SCI Operations Pty Ltd v Australian Paper Manufacturers Ltd

[1983] FCA 210

,

CATCHWORDS

TRADE PRACTICES - two competing takeover bids - appl ica t ion by

Trade Practices Commission pu r suan i t o s.50 of Trade Practices AcL

1974 i n r e l a t i o n t o second bid - undertakings given by target

company and both bidding companies ncit t o d e a l i n shares of t a r g e t

company - a c t i o n r e a d y f o r t r i a l a f t e r t h r e e months of preparation

- lengthy hear ing ant ic ipated - appl ica t ipn by t a r g e t company f o r

re lease from under t ak ings to pe rml t s a l e o f sha res to f i r s t b idde r

- f i r s t b idde r no t a p a r t y t o t h i s a c t i o n b u t not a s t r a n g s r t o it

e i t h e r - v a l i d i t y of undertakings - f ac to r s r e l evan t t o exe rc i se

of d iscre t ion .

S PRACTICZ AND PROCEDURE - undertakings given m one ac t ion by and

concerning party i n r e l a t e d a c t i o n - val idi ty of undertakings.

Trade Practices Act 1974 ss.50, and 81.

TRADE PRACTICES COMMISSION v A . P . M . INVESTMENTS PTY. LIMITED

and FIBRE CONTAINERS LTD. and O r s . -

No. VG 84 of 1983

Woodward J.

Melbourne

22 Augus t 1983

IN THE: FEDERAL COURT OF AUSTRALIA

)

VICTORIA	D STRICT	REGISTRY	1	No. VG 84 of 1983
1

DIVISION	GENERAL	1
BETWEEN:

TRADE PRACTICES COMMISSION Applicant

and

A.P .M. INVESTMENTS PTY. LIMITED First Respondent

FIBRE CONTAINERS LIMITED Second Respondent

LEIGH-MARDON PTY. LIMITED _. Third Respondent

ASSOCIATED NOMINEES PTY. LIMITED Fourth Respondent

FRANCIS JAMES BURKE Fifth Respondent

PETER B CKER Sixth Respondent

WILLIAM GIBSON eventh Respondent

and

JOHN FRANCIS ELFVERSON Eighth Respondent

Fifth to Eighth Respondents as

Trustees for LEIGH-MARDON PTY. LIMITED

and

ARTHUR KEVIN SMITH Ninth Respondent

ORDER

JUDGE MAKING ORDER:	Woodward J.
DATE OR ORDER:	24 August 1983
WHERE 6TADE:	Melbourne

UPON the following undertaking	bemg given by the Third to Eighth
Respondents :-

l

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' .

That untll the determlnatlon of these proceedmgs or further

order they will not sell to or accept any offer from A.P.M.

Investments Pty. Limited ("AR4") (or any related corporation

of APM) to purchase any shares held by them or on their

behalf in Fibre Containers Limited.

AND UPON the following undertaking being given	by the Second
Respondent:

That until the determination of these proceedings or further

order it will not aid, abet, counse; or procure APbl (or any

related corporation of APX) to acquire directly or indirectly

any shares in Fibre Containers Limited or in any way be

knowingly concerned in or a party to any such acquisition.

THE COURT ORDERS THAT:-

1. The First Respondent and related companies be and are hereby

released from the undertaking given by them to the Court on

23rd May 1983.

2. The Second to Ninth Respondents inclusive be and are hereby

released from the undertakings given	by them to the Court on
23rd May 1983.

3. S. C.I. Packaging Pty. Limited SCI Operatlons Pty. Ltd. and related companies be and are hereby released from the

undertaking given by them to the Court on 23rd May 1983.
4.	Costs of this Notice of Motion be reserved.

