Paringa Mining & Exploration Company Plc v North Flinders Mines Limited

[1988] HCATrans 220

IN THE HIGH COURT OF AUSTRALIA

Registry No Cl6 of 1988

Between-

PARINGA MINING & EXPLORATION

COMPANY PLC

Applicant

and

NORTH FLINDERS MINES LIMITED,

C.L. MAY MELLOR LAING &

CRUIKSHANK LIMITED,
GEOFFREY HUGH STEWART,
JOHN JOSEPH den DRYVER,

CLEMENS FREDERICK WEGENER,

PETER RICHARD MITCHELL,

DEAN WILFRED HOSKING

Respondents

Application for interim injunction

Paringa

WILSON J

( In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 4 OCTOBER 1988, AT 9.36 AM

Copyright in the High Court of Australia

C3Tl/l/RB 1 4/10/88

MR D. GRIEVE, QC:  May it please Your Honour, I appear with

my learned friends, MR B. LANDER, QC, and

MR C.N. BAGOT, for the applicant. (instructed by

Piper Alderman).

HIS HONOUR:  Yes, Mr Grieve.

MR GRIEVE:- Your Honour, we seek ex parte injunctive relief

and, additionally, leave to file an application for

special leave to appeal which would, we assume, if

granted, come on at some later time.

HIS HONOUR:  Why do you need leave to file an application

for special leave?

MR GRIEVE: Well, I suppose Your Honour's question is well put,

if I may say so.	On reflection, perhaps we do not
need that leave.

HIS HONOUR:	No.
MR GRIEVE:	But at all events - - -
HIS HONOUR:	Has any application been filed yet?
MR GRIEVE:	Not yet, it is in the course of being copied and,

in a mechanical sense we are in a position to do

that during the course of the morning and we offer

any undertaking that is appropriate to that effect.

HIS HONOUR:	Yes.
MR GRIEVE:	Your Honour, the urgency of the matter may only be

appreciated having regard to the somewhat complex

facts and if I may endeavour to outline them very

briefly, the applicant, Paringa, holds in round

terms 49 per cent of the issued capital of

North Flinders Mines Limited. It acquired that

holding in corrparatively recent times by way of an

acquisition from AGL. Immediately following that

acquisition Paringa approached the directors of

North Flinders Mines with a view to having its

nominees appointed to the North Flinders board,

commensurate with its shareholding.

That approach, as events have transpired, was

effectively met with a plan which was the subject of

consideration at a board meeting of North Flinders

on 19 September. The plan, in our submission,

is an elaborate scheme devised with the .avident

objective of diluting Paringa's controlling interest
in North Flinders and each of its component parts

are in that sense interlinked and interdependent.

(Continued on page 3)

C2Tl/2/VH 2 4/10/88

Paringa
MR.GRIEVE (continuing): The plan involves these essential

steps: North Flinders makes an on-market part C

takeover offer for a company called Australian

Development Limited, to which we will refer, for

convenience, as ADL . That offer is for the whole

0£ ADL's capital, the offer being, as we have

mentioned, an on-market part C offer. To all

intents and purposes, therefore, it is an

unconditional offer and North Flinders is bound to take up such shares as are made available to

it in pursuance of the offer.

The offer price for ADL is $2.75 cash per share.

ADL's capital is some $38.7 million shares and, thus,

as a matter of arithmetic, the North Flinders' offer,

if totally successful, would cost it some $106 million-
odd and, obviously, if it is less than totally successful,

then the cost will be whatever proportion of that figure

as equates to the measure of success. Now, that is

the first component of what we contend to be this

overall plan.

The second component is that the bid for ADL is

to be financed by North Flinders by making a

non-renouncable rights issue to its own shareholders

on the following footing. Each North Flinders'

shareholder will have the right to take up two fully
paid 20 cents share for every three shares which he

holds at a premium of $5.30, ie, total acquisition

price $5.50. Each shareholder may, in addition, take

up options to acquire two additional shares for every

three that he holds, the price per option being

$1.00 and the exercise price being $5.50, the

period of exercise three years.

Now, it may be perceived that if Paringa does

not exercise its rights - and the rights are
non-renouncable - then its equity of 49 per cent-odd

will thereby be diminished. Now, the rights issue

is open for acceptance as from - or is to be open for

acceptance as from 14 October - - -

WILSON J:  If Paringa does not exercise its rights and it is

non-renouncable, what is the effect of the - the

shares simply are not taken up?

