Sagasco Amadeus Pty Ltd & Anor v Magellan Petroleum Australia Ltd

[1992] HCATrans 332

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B45 of 1992

B e t w e e n -

SAGASCO AMADEUS PTY LTD

First Applicant

SAGASCO HOLDINGS LIMITED

Second Applicant

amd

MAGELLAN PETROLEUM AUSTRALIA

LTD

Respondent

Application for special leave

to appeal

DEANE J
DAWSON J

McHUGH J

Sagasco 1 12/11/92

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 12 NOVEMBER 1992, AT 10.17 AM

Copyright in the High Court of Australia

..

MR D.M.J. BENNETT, QC:  May it please the Court, I appear

with my learned friend, MR w. SOFRONOFF, QC for the

applicants. (instructed by Feez Ruthning)

MR P.A. KEANE, QC:  May it please the Court, I appear with

MR P.A. FREEBURN for the respondent. (instructed by

Corrs Chambers Westgarth)

MR J.P. CADDICK:  May it please the Court, I seek leave to

appear with my friend, MR C.J. HUDSON as amicus

curiae to present written submissions on behalf of

the Australian Securities Commission. (instructed

by Solicitor to the Australian Securities

Commission)

DEANE J:  In support of what, Mr Caddick? I mean, this is a

leave application.

MR CADDICK: 

Yes, Your Honour; it is simply to place before

the Court the view as to the correct interpretation
of the Corporations Law that the Commission holds.

DEANE J: 

Mr Bennett, what is your attitude?

MR BENNETT:  We have no objection. As we understand it, the

submissions deal with two matters: they support the

application for special leave in the sense that

they discuss the importance of the issue, but support the respondent's ultimate case on the

appeal.	We have no objection to Your Honour seeing
them.

DEANE J:	Mr Keane, what is your connection?
MR KEANE:	Your Honour, we have no objection to Your Honour

seeing them.

DEANE J: Very well. Yes, Mr Caddick.

MR CADDICK:  Thank you, Your Honour. I believe they have

been handed to the Court staff and I seek leave to,

and for my friend Mr Hudson to withdraw.

DEANE J: Certainly.

MR CADDICK:  Thank you, Your Honour.

DEANE J: Yes, Mr Bennett.

MR BENNETT:	May it please the Court.
MR BENNETT:	May it please the Court.  Your Honours, I hand

up six copies of an outline of submissions.

DEANE J:  Mr Bennett, if you can sit down we will not only

look at these, but since both parties are agreeable

Sagasco 2 12/11/92

we will also look at the Australian Securities

Commission's document.

DEANE J: Yes, Mr Bennett.

MR BENNETT:  Your Honours, there are two essential primary

features which appear in the take-overs Code, and

have appeared in it certainly since the late 1970s.

The first is the general principle that one can

acquire up to 20 per cent of the shares in a

company, but one cannot become entitled to more
than 20 per cent unless one goes through the
procedures required for a formal takeover offer, or

one is within some other narrow exceptions.

The second matter is what are known as "the

four Eggleston principles", and they are set out in

both the Code and the law in substantially

identical terms. They are the matters on the basis

of which the Commission can declare conduct to be
unacceptable. Three of those are procedural. They

relate to shareholders knowing the identity of the

offerer, knowing matters they need to take into

account and having time to consider. The fourth is

substantive, and it requires that there be equal

treatment for all shareholders in relation to the

acquisition of a substantial interest.

That fourth Eggleston principle is given

effect to by what used to be section 40 and is now section 698(1) which says that during the currency

of a take-over offer you cannot give one

shareholder any particular benefit you do not give

to all of them. And as I say, all those provisions

are substantially identical in the Code and the

law.

There is a decision, the only real decision in

this area, by Mr Justice Marks in the case I have
referred to on page 2 of Intercapital Holdings

where His Honour held under the Code that the

fourth Eggleston principle was not infringed where

shares were acquired prior to the making of the

offer at a higher price.

So the fourth Eggleston principle is

confined - Your Honours need not go to the case -

the fourth Eggleston principle is confined to cases
where the benefit is given during the currency of

the scheme.

Now, in the Corporations Law, there was a new

we are concerned with in this case, which raises an
issue which, as Your Honours have seen, the subsection added and that is the subsection which of great importance and arising in many take-overs

Sagasco 3 12/11/92

if not in one sense, all of them.	The words are
set out at the bottom of page 2.	I have
deliberately left out some words	which may be
relevant later on but - - -

DEANE J: In one sense of course, though, any provision of

the Corporations Law dealing with take-overs,

affects all takeovers.

