principles are, 1· think, very fully expounded in the very useful
written submissions which I requested counsel
to prepare for me for the purpose of today's hearing. I am most grateful to all counsel for their co-operation in enabling this
matter to be heard today.
Your Honours, I stop there to point out that
the document that His Honour is there referring
to was a very lengthy submission prepared bythe plaintiff dealing with the principles on
which an injunction should be dealt with and
a submission prepared by the plaintiff to which
the defendants acceded - they did not demur - to
the principles of law which are set out and that
is - of over 30-odd pages of detailed submissionssetting out what I think would probably be commonly
accepted as the ordinary principles applicable
to interlocutory injunctions.
SlT5/l/ND J70 17/10/88 Paringa(2) And His Honour had that document before
him, prepared by the plaintiff, and it was not
the subject of debate or contest that those werethe wrong principles. They are, in effect, in
this case with agreement on correct principles.
It is not as if His Honour was - - -
BRENNAN J: That is overstating it, is it not? You would
still rely upon the CASTLEMAINE PERKINS case.
MR CASTAN: Your Honour, we do, but that document went into His Honour as, in substance, an agreed
document.
BRENNAN J: Was CASTLEMAINE PERKINS referred to in that? MR CASTAN: No, apparently not, Your Honour. The matter
came up later. I am not sure that the CASTLEMAINE case has been referred to His Honour at all.
No, it has not, it has only come up since we
have been here. So it is not a case that His Honour relied on; the underlying point was
the one I made earlier.
His Honour goes on:
The differences between the parties, not
so much as to the primary facts which are
contained in the affidavits and which have
been analysed and stressed in the written
submissions I have already referred to,
but more in the application of those facts
to the well known principles for the grantingof an interlocutory injunction. I do not
propose to go into them at any length but
to simply say this, that I have given
serious consideration to the matters that
counsel have stressed on both sides and
in particular tried to concentrate on the
principle question which arises on the
plaintiff's claim in relation to the part C
takeover offer made to the target company Australian Development and the non renouncable rights issue which was resolved upon by the board of North Flinders on 19 September
1988. I should have said both of those
matters were resolved on that day. I have also been referred to a few cases and I am grateful to counsel that they have not cluttered up their submissions with lengthy references to cases on the relevant principles. I believe that I have been referred to the important cases in this regard and the principles which are to be extracted from
those cases. I simply wish to say that having given serious consideration to the main factual matters and the principles
SlTS/2/ND 71 17/10/88 Paringa(2) in the cases I have come to the conclusion
that I should not grant the interlocutory
injunction.That is the background to His Honour's expression then which our learned friend has drawn so much
attention to. His Honour did not commence his
pronouncements that then follow in some vacuum.
It has been a difficult decision to make
because there are a number of aspects about
the case which have caused me or given me
cause rather to give considerable thought
as to how the serious issue is to be analysedand thus articulating for the purpose of
the application for an interlocutory injunction. there are issue or issues between the parties,
certainly, it seems to me that the approach
of the Chief Justice of the High Court in
the QUEENSLAND V COMMONWEALTH case, referred
to by Mr MorGGiIDeis a principle which has,
shall I put it, tipped the balance on the
overall question that I have to consider.
This is not the same case, of course, it's
substantially different. When one looks at the two principle matters in combination,
namely the serious question to be tried
and the balance of convenience, I have not
been able to persuade myself that I should
make the order ..... I am not prepared to
grant -
i t .
Mr Morcombe's submission was referred to
my learned friend an4 as was pointed out by the about interpreting what a judge has said but
it was referred to and my learned friend did
not refer to the relevant passages and I understand -
I am not sure what document it is that Your Honours now have that submission in but
I think Your Honours have now been handed
Mr Morcombe's submission - I think that was put
to you by my learned friends. They referred to page 295 of the transcript before His Honour
and it is in one of the books that I think was
handed to Your Honours this morning.
BRENNAN J: Page 295? MR CASTAN: Page 292, Your Honours. BRENNAN J: That will be in book 3C I think.
MR CASTAN: I am indebted to Your Honour. We do not have
it in that form. We are working off our court
S1T5/3/ND 72 17/10/88 Paringa(2)
transcript. At the foot of page 292, Mr Morcombe says:
acting for the broker I have a different
point of view to put. In a very substantial
way we are a long way removed from the dispute
as between the plaintiff on the one hand
and North Flinders and its directors on
the other. To a very large extent we are an innocent third party caught up in the
dispute. The first point I would like to make is that your Honour is not dealing
with a situation where you are able to make
injunctions which only affect litigants
before you to a very large extent.
Injunctions sought affect not only us the
broker which coincidentally is a defendant,
but also a large number of other people.However, we are in the same boat as North
Flinders to the extent that if your Honour grants the injunction against North Flinders
I would expect that injunction to issue
as against my client as well. The other side of the coin is if your Honour is not
disposed to grant the injunction against
North Flinders similarly I would not expect
an injunction issued against us. The injunction should not issue against any
of the defendants.
And then he adopt Mr Myers. And then he goes on to deal with the market and I will not read
the whole of it but he then, in the next
paragraph says:
For a period of some five days that
announcement had an effect on the market.
Clearly purchases -
at line 17 -
were made by some individuals, on the other side of that coin various people sold their
shares in Australian Development. Also
presumably some people considered the offer
and made decisions as to whether to sell
or not sell, or as to whether to purchase
or not sell on the basis of the announcement
that had been made. It is sort of like
market have had their rights affected.
going to a football match expecting there
to be four quarters and the quarter timesiren saying that's the end of the match.
They well may have had decisions in that
first five days based on the assumption
and in my submission the very reasonable
SlTS/4/ND 17/10/88 Paringa(2) assumption, that the TAKEOVERS CODE would
be permitted to have its full force and
effect, but of course if the injunction issues that won't be allowed to happen.
The market is entitled to assume that the
TAKEOVERS CODE would be allowed to have
its full operation.
And then he goes on about the reputation. Then
His Honour clarifies the date as occurred
in this Court:
Dated between 4 October and 4 November did
you say.
MR MORCOMBE: Yes being the 14 day period after 19 September the day on which the
announcement was made. All shares in
Australian Development -
there is something missing there -
at a price of $2.75. That clearly appears
from the part C takeover offer -
and he goes on at line 11 -
The unequivocal statement by that has been
acted on by the market. In my submission
clearly my clients reputation -
he refers to again. And he goes on at page 295 to again refer to an authority which we would
concede appears not to be the pertinent authoritybut it illustrates what he was getting at, the
underlying point. He says, at line 7: NFM, it removes North Flinders from the
market and does not allow the normal market
forces to operate. In view of those
circumstances, and the matters put by
Mr Myers, I respectfully submit that the balance of convenience clearly is in favour
of injunctions not issuing. I have referred in my list of authorities to the case of
QUEENSLAND V THE COMMONWEALTH.
And then he goes on to refer to the case but
that is the context in which it was referred
to. It was referred to in precisely the context
with which I opened and addressed Your Honours,
namely this issue of where do the third party
rights stand.
Can I then turn to the passages of His Honour's
judgment or decision relating to the refusal
to extend interim protection on 3 October.
SlT5/5/ND 74. 17/10/88 Paringa(2) That commences at page 60. Again, my learned
friend has read some short extracts but it is
necessary to see whether or not the ERINFORD
principle really was being applied in this
decision on 3 October. It is our respectful
submission His Honour did not err and his reference
-- to"synonymous"is entirelyexpl icable once one sees
what His Hono~r was in fact dealing with.
At line 9, page 60 of the application book, hesaid:
Are we not in a different position
to ERINFORD and BERKHOVE in that in this
case the trial is, as we now know, and in
fact knew on Friday night last, definitely
listed for Tuesday next week and will come
on before the appeal.
MR MEYERS: Yes, that is ..... at the forefront of my submissions -
And then His Honour commences at line 22:
I am presently minded that pursuant
to liberty to apply ..... it seems to me in all the circumstances what I should do is
dissolve that interim injunction forthwith.
This is an application to dissolve
an injunction granted by Justice Von Doussa
in chambers on Saturday, 1 October, that
is, two days ago. However, his Honour's
order granted liberty to all parties and
the intervener to apply upon short notice.
That is this application.
I have been referred to the authorities
touching on the question of the jurisdiction
of this court to continue, or rather to
of an appeal, and as all counsel agree there grant an injunction pending the hearing is an undoubted jurisdiction in this regard. The authority for that proposition is that
of ERINFORD V CHESHIRE COUNTY COUNCIL - So His Honour acknowledges ERINFORD and refers
to the passage. At page 61: On this application, counsel has informed
me of the nature of the proceedings before
Mr Justice Von Doussa -
and then says it is not necessary to go to all
the transcript. Then he goes on, at line 6:
SlTS/6/ND 7: 17/10/88 Paringa(2) Mr Grieves, counsel for the plaintiff, has
presented a closely reasoned argument based
on the ERINFORD case, in particular, and
upon the passage in that case which appears
in Sir Robert Magarry's judgment atpage 268, in particular principally arguing
that if this injunction is not allowed to
continue, then the appeal may be nugatory.
~nd His Honour has expressly addressed that vital
issue.
He also presented very forcefully an
impressive argument relating to the other
matters referred to by Sir Robert, in
particular that granting of the injunction
would not in this case inflict a greater
hardship than it would avoid.
And there, again, His Honour is specifically
addressing the greater hardship and he has in
mind, in our respectful submission, the other
parties.- I mean, parties other than the litigants
immediately before the court.
The fact of the matter is, that when
the appeal papers were brought on in chambers
before the learned Chief Justice this
morning, I am informed and I have been advised
by his Honour the Chief Justice, that the
Full Court which is currently sitting in
Banco this week and next week ..... has a
full list and it is just not physically
possible to list the plaintiff's appeal
for hearing during the course of this October
monthly sittings for the purpose of hearing
appeals.
