SCI Operations Pty Ltd v Trade Practices Commission
[1984] FCA 52
•15 MARCH 1984
VISY BOARD PTY. LTD. v. TRADE PRACTICES COMMISSION
Nos. VG249, 302, 303 and 308 of 1983
(1984) ATPR para 40 - 448 / 53 ALR 283 / 2 FCR 113
Administrative Law - Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Sweeney J.
Lockhart J.
Sheppard J.
CATCHWORDS
Administrative Law - judicial review - appeal from the dismissal of an application for an order of review - whether Minister abdicated responsibility to consider taking proceedings for alleged breach of s.50 of the Trade Practices Act - whether appeal court should interfere with exercise of discretion by primary judge not to make the order sought.
Trade Practices Act 1974 ss. 29, 50, 77, 80, and 81
Administrative Decisions (Judicial Review) Act 1977 ss. 5 and 16.
Administrative Law - judicial review - appeal from the dismissal of an application for an order of review of decision of Trade Practices Commission to discontinue its proceedings - whether decision amounted to an unlawful fetter or abdication by the Commission of its duty under the Trade Practices Act.
Trade Practices Act 1974 ss. 80 and 81
Administrative Decisions (Judicial Review) Act 1977: ss. 5 and 16
Federal Court Rules: Order 22 Rule 5(1)
Practice and Procedure - whether court as presently constituted should hear appeal - whether a fair-minded observer might entertain a reasonable apprehension of bias by reason of pre-judgment.
Practice and Procedure - principles to be taken into account in an appeal against the exercise of a discretion by primary judge in granting leave to discontinue.
Trade Practices Act 1974: ss. 80 and 81
Federal Court Rules: Order 22 Rule 2(1) (d); Order 35 Rule 6(1);
Practice and Procedure - appeal against refusal of primary judge to release undertakings - third such application for release - whether circumstances had arisen to justify the fresh exercise of a discretion by the primary judge.
Trade Practices Act 1974: s.50
VISY BOARD PTY LTD v. ATTORNEY-GENERAL (CTH)*
Administrative Law - Judicial Review - Ministerial decision not to institute proceedings under Trade Practices Act 1974 (Cth) - Whether Minister had duty to reply to request to communicate decision within two days - Application for order of review of Ministerial decision dismissed - Appeal - Whether primary judge erred in analysis of evidence - Whether exercise of discretion of primary judge had miscarried - Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5, 16 - Trade Practices Act 1974 (Cth), ss 50, 80(1), 80(1A).
Trade Practices - Ministerial decision not to institute proceedings under Trade Practices Act 1974 - Whether Minister had duty to reply to request to communicate decision within two days - Trade Practices Act 1974, ss 50, 80(1), 80(1A) - Administrative Decisions (Judicial Review) Act 1977, ss 5, 16.
VISY BOARD PTY LTD v. TRADE PRACTICES COMMISSION*
Administrative Law - Judicial Review - Decision of Trade Practices Commission to discontinue proceedings - Application for order of review of decision of Trade Practices Commission dismissed - Appeal from dismissal of application for order of review - Whether Trade Practices Commission took improper consideration into account when making decision to discontinue proceedings - Whether Trade Practices Commission unlawfully fettered its statutory powers, functions and duties under Trade Practices Act 1974 (Cth) - Whether Trade Practices Commission abdicated its statutory duty - Trade Practices Act 1974 (Cth), ss 80, 81 - Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5, 16 - Federal Court Rules 1979 (Cth), O. 22, r. 5(1).
Trade Practices - Decision of Trade Practices Commission to discontinue proceedings - Whether Trade Practices Commission took improper consideration into account when making decision to discontinue proceedings - Whether Trade Practices Commission unlawfully fettered its statutory powers, functions and duties under Trade Practices Act 1974 (Cth) - Whether Trade Practices Commission abdicated its statutory duty - Trade Practices Act 1974 (Cth), ss 80, 81 - Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5, 16 - Federal Court Rules 1979 (Cth), O. 22, r. 2(1), O. 32, r. 6(1).