MR BENNETT:	Oh, that is so, Your Honour. That is so.
DEANE J:	I am trying to identify the matters operating in

my mind against your application, and they seem to

be that it involves merely a question of

construction, indeed on one view, the construction

of two words, and also it involves an interlocutory

judgment.

MR BENNETT:  Yes. Your Honour, in relation to the second,

may I come to that because I will deal with the

problems arising out of that.

In relation to the first, it certainly is, as

Your Honour says, merely a question of

construction, but it is a very impo·rtant question,

and it arises in - - -

DEANE J: That was what I had in mind when I said to you any

provision of the take-over sections of the

Corporations Act is of practical importance in that

sense.

MR BENNETT:  The reason this one is so vital is this: if

one looks at it from the point of view of an

intending offerer, the normal procedure is that one
gets to one's 20 per cent, or almost to one's 20

per cent, then one makes one's offer. In getting

to the 20 per cent, one is normally going to

acquire some large parcels. It is, for a number of

reasons that Your Honours would know, often

inconvenient and difficult to acquire large parcels
on the market.	They are normally acquired by

negotiation or special crossing or however.

If this decision is correct, it will not be

possible for a person to acquire shares off market
prior to making an offer for four months to get up

to the 20 per cent unless every one is done at the

proposed price. Even then, there might still be a

breach. Even if one does it at the price, it might

be said one is giving those shareholders an

advantage because they are getting their money

earlier, they are getting it in cash straight away;

they are not getting it subject to whatever

conditions the offer is subject to, and so on.	So
there are real problems which will arise for offerers in virtually every case.

Sagasco 4 12/11/92

Secondly, what the Court of Appeal has done -

and it is not in accordance with the way the law was submitted primarily by the respondents or in

fact by the ASC - is that they have adopted a third

construction, not the construction which either

party contended for. There may be some suggestion

that it was involved in one subsidiary aspect of

the respondent's argument, but Your Honours need

not be concerned with that.

The Court of Appeal's view was that one can

disregard the statutory definition. That has

enormous consequences for the construction of the

Code generally - not only this section, but other

sections where the phrase appears. Indeed, in one sense, the case is an important case on the law of the interpretation of statutes, because the

disregarding of a statutory definition is something
which of course one is entitled to do, because the
words are "unless the contrary intention appears",

but it is a very major step to take, particularly

in relation to as tightly drafted a law as this

one. In our respectful submission, those issues

are of very great importance.

May I just very quickly, unless Your Honours

do not wish me to do so, take Your Honours through
the argument which we have put as to why our

construction is the correct one, and then come to
what Your Honour puts to me about the fact that the

decision is interlocutory.

DEANE J:  Mr Bennett, I have not quite followed which of the

three alternative interpretations suggested by the

Securities Commission is the Commission supporting.

MR BENNETT: 

As we understand it, the Commission supports

the one which was the respondent's primary
contention which is that the words:

a person whose shares may be acquired under

the takeover scheme -

if Your Honours go to page 2 of my submissions

where the subsection is set out, Your Honours see,

at the bottom of page 2, the words:

a person whose shares may be acquired under

the takeover scheme means -

it is said, "a person whose shares might be

acquired under the takeover scheme if it were made

immediately", at that moment, if it were then in

force. Our contention is that it means a person

whose shares may be acquired under the proposed

take-over scheme when it occurs.

Sagasco 12/11/92

The third view, and the view taken by the

Court of Appeal, is that the words, "the takeover

scheme", do not have the statutory meaning at all

and just mean the general scheme in the ordinary

English sense of the word which includes the

current acquisition. The Court of Appeal's view is

summarized at the bottom of page 3 of our

submissions.

DEANE J: Mr Bennett, we might hear what Mr Keane has to

say.

MR BENNETT: If Your Honour pleases.

MR KEANE:	Your Honours, the occasion for the applicants' invitation to this Court to take up this point is,
as Your Honour the Presiding Judge has observed, a
challenge to an interlocutory injunction.

DEANE J: Except there are two sides of that, are there not?

One is it obviously is. The other side is you have a decision of a Full Court of a Supreme Court which

no doubt will be treated as a precedent as to the

construction of this section. Having said that, it

may be of assistance if you could highlight the

inconveniences and undesirabilities involved in

this Court intervening in this case at this stage.

MR KEANE:  Thank you, Your Honour. Your Honour, the

immediate question is indeed whether leave should

be granted now rather than after a trial, in our

submission.

DEANE J: Yes.