I understand from the learned
Chief Justice that he had informed the parties
application for listing the matter in the that if they still wished to proceed with the appeal then of course the appropriate next monthly list for hearing appeals would be given appropriate consideration and no doubt could be heard then. But, as we now know, and as has been confirmed by the Chief Justice, the trial of this matter will be heard as from 10.15 next Tuesday,
11 October.
It is interesting to observe in that comment
an express reference by His Honour the Chief Justice
to an application for listing, an application
presumably which is something other than the
hearing of the appeal. So that some procedure
is clearly conternplatedfor corning before the court
SlTS/7/ND 76 17/10/88 Paringa(2)
to have urgent matters at least listed. And one might ask, if there is a procedure for having
them listed urgently, presumably one could take
advantage of that procedure or expedite that
procedure for the purpose of obtaining interim
relief.
In my judgment the matters that are
appropriate to consider for the purposes
of extending or granting an injunction until
the hearing of the appeal are synonymous
with the matters that were extensively
canvassed and upon which very erudite
submissions were made for the whole of
last Friday. I admit that was done on a time basis but that was because there had
been a considerable debate during the earlierapplications which I had heard in the course
of the week prior to last Friday, i luding
a more informal sitting which was really
to inform the defendants of the position
on Sund~y, 25 September, and of course the
more extensive submissions that were made
on Monday night, 26, and carried over on
until Tuesday, 27.
Monday night was the night when the court apparently
sat until midnight.
I have previously referred to that
fact but it seems to me that once again
it is appropriate to repeat it in respect
of the current opposition to this afternoon's
application to dissolve the injunction of Saturday night. As I consider the issues
to be synonymous, I accordingly indicate
that in my view I have exhausted my functions
for the purpose of determining whether I
should exercise a discretion to extend theinjunction. Admittedly last Friday that
was for the purpose of granting an injunction until trial, that is to say, until judgment, whereas the matter that was being considered
by my brother von Doussa on Saturday night and is accordingly before me this afternoon, is to consider whether the injunction, or whether an injunction should be granted
until the disposal of the appeal. But the appeal could not be heard now until early next month. I don't know and I could not forecast what stage the trial would have reached ..... but it is quite clear in my mind that a substantial amount of factual material and all legal submissions would have been ventilated in open court.
SlTS/8/ND 17/10/88 Paringa(2) 77 He then goes on to consider again this third
party or public interest, as I have widely called
it, this factor. He says, at the bottom of 366 at line 28: In the light of all these circumstances
it seems to me that it is totally inappropriate
to allow the injunction to stand and I have
not mentioned, although I hasten to add
that I am not unconscious of the fact, that
we have now reached the stage where the
Part Coffers have been dispatched I understand
sometime between Friday night and Saturday
high noon, round about that time, and that
the processes of the coding -
and that should read "code" -
have now been put into operation and that,
therefore, very serious questions relating
to the balance of convenience are even moreapt in consideration of the present stage
that we have reached -
So His Honour is clearly taking into account
subsequent events in making his next stage
determination.-
and what should be done in relation to holding
or freezing the situation, that is to say,in the granting of any further or other
interlocutory or even interim injunction.
That being the case I grant the
application for dissolving the injunction
that was granted on Saturday night.
No~ my learned friend has then complained that
he wanted to be heard again - or that Mr Grieve
wanted to be heard further. Mr Grieve seeksto defer giving effect to the order until a time
later and goes on to say - he says he might be moved to:
vacate the hearing date with a view to
endeavouring to press our appeal at the
earliest possible time.
And His Honour asks:
But how will the withholding of the order ..... assist or hinder, or in any way
further your interests in the matter?
And my learned friend has addressed Your Honours
about this exchange as though it illustrates
that His Honour did not understand something.
SlTS/9/ND 78. 17/10/88 Paringa(2) But, of course, what it illustrates is that
His Honour understood it perfectly well.
His Honour had come to the conclusion that the
appeal would not be rendered nugatory, that this
was not a case where the interests were such
_ that there was an overwhelming need to preserve
-- our learned friend's client's position_by interim
relief. He had come to the conclusion their position was more than satisfactorily covered
by damages, presumably, once one evaluated what
the correct amounts were. It is not a case where
one can assume, as our learned friends do, that
their position is correct and then say the judge
necessarily got it wrong because he did not accept
their view of what the case was really about.
BRENNAN J: One function that the judge did have to perform was to evaluate the strength of the attack upon
his own judgment; is that correct?
MR CASTAN: If it was put that way, in that sense, yes.
It was an application for interim relief pending
an appeal from his order of 30 September and
that is a function which every judge - yes, one
would have to concede that in that sense, in
every case, in an ERINFORD type situation a judgeis, so to speak, considering, in effect, an attack
on that which he has just determined. Yes, that
element is, I think, true.
That, of itself, of course, does not mean
that it is erroneous. It has about it the
undesirable factor that I have already conceded
to Your Honour of there not being an independent
review, certainly.
Mr Grieve attempts to outline what our learned
friend say is this disastrous harm and His Honour's
response to that is the perfectly proper response,
we would respectfully submit, at the foot of
page 64.
This too was debated on Friday. He said:
It is not as if there is something he has not
heard before. One might rhetorically ask: how many times does a judge have to sit and hear
the same thing said over and over again - thisbeing, I think, it was said the fourth or fifth
time this had been run. And then, again, Mr Grieve, at page 368, takes up the matter again, still pressing that the appeal would be rendered
nugatory. And he is clearly addressing that issue to the judge. At line 8, he says: The issue in this question of will the appeal be nugatory. In other words will the courts
facilities for justice be effectively
SlTS/10/ND '79 17/10/88 Paringa(2) destroyed by extra curial conduct .....
We would ask your Honour give such directions
as appropriate ..... to maintain
von Doussa J's order -
so that -
we could consider our position -
Then there is a resistance to that and the
defendants, in our respectful submission, are
perfectly entitled to put a submission saying ultimately determined on the bottom of page 370 concerning costs.
that the court should not do that. It is then
a matter for our learned friends to go elsewhere.We would respectfully submit there is no
error in that. There is clear consideration
of the ERINFORD principle. The complaint our friends have is that the learned judge did not
opt for interim relief, he opted against it.
That, under the ERINFORD principle, he is perfectly
entitled to do. It is not inherent error to
not grant the interim relief. The problem, as Your Honour has point out, is the question of what happens next and whether there is any
form of review of that.
The next matter that is complained of is
what is claimed to be a refusal to be heard and
my learned friends have said much about this
exercise on the 11th and then again on
12 October to raise the matter afresh with what
my learned friends say is fresh evidence and
he went so far as to say evidence of concealment
and ofrra.la fides and all sorts of colourful matters
which he says have been discovered. We ·say, and I say this in parenthesis because it does
not really concern this Court we would submit, but we point out that apparently the initial relation to the issue of whether or not a particular director had abstained. And that was what was exhibited,and, subsequently, on discovery, the whole of the relevant minutes are put in. There is no mystery about it and that, apparently,is the view the judge came to because the whole
of it was put to him.material that was exhibited was exhibited in
My learned friend says, "Well, this was
only an application to make an application and
then we did not get to actually make our application in substance." But when you look
at what happened, he went for an hour aa:ia half
and put all the new material. The judge having
heard the whole of the argument the previous
SlTS/11/ND 80: 17/10/88 Paringa(2) week and late into the night is entitled to say,
"Well, tell me what it is that has changed.
Here we are about to start the trial, you apply
again for a fresh application, I do not have
to start again and go again from nine untilmidnight or whatever the case will be. Tell
--me now what has changed since last week." And that is a perfectly proper course to take, we
would respectfully submit. And one sees that
is precisely what develops.
Mr Gray makes the application on page 3 -
this is now in, I think, what is the second book
of the transcript that Your Honours have. And as one follows it through there is some procedural
wrangling. There is Mr Myers urging that it
go on. And then, at page 15, His Honour says: Mr Gray, why should I hear this
application.
From that page till page 34 of transcript - my
learned friend has read page 34 three times,
I think, in the course of his submissions on
Friday and today but he has not take Your Honours
to what he engaged in over the hour or hour and
a half that is comprised in the intervening material.
And what he did was he took the judge to the new - supposed new - material. He went to it
all. He went through it all. He went to the
exhibits, he went to the document, he showed
the judge what it was. And my learned friend, again, has made much in his submissions of saying,
"Well, the judge, towards the end said, 'Well
it does not really raise any new issues'." And
he said, "Issues shows error." The use of the
word "issues", in our respectful submission, tells
us nothing whatsoever. It simply indicates that
His Honour has had new material put before him
and has said, "Well, I do not think that new
material changes the substance of all that has
gone before." And one might rhetorically ask: if one is entitled to renew an application on new material -
and doubtless that is so - is a judge bound to
hear the whole of all the argument all over from
the beginning again, or is he entitled to say -
this all occurring in the course of a trial -
"Well, we heard it all yesterday, you applied
for an injunction, now you apply again, that
is your right, but now tell me why I should start
again. What are the new materials?" That is
precisely what has happened here and one can
read this closely and see that that is exactly
what occurred and if one needed to focus on
particular matters indicating His Honour's
SlTS/12/ND 81 17/10/88 Paringa(2) willingness to address the new material, at
page 17 he specifically asked Mr Gray:
Which paragraph -
of the affidavit. Mr Gray says, at line 12: it cries out for some form of holding
the status quo.
HIS HONOUR: Is that information disclosed
in Mr Burke's affidavits.
This is not the response of a judge denying a
hearing.
MR GRAY: Yes, it is. HIS HONOUR: Which paragraph?
MR GRAY: ..... paragraph 11 and paragraph
12.
HIS HONOUR: You say that is the new information that came to you as a result of discovery.
MR GRAY: Yes. I can perhaps demonstrate to your Honour.
HIS HONOUR: Let me refresh my memory on paragraphs 11 and 12.