(Continued on page 4)

C3T2/l/SH	4/10/88
Paringa

MR GRIEVE: Well, they can be placed. There is a provision

in the arrangement whereby North Flinders reserves
the right in the event that any shareholder or
shareholders decide not to take up their rights

then the board may place those shares:elsewhere.

So there is a twofold threat to Paringa. Now,

the object, as stated by North Flinders,of this

rights issue~ is to finance the bid for ADL, and

it is of significance that no other purpose or

object is ascribed by North Flinders to that issue.

There is no statement anywhere in the evidentiary

material that has been filed to the effect that shares and if all the options are taken up it
North Flinders needs the capital for purposes other
than the ADL bid .. but; as a matter of arithmetic,
if the rights issue is fully subscribed North

will obtain a further $24 million-odd for the $1.00

per option component, thus it will receive in all

something in the order of $158 million-odd. And

as we say, that is for the espoused purpose of

financing the ADL bid which, at maximum, cannot

cost North Flinders any more than $106 million.

If the ADL is wholly successful it will not cost
North Flinders more than $106 million-odd.

The position is further compounded if the options are all taken up and in due course exercised,

in that that would involve North Flinders in the

further receipt of some $134 millionaodd. In that

event North Flinders total receipt would be in
excess of $290 million-odd, in short, almost three

times what it would need to fund its bid for ADL.

As we have put there is no explanation offered at

all as to what is intended to be done with the

surplus cash. Now, again as a matter of arithmetic,

if the rights issue is taken up by all of the

North Flinders shareholders, other than Paringa,

Paringa's equity in North Flinders will reduce

from some 49 per cent - almost 50, in fact, 49.96 -

to approximately 37 per cent. (Continued on page 5)

C3T3/l/MB	4	4/10/88
Paringa

MR GRIEVE (continuing):  On the other hand, of course, for

Paringa to take up its rights issue it would

cost Paringa some $87 million°-odd. Now Paringa' s equity would be further diminished if the options are taken up by all other shareholders and it

would slip back, as it were, to a little less

than 30 per cent to some 29 per cent-odd. And

if in the ultimate result the shares that were,

as it were, offered to it in the rights issue

were placed by the board elsewhere, Paringa's

equity would go down to approximately 20 per cent.

Now, those figures are, of course, all variable

depending on the degree of participation of the

shareholders in the rights issue. But having

exposed the plan thus far, in our submission the following questions immediately crop up. First, is the price of $2.75 for the ADL shares

at all realistic? There has been filed a volume

of expert evidence on Paringa' s . behalf, not the
subject of any substantial response no½ we would

ultimately submit, particularly cogent response

to the effect that it is on any view manifestly

excessive having regard to ADL's assets.

I should, Your Honour, digress for a moment

to mention that North Flinders, as its name suggests, is

a mining company; it has an operating gold-mine

in the Northern Territory and it is a successful

gold-mine, so much so that the company pays dividends
and the like. ADL is also a gold-mining company

and it too has a gold-mine in the Northern Territory.

It would appear from what has been said on behalf
of the defendants in the proceedings that North

Flinders would argue that its decision to acquire

ADL is a justifiable commercial decision having

regard to the compatibility of the two companies

mining interests.

We would pro tern, in all events, respond

a consideration or an evaluation of ADL from	to that by saying: "Very well, that warrants
the viewpoint of its net tangible assets and not from the viewpoint that may be taken if one were a share trader or the like seeking to make
a short or medium te~m speculative gain having
regard to the prevailing market price." In other
words in evaluating ADL one should put to one
side the share market price and look predominantly
at the net asset backing value.

(Continued on page 6)

C3T4/l/AC	5	4/10/88
Paringa

MR GRIEVE (continuing):  Now, our experts express a variety

of opinions on that subject and in sum they come

to the result that on that approach ADL could not be

said to be worth more than somewhere in the region

of a $1.00 to $1.50 per share. In other words, viewed

that way, the offer of $2.75, to put it colloquially,

is way over the top. Now a consideration of the

ADL offer price must also be influenced, in our

submission, by the very substantial fact that ADL's

capital, as to 55 per cent-odd, is held by Poseidon.