MR KEANE:  In that regard, what the respondent, Magellan,

ultimately seeks in the action, is cancellation of

the share purchase by Sagasco from Bankers' Trust and Bankers' Trust subsidiaries. For that, proof

of contravention of section 698(2) is necessary,

but of course it is for the trial court to set

aside the transaction; it is a question of
discretion under section 613 of the law.	So that

for the case to be attended with real consequences

for the parties, more is required. Beyond that,

Your Honours, it is also, in our respectful

submission, appropriate to recognize that it is for

the trial court to decide whether the take-over may
proceed under the present Part A statement, which
we challenge on the grounds of insufficient
disclosure, particularly in respect of two points:

the first is in the disclosure as to the giving of

this benefit by Sagasco to Bankers' Trust which,

for the purposes of this procedure or the

proceedings thus far, they be prepared was a

benefit. They do not in the Part A acknowledge

they gave this benefit in the sum of what may be

Sagasco 6 12/11/92

$Al.30 a share, and that, we would submit, is a

matter of some potential interest to the prospect

of the vendors of Magellan shares.

The other aspect relates to the relationship

between this take-over offer and a takeover offer

which was announced on the same day as this take-

over offer was announced and the shares in Magellan

were acquired from Bankers' Trust by Sagasco. The

position is, Your Honours, that on the morning of 3
September 1992 Sagasco held no shares in Magellan.

On that day a take-over offer by Santos for Sagasco

was announced at a meeting held to discuss that

take-over proposal; it was resolved to proceed with

the acquisition of these shares.

Now, it is our submission, and it was a

submission which the Court of Appeal did not need

to deal with because they resolved the matter

before then sufficiently for their purposes by

reference to section 698(2). So that the

Court of Appeal has not dealt with this point as to

whether there has been insufficient disclosure, in
effect, of Sagasco's motivation of its subjective
appreciation of the relationship between the Santos

take-over of Sagasco and its attempt to acquire

Magellan, the relevance being to some extent

suggested, albeit cryptically, in the material that was before the Court of Appeal, in that Santos is a large oil and gas producer in South Australia and

there is material to suggest an appreciation on

Sagasco's part that it is in a position to dominate

the market in respect of gas supply in South

Australia.

Magellan is a gas producer. It is suggested

in the material that the acquisition by Santos of

Sagasco may contravene section 50 of the Trade

Practices Act, the mergers provisions. It is our

submission that the acquisition by Sagasco of

Magellan is calculated to ensure such a

contravention because it will ensure market

dominance.

Our point is, and the point which, as we say, the Court of Appeal did not need to come to grips

with and did not deal with because it decided it
simply on the basis of 698(2), is whether the

Part A statement is deficient in failing to disclose Sagasco's own subjective appreciation of the urgency and its motivation in relation to this

acquisition. In other words, Your Honours, is it

an anxious purchaser?

DAWSON J:	What would happen if this Court were to dissolve the injunction - or likely to happen?
Sagasco	12/11/92
MR KEANE:	If this Court were to dissolve the injunction, then Sagasco would be free to issue the offers in
their present form.
DAWSON J:	But you say the Part A statement is defective in other respects.

MR KEANE:  Yes, it is. Your Honour, the point we make is:

we would seek, whether it be before this Court if

leave were to be granted, or before the trial judge

if the matter were to proceed to a trial, to

support the continued operation of the injunction

on these other grounds which - - -

DAWSON J: That is what I was getting at.

MR KEANE:  I know it has been a long time coming, but we

submit that these are reasons why it is

inconvenient for this Court to take this matter up

at this stage on the footing that it is decisive of

whether the injunction should remain.

DAWSON J:  Why was an application not made for an injunction

on more than one ground?

MR KEANE:  It was, Your Honour. As Your Honours will see

from the Court of Appeal's judgment, they

identified the three grounds on which we sought the

injunction. The first related to section 64l(l)(c)

which Their Honours regarded as speculative having

regard to the material presently before them. The

second was 698(2) which, if our point is correct

and if the Court exercises its discretion to set

aside the transaction, destroys the platform from

which the bid was launched. The third was a

deficiency in the Part A statement which we submit
involves a failure to comply with section 750 of

the Code.

DEANE J: What is the time frame, Mr Keane, in relation to

the Part A statement?

MR KEANE:  Your Honour, the other side have sought in the

past extensions of time in relation to that. I am

not in a position to tell Your Honour what the
present situation is in relation to the grant by
the ASC of extensions of time in relation to the

Part A.

DEANE J: would it be likely that they would extend time to

keep a Part A statement current during the period

that would be involved in an appeal to this Court?

MR KEANE:  Your Honour, it would be our submission that,

while we cannot speak for the ASC, it would be a

most extraordinary thing if the ASC did not conduct

itself so as to conform its exercise of discretion

Sagasco 12/11/92

to the exigencies of the orders made by this Court

or any other court.

DEANE J: It cannot be assumed that the question of the

event, can it? Part A statement will not just go away in any

MR KEANE:  Oh no, Your Honour. It might be suggested that

the other side might decide not to persist with the Part A and indeed that suggestion has been made in

correspondence.