APM INVESTMENTS PTY LTD v. TRADE PRACTICES COMMISSION*
Trade Practices - Order granting leave to Trade Practices Commission to discontinue proceedings for injunctive relief - Stay of operation of order - Whether Full Court of Federal Court as presently constituted should hear appeal - Whether court had pre-determined outcome and issues in the appeal - Whether primary judge had erred in exercise of discretion - Whether Full Court should substitute its discretion for that of primary judge - Whether order granting leave to discontinue resulted in injustice - Trade Practices Act 1974 (Cth), ss 80, 81 - Federal Court Rules 1979 (Cth), O. 22, r. 2(1)(d); O. 35, r. 6(1); O. 52, r. 14(2).
SCI OPERATIONS PTY LTD v. TRADE PRACTICES COMMISSION*
Trade Practices - Undertakings by companies competing in takeover offer - Alleged breach of s. 50 of Trade Practices Act 1974 (Cth) - Undertakings to maintain status quo pending litigation - Injunctions sought by Trade Practices Commission to prevent takeover - Parties released from undertakings by single judge of Federal Court - Fresh undertakings accepted by court - Full Court quashed order to release undertakings - Appellant's third application for release from undertakings - Appeal against refusal of single judge to release appellants from undertakings - Whether new and unforeseeable circumstances or substantial new considerations had arisen - Trade Practices Act 1974 (Cth), s. 50.
Appeal - Practice and Procedure.
HEADNOTE
In May 1983, SCI Packaging Pty Ltd (SCI) and APM Investments Pty Ltd (APM) each publicly announced its intention to make a takeover offer for all of the issued shares in the capital of Fibre Containers Ltd (FCL).
In May 1983, the Trade Practices Commission (the Commission) obtained undertakings (the May undertakings) from SCI and APM to effectively maintain the status quo pending litigation.
On 19 May 1983, SCI had sought, inter alia, declarations that the acquisition of FCL shares by APM would contravene s. 50 of the Trade Practices Act 1974 (Cth) (the Act) and that APM's pricing policy contravened s. 46 of the Act.
On 20 May 1983, the Commission sought injunctions to prevent the takeover of FCL by APM, alleging that such a takeover would breach s. 50 of the Act.
An outline of the history of the events giving rise to four appeals which were all dismissed (numbers VG 302, 303, 308 and 249 of 1983), appears in the reasons for judgment of Sweeney J. The four appeals were listed for hearing on 18 January 1984, and were heard separately by the Full Court of the Federal Court of Australia.
An appeal (VG 302 of 1983) was brought by Visyboard Pty Ltd (VB) from the judgment of a single judge of the Federal Court of Australia (Woodward J.), which was delivered on 20 January 1984, dismissing an application by VB under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the Judicial Review Act): VB had sought an order of review of the decision of the Attorney-General (Cth) not to institute proceedings against SCI Packaging Pty Ltd (SCI) under s. 80 of the Trade Practices Act 1974 (Cth) (the Act) in relation to SCI's announcement in May 1983 of its intention to make a takeover offer for the shares in Fibre Containers Ltd (FCL).
In August 1983, VB had unsuccessfully endeavoured to persuade the Trade Practices Commission to institute proceedings against SCI for allegedly contravening s. 50 of the Act. SCI had made an application, to which the Commission had consented, for release of its May undertakings to preserve the status quo pending litigation. Before the delivery of judgment on SCI's application, VB wrote a letter dated 25 October 1983 (the October letter) to the Commonwealth Attorney-General and sent another letter in similar terms to the Commission. At about the same time VB issued its own proceedings pursuant to s. 81 of the Act against both SCI and APM.
In the October letter VB urgently "requested and required" that the Minister, in the exercise of his statutory power, make a decision whether or not to institute proceedings against SCI and apply for an injunction under the Act, restraining SCI from acquiring, directly or indirectly, any shares in the capital, or any assets of FCL. The October letter further requested a response by telex or in writing on or before 5 p.m. on 27 October 1983. On that date the Attorney-General replied by telex stating that the prime responsibility for enforcement of the Act lay with the Commission and that "in the absence of compelling reasons to the contrary" the Attorney-General would adopt the same view as that taken by the Commission.