Mr Gray suggest the exhibits. Then they go through and then Mr Gray at line 13:
MR GRAY: Has your Honour had the document -
and the exhibit number is marked - and they go through. And .then Mr Gray at length takes His Honour to
the document. Look at the content of the document - line
24: under the heading 'Sale of Paringa shares'
..... see that a Mr John Bate ..... was welcomed
to the meeting -
this is the dramatic revelation brought to His Honour's
attention. He had given pertinent advice about
defensive take-over manoeuvres. It was not produced
before and he goes on to explain then why he
says it is so significant that Mr Bate came into
the meeting .. On the top of page 19, they arevery significant. His Honour is still looking
at it. Look at exhibit 8. At line 10, "That
is the letter". Mr Gray goes on, the letter
SlTS/13/RB 82 17/10/88 Paringa(2) from May Mellor, the strategy plan. And then
all down there he discusses the strategy plan
and explains it to Your Honour.
BRENNAN J: If you look at the bottom of page 19 and the
top of page 20 - - -
MR CASTAN: Yes, I was come precisely to that. That is exactly what His Honour has done and perfectly
properly because His Honour says it -
may be material evidence -
Keep in mind this is a case involving these very
issues all ready and running, Your Honour -
for the trial but it doesn't really add
to the basic grounds upon which you sought
an interlocutory injunction on 29 and 30
September. These allegations were made
by the plaintiff when you were before me
on 29 and 30 September by way of imputations.
You said I should imply or I should infer,I think that was the word that was used.
MR GRAY: My learned friends told your Honour it was an improper inference to draw.
HIS HONOUR: That may be so but the question that I was asked to determine as a serious
question to be tried which combined with
the balance of convenience rendered it essentialfor me to protect the plaintiff's interest
were matters that were all before me on
this, if you like, very broad spectrum,
this simply itemizes in more detail what
was put to me on the 29th and 30th and I
ruled on it on the 30th.
MR GRAY: It doesn't itemize it in a way.
What it is, it is hard evidence not inference. MR;eRAY~ Why was it sworn?
He goes on. Then His Honour says: That is not a matter I can determine on an interlocutory application, why that
was not disclosed to me upon that previous
occasion. It willl be very relevant no
doubt upon the trial. This is a matter
to be determined on the issues.
Then he goes on about Mr den Dryver and the allegation
of withholding and my learned friend amply expounds
SlTS/14/RB 83 17/10/88 Paringa(2) on why it is important to draw a conclusion about
half a document. It is difficult.,.one might
interpolate, to see precisely why the question
of a half a document or the whole of the document
really does affect the question of injunction
if the very matter was put initially, that is
--to say an allegation of impropriety of this kind, unless His Honour had initially held that there
was not a serious issue to be tried, but if His
Honour had held there was a serious issue tobe tried, then this simply makes it clear that
he was right about that.
And then at line 6 on page 21, having had
it put to him that our friends were aware of
this and it was concealed:
HIS HONOUR: That may or may not be so. I am sure ..... they were aware of it. Be that as it may I still don't see how this
is bringing up something in the way of a
new issue relevant to the two questionswhich I was considering on 29 and 30 September.
His Honour is not looking for a new issue in
the sense of a new legal issue. He is saying,
why is this something new that affects the decision
I made. How does it affect the decision if I have already considered the question of serious issue.
That -
is merely particulars of what I was then
considering and that I shouldn't entertain
this application at this stage but as has
been put to me by other counsel we should
proceed with the trial forthwith.
(Continued on page 85)
SlTS/15/RB 84 17/10/88 Paringa(2) MR CASTAN(continuing): Now, that does not stop our learned
friend, because ~-ie goes on and the debate continues
over and over and then there is a reference at page 22
which is helpful in explaining some of what His Honour
had meant in relation to COMMONWEALTH V QUEENSLAND.At line 26, on page 22,His Honour harks back to that
matter:.
Yes, but that case of the --QUEENSLAND case was
referred to in particular, as I recall it,
and I haven't refreshed my memory in the
last week I must admit, as I recall it in
relation to the serious question to be
tried and I did say I think in some fairly
brief reasons that I expressed extempore
at the end of Friday 30th, that I thought
that the matters had been very fully
canvassed in the transcript and that Irelied on what had been said in the transcript
both in relation to the serious question to
be tried and the balance of convenience and
the question of damages as an alternative
remedy was canvassed during the course of
the submissions that were made. So, it wasn't just a serious question to be tried and
admittedly the QUEENSLAND case was with
a particular reference to the serious question
to be tried but there is also this other
matter of the alternative remedies. Now that, of course, is not touched on by this at all.
My learned friend goes on for another long explanation
of what he says it is all about and says, at thefoot of that passage:
So, we know on 8 July that was advice in
regard to defensive. take-over manoeuvres. His Honour says:
I can follow that. I mean I can follow that suggestion or that submission.
MR GRAY: That not only is a suggestion it is
there in the document from the defendant. It
wasn't brought forward. The defendant before Your Honour on that occasion said: no, we didn't have an intention.
And then His Honour says:
But you are assuming, are you not, for the
purpose of this present application which is really confined to whether I should hear you
on the application for an interlocutory
injunction now before you open your case or not,
you are assuming that Mr den Dryver doesn'thave any explanation through either absentmindedness
SlT6/l/VH 85 17/10/88 Paringa(2) or through inefficiency in his office or
through blatant dishonesty, as you suggest,
for withholding those further pages in that,
I agree, very important document .... there may be a number of other aspects - - -
and he then goes on to say, my learned friend eoes
on to say, "Well, we will call him for cross-examination
now," a witness who is about to be called into the
trial.
BRENNAN J: Well, what you are saying is that all the relevant
material was placed before the judge before he gave
his ruling at 1.20 pm on that day.
MR CASTAN: Yes, Your Honour. BRENNAN J: Yes.
MR CASTAN: It was all put and it is important to see that it was because our learned friends have stressed, at
page 34 - but by page 34 what is emerging is what
we would respectfully put, is His Honour's fully
justified impatience with what is developing, because
His Honour has had put to him over and over again
all of the new material and has asked for an
explanation of how it affects the fundamentalquestions - the correct questions, we would
respectfully submit - that he has addressed back
on the 30th and is not receiving any answer to that
question. He uses the word "issues" - my learned
sought to make much of that - it does not affect it.
What he was seeking to find out was how does
this new material really affect it? How does it change the fundamental principles that I did address? them and it is our respectful - - -
BRENNAN J:
The question is whether the new evidentiary material that was available on that day was something
which required further consideration by the learned
trial judge in the exercise of the same discretion
addressing the same questions; is that right?
MR CASTAN: Yes, Your Honour, and he did give it consideration,
in our respectful submission. It was put to him
at great length and that is all that matters. The technicality that this finished up being called "an application for leave to make an application"
does not affect the matter, in our respectful
submission. He had all the material put to him; put to him fully; he understood it and he asked
over and over again as to how it really affected the
issues he did have to address and did not receive
a satisfactory answer, in our respectful submission,
SlT6/2/VH 86 Paringa(2) and what we see at page 34 is his final conclusion
of the matter, ultimately saying "Let's get on with
it," and that is what a judge is fully entitled to
do. Finally, Your Honour, I would take Your Honours
briefly to the passages at page - or perhaps I do not
need to go to it. We would respectfully submit that what occurred on the 12th - and it is in the passages
-- at pages 60 to 66, I think it is, is a form of going through the motions to set up a basis on which to
come to this Court or to some appeal court. And I
say that advisedly because Mr Lander, in that instance,
when one analyses that transcript, did not have any
new material.; did not seek to put anything further;
did not seek to do anything except to carefully
structure a so-called application to make an
application.
When he was asked by the judge, "Is this an
application for injunction or an application to make
application for an injunction?" he said, "It is
an application to make application for an injunction
but I don't have anything further to say." And
that is, one might say with the utmost respect, a
very strange way to go about seriously putting
matters to a court. He had nothing new to say; he had no additional material and deliberately chose not
to put it as an application for an injunction but
to dress it up in this somewhat artificial form ofapplying to apply for an injunction or seeking leave
to apply for an injunction.
BRENNAN J: This was founded on what Mr Justice Toohey had said
the previous afternoon, is it not?
MR CASTAN: Yes, he drew attention to what had been said, but had nothing else and one might well ask why he
did not say, "We renew our - - -" simply in
straightforward terms if that was all he had to
say - "We renew our application for an interlocutory
injunction in the light of what Mr Justice Toohey
said." But he carefully avoided saying that and
that is unexplained. Your Honours, I have perhaps that. gone well over the time, I see, and I apologize for
MASON CJ: Yes, well, that cannot be helped, Mr Castan, but
I should ask you whether you have put all you want
to put against the appeal, so far as it relates to
the refusal of interim relief pending the hearing
of the appeal and. so far as Mr Justice Legoe's order
dissolved the injunction granted by Mr Justice von Doussa.They are the important aspects of the case.
MR CASTAN: Yes. I think the answer is yes to that, Your Honour, and I do not think there is more we would wish to say
but could I simply reserve the opportunity to add
anything that is - - -
S1T6/3/VH 87 17/10/88 Parintga(2)
MASON CJ: Yes. Well, we will resume at 2 o'clock. AT 12.57 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.09 PM:
MASON CJ: Yes, Mr Castan.
MR CASTAN: I have completed my submissions, Your Honour. MASON CJ: Thank you. Mr Heerey? MR HEEREY: If the Court pleases, we have some written
submissions. I hand five copies to - - -
MASON CJ: Thank you. MR HEEREY: We do not seek to advance what appears as point one in our written submissions, if the Court pleases.
As to the order of 3 October we simply adopt and
rely on what was said by Mr Castan. What is said
in points -2 and 3~ have been already adverted to, likewise _4, likewise 5, in subtance and also 6. We simply note that, although initially,
one of the orders against which special leave was
sought to appeal was the listing decisions in the
Supreme Court and those implicitly have been abandoned by the applicant.