DEANE J:  Can they not serve a new one?

MR KEANE:  They can serve a new one. They can serve a new

one. And this question as to the sufficiency of disclosure remains, in the absence of appropriate

undertakings from the other side which presently

are not forthcoming. That is as to disclosure.

Your Honours, might I say one further thing,

and that is in relation to these matters.

Obviously the matters concerned with the other

side's internal appreciation of its position, and

its position vis-a-vis Magellan and Santos are

obviously the strength of our case, is likely to be
enhanced after discovery. It is for that reason
that for our part, we submit the more convenient

course is to allow the matter to proceed to a trial

in relation to which we have made suggestion to the

other side for - - -

DEANE J:  But if this Court gave leave in relation to the

question of law, of construction, there would be no

reason why the preparation for the trial could not

proceed if it was necessary from your client's

point of view.

MR KEANE:  Your Honour, that would certainly be the position

we would urge in the event the Court were to give

leave. Indeed, we would submit that the matter

ought to proceed to trial notwithstanding the

pendency of the question.

DEANE J:  What is the likely time for a trial in the

Supreme Court of Queensland?

MR KEANE:  Your Honour, the position in terms of the

evidence is there is a suggestion in the affidavit
material by the other side that they were told by

the registry that it was unlikely a trial could be

held within 12 months. We have subsequently been

in correspondence with the other side and invited

them to accompany us on an application to the

senior judge administrator to have a speedy trial
fixed, and failing a speedy trial, to join with us

in an application to have the matter dealt with by

Sagasco 9 12/11/92

a referee pursuant to section 12 of our

Judicature Act which we are confident we could do

by the end of January. The other side, I might

say, have not taken up that suggestion.

We are in a position if Your Honours care to,

to give Your Honours affidavits exhibiting this

correspondence. May we seek leave to read and file

affidavit by Raymond Robert Lindwall, sworn

yesterday.

DEANE J:	Have you seen this, Mr Bennett?
MR BENNETT:	Yes.

DEANE J: While that is coming, Justice McHugh has pointed

out to me that the ASC document contains a

suggestion to the effect that the Part A question

might simply go away by l January or thereabouts.

MR KEANE:  Your Honour, that might be because it becomes

stale and no further extensions are granted. But

the question then remains, the issue in respect of

which the parties are presently at odds, and

clearly at odds, namely, the sufficiency of this
disclosure, will not go away in respect of any

Part A statement that is delivered unless the other side make the sorts of disclosure which only they

are in a position to make. That issue will not go

away. We will be back before the courts seeking

another injunction in relation to the sufficiency

of that Part A, assuming they are successful on

this 698(2) point and assuming that the present

Part A statement becomes stale and they are given

leave by the ASC to withdraw it.

McHUGH J: Well, from a practical point of view, this point

is a dead letter after January 1993, is it not?

MR KEANE:  Which point, Your Honour?

McHUGH J:	The take-over offer point, the 698(2) point.
MR KEANE:	No, Your Honour.  It will not be a dead letter

because the final relief we seek is to have the

share transaction set aside. We could not suggest

to Your Honour that the 698(2) point would ever

become a merely technical one.

MCHUGH J:	No.
MR KEANE:	If we can just ask Your Honours to look at

exhibit A to Mr Lindwall's affidavit, and

exhibits C and D - we do not propose to read them

out to Your Honours but we do submit that that
material reflects, contrary to the basis for

urgency contended for in the application book, a

Sagasco 10 12/11/92

rather relaxed approach to the determination of these questions by Segasco and, particularly, a

view on Segasco's part that there is no real

pressing need for a trial, rather than that it is

appropriate for this Court to take the matter up

now because there cannot be one promptly. It is

our submission that it is unsatisfactory to Segasco

to say, as they do at page 62 of the appeal book,
that special leave should be granted in respect of

this interlocutory order because there may be court

delays in having the matter dealt with at a trial.

Your Honours, I appreciate the point which

Your Honour the presiding Judge asked us to

address. We have said what we think we can

usefully say about that.

DEANE J: Well feel free to deal with any other matter,

Mr Keane. I was simply drawing your attention to

what I thought was your best point.

MR KEANE:  Yes, Your Honour. And no doubt, in an

application of this kind the rightness of the point

and the convenience of dealing with the point now

in terms of the orderly administration of justice

is important. If we might take just a moment

though, with respect, not to urge Your Honours to

the view that the question of construction is not

important - we could not look Your Honours in the

eyes and suggest that - but to make the submission

that the Court of Appeal's decision is, with

respect, plainly correct, and we would take only a

moment to do that, if we may.