I N THE	FEDERAL	COURT OF	AUSTRALIA	)
1

V I C T O R I A	D I S T R I C T	R E G I S T R Y	j	N o . VG 84 of 1983
1

GENERAL	D I V I S I O N	1
BETWEEN:

PRACTICES COMMIS ION TRADE Applicant

and

A.P.M. INVESTXENTS PTY. LIMITED F i r s t R e s p o n d e n t

FIBRE CONTAINEXS LIMITED Second R e s p o n d e n t

LEIGH-MARDON PTY. L IMITED Third R e s F o n d e n t

ASSOCIATED NOMINEES PTY. LIMITED Fourth R e s p o n d e n t

PRANCIS JAMES BURKE F i f t h R e s p o n d e n t

PETER BECKER S i x t h R e s p o n d e n t

WILLIAl.1	GIBSON	Seventh	R e s p o n d e n t
and

JOHN FRANCIS ELFVERSON Eighth R e s p o n d e n t

F i f t h t o Eighth R e s p o n d e n t s as

T r u s t e e s for LEIGH-MARDON P T Y . L I M I T E D

and

ARTHUR KEVIN SMITH N i n t h R e s p o n d e n t

CORAM : W o o d w a r d J.

DATE:	22 A u g u s t 1983
-

REASONS FOR JUDGMENT

This is an interlocutory application, m a d e by w a y of

no t i ce of motion dated the 11th day of A u g u s t 1983, for release

f r o m cer ta in undertakings given t o the C o u r t by the respondents

other than APM Investments P t y . L t d . These respondents are Fibre

I

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Containers Ltd. and various substantlal shareholders in that

company, all but one of whom are closely connected with Amatll

Ltd. It will be convenient to refer to these respondents

collectively as 'Fibre Contalners'. I note in passing that the

ninth respondent is not a party o this applicatlon because he is

ill and unable to give instructions.

Fibre Containers Ltd. is the target company for two

competing takeover bids made last May. The first was by S.C.I.

Packaging Pty. Ltd. ('SCI') and the second by A.P.M. Investments

Pty. Ltd. ('APM'). The APM bid has given rise to two applications

to the Court pursuant to s.50 of the Trade Practices Act 1974

('the Act'). The action in which the present notice of motion is

brought has been commenced by the Trade Practices Commission

('TPC'). It seeks injunctions to prevent the takeover of Fibre

Containers by A m , alleging that it would represent a breach of

S . 50 of the Act because of the substantial power already enjoyed

by APM Containers operate. In the other action in the relevant markets in which A M , SCI and Fibre

(VG No. 82 of 1983) SCI

is seekmg declarations that the proposed APM takeover would

constitute a breach of S. 50 of the Act. SCI also seeks other

relief- pursuant to other sections of the Act, not relevant for

present purposes.

These two actions were called on together in a series of

directions hearings beginning on 23 May 1983. It was not until	28
July that it was decided by the Court that they should not	be

t

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heard together - as had been requested by SCI with the support of

Fibre Containers but opposed by APM. Reasons for this decision

were published on August 4.

I

Before the first directions hearing in the present

matter, the TPC sought undertakings from APM, SCI and Fibre

Containers which would have the effect of freezing the two

takeover bids unttl after the TPC case against APM had been

_.

determined. As a result of the responses received from those

three parties, counsel for the TPC were able to tell the Court on

23 May,

"There is also a claim for interlocutory relief,

and to put the matter shortly the parties to the

application and my learned friend Mr. O'Callaghan's

clients [SCII, are here to give undertakings to the

court which we envisage would take the place and

stand instead of interim injunctions which we would

otherwise have sought. "

Mr. McComas, the solicitor appearing for Fibre

Containers, said,

"The second to ninth respondents are prepared to

give the undertakings sought by the Trade Practices

Commission in this matter. I have reduced some

undertakings to writing. 'I

This undertaking by Fibre Containers was later recorded

in an order of the Court (then constituted by Northrop J.), taken

out by the Commonwealth Crown Solicltor and dated	2 3 May, in the
following terms:

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"That until the determination of these proceedings

or further order they will not:-

1.   Sell to or accept any offer from A.P.M. INVESTMENTS PTY. LTD. (APM), (or any related corporation of APM) or S.C. I. PACKAGING PTY.