Now it would appear, and we respectful submit it to·

be so, rather incongruous for an unconditional

on market part C bid to be made for the whole of the company's capital when more than halt of that

capital is in the hands of one party a.nd when,

as here, that party has indicated that it wishes to
reserve its decision as to what it intends to do

in relation to the bid. In short, Poseidon has

said, we are not saying that we will accept, we are

not saying that we will reject, we are holding our hand.

We will make our decision in the due course of time.

That is their publicly stated position.

Now, the experts that we have gatliered_ together charge

that the $2.75 is a price that contains, what in

broker's language is a premium for control and it

operates against a market background where pre-offer

last sales were in the region of $2.40. And our

charge is that it is incongruous, to say the least,

to offer a premium for control, when control is

demonstrably in the hands of one party, Poseidon,

who has reserved its position. And that in effect,

raises the second question in relation to the ADL

offer:  can the bid, having regard to those expressions

of expert opinion, and having regard to the fact

that 55 per cent of ADL is held by Poseidon, be

said to be commercially realistic, prudent and

critically a proper exercise of the powers of the

directors of North Flinders.

(Continued on page 7)

C3T5/l/SR	4/10/88
Paringa

MR GRIEVE (continuing): We, of course, charge - and it is

fundamental to our case - that this plan, of

which we have mentioned two elements, is vitiated

by a collateral purpose on the part of the

defendant directors, namely the purpose of diluting

Paringa's equity in North Flinders, and is

· incapable of explanation and justification on

any proper basis to the effect that the price
payable for ADL under the offer is a proper price

having regard to ADL's true worth as a gold-mining

company.

We would go on to add, of course, the plan

is inexplicable on the footing that, as devised,

it contemplates the possibility, at least, of

North Flinders obtaining substantially more cash

for capital than it could conceivably require

for its stated object of taking over ADL.

Your Honour, there is a third element in the

plan and that is that North Flinders has made

a bid for Paringa itself and that is on a share

for share basis.

The experts tell us that that bid values Paringa in the order - I think from memory -

of $1.50 or $1.60 and that fact has to be taken

into consideration in the light of the event

that apparently brought all this about, namely

the acquisition of the interest in Paringa from

AGL. That acquisition was by a company under

the control of another company called Genoa and
involved Genoa's purchase from AGL of the latter's

shares in Paringa at a price of $3.10.

It can be reasonably inferred from that,

we submit, that having acquired shares in Paringa

for $3.10, it is scarcely likely that Genoa will

be interested in a share for share bid at the
suit of North Flinders when that share.for share

bid values the Paringa shares at some 50 per cent

or so of what has been paid for them, but if

the North Flinders' bid for Paringa does proceed,

and if the shareholders or any number of them

in Paringa accepted, then again, as a matter

of arithmetic, that will operate to water down

Paringa's interest in North Flinders.

(Continued on page 8)

C3T6/l/ND	7	4/10/88
Paringa

MR GRIEVE (continuing):  Now, that is a very brief outline,

if I may say so,	no doubt an unduly brief outline
of the facts.	How we come to be here is that there

was an application to Mr Justice Legoe of the

Supreme Court of South Australia for injunctive relief. That application was entertained by

His Honour ex parte on Friday week last, ·and

His Honour granted relief pro tern.

HIS HONOUR:  What date was that, Friday week - - -

MR GRIEVE:  Friday week, 23 September. The matter

was made returnable on the following Wednesday,

28 September, when the proceedings continued

inter partes and various attempts were made on the
part of the defendants to persuade His Honour to

dissolve the injunctions. Those proceedings continued

on the Thursday, 29th, and Friday, 30 September, when

after some consideration Mr Justice Legoe determined,

in the exercise of his discretion, we would be submitting for wrong

reasons, and we can develop that in a moment, that he should not allow

the injunction to go further and he dissolved it.

The next step was an application by Paringa to

Mr Justice von Doussa on Saturday, l October,
Mr Justice Legoe apparently being unavailable, for injunctive relief pending the hearing of an appeal against Mr Justice Legoe's decision to dissolve the

injunction. Mr Justice von Doussa entertained that

application and, on the evening of Saturday last,

granted certain limited injunctive relief until 6.30 pm

this coming Wednesday, that is tomorrow, 5 October.