Your Honours, the Court of Appeal was

unanimous in the view that the evident intention of section 698(2), in the context of chapter 6, was to

ensure a quality of opportunity to shareholders to

participate in any benefits accruing to

shareholders under a proposal such as that

implemented by the present applicants on
3 September this year.	Your Honours, with respect,

that is a reasonable intention to attribute to the

Parliament; it is the reasonable intention to

attribute to the Parliament. As we have mentioned,

on the morning of 3 September the applicant had no

shares in Magellan; by the evening it had Bankers'

Trust shares and had announced its proposal to take

over Magellan. It is hardly surprising, with

respect, that the legislature should intend that

Bankers' Trust should not obtain benefits from

Sagasco in respect of the take-over that other

shareholders would not share. That conclusion

does, with respect, accord with the Eggleston

principles, in particular that reflected in

section 73l(d) of the Corporations Law, and that

Mr Justice Marks in the Intercapital case did not

Sagasco 11 12/11/92

see those principles as having been extended so far by legislation previously, is really not reason for

thinking that the legislature did not intend to
move the Act further to accord with the principles;

to move the positive law further to accord with the

principles that inform its provisions.

Your Honours, that the introduction of a new

section which would work a change in the law is

hardly surprising. One might ask, with respect,

rhetorically, why the legislature would bother to

make the change in the law which our learned

friend's outline suggests was effected in

paragraph (e) at page 6 of their outline.

Your Honours, the other thing we would wish to

say at this stage is that it is not correct to say

that the Court of Appeal's interpretation of the

section was not raised in argument before it.

Magellan's argument was that in section 698(2) the

term take-over scheme could not mean a take-over

scheme as defined in section 603 of the

Corporations Law. And, Your Honours, that

submission was made explicitly on the basis that at

the time when section 698(2) is intended to apply,

namely, during the period of four months before

take-over offers are sent, there cannot be in
existence a take-over scheme as defined for the

reason that the requirements of the division, in

relation to take-over schemes, could not have been

complied with at that time. That point was made in

the respondent's submissions and it appears in the

supplementary appeal book at page 126.

DAWSON J: There could be a contingent take-over scheme,

could there not?

MR KEANE:  Your Honour, the point is made, as the other side

make it, in the application book at 64 point 5 that

the subsection is concerned with a hypothetical

situation. It is, as Your Honour says, a
contingent scheme.	The way in which it was put

before the Court of Appeal, as is recorded at

45 point 2 to 45 point 7 of the appeal book, on our

part, was that it was to speak of a take-over

scheme as if it had been made immediately; that is

to say, it recognizes the hypothetical quality of

it.

But, Your Honour, the point is, with respect,

that it cannot be a take-over scheme as defined,
because it is not a take-over scheme that can, at

the time when the section applies, be yet in existence. The point that is made about the reference by the Court of Appeal to the

observations that they made in respect of scheme

encompassing, as a matter of ordinary language, any

Sagasco 12 12/11/92

plan or proposal reflects the recognition of the

breadth of the term.

It is not said by our learned friends in their

outline, in their oral submissions or in the

application book that the words cannot bear that

broad signification. Their contention is that in

this context they must bear the signification
indicated by the definition of "take-over scheme".

Our point is simply that they cannot have that

signification. Once they cannot have that

signification, the broader view is plainly correct

and certainly accords with a purposive

interpretation of the provisions.

Your Honours, it is our submission that the

view taken by the Court of Appeal was correct.	It
is the only view which makes the section work in

any way that would have made it worth bothering to

amend the Act after the Intercapital decision.

That is what we wish to say to Your Honours

concerning the correctness of the decision. I do

not think there is anything we can usefully say to

Your Honours further in relation to the

appropriateness of extracting this question now or of abstracting this question now for determination independently of a determination of the other

issues which we submit sustain the injunction.

DEANE J:  Thank you, Mr Keane. Yes, Mr Bennett? You can

confine your comments to whether it would be

appropriate to grant special leave in terms of it

being an interlocutory judgment.

MR BENNETT: Certainly, Your Honour. There are a number of

preliminary matters. First, I am a little

surprised to hear my learned friend mention the

issue about the Santos take-over and the suggestion

that that in some way causes a problem under

section 750 for us. That matter is not in my

friend's statement of claim at all. It was

rejected by the trial judge. It was referred to in

argument before the Court of Appeal but not dealt

with by it, and they have never sought to amend

their statement of claim to deal with it. We would

regard it as just not being pressed. It certainly
is not an issue in the case at the moment on the

pleadings.