Accordingly, the Attorney-General advised that he did not propose to institute proceedings against SCI in respect of its possible acquisition of FCL.
Held (per curiam): The primary judge had correctly concluded that the appeal should be dismissed.
(Per Sweeney J.). No ground had been established for review under s. 5 of the Judicial Review Act. To hold otherwise, in the circumstances of this case would be to put a premium on audacity and add an unwarranted terror to the holding of ministerial office.
House v. The King (1936) 55 C.L.R. 499; Adam P. Brown Male Fashions Pty Ltd v. Philip Morris Inc. (1981) 148 C.L.R. 170 referred to.
(Per Lockhart J., Quaere). Whether the Attorney-General's decision was properly characterised as a decision made under an enactment within the meaning of s. 3(4) of the Judicial Review Act.
(Per Lockhart J.). The Attorney-General was under no duty, statutory or otherwise, to reply to VB's letter asking him to make, and to communicate, a decision within forty-eight hours to VB concerning whether or not he would institute proceedings against SCI to restrain a breach of s. 50 of the Act.
An appeal (VG 303 of 1983) was brought by Visy Board (VB) from the judgment of a single judge of the Federal Court of Australia, (Woodward J.) which was delivered on 22 December 1983, dismissing an application by VB, under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the Judicial Review Act) for an order of review of a decision of the Trade Practices Commission (the Commission).
The relevant decision of the Commission was to take such steps as were necessary to discontinue its proceeding (VG 84 of 1983) against all parties, on terms, inter alia, that:
1. The second respondent, Fibre Containers Ltd (FCL), and the third to eighth respondents, who were shareholders in FCL and closely connected with Amatil Limited (Amatil), would pay the costs of the Commission and indemnify the Commission against any costs it was ordered to pay.
2. The Commission would not issue injunction proceedings that had the effect of restraining APM Investments Pty Ltd (APM) from acquiring shares in FCL.
On appeal, it was contended on behalf of VB that:
(1) In making its decision the Commission had improperly relied upon or taken into account an offer made by FCL and Amatil to pay the Commission's costs and to indemnify the Commission against costs which it might be ordered to pay.
(2) The decisions to give the undertaking in relation to the seeking of an injunction against APM to restrain it from acquiring FCL shares amounted to an unlawful fetter by the Commission of its statutory powers, functions and duties under the Act.
(3) The decision in the circumstances of the present case amounted to an abdication by the Commission of its statutory duty under the Act to prevent APM's proposed acquisition of shares in FCL.
Held (per Lockhart and Sheppard JJ.): (1) It was not improper for the Commission to take the costs offer into consideration when making its decision to discontinue proceedings.
(2) The Commission was plainly entitled to decide to discontinue proceedings and was not abdicating any statutory duty in making that decision.
(3) When all the circumstances surrounding the Commission's decision to discontinue the proceedings were considered, the Commission could not be said to have fettered its future exercise of any statutory powers, functions or duties which might arise under ss 50 and 80 of the Act.
Watson's Bay and South Shore Ferry Co. Ltd v. Whitfield (1919) 27 C.L.R. 268; Ayr Harbour Trustees v. Oswald (1883) 8 App. Cas. 623; Cugden Rutile (No. 2) Pty Ltd v. Chalk (1975) A.C. 520; Birkdale District Electric Supply Co. v. Southport Corp. (1926) A.C. 355; Mulliner v. Midland Railway Co. (1879) 11 Ch. D. 611; York Corp. v. Leetham (Henry) & Sons (1924) 1 Ch. 557, referred to.
Held (per curiam): Accordingly, the appeal would be dismissed and VB would be ordered to pay the costs of the Commission.