LTD. (S.C.I.), (or any related corporation of S.C.I.) to purchase any shares held by them or

on their behalf in FIBRE CONTAINERS LTD;

2. Aid, abet, counsel or procure A.P.M. (or any related corporatlon of A.P.M.) or S.C.I. (or any related corporation of S.C.I.) to acquire directly or indirectly any shares in FIBRE

CONTAINERS LTD. or in any way be knowingly

concerned in or a party to any such

acquisltions. "

Counsel for SCI then gave an oral undertaking to the

Court, recorded in the transcript in the following terms:

"On behalf of SCI Packaging Pty Limited and SCI

Operations Pty Limited and related corporations, we

undertake to the court that they shall not prior to

the hearing of determination of application VG 84

of 1983, or until further order acquire or take any

further steps to acquire any shares in the capital

of Fibre Containers Llmited. "

(The phrase 'hearing of determination' should

presumably read 'hearmg and determination'.)

Northrop J. then pointed out that SCI was not a party to

the pre-sent proceedings, VG No. 84 of 1983. Counsel replied,

"We accept the proposition that we are inextricably

bound up and we will give ampliflcation when we

pursue our application which we made earlier."

(This was a reference to the application for joint

hearings.)

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On July 20, in the course of hearing a number of other

interlocutory appllcations in the two matters, the Court considered a notice of motion, from the second respondent only, asking that it (Fibre Containers Ltd.) be released from so much of

paragraph 2 of its undertaking as related to SCI. It was made

clear in the accompanying affidavit, and in submissions, that all

the second respondent was seeking was the right to take

negotiations with SCI one stage further, to give that company a

chance to make a revised offer which might be more acceptable to

the shareholders of Fibre Contalners Ltd. than the first offer had

been. Presumably, if such negotiations had proved -fruitful, there

would have been a further approach to the Court, seeking release

of both Fibre Containers Ltd. and its shareholders from so much of

paragraph 1 of the undertaking as related to SCI, thus opening the

way for a sale of shares to take place.

The material adduced in support of that application

consisted of two paragraphs	of an affidavit by the company‘	S
chairman of directors. He said

“I am informed and verily belleve that these

proceedings and all the preparation lncidental

thereto, will take a substantial amount of time and

involve a large amount of work, effort and expense

for all parties involved lncluding the second

respondent.

I also believe that the likely duration of the

proceedings and the uncertainty which would attend

the outcome thereof is and will continue	to be
disruptive of the business of Flbre Containers

Limited and unsettling to its employees and

customers. ”

- 6 -

Mr. McComas, who made the. application for the second

respondent, in answer to a question from the Bench as to how the

granting of the application would make the buslness of the company

less disrupted, or its employees and customers more settled, said,

“There can, of course, be no assurance that it

will, your Honour, but the mind of the second

respondent is at a polnt where it feels it should

make some endeavour to extricate itself, if it is

at all possible, from the dlfficult circumstances

in which It finds itself as a direct result of

these proceedmgs, or perhaps I should say, as a

primary result of the takeover offer having been

made by AR4, and secondly, as a result of the

proceedings which have followed and, of course, it

acknowledges that if the court sees fit to release

it in the manner which is requested there is no

guarantee that discusslons with SCI Packaging,

assuming it is willing to have those discussions,

will at all be fruitful, but such is the concern

that the second respondent has for its business

that it feels it ought to make this attempt .....‘I

This application by Fibre Containers Ltd. was opposed by

APM on the ground that it Would be patently unjust to relax the

undertakings so far as SCI was concerned while at the same time

holding APM to its undertakings and thus freezing its bid.

. The TPC expressed “a strong preference to have the

‘freeze‘ maintained all around, that being consistent with the

Commission‘s desire to see an even-handed approach wlth respect to

the parties . . . . ‘ I . It therefore opposed the application.

- 7 -

Counsel for SCI said that their cllent felt constrained

to oppose the application, though naturally sympathizing with i ,

because of the negotiations that had taken place with the TPC.

SCI's primary concern was that the TPC should continue with its action against APM, and it could not countenance any move which might lead the TPC to have second thoughts on that subject.