The other aspects of section 750 primarily

concern the same point which arises in this appeal,

the section 698 point.	The second preliminary
matter, may I say this:	my instructions are that

the Part A will expire tomorrow and that my client

does not propose to seek an extension of time in

relation to it. So it will be necessary to lodge a

new Part A at an appropriate stage in the future,

Sagasco 13 12/11/92

assuming we are eventually released from the

injunction.

DAWSON J:	Why does not the question then become academic?
MR BENNETT:	Because, Your Honour, my friend's opening

comment that the relief they ultimately seek is

cancellation of the purchase, which is a

$25 million purchase of shares. One possible

consequence is a vesting of those shares in the

ASC under the legislation. There are very serious

consequences.

DAWSON J:  I did not mean the whole thing, but the

question - yes, I see.

MR BENNETT:  May I just explain to Your Honours the various

scenarios?

DAWSON J:  The need for an injunction becomes academic, does

it not, in relation to the Part A statement?

MR BENNETT:  In relation to that Part A statement, yes,

there would be obviously be an application on the

same basis.

DAWSON J:  It would be another application and it may be

another Part A statement in a different form.

MR BENNETT: But, Your Honour, the principal issue, the

section 698 issue would remain because these

shares, my friend would no doubt wish to submit,

should be dealt with in such a way that we do not

get the benefit of them in relation to the proposed

take-over. That is the real issue.

DAWSON J:	I follow that, that is an issue, but what you would be asking this Court to do would be to
dissolve the injunction, that is to dissolve an
injunction which no longer really had any effect?
MR BENNETT:	The injunction, I think, is wider than that,

Your Honour.

DAWSON J:  The injunction is in the form of the

undertakings.

MR BENNETT:  Yes, but may I, just before I come to the terms

way,
of the injunction, answer it this Your Honour. end of the litigation; there will be nothing left

whatever happens because my friend's three points:

the section 698 point, he will have failed on as a

matter of construction, and that is the end of it;

the section 641 point, which to some extent goes

with the section 698 point, will fail for the same

reason but even if it does not, as this Court would

Sagasco 14 12/11/92

no doubt hear in determining the appepl, after

3 January, which is four months from the date of

the conduct, there would be no room for the

application of section 641.	So that point, if we
succeed, will be totally - - -

DAWSON J: 

The point I am merely making is the Court would

be deciding an issue in relation to a Part A
statement which is no longer in existence or stale.

MR BENNETT:  No, Your Honour. If Your Honour goes to

page 27, Your Honour sees that the terms of the

undertakings A and B, and Bis:

an injunction ..... restraining the first and

second defendants from acquiring shares in the

plaintiff pursuant to section 620 -

so that is far broader.

DAWSON J: Yes, it is, but just to complete that, can it be

said that the Court will be deciding an issue in

relation to a take-over offer which has come to a

stand still?

MR BENNETT:  No, Your Honour. It is certainly my client's

intention, on my instructions, to proceed with the

take-over offer. But in relation to this Part A statement, rather than seek continuous extensions

and have the problems arising from that and the
problems arising from parts of it becoming stale
and needing to be updated and so on, the view has

been taken that it is appropriate for there to be a

new one.

DAWSON J: What about the four month period?

MR BENNETT:  Your Honour, there will need to be an

application in relation to that. But the four

month period is only relevant under section - well, the four month period under section 641 will become academic after 3 January. The four month period in

relation to section 698 does not become irrelevant

because, on my friend's case, we were a person

proposing to make an offer within four months,

therefore, on his case and on the basis of the

decision below there has been a breach and all the

consequences flow from that, including the second

injunction or undertaking, and including the more

serious ultimate consequences.

DAWSON J:	I see.
MR BENNETT:	So we say if we succeed ultimately on this

appeal, that will substantially be the end of the

litigation. If we fail there may be certain issues

to be determined. But our concern is that we

Sagasco 15 12/11/92

should not be put in the false situation of having

to face a trial where the primary question of law

has been wrongly decided against us, and where numerous matters will be debated, confidential

material discovered and the usual arguments that

flow from that, where it may well be all
unnecessary. Whereas the question of law is a

vital and important question which substantially

determines the real issues between these parties.

May I just say this, Your Honours: that first

of all, the practice is now, and was applied in
this case, that underlying pure questions of law

are often determined on a final basis on

interlocutory injunction applications. One does

not apply the Ethicon test to the question of law

and say, "Is the question of law arguable?" One

rather determines the question of law, and that has

been approved by this Court in an old case called

Keogh, and by numerous recent cases I can give if

Your Honours wish.

So it is a case where Your Honours have two

courts which have on effectively a final basis
dealt fully with an issue of law. Secondly, in

take-over cases they almost always arise and are

ultimately determined as a practical matter on interlocutory applications. Most of the major

take-over disputes before the courts have been

decided on an interlocutory basis, but that has

effectively been the final order, and that would

substantially be so in this case.