An appeal (VG 308 of 1983) was brought by APM Investments Pty Ltd (APM) against an order of a single judge of the Federal Court of Australia (Woodward J .) which was delivered on 22 December 1983. The Trade Practices Commission was granted leave to file a notice of discontinuance pursuant to O. 22, r. 2(1)(d) of the Federal Court Rules 1979 (Cth) in an application by the Commission for an injunction to prevent a sale of shares in Fibre Containers Ltd (FCL) to APM (VG 84 of 1983).
His Honour set out the considerations which he took into account in favour of the applicant Commission as follows:
1. The applicant should not be compelled to litigate, against its will, at great length, and with considerable expenditure of public moneys, an action which it believes, on reasonable grounds, to be pointless;
2. The circumstances which have arisen, and which appeared to make further litigation by it unnecessary, were not designed by it; nor could they readily have been foreseen when the litigation was instituted;
3. The merits of the action have not been entered into - there is nothing to suggest that the applicant's case is lacking in good faith or in merit;
4. The applicant is prepared to surrender any right to pursue the remedy which it is presently seeking, namely an injunction to prevent the acquisition of certain shares or assets; (however it reserves the right, if it ever becomes appropriate, to bring an action which would probably be based on substantially the same material, seeking a divestiture of shares or assets so acquired); and
5. The applicant is prepared to submit to an order for those costs which it would be obliged to pay if its action were being dismissed on its merits at this stage.
A stay of operation of that order was granted by Woodward J., until the determination of the instant appeal or until further order.
When the Full Court of the Federal Court of Australia commenced hearing the appeal on 20 January 1984, a submission was made on behalf of APM that the court, as it was then constituted, should not hear that appeal or another party's appeal, namely VG 249 of 1983.
It was contended that the court, as it was presently constituted, had acted on 13 December 1981, in such a way that
"a fair-minded person could apprehend that the court had pre-determined the
outcome of the appeal and also real and significant issues in the appeal".
On 24 January 1984, the court announced that it did not propose to accede to the application of the other party that the court should not hear the appeal and that the court would publish its reasons in due course.
Visy Board Pty Ltd (VB) applied on motion to be joined as a respondent to the appeal or permitted to intervene in the appeal pursuant to O. 52, r. 14(2) of the Federal Court Rules 1979 (Cth) or, alternatively, to be given leave to appear as amicus curiae.
Held (per curiam): The appeal would be dismissed and the stay of operation of the order under appeal would remain in force until the Commission's minutes of orders giving effect to that dismissal had been considered and the appropriate orders had been made. The question of costs would be reserved.
(Per Sweeney and Lockhart JJ.). The primary judge made no error in dealing with the question of the principles relating to the exercise of his discretion in the present case . . . (or) acted upon a wrong principle, allow extraneous or irrelevant matters to guide or affect him, mistook the facts, or failed to take into account any material consideration. The result embodied in his Honour's order was not "unreasonable or plainly unjust".
House v. The King (1936) 55 C.L.R. 499; Lovell v. Lovell (1950) 81 C.L.R. 513; Mace v. Murray (1955) 92 C.L.R. 370; Adam P. Brown Male Fashions Pty Ltd v. Phillip Morris Inc. (1981) 148 C.L.R. 170, referred to.
(Per Lockhart J.). Order 22, r. 2(1)(d) of the Federal Court Rules 1979 (Cth) does not specify the matters which the court must take into account when considering an application for leave to discontinue, nor does it impose any fetter upon the exercise by the court of its discretion. It is for the court in the exercise of its discretion in each case to decide whether leave to discontinue should be granted and, if so, on what terms. The court must consider all the relevant circumstances including any injustice that may be sustained by any party if leave to discontinue is granted or refused as the case may be.
Covell Matthews and Partners v. French Wools Ltd (1977) 1 W.L.R. 876; Covell Matthews and Partners v. French Wools Ltd (1978) 1 W.L.R. 1477, referred to.
Held (per Sweeney and Lockhart JJ.), that it was more appropriate to make an order granting Visy Board Pty Ltd (VB) leave to be heard as amicus curiae rather than to grant leave to add VB as a party or to give VB leave to intervene in the appeal.