As to point 7, we do not need to add to
what Mr Castan has said. We come to point 8 and we would like to take the Court briefly to some of
the provisions of the COMPANIES (ACQUISITION OF
SHARES) CODE which we say interference with that
process would affect the holders of the ADL shares
potential purchasers of - delete the words,"shares of" where first appearing - and also the cormnunity at large which has an interest in a share market operating fairly with a minimum of uncertainty and confusion, and in accordance with the legislation governing it. At this stage, could we hand to the Court some
copies of the relevant provisions of the C ? They contain section 6, 17 and 33 and 34. If we
could go first to section 17,-17(2A) reall7 is the
basic provision which establishes the- on-market
announcement. It provides that:
Subject to this section, a person, or 2
or more persons together, may make offersto acquire shares included in a class of
shares in a stock exchange listed comn~nv
SlT6/4/VH 88 17/10/88 Paringa(2)
by causing a dealer to make on its or their
behalf at a relevant official meeting an
announcement to the effect that, during the
period of one month beginning on the first
trading day of the company's home stockexchange after the end of 14 days after the day of the announcement, the dealer offers,
on behalf of that person or those persons,
to acquire, ata cash price per share specifiedin the announcement, all shares that are included
in that class in respect of which offers
constituted by the announcement are accepted
in accordance with subsection (2A).
And it is important to note firstly that that announcement is the offer, unlike the Part A
procedure where notice is given of an intention to
make an offer. It is the announcement which is the
offer which is made on particular terms, namely, that
it remains open for accept:.qnce over a period beginning 14 days hence and concluding_. after a further 28 days. And the part C statement which the Court will see
referred to in section 17(10), that is the statement
which has to be served on the target company on the
day the announcement is made and, by 17(10Xb)
copies are to be dispatched to shareholders of the
target company within 14 days. The part C statement
is not the offer and the copies which are dispatched
to the shareholders are not offers; they are simply
notification of the offer which has already been
made and constituted by the announcement.
Now, as we say in our outline, the legislation
provides very specifically for the circumstances in
which that offer, constituted by the announcement,
can be withdrawn or suspended and those provisions
are contained in sections 33 and 34, and 9(a)
of our submission sununarizes the prescribed occurrenceprovisions, That is section 33(1) which provides
that if the:·
prescribed occurrence takes place, the on-market offerer may -
withdraw. Those prescribed occurrences are defined
in section 6 and it is not necessary to take the
Court to them in detail because they deal with matters
affecting the target company, for example, its winding
up or appointment of receiver.
Likewise, there ar~ provisions under which the offer
is deemed to be withdrawn, the death or bankruptcy
of the offerer, the official management or winding-up
of the offerer where a corporation - section 33(4)
and the death, bankruptcy, et cetera of the offerer'sbroker, under section 33(5). But section 33(6) is
S1T6/5/VH 89 17/10/88 Paringa(2) of great importance, in our submission, because that
deals with the circumstances in which, apart from
the specified events referred to, the offerer can
have the offer withdrawn and 33(6) provides that:
After the making of a take-over announcement
and before the end of the period in which
offers constituted by the take-over announcement
remain open -
(a) the on-market offerer may, with the consent
of the Conunission -
that is the National Securities and Companies
Conunission -
by causing a dealer to make on the on-market
offerer's behalf behalf at a relevant
official meeting an announcement to that effect,
withdraw such of the offers -
(b) is the comparable provision relating to the
offerer's broker. But they all are preconditioned
on the Conunission granting:·
Its consent to such a withdrawal ..... it is
satisfied that in all the circumstances it
is just and equitable to permit the withdrawal
of the offers.
And here, in our submission, it is clear that the legislation vested in the Conunission, which is an expert
body charged with the administration of the securities
market and is to be credited with the special knowledge
as to how the market operates and is given a
statutory criterion to apply that or to grant or
withhold that consent, that that is, in our submission,
the exclusive repository of the 2ower to enable the
offeror to withdraw his offer. I should add that section 34 provides a comparable provision for
suspension.of the offer, but again with the approval
of the Conunission. Now, if the announcement constitutes an offer,
and it can only be withdrawn in those specified ways,
the further consequence is, as we point out at the
foot of paragraph 9, that the offer is capable of
acceptance without any further act on behalf of theofferor or its broker and can, in certain circumstances,
be accepted by notice in writing to the stock exchange. There
is an error there in outline; we would ask the Court
to substitute subsection(2A),so it should read
section 17(2A). If we can take the Court to that
provision it provides that:
Offers that relate to shares included in a
class of shares in a company and that are
S1T6/6/VH 90 17/10/88 Paringa(2) constituted by an announcted by an announcement
made by a dealer in accordance with this
section may be accepted:
(a) in any case - at a relevant official
meeting -
that is, where the offerer's broker is present, or -
(b) if the offers cannot be accepted at a
particular relevant official meeting:
(i) because neither the dealer nor a representative
of the dealer is present at that official meeting;
(ii) because dealings in shares included in that
class are not permitted at that official meeting;
or
(iii) for any other reason;
then -
by a notice in writing -
et cetera -
served on the company's home stock exchange.
Now, in paragraph 10 we outline what we submit is
the significance of that statutory machinery for the
purpose of the interlocutory injunction proceedings.
We say there is no jurisdiction in the Court to
effect a withdrawal or suspension of the offer and
the statutory provision is an exclusive one vested in
the NCSC and further, that the offer can be accepted
and create a binding contract without any act of the
offerer or its broker and therefore it is not a case, as had been said before on behalf of the applicants,that if there was a breach of the Code,
the fact that it was done pursuant to an injunction
would provide a defence to any proceedings under the Code. The point we submit can be illustrated by the - - -
BRENNAN J: I am not sure that I follow that last nart. If the proposition is that the offer is susceptible of
acceptance in accordance with subsection (2A),
.t:J.hat:..:iK .one::proposition.
MR HEEREY: Yes. BRENNAN J: But do I understand you to say that because of the
provisions of (2A) that an injunction
would be ineffective against the company?
MR HEEREY: Yes, we do say that, Your Honour.
S1T6/7/VH 91 17/10/88 Paringa(2) BRENNAN J: And why is that?
MR HEEREY: Well, could we illustrate it by taking Your Honour to page 190 of the application book which contains
the terms of Justice Wilson's injunction which isthe currently effective one, but the language of
which is identical with those earlier granted.
- - The injunction in paragraph 2 against our client
restrains it:
From on behalf of North Flinders Mines
Limited offering to acquire acquiring
or receiving acceptance of any such offer -
et cetera. Now, on consideration, the language there perhaps exposes the ineptness of injunctive
intervention in the scheme proposed by the statute,
because there is no point in injuncting the offerer
or its broker from offering to acquire, because thathas already happened with the announcement which was
made on 19 September, or acquiring or receiving
acceptance, because the provisions of the Code
do not require the offerer or its broker to take
any act to constitute an acceptance. On the contrary, on ordinary contractual principles, we have an offer
of the carbolic smoke-ball kind, made if not to
the world at large, to a particular section of thepublic, the holders of the target company shares.
The offerer cannot withdraw it because it is governed
by the statutory provisions and the offeree cah then,
within the period prescribed, accept it simply by
communicating his acceptance.
BRENNAN J: To whom? MR HEEREY:
To the dealer. Or, if the dealer is otherwise prevented from accepting it, by notice to the stock
exchange. BRENNAN J: Well, be it so. That would still leave for ultimate
resolution, if an injunction were granted, the question
whether the offer has already been made in the manner
that you have submitted it has been, so that any acceptances affected by notice to the stock exchange thereafter is effective for the purpose of creating
a contract of sale of the ADL shares.
MR HEEREY: Yes, well, Your Honour, we say, in the circumstances of this case, there is no attack on the basis of
non-compliance with the Code. The attack made is that the offerfor suggested improper reason was too
high. But for practical purposes, it seems to be accepted that the statutory requirements of the Code,
the making of the announcement and the giving of the
part C statement have been carried out
and th~t the Code has been complied with. So our point is that there is therefore an offer made,
subject to acceptance by the offeree, and it has this
SlT6/7/VH 92 17/10/88 Paringa(2)
special characteristic provided by the legislation,
namely, that it cannot be withdrawn, except in
certain very limited circumstances, so that the
offerer does not have to do anything.
BRENNAN J: That may well be right, but does it arise here?
-- In other words, if the injunction is ineffective to produce the result to which the plaintiffs aspire,
so be it. But is there any reason why the injunction
should not go, given all other matters in favour
of the applicant's case.
MR HEEREY: Yes. Well, the books tell us that equity does not work in vain, Your Honour, and if what was sought
to be achieved by injunction is something which
plainly cannot be achieved because it would cut
across a statutory right given to the shareholders
of the target company, that would, in itself be a
good reason for not granting the injunction.
BRENNAN J: It seems to me to be a large question as to whether the provisions to which you have drawn our attention
have the effect of rendering nugatory any resort to
the Court by a party being a shareholder in the
company complaining of a part C offer which is an act of
oppression, because, if your argument is right, once
the offer is made, then the horse has bolted and
nothing can put it back again.
MR HEEREY: Yes. Well, we say, respectfully, that is the
conclusion because once the part C mechanism has been
set in train, there are other interests involved,
other than the internal management of the offerer
company. It is probably developed in the next
three subparagraphs of the section of our outline,
Your Honour, in which we put, if, as contrary to
our submission, it were held that it nevertheless
was possible to prevent the part C machinery operating
by injunction, as a matter of discretion we would
contend that the announcement of the offer created
a reasonable expectation in the market-place that
$2.75 would be available for each ADL share for a period of, in effect, six weeks.
People were entitled to order their affairs on
that basis; to make connnitments on that assumption,and
to interfere with that process introduced substantial
confusion and uncertainty into the market. If the period is stopped, is it to resume again and, if so, at what stage? So the degree of certainty which the
part C machinery, from the legislation, was obviously designed to introduce is substantially interfered with. The second limb of that really develops from what I was putting a moment ago. At
the very least, there is the potential of ~Jl ADL
shareholder putting into practice the argument that
we have just been advancing, namely, saying that this
S1T6/8/VH 17/10/88 Paringa(2) is a statutor,y offer; we are entitled to accept it,
and then suing in the courts to enforce that contract.