In his submlssion in support of the application, Mr.

McComas sought to emphasize that no irrevocable step would be

taken if the application were granted. All that was sought was

the right to negotiate, while the ultimate resolution of all

issues remained within the control of the Court. This, he said,

would give ample opportunity for justice to be done. As I said to Mr. McComas in the course of argument, I felt that this approach was somewhat unrealistic. Either the negotiations would prove

unfruitful, in which case his client would gain nothing: or they

would bear fruit, in which case the commercial realities of the

situation would produce an inevltable conclusion, and APN would

have suffered the prejudice it feared.

In view of the fact that all other partles opposed the

application, and that the positions of all parties, in a difflcult

commercial situation, had already been frozen by mutual agreement

for a period of two months, I took the view that the balance of

justice and convenience required that the undertakings continue In

force. I therefore refused the application.

- 8 -

There was some d i s c u s s i o n a t t h a t t i m e , and again on a

la te r occas ion , as to whether the form of order taken out on

May 23rd by the Commonwealth Crown S o l i c i t o r , f u l l y and accura te ly

recorded the undertakings whlch had been offered t o t h e Court on

t h a t d a t e . I ind ica t ed tha t I would not record any d i f f e r e n t form

of undertakings i n the absence of consent by a l l p a r t i e s , and t h a t

any applicatlon to vary the recorded order would have t o b e made

i n proper form and should probably be dealt with by Northrop J.,

whose order it was. I n the event , no such application has been

made and I the re fo re dea l w i th th i s ma t t e r on t h e b a s i s t h a t t h e

order correct ly s ta tes the undertakings given.

The f i r s t a p p l i c a t i o n f o r r e l e a s e from undertakings

having been refused on Ju ly 2 0 , the present notice of motion was

issued on August 11. On August 1 7 t he i s sue was re-argued a t

g rea te r l ength , on a somewhat d i f f e r e n t b a s i s , and with two

p a r t i e s announcing changed a t t i t u d e s t o it.

The appl ica t ion has now been put on t h e changed b a s i s

that both Fibre Containers L t d . and i t s shareholders wish to be

r e l e a s e d f r o m a l l p a r t s o f t h e i r u n d e r t a k i n g s so f a r a s

negot ia t ions w i t h S C I are concerned. They make it c l e a r t h a t t h e y

hope t o pursue such negot ia t ions to f ina l i ty . They a l s o make it

c l e a r t h a t t h e y have no wish o r i n t en t lon t o negot ia te with APM

while the TPC maln ta ins tha t a takeover by APM would cons t i t u t e a

breach of s . 5 0 of t h e Act and the Court has made no cont ra ry

f inding. They therefore say t h a t it i s unnecessary that hey be

- 9 -

_ .

bound by undertaking or by injunction not to negotiate with APM,

but they offer such an undertaking if it is required. I should

I

make it plain that this unwillingness to negotiate with APM in

present circumstances was also clearly indicated by Xr. McComas in

his July application.

The TPC has changed its attitude to the application. It

now says that it does not oppose the makhg of the orders sought

in the notice of motion, provided Fibre Containers remain sultably

bound by undertakings not to negotiate with APM.

Perhaps partly because of this change of attitude by he

TPC, and certainly because of continuing assurances by the TPC

that it lntends to proceed with its action against APM (SO long, I

assume, as a takeover by APN remains a realistic possibility), SCI

now feels free to support the application and has done so.

In the result, therefore, the application is opposed

only by APM. This is the background against which I must consider

the arguments for and against the application.