An appeal (VG 249 of 1983), which was part heard, was brought by the appellant SCI Operations Pty Ltd (SCI) and a related company against the judgment of a single judge of the Federal Court of Australia (Woodward J.) which was delivered on 15 November 1983. His Honour dismissed SCI's notice of motion dated 7 October 1983, in which SCI sought for the third time to be released from certain undertakings namely, not to acquire or dispose of certain shares pending litigation, which were given to the court on 23 May 1983 (the May undertakings). On 22 August 1983, Woodward J. had ordered the release of all parties from their undertakings, but his Honour had accepted a fresh undertaking from Fibre Containers Ltd (FCL), Amatil Ltd (Amatil) shareholders in FCL, who were closely connected with Amatil not to finalise any sale of shares to APM Investments Pty Ltd (APM).
On 21 September 1983, on appeal to a differently constituted Full Court of the Federal Court this order had been quashed and the Full Court held that, although the May undertakings were to operate until the hearing of the proceeding or further order, the undertakings should only have been released if new and unforeseeable circumstances or substantial new considerations were shown to have arisen since the undertakings were accepted and, in the interests of justice, required their release. It was submitted for SCI that two new circumstances had arisen namely, APM's proposal to sell part of FCL's plant if it were successful in acquiring the shares of FCL, and the resolutions in October 1983, (the October resolutions) by the directors of the subsidiaries of Amatil that they would not sell their shares in FCL to APM or to any of its related corporations "at any time in any circumstances or for any price". The Trade Practices Commission, FCL and Amatil contended that the appeal should be allowed, but the appeal was opposed by APM.
Held (per Sweeney and Lockhart JJ.): (1) It was open to his Honour to form the view that APM's proposal should not be regarded as a new circumstance justifying the release of the undertakings and to impute error to his Honour in forming that view would not be justified.
Mace v. Murray (1955) 92 C.L.R. 370; Adam P. Brown Male Fashions Pty Ltd v. Philip Morris Inc. (1981) 148 C.L.R. 170 referred to.
(2) (Per Sweeney J.). It was further open to his Honour, having heard evidence . . . and being familiar with the detailed history of the matter, not to regard the October resolution . . . as such a new circumstance justifying him in re-opening the question of the undertakings.
(Per curiam). Accordingly, the appeal should be dismissed.
(Per Sheppard J.). This appeal should be dismissed for different reasons from those of the primary judge. It is my respectful view that his Honour allowed what had been said by the other Full Court to weigh too heavily with him. The factual situation which confronted his Honour was very different from that with which that Full Court had to deal . . . the Commission did not oppose the application for the release of the undertakings . . . . It was the Commission's firmly held belief that the Amatil interests would never sell to APM . . . . But it has to be remembered that the proceedings were to be kept on foot. The Commission had not changed its mind that APM would be in breach of s. 50 of the Act if it acquired the shares . . . it was right to refuse to release the undertakings.
HEARING
1984, January 18, 20; March 15. #DATE 15:3:1984
APPEAL.
The appellant appealed from the judgment of a single judge of the Federal Court of Australia dismissing an application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) for an order of review of the decision of the Attorney-General (Cth). The Minister had decided not to institute proceedings against another company under s. 80 of the Trade Practices Act 1974 (Cth) in relation to its announced intention to make a takeover offer for the shares in a target company.
The facts appear in the judgment of Sweeney J.
APPEAL.
The appellant appealed from the judgment of a single judge of the Federal Court of Australia dismissing an application by the appellant as applicant under the Judicial Review Act for an order of review of a decision.
APPEAL.
The appellant appealed from the judgment of a single judge of the Federal Court of Australia granting leave to the Trade Practices Commission to file a notice of discontinuance pursuant to O. 22, r. (1)(d) of the Federal Court Rules 1979 (Cth) in an application for injunctive relief.
The facts appear in the judgment of Sweeney J.
APPEAL.