At the very best, that would create great considerable
uncertainty. Finally, in the history of this matter,
it is illustrated, there is unfairness as between
the shareholders of ADL who got in quickly. That
figure is incorrect, it should be 17 per cent andnot 21 per cent. But there was some 13 per cent or
so who bought between 19 September, the date of the
announcement, and the 23 September when the first
injunction was granted, and the 4 per cent-odd that
bought last Tuesday, and the primary purpose of the
Code is that there should be fairness as between
the shareholders of a target company and some with
special knowledge or special position should not be
able to sell out at a benefit unavailable to others. considerations which weigh against the grant of an
injunction and were, as the transcript appears, raised
before His Honour.
As to the order of 11 October, at points 11, 12,
13 and 14, that has been developed by Mr Castan and
we adopt our learned friend's argument. Perhaps
one passage worth mentioning, which appears at
page 7 of the transcript at the outset of the
application, where Mr Gray was outlining the course
they wanted to adopt, at line 34, he said to
His Honour:
We would anticipate that we would be perhaps
an hour-and-a-half in developing the matter.
We would take on board Your Honour's knowledge
of all matters to date unles Your Honour
required some further elucidation of matters
that have already been canvassed.
So at the very outset there was a concession, as,
of course, had to be made, that His Honour was entitledto deal with the matter in the light of the six or
seven days that the hearing had progressed and he
asked for an hour and a half and got about an hour and 20 minutes, on our estimate.
Point 15 and 16 have been developed by Mr Castan.
Point 17 also, and we would simply say that a fair
reading of the transcripts indicate that really one
thinks Mr Gray had said all he wanted to say until
it appeared that His Honour was about to rule against
him, and we would submit that natural justice does
not guarantee him a right to speak as long as he wants.
Tha:118 is a Panfida matter which has not been
ventilated, I think, before this Court. One of the other matters put on 11 October was that there
was aome other litigation in which a minority
shareholder of Paringa had obtained an injunction to
prevent Paringa obtaining, amongst other things,
SlT6/9/VH 94 17/10/88 Paringa(2) North Flinders rights shares. Well, that has now
been varied. Those are our submissions, if the Court pleases.
MASON CJ: Thank you, Mr Heerey. BRENNAN-J: Mr Heerey, just before you return to your seat, could I just ask you this? If an injunction were
granted in the form of the order made by
Mr Justice Wilson, what damage would follow to your
client?
( Continued on page 96 )·
S1T6/10/VH 95 17/10/88 Paringa(2)
MR HEEREY:
We cannot point to anything specific other than the loss of commission on the transaction of the business,
Your Honour.
BRENNAN J: Yes. And if your argument is right, it would not necessarily even produce that?
MR HEEREY: That would seem to follow, Your Honour.
BRENNAN J: There is nothing in the Code, in your submission,
which precludes the making of the injunction except
that it may be one that is made in vain.
MR HEEREY: Yes. If Your Honour pleases.
MASON CJ: Yes, Mr Archibald.
MR ARCHIBALD: If the Court pleases, there is little that we
would wish to add. May we hand to the Court an outline of our submissions.
MASON CJ: Thank you. MR ARCHIBALD: May we mention first an aspect of the application made on 12 October to Mr Justice Legoe in which counsel
for Paringa sought to renew the application made by
Mr Gray on the previous day. The Court should not,
in our submission, proceed upon the footing that the
application made on 12 October was in consequence of
or was linked to the delivery of reasons by
Justice Toohey the evening before.
So far as the basis upon which the application
was made, it was in no way linked to Justice Toohey's
reasons or conclusion. The trial transcript at pages 64, 65 and 74 to 75 show the basis upon which
the application was made and it was not suggested at
all by counsel for the applicant that the reason for
the application being made was that something had fallen
from Justice Toohey which made it appropriate for the
application to be made and, indeed, at page 75, it was
His Honour Mr Justice Legoe who raised for the first time the circumstance of Justice Toohey's reasons,
counsel for Paringa having repeatedly said previously in the course of the application that the application
was being made on the same grounds and for the same
reasons advanced by Mr Gray on the previous day,
and at page 75 line 2 Justice Legoe said:
Some of those reasons have now changed, haven't they? For example, paragraph 8 refers to
certain submissions made by Mr Myers Q.C.
to Toohey J. in the High Court and we dealt
with that yesterday and now we know that
Toohey J. has made his decision. So, that really doesn't reflect on this application,
does it?
SlT7/l/RB 96 17/10/88 Paringa(2)
Now the submissions referred to as having been made ' by Mr Myers to Justice Toohey were the submissions concerning the undesirability of this Court being in a position in which it might seek or be compelled to
monitor proceedings in the course of the trial, and
the availability of application to be made by the
-plaintiff to the trial judge if further evidence came
out, as Justice Toohey said. The exchange between Mr Myers and Justice Toohey is at page 158 of the
application book.
So all of those matters about the ability to make
application based on fresh material had been canvassed
in the course of Mr Gray's submissions on the previous
day. All that happened on 12 October was that for a
reason that was otherwise not announced, that counsel
for Paringa sought again to make that application on the
same grounds and the same basis as had been made the day
before. The argument went for an hour or so and eventually His Honour refused the application.
It is not as though there were changed circumstances
on the 12th that had not obtained on the 11th when the
application was initially made and it is, in our
submission, significant that on the 12th no endeavour
was made on behalf of Paringa to say, well, there were
matters that Mr Gray had wished to advance on the 11th
that he was prevented from submitting; all that was
said was, we simply repeat the same matters and the
same grounds.
So that on the issue of the applications on the
11th and 12th, in our submission His Honour did not err
in the exercise of His Honour's undoubted discretion
in dealing with the applications before His Honour.
The only other matter that I think we would wish
to develop in submission concerns the position of ADL
shareholders. It is true that a market for ADL shares
would remain if an injunction were to continue but the
market which remains and in which ADL shareholders can
offer and hence it is a market bereft of the control sell is a market bereft of the impact of the part C premium inherent in the price at which the part C
offer is pitched. The market has in substance returned to levels near the pre-existing market level after the
injunctions had been granted. It is true that ADLshareholders can sell in that market if they wish but they are deprived of the advantageous price which the part Coffer infers, as it necessarily must because of the premium for control inherent in it. BRENNAN J: What do you say of the ability of the ADL shareholders to accept the part Coffer irrespective of the existence of an injunction?
MR.ARCHIBALD: Subsection (2A) seems to indicate that they can
accept by notification to the exchange but were they
SlT7/2/RB 97 17/10/88 Paringa(2) to do that, the present form of injunction would preclude
their receiving payment, payment which would otherwise
attend upon the conclusion of the contract achieved by
the acceptance of the offer. So that they may be able to effect a contractual relationship but they would be
deprived of the ordinary and natural advantages of that
_contract and hence not achieving that which would
ordinarily follow from the acceptance of a part Coffer.
BRENNAN J: They would have the worst of both worlds.
MR ARCHIBALD: We would submit so. And the further matter that we advance in relation to the position of ADL
shareholders is this: we would submit that even if the
contentions of Paringa were established at trial on a
final basis, namely that the directors had acted for
ulterior purposes, nevertheless the Court would not
interfere with the progress of the part Coffer because
the ADL shareholders are third parties who, at the
time of the acquisition of their statutory rights, had
no notice of and were not participants in the activity
involving the impugned acts of the directors.The rights of the shareholders accrue, in our
submission, at the time of the part C announcement
because, as my learned friend, Mr Heerey, has identified,
the Code operates from the moment of the announcement
being made; the offers are made by the announcement and
cannot be withdrawn. So to that extent the ADL shareholders have a statutory accrued right thereafter
to proceed to take advantage of the position which the
Code ordains in their favour.
Now, if they had no notice at that time - and it is
not suggested in the evidence or in the pleadings that
there was any awareness of ADL shareholders of any ofthe matters now complained of - the Court would not,
in our submission, seek at any time to set aside or
interfere with the right which those shareholders hadat that moment achieved.
We would submit that that follows from general
principle and in point 2 in our outline of argument
we had identified two cases which, in our submission,
bear out those propositions. We have copies for the Court, if the Court desired.
MASON CJ: Thank you. MR ARCHIBALD: We would refer the Court to the statement of the principle in this regard to the reasons of
Mr Justice Dixon, as His Honour then was, in RICHARD
BRADY FRANKS LIMITED V PRICE, 58 CLR 112, the passage
in question appearing at page 142 at about point 7
on the page about eight lines into the paragraph,
His Honour said:
S1T7/3/RB 98 17/10/88 Paringa(2) Directors are fiduciary agents and their powers
must be exercised honestly in furtherance of
the purposes for which they are given. Underthe general law of agency it is a breach of duty
for an agent to exercise his authority for the
purpose of conferring a benefit on himself or
upon some other person to the detriment of his
principal. But, at the same time, if his act
is otherwise within the scope of his authority
it binds the principal in favour of third parties
who deal with him bona fide and without notice
of his fraud. The rule, no doubt, is the samewith respect to the acts of directors.
And here, of course, we are concerned with the acts of
directors, the power to make a part Coffer clearly
being within the general scope of authority of
directors of a public listed company. That proposition
is - - -
GAUDRON J:
I wonder, Mr Archibald, if it is rigp.t to describe the shareholders as acquiring an accruea vested right to
accept. One could well understand their acquiring an accrued vested right on acceptance, but is it right to describe the right to accept as such a right?
MR ARCHIBALD: We submit so. The right is the right to accept. Whether they take advantage of it or not is perhaps
nothing to the point but they have that ability to
implement that right and the injunctions which are
sought by Paringa here would interfere with that right.
It is true that if they exercise that right, further
consequences would follow. They then achieve particular
contractual rights pursuant to the contract arising on
acceptance and other consequences follow from that. So there are further rights down the track, if we can put it colloquially, but certainly we submit that the moment the announcement is made there is a right which
is interefered with by the injunction sought.
In the context of the general principle to which
we referred, the matter is touched on in a dictum in the decision of this Court in HARLOWE'S NOMINEES PTY.