Mr Justice von Doussa apparently, and we submit

correctly - - -

HIS HONOUR:  I take it that was not related to the hearing of

an appeal from the decision of Mr Justice Legoe.

MR GRIEVE:  Yes, it was, Your Honour. I am sorry, I did not

put that well.	Mr Justice von Doussa's order on
Saturday last was made until tomorrow, but was

predicated on the footing, and indeed an undertaking

was extracted, that Paringa would appeal from

Mr Justice Legoe's decision, and the principle that was

invoked before Mr Justice von Doussa, and in our

submission correctly applied by His Honour, was the

principle recognized by Mr Justice Megarry in the

ERINFORD PROPERTIES case, (1974) Ch D 261, where,

in substance, His Lordship said that it is within the

power and jurisdictional authority of a single judge

to grant an injunction pending an appeal, and that

power should, in the ordinary course of events be

exercised if it may be seen that, absent such interim

relief pending the appeal, the appeal could prove to

be nugatory, or any success, rather, of an appeal,

could prove to be nugatory in the hands of the appellant.

C3T7/l/HS	4/10/88
Paringa

MR GRIEVE (continuing): Now, Mr Justice von Doussa reserved to

all parties licerty to apply in relation to the order

that he had made on Saturday, 1 October.

North Flinders and certain other parites invoked that

liberty by returning to Mr Justice Legoe yesterday

afternoon. But before we come to that, could we just

· -mention a further sequential development? Pursuant

to the undertakings given -

HIS HONOUR:  But I am still not clear - why was the 30th -

the Wednesday, tomorrow, specified by

Mr Justice von Doussa? Was it contemplated there

would be a hearing on notice on the question of an

interim injunction?

MR GRIEVE:  His Honour obviously did contemplate that the

defendants would, in all. likelihood, invoke the liberty

to apply that he had reserved to come back.

HIS HONOUR:  Your application was ex parte to - - -

MR GRIEVE:  Yes, it was. I am sorry, I stand corrected.

Our application on the Saturday was indeed inter partes.

HIS HONOUR:	Was it?
MR GRIEVE:	But what His Honour did, not being especially

familiar with the matter and having a real limitation

of time running against him, was to accede to

Paringa's application for relief pending the appeal in a limited way, both as to time and as to terms. And, as to time, we have mentioned that His Honour's order ran till 6.30 on the following Wednesday, and

not beyond, subject, of course, to its extension and,

as to terms, His Honour's order was limited to

restrain action in relation to the part C bid for

ADL. Paringa had, in fact, sought, as it now seeks,

wider relief restraining action in relation to the
rights issue and in the relation to the bid for

Paringa itself.

Mr Justice von Doussa thought it appropriate to,

back to Mr Justice Legoe, who was seized of it in

as it were, hold the fort by making the limited order
both as to t~me and as to terms in the likelihood

that the matter would either find its way to the Full

greater detail than Mr Justice von Doussa. We say

"in greater detail," as to facts His Honour had the

opportunity of considering some of the evidence.

Now, the next development, Your Honour, was on the

Monday morning, yesterday morning, when an application

was made to Chief Justice King for an early hearing

of the Paringa appeal.

C3T8/l/VH	9	4/10/88
Paringa

MR GRIEVE (continuing):  The Chief Justice indicated that the

Full Court was fully committed in its present sittings,

which apparently commenced yesterday and are to run

for a week and a half, and that in that light it

was not possible for the Full Court to do anything

more than indicate that the appeal could at best

find its way into the November sittings. Now, the

next step, as we foreshadowed, was that the defendants

then invoked the liberty to apply, reserved by

Mr Justice von Doussa and applied yesterday

afternoon to Mr Justice Legoe to the effect that

His Honour should dissolve, Mr Justice von Doussa's

orders and leave Paringa without any injunctive

protection at all in the ensuing term.

Mr Justice Legoe was persuaded to do just that

and His Honour so ordered at approximately 5.30 pm

yesterday evening. Mr Bagot then contacted the

appropriate administrative officer of the

supreme court who in turn was in contact with

the Chief Justice with a view to seeking relief

on an urgent footing from the Full Court. The

response to that, via the administrative officer,

was that the Full Court would not entertain any

application, having regard to its appellate

commitments and that Paringa need not, as it were,

apply.