An appeal (VG 249 of 1983) was brought by the appellant company and a related company against the refusal of Woodward J. in an application brought by the Trade Practices Commission to release the respondents from certain undertakings given by them in May 1983 not to acquire or dispose of certain shares pending litigation.
R. Merkel Q.C. and N. J. Young, for the appellant.
D. Shavin and P. J. Jopling, for the first respondent.
P. J. O'Callaghan Q.C. and A. H. Goldberg Q.C. and A. J. Myers, for the second respondents.
Cur. adv. vult.
Solicitors for the appellant: Arnold Bloch Leibler & Co.
Solicitors for the first respondent: T. A. Sherman, Acting Commonwealth Crown Solicitor.
Solicitors for the second respondent: Barker Harty & Co.
J. D. WHITEHEAD.
Orders accordingly.
JUDGE1
There are four appeals presently before the Court and it will be helpful to a separate consideration of each of them to set out the history of the events which have given rise to them.
History
Fibre Containers Ltd (FCL) is the target company for two competing takeover bids made in May 1983, the first by SCI Packaging Pty Ltd (SCI) and the second by APM Investments Pty. Ltd. (APM). The APM bid gave rise to two applications to the court pursuant to s. 50 of the Trade Practices Act 1974 (the Act), one of which, application VG84 of 1983 was commenced by the Trade Practices Commission (the TPC) on 20 May 1983, seeking injunctions to prevent the takeover of FCL by APM, alleging that it would represent a breach of s. 50 of the Act because of the addition it would make to the substantial power already enjoyed by APM in the relevant markets in which APM, SCI and FCL are alleged to operate. In the second such application (VG82 of 1983) issued on 19 May 1983, SCI sought declarations that the acquisition by APM of the FCL shares would constitute a contravention of s. 50 and that the pricing policy adopted by APM constitutes a contravention of s. 46 of the Act, and other consequential relief including damages.
Before commencing application VG84 of 1983, the TPC obtained undertakings to it by SCI and from APM to produce the effect of maintaining the status quo until the matter could be brought before the Court.
In an affidavit sworn on 20 May 1983 Mr Krascum, an officer of the TPC, said that enquiries on behalf of the TPC indicated that FCL was seriously considering each of the proposed offers, so that there was a serious prospect of a take-over of FCL by either SCI or APM. On 17 May 1983 the TPC had decided that APM should be notified that it considered APM's proposed acquisition of FCL would breach s.50 of the Act. There have been fluctuations in the attitudes of the parties from time to time but that opinion of the TPC has remained constant.
When the application came on for directions on 23 May 1983, before Mr Justice Northrop, undertakings were given to the Court on behalf of APM, SCI, SCI Operations Pty Ltd, and FCL, and also on behalf of: Leigh-Mardon Pty Ltd; Associate Nominees Pty Ltd; Francis James Burke, Peter Becker, and William Gibson (as trustees for Leigh-Mardon Pty Ltd); and Arthur Kevin Smith; all of whom are substantial shareholders in FCL and all but the last of whom are closely connected with Amatil Ltd. I will follow the course adopted by Mr Justice Woodward in referring to these substantial shareholders in FCL, who are closely connected with Amatil Limited, as Amatil.
The recital to the corrected order of 23 May 1983 was in the following terms:
"Upon the following undertakings being given by the First Respondent, S.C.I. Operations Pty. Ltd. and S.C.I. Packaging Pty. Ltd.:-
A.P.M. Investments Pty. Ltd., S.C.I. Operations Pty. Ltd. and S.C.I. Packaging Pty. Ltd. each by their respective Counsel undertake to the Court that they and any related corporations will not, prior to the hearing or determination of Application No. VG84 of 1983 or until further order, acquire or take any further steps to acquire any shares in the capital of Fibre Containers Ltd.
AND upon the following undertaking being given by the Second to Ninth Respondents:-
that until the determination of these proceedings or further order -
1. The Third to Ninth Respondents will not sell to or accept any offer from A.P.M. INVESTMENTS PTY. LTD. (A.P.M.) (or any related corporation of A.P.M.) 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. The Second to Ninth Respondents will not aid, abet, counsel or procure A.P.M. (or any related corporation 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 acquisitions.