~ The first submission put by counsel for Fibre Containers

was that the Court had no power to grant injunctions in the terms

used in the undertakings and therefore no power to receive such

undertakings either. I do not accept thls submlssion for two

reasons. First, I think that [?hatever might be said about the

power, in cases under s.50 of the Act, to grant interlocutory

I :

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injunctions which have the effect of restraining persons who are

strangers to the litigation from dealing in the shares or assets of the target company, the power is clear where all the persons concerned are parties to the litigatlon. It must be remembered

that the undertakings in guestion were given in the course of

overlapping directions hearings of the two parallel actions under

s . 5 0 of the Act - ths present sction by the TPC and S C I 'S action

No. VG 82 of 1983. At the time the undertakings were offered, S C I

was anxious to obtain a partial joint hearing of the two closely the present action concludes, although it must be conceded that

related matters. Fibre Containers a lso supported a joint hearing.

any final judgment reached in the present action would be likely

to have a vital impact on that part of SCI's action which concerns

S. 50 of the Act. I think that, in all these circumstances, there

was power either to issue in-~unctions or to accept the

undertakings at the time they were offered, and thls power was not

affected retrospectively by a decislon to hear the	two cases
consecutively rather than, in part, concurrently.

Secondly, it was agreed by all counsel that the power of

the Court to accept undertakings at an interlocutory stage covers

cases "when the undertaking is reasonably related to the orderly

procedure of the court or to the subject matter of the

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litigation", to use the language of the majorlty of the Full Court

..

of the High Court (Gibbs C.J., Stephen, Mason and Wilson JJ.) in

Thomson Australian Holdings Pty. Ltd. v Trade Practices Commission

and Others (1981) 37 ALR 66 at 76.

Counsel for Fibre Containers argued that there was no

power to accept an undertaking not to sell shares of the target

company to SCI, because SCI was not a party to present proceedings

and it had not been alleged by anyone that an acquisition of Fibre

Containers Ltd's shares by SCI would contravene s.50 of the Act.

I believe that, in a proper case, while a s . 5 0

applicarion was on foot, the Court could accept an undertaking

from the target company that it would not sell its shares	or
assets to a stranger to the litigation. It is much harder to

imagine a case where an injunction in such circumstances would be

within power, but the Full Court of this Court has held that the

decision of the High Court In Thomson's Case (above) does not

preclude an interlocutory undertaking being accepted where an

interlocutory injunction could be beyond power - as where an

undertaking is offered as a condition for the granting of an

adjournment. See the judgment of Bowen C.J., Evatt and Deane JJ.

in Electrical Trades Union -of Australia and Anor v Waterside

Workers Federation of Australia (1982) 56 F.L.R. 430 at 4 3 3 .

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I

In any event, for easons whlch I have given, S C I was

not a s t r a n g e r t o t h l s l i t i g a t i o n . I ts own claim against APM

under s.50 of t h e Act i s before the Court as present ly const i tuted

and awai t s hear ing as soon as poss ib le a f te r the p resent case .

Counsel f o r S C I have said ' I . . . we a re inex t r i cab ly bound up" with

the present proceedings, and have ind ica ted tha t they would

continue to attend these proceedings even though they have been

denieci t h e r i g h t t o p a r t i c i p a t e i n them d i r e c t l y . Counsel f o r t h e

TPC have said that wi tnesses from S C I w i l l p lay a major p a r t i n

the presenta t ion of the i r case .

. To have accepted the view that a decision in favour of

separate hear ings would have t h e e f f e c t o f making undertakings i n

the present case concerning S C I unenforceable, would have been t o

i n h i b i t a proper decis ion as to the order ly conduct of the cour t ' s

business. This i s a touchstone by which the va l id bas l s of the

undertaking can be judged. NO such point was argued or consldered

when	the'	decision	i n	favour	of	separate	hearings	was made on 28
Ju ly .

I have no doubt t ha t , i n t he c i r cums tances o f t h l s ca se ,

the Court had power t o r 'eceive the undertakings i n quest ion on Piay

23 and has power to	en fo rce	them	today	in	the	events	that	have
occurred.

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I

I

I turn now to conslder whether, as a matter of

discretion, the Court should grant the present application.

The arguments in favour of granting the application may

be summarized as follows:

1. Fibre Containers Ltd., as the target company of a

takeover bid, is an innocent party, Whose.freedom of action should

not be curtailed. The same applies to its shareholders.