Now, having said all that, Your Honour, the

questions of general importance that arise, and that we

would be seeking to ventilate. on the application

for special leave are, first, qua Mr Justice Legoe's

decision of yesterday afternoon, as it v;rerei rescinding or

dissolving Mr Justice von Doussa's orders, was

His Honour wrong in implicitly refusing to apply the principle applied by Mr Justice Megarry in

the ERINFORD case. His Honour approached the
question by saying that the issue before him

yesterday afternoon was precisely the same issue

as was before him on the preceding Friday. He

expressed that by saying that the issues were

synonymous.

Now, it is our contention that by putting it

that way he implicitly refused to apply the approach

taken by Mr Justice Megarry, namely, that the

question of whether or not a party who had

unsuccessfully sought interlocutory relief should

nevertheless have some interim relief pending an

appeal, is essentially whether or not a successful

result in that appeal would, in the particular

circumstances, prove to be potentially nugatory.

C3T9/l/MB	10	4/10/88
Paringa

MR GRIEVE (continuing): And that, in our submission, 1s

quite a different question altogether from the

question that arises on an application for

interlocutory relief, namely, whether or not

the plaintiff has made out a case that there

is a substantial question to be tried and whether

or not the balance of convenience favours the

restoration of the status quo by injunctive relief.

Those are issues which are, in our submission,

quite distinct and different from the issues

that arise if the ERINFORD formula is correct

and we respectfully submit it to be.

The second question on the leave application

which will arise in due course, and which we

will submit to be a question of general importance,
concerns the Full Court's view of the matter.

Shortly stated - and we, of course, intend no

disrespect at all - but shortly stated it is

the applicant's contention that it has been the

subject of a curial lock-out. And the question

that arises from that, if we may venture to formulate

it here and now, is whether or not it is the

duty of a court of record, a court of superior

jurisdiction such as the Supreme Court of

South Australia, whether personified by a single

judge or whether sitting in bane, the question

is whether or not such a court has a duty to

make available its facilities for granting equitable

relief in a case of substantial importance - and

one can measure "substantial importance" in our

submission in monetary terms if none other -

where_ it can be arguably demonstrated that absent

some equitable relief the plaintiff will suffer

irreparable and considerable harm.

One can formulate that question in a variety

of ways but the alternative way of putting it
is whether or not it is within the proper function

of a superior court to decline to make its facilities

for equitable relief available in a case of

substantial urgency and importance simply because

it has, as it were, prior commitments which on

any view can and, perhaps in a particular circumstance,

should be adjusted. Now, in our submission,

those two questions - the question concerning the ERINFORD principle and the question as to what, if any, is the duty of a superior court

to make its facilities for justice available are

substantial questions of general public importance

and would warrant the grant of leave. That is

a matter of course that we will have to develop

in due course.

C3Tl0/l/AC	11	4/10/88
Paringa

MR GRIEVE (continuing):  But if we may return for a moment

to the facts and to the need for relief that

we maintain, the outcome of the decision by

Mr Justice Legoe to dissolve Mr Justice von Doussa's

orders and in the same breath His Honour's decision

not to extend or enlarge the injunctive relief

·granted by Mr Justice von Doussa has, in simple

terms, cleared the way for North Flinders to

proceed with its bid for ADL and to proceed with

~ts bid for Paringa and to proceed with its rights

issue.

The most immediate of those three courses of action that it is now free to undertake is

the first of them, the bid for ADL. As we have

mentioned, that bid is an on-market bid and is

therefore capable of acceptance by any ADL shareholder

pursuant to section 17 of the COMPANIES TAKEOVER

CODE, simply by notice to any stock exchange

at which the ADL shares are being traded. The

stock exchanges, indeed, will have opened, at

least in Sydney and Melbourne, a matter of three-

quarters of an hour or so ago and the way is

clear for shareholders in ADL to accept the North

Flinders' bid and for all we know they may well

have been busily doing so in the last three-quarters

of an hour.

As each offer is accepted, Paringa's equity

is necessarily diminished. And that is why we

regret to have to trouble Your Honour on this

urgent basis.

HIS HONOUR:  That is only if Paringa does not take up the

rights issue, is it not?