LIMITED V WOODSIDE (LAKES ENTRANCE) OIL COMPANY NO
LIABILITY, 121 CLR 483 at page 500, the last page of
the reasons of the Court. The Court being fairly neutral on the point, not needing to decide it, but the Court dealing with the issue in the second half of that paragraph the Court said:
We need not discuss this question; but we
must make it clear that we are not to be
taken as denying that Burmah's legal title
to the shares would have provided an effectiveanswer to a claim for the relief that Harlowe
seeks, in the absence of a finding that at the
time of the allotment Burmah had notice of the
breach of duty.
SlT7/4/RB 99 17/10/88 Paringa(2) There there was an allotment of shares by Woodside
to Burmah, the plaintiff contending that the allotment
made by the directors was in breach of duty for an
ulterior purpose. So it is the issue that is raised here and the Court, in our submission, there
indicating that were it necessary to decide, the Court
·-may well have taken the view that Burmah's rights
would not be interfered with.
We submit here the Court would not interfere
with the rights of ADL shareholders,relevantly the
rights being the right to accept the part Coffer if
the shareholders so desire.
If the Court pleases, there is nothing further we
would wish to add in elaboration of our submissions.
MASON CJ: Thank you, Mr Archibald. Yes, Mr Gray.
MR GRAY: If the Court pleases, there are five matters by way of reply.
MASON CJ: You might deal, first of all, with the reliance that
has been placed upon the part C provisions.
MR GRAY: Yes. If the Court pleases, in our respectful submission the provision 17(2A) and the other parts of the
take-over Code do not have the effect of rendering
nugatory the injunctive powers of the Court. We say the matter is not at all clear on the basis of the
legislation. For example, 17(2A)(b)(iii) contemplates
that there cannot be acceptance "for any other reason"
and perhaps, by reason of injunction, could have some
work to do there. In our respectful submission, we
are not in the situation where it is the intention of
the legislature to create a position where theshareholders had a right absolute that in no
circumstances could be taken away. It is not the
intention of the legislature to say that once a part C
offer had been announced, regardless of whatever may
have motivated it, that there once and for all it was
in place and a fait accompli. If necessary, if the Court pleases, we would seek
to expand the interlocutory orders thus far obtained
to include an injunction against the ADL shareholderswho had the benefit of an undertaking from my client
as to damages to-
MASON CJ: But they are not parties to the proceedings, are they?
MR GRAY: ADL has sought to intervene, if the Court pleases, and the basis of their intervention was specifically to
protect the position of their shareholders and -MASON CJ: That may be so, but how would an order made in proceedings to which individual shareholders are not
parties bind those shareholders?
S1T7/5/RB 100 17/10/88 Paringa(2)
MR GRAY: It would have to be on service to them, and protected by an undertaking that has presently been given by my
client to each and every ADL shareholder. Thatundertaking was specifically sought by ADL on behalf
of the shareholders before Justice Wilson.MASON CJ: But this is a rather extraordinary claim to advance
at this late stage of the proceedings.
MR GRAY: It has come about in this way, that the present injunctive order has been quite effective. There have been no acceptances at all, apart from periods of time when there has been no injunctive relief in place. So despite my learned friend's arguments that shareholders
are free to accept under 17 (2A), an interpretationthat we join issue with, we say in fact that has not
happened at all. Toda~ forthe first time, if the Court pleases, to our recollection this particular
argument is advanced. Now that we have had notice of it, we would seek to, if there be any risk, seek a further extension of the injunction. If the Court was not minded to be receptive to
that submission, we would still say that our present
form of injunction has been effective and that there
is not the vested right that Mr Archibald has put and
that 17(2A) does not carry with it the construction that
Mr Heerey has suggested. We are aware of no treatment of these particular provisions of the Code. They are as yet essentially uninterpreted and it is a matter to
be developed in detail. But we would be seeking, if necessary, we repeat, an ·,.:-der against the ADL
shareholders who have, ir ·act, through ADL been
successful in having an .1dertaken proffered by my
client in respect of any ,,Iamage they may suffer.
BRENNAN J:
How can we make an order against people who are not here, Mr Gray?
MR GRAY: If the Court pleases, the basis could only be that
ADL sought and obtained intervention on the ground that it was representing its shareholders' interests. BRENNAN J: Well, it has no authority, surely.
MR GRAY: That was the point we sought to take before Justice Legoe without success. BRENNAN J: Perhaps you did, but at all events so far as
injunctive relief against shareholders is concerned,
the company has no right to represent them.
MR GRAY: Your Honour has the point that we opposed ADL's intervention in the first place unsuccessfully. BRENNAN J: That may be so but that is not the point.
J.01 ·
SlT7/6/RB 17/10/88 Paringa(2)
MR GRAY: That is passed. But we say that the present order has been quite effective to date; there have been no
acceptances apart from the periods of time when the
injunction has not been in place and tha.t past history,
we say, does give a pointer as to the commercial
-_Rosition of the matter.
BRENNAN J: You cannot take it any further than saying that if you can get an injunction in the terms that were
granted, for example, by Justice Wilson, that is as
far as you can seek it, is it not?
MR GRAY: If the Court pleases, we cannot address that any further. There does, of course, remain a power in the commission, in the light of such an injunction and seeing, perhaps, such an anomaly, if it so saw fit, to
give an appropriate direction of its own.We do join issue with the submission that there
was in some way a vested right. We say that the legislation at most gives an opportunity and that
opportunity was an equal opportunity to all ADL
shareholders, for whatever period the offer has been
available for acceptance. Some have accepted, some not. They all had the same opportunity and in fact, in our
respectful submission, the injunctive order we seek is
to maintain the rights of shareholders between
themselves.
Those who did choose to accept and, if the Court
pleases, in circumstances where there is no injunction
to restrain payment, may well have received a windfall
if our case is correct. If our case is made out at
trial, some shareholders of ADL have had a windfall.
It does not give a right to damages in the others. If we lose at trial, then if the part C goes ahead, then the only loss to the ADL shareholders will be the loss of interest on money for a period. And if there are
some who are induced to take a lower figure.for some
particular reason, can make out a claim, they are
protected by my client's undertaking as to damages, Court. which undertaking I am instructed to proffer to this
So, if the Court pleases, we say that as to the balance of convenience and the point under the Code.
We announced to the stock exchange that the plaintiff's
position, that the offer was a breach of duty on the
day that it was first known to the plaintiff, on 19 September in writing. That date by letter the
exchange was put on notice of our client's claims.
BRENNAN J: On what date? MR GRAY: On 19 September, the day that my client first heard of the part Coffer. So that the day the directors
SlT7/7/RB 102 17/10/88 Paringa(2) made the decision and made the public announcement, all
of which took place without notice to my client, but
having notice it immediately gave notice to the exchange
in writing that it was claiming that this was a
circumstance of breach of duty.
BRENNAN J: What, so you say that the acceptances thus far may
be affected in any event by an equity in your client's
favour?
MR GRAY: Yes, we do, but we have had to, in the past, to maintain our injunctions, agree that any acceptances received when there has been no injunctive relief can be paid
for. The courts below, in allowing us to maintain what relief we have had, have required that of us, as did Justice Wilson in regard to the one and a half hours trading last week.If the Court pleases, we have given notice, both publicly and also by letter to the
principal substantial shardholder of ADL,of our claims
to give rise to notice of our equity. So that, in fact,
is in place and is .evidenced through the documents of intended - as exhibits to various affidavits. If I might just turn to the other matters briefly.
An argument was put that there was not a judgment or order within the meaning of the Act sufficient to give
rise to jurisdiction in this Court. In our submission,
the proposition is this that any adjudication having
an operation of its own to affect in some way the
parties' mutual rights and obligations is the threshold
test to be met and the two cases we cite in support of
that proposition are both referred to in the SWISS
ALUMINIUM case. I could give the Court the references. THE MINISTER FOR WORKS (W.A.) V CIVIL & CIVIC,
116 CLR 273, in particular the judgment of Justice Kitto
at page 282 and 285-6. And the decision of FISHER V
FISHER, 161 CLR 438, Chief Justice Gibbs at page 450,
other members of the Court concurring. Those two
cases and one other are referred to in the SWISSALUMINIUM AUSTRALIA case, in particular, if the Court
pleases, at page 425, and when those authorities are read in context, we say that the test is: has there been an adjudication that has the operation of its own to affect in some way the parties' mutual rights and obligations? And we say we fall directly within that test. In our respectful submission, we adopt the
treatment of Justice Wilson in his reasons, following
the inter partes application for an interim injunction.There was a suggestion made that in some way the
plaintiff had not done all that it could do in
approaching the South Australian Full Court for a hearing
and the suggestion was made that there had only been an
approach to the administrative officer or a secretary.
SlT7/8/RB 103 17/10/88 Paring:-?(2) The position is that there was an inter partes
attendance by counsel before the Chief Justice at
9.15 am on 3 October when His Honour the Chief Justice
made known the views referred to in the affidavits and
picked up in the chronology, then later that night
_at 9.30 pm my learned junior, Mr Bagot, approached
Mr Bodzioch, who is the deputy registrar, seeking advice as to whether a Full Court could be convened
and the answer was, no - the information was given,
relayed by the registrar from the Chief Justice - no; in
those circumstances, an urgent appointment was sought
from Justice Wilson of this Court at 9.00 am in
Canberra the following morning. So I just indicate that to the Court. There was notonly a direct attendance
before the Chief Justice by counsel inter partes, butthere was that later cormnunication to the Chief Justice
through his registrar that night.
BRENNAN J: That was for a date for hearing of the appeal?
MR GRAY: That was seeking to ascertain whether the Full Court was able to give an urgent hearing for an appeal from the order of Justice Legoe, and interim relief. BRENNAN J: And interim relief? MR GRAY: I am so instructed. And then in regard to the more recent event, a Mr Abbott, a senior solicitor, went first to the administrative officer without success
and then went to the Chief Justice's chambers and spoke to the associate who, I am instructed, cormnunicated with the Chief Justice and then passed the message back that there could not be a hearing until, at the earliest, the November sittings. So we say, bearing in mind the practice in South Australia, that the plaintiff did all that could be expected of them in the circumstances. They had been before the Chief Justice in person on 3 October and then followed the matter up in an appropriate way in accordance with~ South Australian practice thereafter. This particular
practice of seeking urgent hearings, and the method of doing it, is one that has been established and followed through as a matter of practice of the South Australian court. If the Court pleases.