It is important, we would submit, that this

Court have an opportunity to correct what we submit

is a fundamental error in construing a central

provision of the law, and what the ASC agrees is a

matter of great importance to the law.

DEANE J:  Mr Bennett, what do you say the effect of granting

leave would be so far as delay of the trial, which

the respondent says is urgent, is concerned?

MR BENNETT:  Your Honour, our view is that if we are going

to succeed on the appeal there will not be a trial

on what is the principal issue between the parties.

There may, if the respondent presses it, be a trial

on one very subsidiary issue which my friend has

not mentioned relating to another alleged

deficiency in the Part A statement but that is, we

would submit, unlikely. So, in effect, the

litigation will be determined in our favour if we

succeed in the appeal.

As we understand it, the probability is that

the appeal could be heard if leave were granted in

March. Obviously there would be some delay after

Sagasco 16 12/11/92

that before judgment were delivered, and that is a

matter which, with difficulty, we could accommodate

our commercial affairs to.

We would be submitting to the Supreme Court of

Queensland that it would be inappropriate for

anything to be done in relation to the trial

between now and March. As it cannot hear it for a

year anyhow, there is nothing lost by doing any

interlocutory matters after rather than before

March, and we would be submitting to that court in due course that there would be prejudice to us in

having to give discovery and answer interrogatories

on a matter that may be academic.

DEANE J: Well that is the consideration against granting

leave though, because as things stand, the

respondent has a decision of the Full Court in its

favour on the question of construction.

MR BENNETT:	Yes.
DEANE J:	It is pressing for an early hearing and what has

been put to this Court, is that on the chance that this Court might disagree with that decision as to

construction, the trial should stay where it is

until such time as this Court delivers judgment in

the matter.

MR BENNETT: Well, Your Honour, no for two reasons. First,

subject to the suggestion which we do not accept as

being desirable of going to an outside referee,

there is no practical likelihood on my instructions

and on the evidence of the Supreme Court of

Queensland hearing the matter before March, so that

is not, we would submit, a serious possibility.

The second matter is that we would press on

Your Honours that - and I have not been asked to

argue the matter, that the proposition put by the

Court of Appeal is clearly wrong, and it is a

matter which is so clearly wrong that it would be

unfair for a party to be put in the position of

having to prepare for a trial and perhaps litigate

a trial on a false premise as to the law really,

when the whole trial would be unnecessary, or all

except one very minor aspect would be unnecessary,

if we are right on the proposition of law, and we
add, although I appreciate this is not a

consideration which the Court gives the same weight to, that unless the Court grants leave in this case or a case like it, there will never be an

opportunity to correct what we submit is a very
serious error in the construction of a central

provision of an important statute.

Sagasco 17 12/11/92

There is no particular reason, as long as the

injunction is there, for the trial to be expedited.
But finally, of course, as the trial is not going
to take place before March or until a year anyway,
the trial is not going to be delayed if the
interlocutory steps are delayed, because the date
for the trial - the case is in the queue whether or
not those steps are taking place, and there are
plenty of time for those steps between the delivery

of judgment by this Court, and whenever the trial can take place.

Your Honours, for those reasons it is my

submissions that the convenience of this case is in

favour of the grant of leave, and I take it again

Your Honours have not called on me in relation to

the importance of the point or the question of

error in the Court below.

DEANE J:  Mr Keane, you have a right of reply in relation to

the balance of convenience.

MR KEANE:  Thank you, Your Honours. Your Honours, in

relation to that, may we once again refer

Your Honours to the unsatisfactory position that

our learned friends are urging Your Honours that a

trial cannot take place in Queensland for twelve

months, when they are, as the correspondence shows,

declining to co-operate with us in approaching the

court to have special arrangements made to have the

trial heard. It is most inappropriate and

unsatisfactory, in our submission, for them to try
to suggest to this Court that on the basis of the

position they have taken in not co-operating in

moving the matter on, that therefore there is a

situation of evident inability to have a trial

which suggests that it is more convenient for this

Court to take the matter up now.

DEANE J: Well now, if leave were granted, what would you

have to say about that aspect of the case?

MR KEANE:	Well contrary to the view that our learned friends have indicated they urged to this Court and
will urge upon the Supreme Court of Queensland, it would be our submission that the matter ought to proceed as expeditiously as possible. It is quite
unsatisfactory, in our submission, with respect, for our learned friends to say to Your Honours that
the present Part A statement will become stale, but
that they propose to proceed with the take-over,
and on that footing to say, well this issue about the sufficiency of disclosure in the Part A
statement goes away, as between the parties, and it
is most unsatisfactory in terms of having what are,
plainly, real issues between the parties
determined.  Our learned friends mention that this

Sagasco 18 12/11/92

question of insufficiency of disclosure is not yet

in the statement of claim. Your Honours, that

arose because the statement of claim was delivered

at a time - - -

DEANE J:	I do not think we need descend to the minutiae.
MR KEANE:	As Your Honours please.