MR GRIEVE:  That is correct, Your Honour, yes, but Your Honour

can be assured that it i~ practically speaking,

beyond Paringa's resources to do so. It would

cost Paringa in the order of $80 million to take

up its rights issue and it, in quite frank terms,

does not have the present wherewithal nor,

particularl½ the disposition to do so and its

consideration that it would not be in its interests

to do so derives from the belief which it holds

and it is a belief that is supported by a

substantial body of expert evidence that its

money would not be well spent by North Flinders

in acquiring the ADL shares at the 2.75 price.

HIS HONOUR:  Yes, well, I think you have said enough earlier

to indicate the outline of argument on that question.

C3Tll/l/ND	12	4/10/88
Paringa
MR GRIEVE:	Yes.	Now, Your Honour, the reason why it is

necessary for us to seek urgent injunctive relief

is simply that damages in a case such as this would

be by no means an adequate remedy. We, of course,

could, in theory, claim damages against North Flinders

but that, as it were, if I may use the vernacular,

-is biting the hand that feeds one, in the sense that

we are a substantial shareholder in that company and

it would be a case of having a company in which we are
a substantial shareholder diminish its resources by

paying money to us.

HIS HONOUR:	Who else could you have got damages from?
MR GRIEVE:	The only other person or persons from whom we could claim damages are the defendant directors of
North Flinders.
HIS HONOUR:	Yes.
MR GRIEVE:	But, Your Honour, the measure of damages, although

we have no knowledge of those defendant directors'

personal assets, would in all likelihood substantially

exceed their assets. The measure of damage - and it

is a difficult matter of calculation because it is so

dependent upon the decision-making processes and

activities of so many third parties, but the measure

of damages could well be as high as $60 million and

we are fairly confident in our belief that the

defendant directors could not collectively assemble

any such figure from their own resources by any stretch

on the imagination.

So, -Your Honour, it is a case, we submit, in

which absent sane injunction,. irreparable harm will almost
certainly ensue to Paringa. On the other hand, if one

may exhaust an analysis of the balance of convenience,

it is difficult, if not impossible, to say what great

prejudice or, indeed, what prejudice would flow to

North Flinders by a deferral of its bid for ADL.

HIS HONOUR: Well perhaps it may facilitate your task, Mr Grieve,

if I was to say that that might well be matter that

could be better explored on a inter partes hearing.

MR GRIEVE:	Yes, yes.
HIS HONOUR:	I have been glancing at the draft

order that has been placed before me here and it would

seem to suggest contemplation that I should here and

now grant special leave to appeal. You were not

expecting me to do that, though, I hope?

MR GRIEVE:	No, no.
HIS HONOUR:	Because that would be quite inappropriate.
MR GRIEVE:	No, I appreciate that, Your Honour.

C2Tl2/l/VH 13 4/10/88

Paringa	(Continued on page 13A)
HIS HONOUR:	The only issue, as I see it, which you can properly

bring to my attention, is a motion or an application

for an interim injunction.

MR GRIEVE:  Yes, Your Honour.

(Continued on page 14)

C2Tl2/2/VH	13A	4/10/88
Paringa

HIS HONOUR: 

I would think, in view of the complexity of

the matter and the possibility of the question
of convenience requiring to be debated, that it

should contemplate a hearing on noticeatsome time,

~erhaps, later this week.

MR GRIEVE: 

Yes, indeed.

HIS HONOUR: 

I would prepared, as at present advised, to

grant an interim injunction to some extent with

a view to permitting a hearing to take place,

if necessary, before another aistice, because I

am occupied on Thursday and Friday. But I would

hope it might be possible to have a hearing set

for 2.30 on Thursday.

MR GRIEVE:  Yes, we11would certainly meet. the Court's

convenience without - - -

HIS HONOUR:  It would not be necessary for it to proceed

before me if another Justice is available.

MR GRIEVE: No, quite. Your Honour, I should say, in fairness

to the draftsman of the document, that it was

prepared in the early hours of this morning and

I was fast asleep and I have made no contribution to

it, but we certainly have not sought special leave

from Your Honour he~e and now but we - - -

HIS HONOUR:  Well, unless there is some other matters

that you should direct my attention to perhaps we should go to the question of the order that

ought now to be made?

MR GRIEVE:  Yes. Well, Your Honour, the orders that we

seek, with respect, are those set out in the

paragraphs numbered 1.1 to 1.5, and if I can

characterize those orders in these terms. Orders 1.1

to -

HIS HONOUR:  The prefatory passage to paragraph 1 would

not seem to be appropriate.