MASON CJ: Yes, thank you, Mr Gray.
MR HEEREY: May I just draw the Court's attention to page 116 of the High Court transcript, that is the hearing
before Justice Toohey, where it is apparent thatreference was made to the effect of the Code.
MASON CJ: Thank you, Mr Heerey.
104
SlT7/9/RB 17/10/88 Paringa(2) Mr Gray, I take it that you are authorized to
give an undertaking as to damages on behalf of your
client in the event that the Court comes to the
conclusion that you are entitled to injunctive relief
at this stage?
MR GRAY: -Yes, I am so instructed, if the Court pleases, in the
same terms as were proffered to Justice Wilson on the
last occasion, which is an undertaking that includes
the ADL shareholders.
MASON CJ: Yes. And that would cover an injunction in the terms granted by Justice Wilson or any variation of those
terms?
MR GRAY: Yes, they are my instructions, if the Court pleases.
MASON CJ: Thank you. The Court will adjourn in order to consider the matter.
| T7 | AT 3.00 PM SHORT ADJOURNMENT | |
| UPON RESUMING AT 3.41 PM: | ||
|
Company PLC (Paringa) issued a summons out of the
Supreme Court of South Australia directed to North
Flinders Mines Limited (NFM), its sharebroker and
certain of its directors as defendants. Paringa
thereafter delivered its statement of claim.
Paringa alleges that the defendant directors on
19 September resolved to implement a three part
proposal, consisting in -
(1)
a Part Coffer by NFM for all the fully paid ordinary 10 cent shares in ADL for a consideration
of $2.75 per share, the offer to remain open forone month;
(2) in order to fund the offer, the issue to shareholders
of NFM of a non-renounceable right to the issue of
two shares at $5.50 each with two attaching options
at $1.00 each for every three ordinary shares held
at 14 October 1988, the closing date for receipt ofacceptances being 4 November 1988; and
(3) a Part A offer by NFM for all the issued capital of Paringa for a consideration of two NFM shares
for every seven Paringa shares, the offer toremain open for a minimum period of one month.
SlT8/1/RB 105 17/10/88 Paringa(2) Paringa alleges that it was the beneficial owner of 49.9 per cent of the issued capital of NFM but the directors of NFM who were Paringa's "nominees to the
Board of Directors of NFM" had no knowledge that the
proposal was in contemplation prior to a meeting of
the Board on 19 September. Paringa alleges that the
-Gefendant directors who passed the resolution to
implement the proposal on 19 September acted in breach
of their duty to act bona fide in the best interests
of NFM as a whole. Paringa claimed, inter alia, aninjunction restraining the defendants from taking steps
to implement the proposal.
On 23 Sepember Mr Justice Legoe granted an
interim injunction tmtil midnight on 28 September on an
ex parte application by Paringa. The defendants applied on Tuesday, 27 September, to have the ex parte
injunction dissolved but the application was refused.
However, His Honour made an order varying the injunction
and extending it until midnight on 29 September.
The injunction was subsequently extended until midnight
on Friday, 30 September. But on that day His Honour refused to continue the injunction until the hearing or determination of the action, though he fixed 11 October
as an expedited date of trial.
In refusing the interlocutory injunction,
Mr Justice Legoe said:
I simply wish to say that having given serious
consideration to the main factual matters and
the principles in the cases I have come to theconclusion that I should not grant the interlocutory
injunction. It has been a difficult decision to
make because there are a number of aspects about the
case which have caused me or given me cause rather
to give considerable thought as to how the serious
issue is to be analysed and thus articulating forthe purposes of the appliation for an interlocutory
injunction. When one considers the issue or issues
and there are issue or issues between the parties,
Chief Justice of the High Court in the QUEENSLAND V certainly, it seems to me that the approach of the THE COMMONWEALTH case, referred to by Mr Morecombe
is a principle which has, shall I put it, tipped
the balance on the overall question that I have
to consider. This is not the same case, of course,it's substantially different. When one looks at the two principle matters in combination, namely the serious question to be tried and the balance of convenience, I have not been able to persuade
myself that I should make the order. Paringa, apprehensive that irremediable damage
would be done to its interests during any gap in the
injunctive protection it was seeking by reason of
SlT8/2/RB 106 17/10/88 Paringa(2) receipt of acceptances of the Part Coffer, sought
an injunction pending the determination of an appeal
to the Full Court of the Supreme Court against the
refusal by Mr Justice Legoe to grant an interlocutory
injunction. On Saturday, 1 October, Mr Justice von Doussa -_granted a limited injunction until 5 October, giving
liberty to apply for its earlier dissolution or
continuance. Late in the afternoon of Monday,
3 October, Mr Justice Legoe dissolved that injunction.
His Honour said:
In my judgment the matters that are
appropriate to consider for the purposes of extending
or granting an injunction until the hearing of the
appeal are synonymous with the matters that were
extensively canvassed and upon which very erudite
submissions were made for the whole of last
Friday ....
As I consider the issues to be synonymous,
I accordingly indicate that in my view I have exhausted my functions for the purpose of determining whether I should exercise a
discretion to extend the injunction. Admittedly
last Friday that was for the purpose of grantingan injunction until trial, that is to ~ay, until
judgment, whereas the matter that was being
considered by my brother von Doussa on Saturday
night and is accordingly before me this afternoon,
is to consider whether the injunction, or whether
an injunction should be granted until the disposalof the appeal. But the appeal could not be heard now
until early next month. I don't know and I could not forecast what stage the trial would have
reached by the time that appeal would be heard but
it is quite clear in my mind that a substantial
amount of factual material and all legal
submissions would have been ventilated in open court.
In the light of all these circumstances it
seems to me that it is totally inappropriate to allow the injunction to stand and I have not
mentioned, although I hasten to add that I am not
unconscious of the fact, that we have now reached
the stage where the Part Coffers have been
dispatched I understand sometime between Fridaynight and Saturday high noon, round about that
time, and that the processes of the coding have
now been put into operation and that, therefore,
very serious questions relating to the balance of
convenience are even more apt in consideration of
the present stage that we have reached and what
should be done in relation to holding or freezing
the situation, that is to say, in granting of anyfurther or other interlocutory or even interim
injunction.
SlT8/3/RB 107 17/10/88 Paringa(2) That be:i.ng., the~ case I grant the application for dissolving the injunction that was granted on
Saturday night.
His Honour's understanding that the appeal could
not be heard until November was confirmed to Paringa's
-a~visers by the Chief Justice. The FUll Court's list for October was full. The Chief Justice further informed Paringa's advisers that the Full Court could
not entertain an application for interim relief pending
the appeal and directed that all interlocutory
injunctions should be heard by Mr Justice Legoe who
was to preside at the trial.
The next day, 4 October, between 9 am and 11.18 am,
approximately 4.4 per cent of the shares in ADL the subject of the Part Coffer were sold to NFM. That
morning Paringa made an application to this Court for
special leave to appeal against the orders made by
Mr Justice Legoe on 30 September and 3 October and
against the Full Court's refusal to entertain either
an application for an expedited hearing of Paringa's
appeal to the Full Court or an application for an
interim injunction pending the hearing of that appeal.
At 11.00 am on 4 October Justice Wilson granted an
ex parteapplication for an interim injunction pending
an inter partes hearing on 6 October. Justice Toohey
heard the parties on 6 and 7 October. His Honour
reserved his decision and the injunction was extended.
On Tuesday, 11 October, the trial connnenced before
Mr Justice Legoe. Justice Toohey was to announce his
decision in Canberra that afternoon. That morning,
senior counsel for Paringa sought an injunction from
Mr Justice Legoe to cover the period of the trial.
It was said that further material supporting the
grant of an injunction had appeared on discovery. The argument proceeded until the luncheon adjournment at
1.20 pm. Before adjourning, His Honour said:
I have entertained your submissions now for, I
but I suppose it is the best part of an hour, but don't know how long you have been on your feet whatever it is I have got the point, I understand what you are getting at and I am not satisfied they raise new issues, even the Panfida
order, which would warrant me in delaying any
further the connnencement of these proceedingsand I so rule without giving any further reasons. That is my ruling.
After the luncheon adjournment, counsel for Paringa
informed His Honour that Justice Toohey was to deliver
his decision in Canberra at 4.30 pm that afternoon, that
the application for special leave to appeal would be
listed for hearing on Friday, 14 October, and that
SlT8/4/RB . 108 17/10/88 Paringa(2) Justice Wilson would be available to entertain an
application for an interim injunction until the Friday afternoon. Counsel then renewed Paringa's application to Mr Justice Legoe for an interim injunction until
Friday, the 14th. This exchange occurred:
HIS HONOUR: I know but you are going to ask Wilson J. to do that this afternoon. What is the
point in my entertaining an application or even
hearing. Surely the ball is in the High Court now. MR LANDER: In the event that Your Honour made
that order there would be no necessity to make
an application to Justice Wilson.
HIS HONOUR: You have already said that once. MR LANDER: Well, I do apply for Your Honour to
make that order.
HIS HONOUR: The application is rejected.
Following Justice Toohey's refusal of the
injunction and pursuant to a suggestion made in
His Honour's reasons for judgment, Paringa renewed its
application to Mr Justice Legoe for an interim
injunction. The application was refused, evidently on the ground that it did not raise a new issue.
After Justice Toohey refused injunctive relief in
this Court, Justice Wilson on 12 October granted a
further interim injunction until Friday, 14 October.
We extended that injunction until today.
In the ordinary case, it would be most inappropriate
for this Court to entertain an appeal from the refusal
of an interlocutory injunction by a court of trial.
Several considerations make it inappropriate. In the
first place, such an appeal would produce a confusing
division of judicial control over the proceedings.