2. It is quite possible that Fibre Containers could

negotiate' an early sale of shares on terms which could be worth

$50m. to the shareholders. Such a sum invested. at, say, 16%

interest would brlng in $am. per year. The present annual profits

of the company are about $3m.

Because of the uncertainty created by the present litigation, Fibre Containers Ltd. is In danger of losing valuable

3 .

staff and customers. It seems that some attempts have recently

been made by unnamed competitors to make inroads in both areas,

although these attempts have not been successful. There must,

however, be some loss of confidence in the company due to the

uncertalnty of its future and thls can only work to the detriment

of the company and its shareholders. Affidavit evidence to	thls
general effect has not been challenged.

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4. Fibre Containers have given no undertaking not to sell

shares to any company other than APM and SCI. Since there is no

I

suggestlon that a sale to SCI would be in breach of s.50 of the

Act, there is no good reason why SCI should be treated differently

from other possible purchasers.

Fibre Containers have no recourse to the TPC or APM for any losses which they may suffer as	a result of adherence to the
undertakings given.

5.

6. The hearing of the present case is likely to last three

months or more. There could well be one or more appeal hearings,

and the Court might be persuaded that undertakings which had been

in force for a number of months should be allowed to continue In

force to cover the period of appeals.

7. Fibre Containers should not be penalized for having

complied, in a responsible way, with a request of the government

regulatory authority, the TPC, to maintain their present

shareholding position at a time when the TPC was investigating the

situation and instituting proceedings.

8. When it became apparent that Fibre Containers could

become the innocent vlctims of the general 'freeze' which had been

agreed to, they sought release from their undertakings. They

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should not now be penalized because they then sought only a

limited release and were not able to attract the support	f other
parties, particularly the TPC.

9. There can be no compulsion on Fibre Contamers to

consider a takeover bid from APM. In the present circumstances,

Fibre Containers have reached a firm conclusion that they will not

consider such an o€fer. They should otherwise be free to deal

lawfully with their own property.

Any harm which might be suffered by Am1 as a result of the success of this application is a direct result of the view

10.

responsibly held by the government regulatory authorlty, the TPC,

that APM would be in breach of the Act if its takeover proceeded.

The arguments which APM can advance against any

variation in the present appllcation of undertakings are:-

A. The undertakings have been in force now for three

months. In that period a great deal of time and effort have gone

into the preparations for hearing of this case. The costs, both

in legal fees and in staff time, have been very great indeed.

B. The case is now ready to begin. It has been prepared

with all. possible speed on all sides and the hearing will not be

unnecessarily prolonged by any party to it.

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C. It would be unfair for one of the two suitors for Fibre

Containers to be held to its undertaking not to negotiate Whuhlle

~

the other was released from Its parallel undertaking.

D. Fibre Containers have already made one unsuccessful

attempt to obtain release from their undertakings. The onus is now on them to show changed circumstances since that time.

E. The very giving of the mutual undertakings in this case,

and the resulting 'freeze' in negotiatlons for three months, have

apparently produced the result that Fibre Contamers are no longer

ready to negotiate with APM - as they were when the undertakings

were sought and given. APM has thus been prejudiced by the

existence of the undertakings and the delay in seeking	to have
them lifted.

F. If undertakings such as those in the present case are

not sought, given and maintained, many takeovers could be totally

frustrated by the mere institution of proceedlngs by the TPC.

Another bidder couid seize the opportunity to play on the concerns of the target company about cost of litigatlon, uncertainty and

delay,,and might succeed in arranging a takeover, posslbly even at

a lower price than that originally offered. The orlglnal offeror

would probably be restrained from negotlating, and it would never

have the opportunity to defend itself in court against the	TPC'	S
allegation.

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These arguments against granting the present applicatlon

a re cogent . I f the l ength of l i ke ly fu r the r ope ra t lon o f t he

undertakings had been measured i n days or weeks, I th ink they

should have prevailed. B u t t h e r e a l i t y o f t h e s i t u a t i o n i s t h a t

the undertakings, i f cont inued i n force , w i l l o p e r a t e f o r a t l e a s t

a number cf months. If kept in force dur ing poss ib le appea ls -

and consistency would probably requi re tha t resu l t - they could

opera te for a year or more.