MR GRIEVE:	No.
HIS HONOUR:	I would not want to be granting an interim -

the only basis on which this Court could grant

an interim injunction would be having regard to

the fact that an application for special leave

to appeal to this Court has been lodged or is

about to be lodged and we cannot be concerned with

the likely hearing of a Full Court appeal in

South Australia.

MR GRIEVE:  Indeed, we appreciate that, Your Honour. We

would protem, in all events, simply seek interim

relief until the return date inter partes and we

can take it on from there as to what the future holds.

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Paringa (Continued on page 14A)

HIS HONOUR:	But the basis and authority for the grant of any interim relief by this Court must be
dependency of an application for special leave to this Court.

(Continued on page 15)

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Paringa
MR GRIEVE:	Indeed, yes.	Your Honour, I understand, as I

mentioned earlier, that the papers, if not in a

form to be filed, are imminently to be in that form,

and we are, of course, prepared to offer to

Your Honour the undertaking that they will be filed.

HIS HONOUR:  I think it would be on the basis of an undertaking

on your part that the proceedings be instituted today.

MR GRIEVE:	Yes, certainly, Your Honour. That is given without equivocation. We also, of course, offer the
usual undertaking as to damages and, if I may address the particular orders; orders 1. 1 to 1.3 all relate
to the ADL bid.  The defendant C.L. May Mellor
Laing & Cruikshank Limited is the nominated broker for North Flinders in the sense that that company
stands in the market as the offeror on behalf of
North Flinders, and hence the need to entail it.
Order 1.4 deals with the rights issue, and order 1.5 deals with the North Flinders bid for Paringa, and
given that the scheme, as we contend it to be, is interlocked, it is our respectful submission that
if the Court is minded to make an order in relation to the part C offer for ADL, logically an order in
relation to the rights issue should also be made in that the rights issue has as its raison d'etre the
offer for ADL and nothing else.
HIS HONOUR:	Yes, it is more difficult to link in the offer

for Paringa:

MR GRIEVE:  It is a little more difficult, yes, although we

do sa~ that in the events that have happened, and in

particular in the timing of the events that have

happened, it is difficult, if not impos~ible,to say

that that does not have its place in the overall

scheme and its role as directed towards the dilution

of Paringa's interests.

(Continued on page 16)

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Paringa

HIS HONOUR:  Yes. Bearing in mind the limited nature of

the injunction that I am prepared to order I

would be prepared to make it in the terms set

out in 1.1, 1.2, 1.3, 1.4 and 1.5.

MR GRIEVE~ May it please, Your Honour.

HIS HONOUR:  But what other orders then - I should put a

limit to it presumably.

MR GRIEVE:	Yes.
HIS HONOUR:	Would it be in order to say, "Pending further

?rder made urron the hearing of this matter

inter partes - - -

MR GRIEVE:  Yes. We would respectfully submit that would

be appropriate.

HIS HONOUR:  - - - commencing at 2.30 pm on Thursday.

MR GRIEVE:  Yes. We submit that that would be appropriate.

HIS HONOUR:  The Registrar has drawn my attention to the

reference to 23 September at the end of

paragraph 1.4. Is that appropriate?

MR GRIEVE:  Forgive me, Your Honour. I will just

HIS HONOUR: It is really a proviso, is it not?

MR GRIEVE:  Yes.

HIS HONOUR: It is an exception.

MR GRIEVE: Yes, Your Honour, that is right. It is appropriate

in the sense that the bid was announced on

19 September and we did not make our first move

to Mr Justice Legoe until the 23rd and we therefore

acknowledge that any dealings which may have	taken place, and indeed there were dealings,	in the ADL shares in that four-day period cannot
be in any way affected by any order that we may have.

HIS HONOUR:  And there has been virtually interim injunctions

covering ADL since that time.

MR GRIEVE:  That is so, Your Honour. Yes.

HIS HONOUR: Until - - -

MR GRIEVE: Well, the only gap that has really occurred

is from 5.30 until now. There was a small gap,

I suppose on Friday night between the time that

Mr Justice Legoe refused to continue the interlocutory

injunction and dissented.

HIS HONOUR: Perhaps any difficulties arising fran those gaps could

be worked out later on.