Next, the questions whether there is a serious issue to be
tried, where the balance of convenience lies and what should be done to preserve the status quo could seldom
give rise to a point of principle which would warrant
the intervention of this Court. In cases relating to
acquisition of shares, the exigencies of the market may
frequently require such a speedy determination of an
application so as to preclude the nice examination of the
facts which a court ordinarily undertakes. And, where
an interlocutory order does not determine the rights
of the parties, the order would usually be an exerciseof discretion on a point of practice or procedure.
In ADAM P. BROWN MALE FASHIONS PTY LTD V PHILIP MORRIS INC.,
(1981) 148 CLR 170, at pages 177, 180, a case relating
to an interlocutory undertaking, this Court repeated with
approval what Chief Justice Jordan said in a well-known
SlT8/5/RB 109 17/10/88 Paringa(2) passage in IN RE THE WILL OF F.B.GILBERT (DEC),
(1946) 46 SR(NSW) 318, at page 323:
upon interference with the orders of
I am of opinion that, ... there is a material not kept
difference between an exercise of discretion on
a point of practice or procedure and an exerciseof discretion which determines substantive rights.
Judges of first instance, the result would be
disastrous to the proper administration of
justice. The disposal of cases could be delayed
interminably, and costs heaped up indefinitely,
if a litigant with a long purse or a litigious
disposition could, at will, in effect transfer
all exercises of discretion in interlocutory
applications from a Judge in Chambers to a
Court of Appeal.
These considerations weighed strongly with Justice Toohey, and rightly so, in the judgment which he delivered on
11 October.
In general, the orderly administration of justice
would be impeded if this Court intervened in interlocutory
proceedings in a matter pending in a court of trial. It
is the responsibility of a court of trial to determinethe course of interlocutory proceedings, subject to
appeal to the relevant intermediate appellate Court.
In this case, an appeal lay as of right to the Full
Court of the Supreme Court of South Australia from the
order made by Mr Justice Legoe on 30 September refusing
an interlocutory application: SUPREME COURT ACT 1935 (SA), section 50(3)(b)(iii). That appeal was not without
prospects of success, for the case which "tipped thebalance" in His Honour's thinking (QUEENSLAND V
COMMONWEALTH (1988) 77 ALR 291) was an unusual case
involving a contest between governments about
Australia's performance of its obligation·s under an
international convention. The case presented issuesvery different from the issues which arose for
determination in the present case. And it is by no means clear that His Honour had posed for himself the
relevant question: was there a serious issue to be
tried? Although His Honour expressly referred to the
existence of a serious issue to be tried and the balance
of convenience, his reliance on QUEENSLAND V COMMONWEALTH
suggests that he was putting some gloss on the first ofthese elements by requiring Paringa to establish a
clear and strong case for interlocutory relief.
Mr Castan, QC has submitted that Mr Justice Legoe's
reference to QUEENSLAND V COMMONWEALTH should be understood
as a reference to the principle in CASTLEMAINE TOOHEYS
LTD V SOUTH AUSTRALIA, (1986) 161 CLR 148. According
to Mr Castan, QC, the true explanation is that
Mr Justice Legoe rejected the application because he
SlT8/6/RB 110 17/10/88 Paringa(2) gave primary weight to the "public interest" of the
4500 shareholders in ADL who were not parties to the
proceedings. Part II of the Code, so the argument ran,is a complete "code" of protection for shareholders.
The argument was developed and refined in the submissions
-of Mr Heerey, Qc and Mr Archibald, QC to the point
where it was suggested that section 17(2A) of the
COMPANIES (ACQUISITION OF SHARES) (SOUTH AUSTRALIA)
CODE conferred a statutory vested right on ADL
shareholders to accept the offer for their shares.
It is not necessary for us to determine the effect of
Part II. But it is clear that the statutory provisions
do not oust the jurisdiction of the Court in appropriate
cases to grant relief moulded to leave the operationof the Code intact. An injunction in the form granted
by Justice Wilson does not affect the operation, if any,
which Part II may have in this case.
It is perhaps possible that Mr Justice Legoe had
it in mind that damages would be an adequate remedy.
However, when we bear in mind that Paringa's complaint
was that the decision of the NFM directors to make the
Part Coffer was oppressive to Paringa, it seems scarcely
likely that His Honour would have concluded that
damages would afford an adequate remedy to Paringa.
Although Mr Justice Legoe exercised a discretion,
it is at least arguable that the refusal of an
interlocutory injunction would allow NFM to implement
its three part proposal and might thereby preclude the
grant by the Court of the substantive relief sought
by Paringa if it should be found entitled to the relief
claimed at the conclusion of the trial. In this
respect it is at least arguable that the refusal of
interlocutory relief amounted to something more than
a decision on a mere matter of practice and procedure.Moreover, as Mr Justice Legoe did not advance any
explanation for his conclusion that Paringa had failed
to show that there was a serious issue to be tried,
it was a case in which Paringa was fully entitled
to exercise its right of appeal to the Full Court. The Full Court of the Supreme Court of South Australia was unable, because of pressure of business,
to hear the appeal. In that situation, it was incumbent
on the Court - that is, the Supreme Court - properly to
consider Paringa's application to grant an injunction
pending the determination of the appeal.
Although the judge appealed from has jurisdiction
to maintain the status quo pending an appeal, that
jurisdiction is concurrent with the jurisdiction of the
appellate court to grant similar relief as an incident
of its substantive appellate jurisdiction: cf JENNINGS
CONSTRUCTION LTD. V BURGUNDY ROYALE INVESTMENTS PTY LTD
[No 1], (1986) 161 CLR 681. We shall assume without
SlT8/7/RB 111 17/10/88 Paringa(2) deciding, because we have not heard argument on the point,
that the appellate court's jurisdiction may be exercised
(subject to the appropriate rules) by a single judge of
that court (cf. section 48 of the SUPREME COURT ACT)
but it is not satisfactory to leave to the judge whoseorder is under review the exercise of the appellate
-discretion to grant or refuse the injunction pending
the appeal, especially when a refusal is said practically
to preclude the granting of the substantive relief claimed
in the action. The judge appealed from is necessarily disadvantaged when it comes to an evaluation of the
strength of the appellant's attach on the judge's
original exercise of his discretion. So it was in the present case. Mr Justice Legoe, when he dissolved the injunction granted by Mr Justice von Doussa,
perceived the issues which then fell for determinationto be "synonymous with the matters" canvassed on the
original application for an interlocutory injunction.
This view was incorrect, as Justice Toohey has
pointed out. Mr Justice Legoe should have been concerned not only to evaluate the argument against his original
decision but also to inquire whether refusal of interim
relief would have rendered the appeal nugatory.
The result is that the appellant to the Full Court
has been denied the independent consideration of
its application for an injunction pending the appeal
to which it was entitled. So long as the direction restricting the making of interlocutory applications to Mr Justice Legoe alone remains, the Supreme Court will disable itself from independently considering
that application. This is therefore an extraordinary
case but it will cease to be so once the implication
of the disabling procedure adopted in the Supreme Court
is noted. In the meantime, it is necessary for this
Court to make an order which will reserve to the
Supreme Court an effective jurisdiction to determine
what should be done.
It is not necessary to examine the facts of the case to review the order made by Mr Justice Legoe
on 3 October. His Honour failed to evaluate the strength of the appeal against his refusal of an injunction on
30 September. As no appeal against the order of
3 October will be heard by the Full Court, it is
appropriate to grant special leave to appeal from that
decision to this Court in the interests of the
administration of justice (JUDICIARY ACT 1903 (CTR),
section 35A(b)), to allow the appeal instanter and,in
lieu of the order appealed from, grant an injunction in
the terms of the injunction granted by Justice Wilson
until Paringa's appeal from the order of
Mr Justice Legoe of 30 September is heard and determined
or until further order of the Full Court or of a judge
of the Supreme Court of South Australia (other than thejudge appealed from) or until the expiration of
SlT9/l/RB 112 17/10/88 Paringa(2) 24 hours from the delivery of judgment at the trial,
whichever is the earliest. All other applications for
special leave are refused. The matter is otherwise remitted to the Supreme Court of South Australia.
MASON CJ: Now, Mr Gray, can you give the undertaking to which --the Court has referred and which you say you are authorized to give on behalf of your client?
MR GRAY: That is so, if the Court pleases.
MASON CJ: Thank you. Now, Mr Castan and those who are with can you?
you, you cannot resist an order for costs, can you?
MR CASTAN: No doubt Your Honour would hear me. MASON CJ: Certainly.
MR CASTAN: I was going to raise the question that it is a matter which is in truth still part of an on-going
proceedings which might ordinarily be treated as a
matter that would become costs of the cause.
MASON CJ: But we do not make orders for costs so that they
become costs in a cause proceeding in a supreme court.
MR CASTAN: Ordinarily, of course not, Your Honour. I simply refer to the rather exceptional way in which this
matter has come. I would not put it any higher than
that, Your Honour, but it is, as Your Honour perhaps
has said, a rather extraordinary circumstance.
MASON CJ: Yes. Does anyone else want to say anything on costs for the respondents?
MR HEEREY: No, Your Honour. MR ARCHIBALD: No, Your Honour.
MASON CJ: We need not trouble you in response to that submission, Mr Gray. Paringa is entitled to its costs of and incidental to its successful appeal to this Court
including reserved costs. No order is made as to the costs of the various applications in the supreme court.
Now, perhaps there is one other question and that
is the question of service of notice of the injunction.
I take it, Mr Castan, that there is no difficulty about
acknowledging that there is no need to actually serve
the respondents with notice of the injunction?
MR CASTAN: That is correct, Your Honour.
SlT9/2/RB 113 17/10/RB Paringa(2)
MASON CJ: And does that go for the clients of Mr Heerey and
Mr Archibald as well?
MR HEEREY: That is so, Your Honour. MR ARCHIBALD: Yes, Your Honour. MASON CJ: Very well, I think that concludes the matter. AT 4.05 PM THE MATTER WAS ADJOURNED SINE DIE
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