AND subject to the making of an appropriate Declaration by the National Companies and Securities Commission to enable effect to be given to the undertakings herein pursuant to the Companies (Acquisition of Shares) (New South Wales) Code."
The order then set out the directions which were given.
(The first respondent was APM, the second respondent was FCL, and the third to eighth respondents were Amatil. The ninth respondent was Arthur Kevin Smith.)
The directions given on 23 May 1983 were designed to enable the trial of the application to commence on 18 July 1983. Various other directions hearings and interlocutory applications took place, and appeals were instituted, with the result that the trial has not commenced.
In its amended statement of claim the TPC gave particulars of the markets which it said were involved and alleged, amongst many other things, that
1. APM owns 18 1/2% of the issued capital of FCL.
2. APM owns 40% of the issued capital of James Hardie Containers Limited, a consumer of approximately 25% of the paperboard supplied in Australia.
3. APM owns the whole of the issued capital of Containers Limited, a consumer of approximately 2.2% of the paperboard supplied in Australia.
4. APM owns 6 of the 8 mills which produce paperboard in Australia, which 6 mills represent approximately 72% of the paperboard manufacturing capacity in Australia.
5. Between approximately 1953 and the date of the application APM engaged in conduct:
(a) in the paperboard market;
(b) in the fibre container market; as a result of which APM;
(i) strengthened its existing power and acquired further power in each of those markets, or alternatively,
(ii) demonstrated the nature and extent of its power by the exercise thereof in each of the said markets.
Detailed particulars of these allegations were set out under the headings, "Distribution", "Pricing Polices" and "Acquisitions".
6. APM is in a position to control or dominate the paperboard market.
7. APM proposes to acquire all of the issued shares in the capital of FCL.
8. That acquisition would, or would be likely to substantially strengthen the power of APM to control or dominate the paperboard market in contravention of s. 50(1)(b) of the Act and/or result in APM being, or being likely to be in a position to control or dominate the paperboard market in contravention of s. 50(1)(a) of the Act.
9. Further or in the alternative, the acquisition of the FCL shares would result in APM being, or being likely to be in a position to control or dominate the fibre container market in contravention of s.50(1)(a).
10. FCL threatens and unless restrained intends to recommend to its shareholders that they accept APM's offer.
12. Amatil own approximately 71% of the issued capital of FCL.
In its defence, which, as will be seen, has been otherwise amended, APM admitted that it proposed to make offers to the shareholders of FCL to acquire their shares, and this intention on its part has never wavered. It is unnecessary for present purposes to give details of its stated willingness to increase the amount offered for each share.
In their amended defence dated 29 July 1983, Amatil stated that if and when APM made offers to acquire all of the issued capital of FCL they would consider whether or not they would accept those offers in respect of the shares in FCL which they owned or held, which amounted to 74% of its issued capital. By leave, given by consent on 31 January 1984, Amatil changed this plea to read, as follows:
"The AMATIL Respondents admit that the Firstnamed Respondent . . . (A.P.M.) . . . has made an offer to purchase all the issued shares in the capital of Fibre Containers, but neither they nor any one of them intend to accept such offer or any other offer by the Firstnamed Respondent to purchase the said shares or by any other means to permit the Firstnamed Respondent to acquire all or any of the said shares held or beneficially owned by any of the AMATIL shareholders."
This amendment reflected the changed attitude of Amatil to the APM offer, of which more anon. The change in turn led, as we shall see, to the TPC indicating its abandonment of its allegation that FCL threatened and intended to recommend to its shareholders that they accept APM's offer.
On 20 July 1983 Woodward J had before him a notice of motion, in VG84 of 1983, by FCL, seeking that it be released from paragraph 2 of the undertaking which it had given to the court on 23 May 1983 insofar as it related to SCI, to enable it to "sound SCI out" about the possibility of a revised offer to it by SCI. FCL's application was opposed, for differing reasons, by the TPC, APM and SCI, and it was refused on 20 July 1983.