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Paringa

MR GRIEVE:  Yes, we do not apprehend that there would be

necessarily but if there are, certainly,

Your Honour, I suspect they can be sorted out.

There is one other matter that I should mention

to Your Honour for completeness, not that, in

_ our submission, it has any essential bearing

on the matter, that the Supreme Court of South

Australia has fixed the commencement of the hearing

of the main suit on Tuesday next and it may well

be that that hearing will proceed to finality

within the month although the case, as Your Honour
has probably gathered is not without some factual

complexity and it is quite possible that the

trial would run into November and may bring about

a reserve judgment in any event and thus,

notwithstanding the apparent immediacy of the

commencement of the trial, it is Paringa's concern

that unelss some injunctive relief is put in

place until such time as the matter has been

finally determined, that it is vulnerable and

that any ultimate orders that it may obtain would

be of little utility to it in light of the trading

activity that has occured in the meantime.

We just mention that for completeness,

Your Honour. In our submission it does not really

bear on the matter at all.

HIS HONOUR:  Yes, well, certainly I would hope that no

action of the interim nature that is embraced

by these proceedings would in any way inhibit

the pursuit of the rights of the parties and
the ac~ion as instituted in the Supreme Court

of South Australia.

MR GRIEVE:	Indeed.
HIS HONOUR:	And I think it important, therefore, to emphasize

that all ~ the grounds - any order of this Court

is the pending application for special leave

to appeal from the decisions of Mr Justice Legoe

on Friday and Monday.

MR GRIEVE:  And, we would add, although we may have some

difficulties in the sense that the decision of the Full Court, as it were, not to hear us may not necessarily be characterized as an appealable

decision in the sense that it may be said to

be no more than an administrative decision but
we will be, the problems notwithstanding, seeking
to characterize it as a curial decision and one

involving the question that we have foreshadowed.

It may or may not be necessary for us to succeed

on that but Your Honour is, with respect, right.

We acknowledge that this Court 's intervention

is predicated essentially on our claim for special

C3Tl6/l/ND	17	4/10/88
Paringa

leave to appeal from, at least, the decision of

Tl6 Mr Justice Legoe.

HIS HONOUR:  Yes, and whatever the difficulties you may

face in the prosecution of the application for

. special leave, it would seem that at least at

this moment some interim relief is justified

in order to preserve the subject-matter of the

proceeding.

MR GRIEVE:	Indeed.
HIS HONOUR:	And so we can proceed on the basis, then, of an interim injunction. It may well be, of
course, open and a desirable course for the
Supreme Court of South Australia, when it undertakes
a hearing of the matter, to reconsider the question
of an injunction pending the decision.
MR GRIEVE:	Yes, quite.
HIS HONOUR:	And there should be no reason to think that

any proceedings in this Court should in any·way

affect that decision.

MR GRIEVE: 

Of course.

HIS HONOUR: 

What else need be - if upon the undertaking

to file an application for special leave to appeal
today and upon the usual undertaking as to damages,

an interim injunction is ordered in terms of

paras 1.1, 1.2, 1.3, 1.4 and 1.5 of the draft
motion, further orders would be that the interim

injunction inure until further order made on
the hearing inter partes of this matter to commence

at 2.30 on Thursday, 6 October 1988.

MR GRIEVE: 

May it please Your Honour.

HIS HONOUR: 

And the question of costs to be reserved,

I take it?

MR GRIEVE:	Yes.
HIS HONOUR:	What about certificate for counsel?
MR GRIEVE:	We would ask for that, Your Honour, if that is appropriate.
HIS HONOUR:	I think, yes, that there should be such a

certificate.

MR GRIEVE:  Thank you.

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Paringa

HIS HONOUR:  I am not sure that there should be a certificate

for two senior counsel without in any way reflecting

on Mr Lander's contribution.	I would not like
to go that far.

MR GRIEVE:  No, if Your Honour pleases.

HIS HONOUR:  So that there would be a certificate

for senior counsel.

MR GRIEVE:  May it please Your Honour.

HIS HONOUR: Is there anything else, Mr Grieve?

MR GRIEVE:	No, Your Honour, thank you.
HIS HONOUR:	Very well, that concludes the matter and it

will resume at 2.30 on Thursday.

MR GRIEVE:  May it please Your Honour.

AT 10.34 AM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 6 OCTOBER 1988

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Paringa