DEANE J: Well, if there were a grant of leave, would you

press for a condition that leave only be granted on the basis that if it is granted, the applicant will co-operate in seeking and procuring an expeditious

hearing of the trial?

MR KEANE:  Yes indeed, Your Honours.

DEANE J: It will, of course, be a matter for the trial

judge, if leave is granted and things move more

quickly there than here, whether he reserves his

decision until the decision of this Court is known.

MR KEANE: Quite, Your Honour, and in relation to that, we

would press for such a condition if leave were to

be granted. We would submit, with- respect, that

the obvious desirability of imposing such a

condition, if leave were to be granted, itself

reflects the inconvenience involved in abstracting

this point at this stage, when the matter may be

determined finally on the basis of resolution of

other issues.

DEANE J: Well, it does not really though, does it, in the

sense that you are not going to be any worse off if

on the condition we have been discussing leave is

granted at this stage than if leave is granted

after the whole trial is over?

MR KEANE:  No, Your Honour. We could not say, and we do not

suggest, that we would be worse off; all we are

saying is, that in terms of the administration of

justice and the matter running concurrently in

various courts, that is, so far as the

administration of justice is concerned, more -

DEANE J: But even that is not prejudiced in that - - -

MR KEANE:	It is not a prejudice to us.
DEANE J	But it is not to the administration of justice

either, because if leave is not granted until the

conclusion, the Supreme Court in Queensland is

going to have to go through all the procedures,

some of which might be rendered superfluous if

leave is granted at this stage.

MR KEANE:  Some, but not all, Your Honour.

Sagasco 19 12/11/92

DEANE J:  Good. Thank you, Mr Keane. Yes, well you can

have a last go, Mr Bennett.

MR BENNETT:	On the other condition, I assume, Your Honour.
DEANE J: Yes.
MR BENNETT:	We would submit that no such condition should

be	imposed, although of course we would submit to
it	as a condition if the Court took the view that
it	should be.

DEANE J: And, of course - and as you may have noticed, the

bench has not discussed this - while it would

probably be inappropriate to require an

undertaking, if leave were granted on such a
condition, leave would be reserved for an

application to dissolve it if there was not strict

compliance with the condition.

MR BENNETT:  Of course, Your Honour. What we would say

against the imposition of the condition is this,

that the question is a procedural one for the

Supreme Court of Queensland. It might involve a

number of factual questions as to what issues are
in the case, an analysis of those issues to see to

what extent this issue is going to make a trial

unnecessary or not unnecessary, and it is
undesirable that one party should have its hands

tied in relation to what it can submit to that

court.

My learned friend will be able to submit all

that is appropriate to be submitted on his side and

we, in my respectful submission, should be free to

put to the court countervailing considerations

which really depend on matters which cannot at this

stage be analysed in detail by this Court. If

Your Honours are against me on that submission, we

would submit to the condition.	May it please the
Court.

DEANE J:  The Court will take a short adjournment to

consider its course in this matter.

AT 11.16 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.19 AM:

DEANE J:  Mr Bennett and Mr Keane, the Court does not

propose to impose a condition on the grant of

Sagasco 20 12/11/92

special leave to appeal. I would indicate though

that we take the view that the grant of special

leave should not delay the trial. If the applicant

is guilty of undue delay in terms of proceeding to

trial, it will be open to the respondent to apply

for revocation of leave.

I would indicate the reason we do not propose

to impose a condition is primarily the point raised

by Mr Bennett, and that is that it would be quite

inappropriate for this Court to do anything that

would affect the submissions which Mr Bennett's

client might see fit to make to the Supreme Court.

MR BENNETT:  Would Your Honour be prepared to permit me to

make an inquiry as to the scope of what Your Honour

has said in one respect?

DEANE J: Yes.

MR BENNETT:  Does Your Honour contemplate that what

Your Honour has said would be breached if we were

to submit to the Supreme Court of Queensland that

it was inappropriate for discovery to take place or the trial to take place prior to the hearing of the

appeal?

DEANE J:  No, we are not imposing any limitation on what you

submit to the Supreme Court, but I would imagine

the Supreme Court would take account of the fact

that we have indicated that we do not think the

grant of special leave should delay pre-trial
procedures or the trial. There will be a grant of

special leave to appeal in this case.

MR BENNETT: If Your Honour pleases.

AT 11.21 AM THE MATTER WAS ADJOURNED SINE DIE

Sagasco 21 12/11/92