I n these ci;cumstances, I f lnd tha t the probable cos t t o

the innqcent t a rge t conpany becomes a fac tor o f very g rea t

importance and, together with the other factors I have l is ted I n

* paragraphs 1-10 above, i s s u f f i c i e n t o overcome the con t r a ry

arguments.

I have therefore, I n sp i t e o f a grea t dea l o f sympathy

fo r t he application pos i t i on of APM, reached the c lear conclusion that th i s

should succeed.

That, however, i s not the end of the mat ter . Because of

the in te r locking na ture of the undertakings i n t h i s c a s e , which

were ;ought and glven on the understandlng that both APN and S C I

would be s lmi l a r ly bound, I th ink it would b e u n f a i r t o r e l e a s e

F ib re Con ta ine r s and S C I from t h e i r u n d e r t a k i n g s w l t h o u t

consider ing afresh the posi t ion of A P N .

- 18 -

I accept the argument which was put to me by counsel for

the TPC that it is not appropriaie in thls case to allow APM	to
pursue its takeover bid while relying upon the as-yet-untried

powers, given under s.81 of the Act, to order divestiture of

shares found to have been acquired in breach of S . 50. I have no

doubt that APM should be restrained from acquiring any addltional

shares in Fibre Containers Ltd. before this litigation 1 s

concluded.

On the other hand, I see no reason in principle why APM

should be restralned from negotiating for the acquisition of shares, such acquisition to take effect only if the Court flnds

that it would not be in breach of S. 50 of tKe Act. This

requirement could perhaps be met by undertakings or injunctions using the language of paragraph 1 of Fibre Containers' existing

undertakings. But because this proposition is novel, I would

prefer to give the parties to this action the opportunity to

consider and, I would hope, agree upon an appropriate form of

words to produce the result I have indicated.

I recognize that, in view of the firmly expressed

intention of Fibre Containers not to have any dealings vlth RPM In

present circumstances, such limlted undertakings may be both

unnecessary and, from APM's point of view, unhelpful. However

parties acting in good faith may sometimes depart from their

expressed intentions, and I believe thar even-handed justice

requires undertakings of the kind Indicated.

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I propose therefore to do no more at present than

state my intention to release all parties from their exlsting

undertakings when APN and Fibre Containers have prepared fresh

mutual undertakings, along the lines indicated, which are

acceptable to the Court. The views of the TPC will of course be

important in this connexion.

Before concluding these reasons, I should say that I am

conscious of the fact that there have been few actions brought

under s.50 of the Act, and this judgment may be seen as offerlng

some guidance for the handling of the early stages of future

proceedings. I simply want tQ stress that each case wlll have to

be dealt with in the light of its own facts and surrounding

circumstances. Nothing I have said should be taken as disapproving the practice adopted here of obtaining wide-reaching

undertakings in the early stages of such litigation, so that all

parties involved can concentrare on preparing for that litigation,

free from concern about what may be happening to shares in the

market place or in deals arranged behind closed doors.

The main point whlch emerges from these proceedings 1s that, on proper notice and proper material, a party should be able

to have injunctions varled, or to be relieved of its undertakings,

where the justice of the developing situation so requires. The fact that others have been similarly bound, and have acted for

I

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some time on the assumption that all parties will continue to be bound, is a consideration important to the exercise of discretion,

but is not necessarily conclusive.

I shall sit again, at times to be arranged, to determine

the form of, and to receive, appropriate undertakings and to

consider the future conduct of these proceedings and of the

related matters VG No. 82 and VG No. 126 of 1983.

I certify that this and the 19

preceding pages are a true copy of the

Reasons for Judgment herein of the Court

pdociate to the Honourable

Mr. JustlCe A.E. Woodward

Dated: 22 August 1983

I

Note. After further argument on	24 August 1983, undertakings !?ere accepted
-

from the second to eighth respondents only.

hr. Justlce A.E. Woodward

Dated: 24 August 1983