On 27 and 28 July S.C.I.'s application for a joint hearing of VG82 of 1983 and VG84 of 1983 was heard by Woodward J and refused on 4 August 1983.
By further notice of motion dated 11 August, which was heard by Woodward J. on 17 August, FCL and Amatil sought orders that they be released from their undertakings in relation to SCI, and that SCI and its related corporations be released from the undertakings given by them to the court on 23 May 1983. The TPC stated that it did not oppose these releases, provided that FCL and Amatil remained bound by their undertakings not to negotiate with APM until the TPC's s. 50 proceedings had been determined. SCI supported the application, and APM opposed it.
His Honour published reasons for judgment on the motion on 22 August 1983 but postponed making any orders until 24 August 1983 when he ordered the release of all parties from the undertakings given on 23 May 1983, and accepted a fresh undertaking from FCL and Amatil not to finalize any proposed sale of shares to APM.
APM appealed against the order made on 24 August 1983, and on 21 September 1983 a Full Court of this court constituted by Smithers, Fitzgerald & Jenkinson JJ allowed the appeal and set aside the order of 24 August 1983.
On 10 October 1983 APM was given leave to amend its defence filed in VG84 of 1983. The substance of the amendment, as set out in paragraph 17A, was to foreshadow that, if it were successful in acquiring the shares in FCL, APM would dispose of about half of FCL's productive capacity.
This idea of splitting FCL was first considered by APM in early September as a course to be pursued if the Full Court were to dismiss the appeal against the order of 24 August 1983 and release all undertakings. APM had discussed the proposal with the TPC and had been encouraged by the TPC reaction, although the TPC had indicated that, before expressing any approval, it would need to know who was to acquire the other half of FCL's business.
APM did not tell FCL, Amatil, or SCI of the splitting proposal and in the event the Full Court allowed the appeal. However APM then decided that it would seek from FCL and Amatil their reaction to its proposal to split the company after acquisition. APM's object was to secure a generally agreed release from all undertakings, and enable a prompt result to be achieved by a free bidding match in the market place, thus avoiding the necessity for further protracted litigation. The proposal was eventually totally rejected by Amatil, and APM applied to amend its defence again by deleting all reference to such a proposal. This amendment has since been allowed.
Amatil reacted strongly to the news of APM's plan to split FCL's capacity, if its offer were accepted. In his affidavit of 12 October 1983, Mr Peter Becker, Chairman of Directors of FCL and of Leigh-Mardon Pty Ltd and a director of Amatil Limited deposed as follows:-
"8. Paragraph 16 of the said Part A Statement of the First Respondent (APM) including the heading thereto is in the following terms:
'INTENTIONS OF INVESTMENTS REGARDING THE BUSINESS OF THE COMPANY
It is the present intention of Investments -
(a) to continue the business of the Company in its present basic form;
(b) not to make any major changes to the business of the Company, including any redeployment of the fixed assets of the Company;
(c) not to close any of the existing operating plants of the Company; and
(d) to continue the employment of the present employees of the Company.'
9. The intentions of the First Respondent, as expressed in paragraph 17A of its Amended Defence are directly contrary to the intentions of the First Respondent as expressed in sub-paragraphs 16(a) and (b) of the said Part A Statement and represent a significant and fundamental change in the intentions of the First Respondent as originally expressed.
10. In my opinion publication of the intentions of the First Respondent as expressed in its Amended Defence will have an extremely serious adverse effect on the business of the Second Respondent (FCL), upon the morale of its employees and upon the relations of the Second Respondent with its customers and consequently its ability to compete effectively in its market. In this regard I have read the affidavit of George Castan, a Director of S.C.I. Operations Pty. Limited and S.C.I. Packaging Pty. Limited dated 7th October, 1983 and filed herein and agree with the opinions expressed therein as to the impact which the publication of the intentions of the First Respondent is likely to have on the business of the Second Respondent, the value of that business and upon its employees.
11. In all of the circumstances and having regard to the intentions of the First Respondent as expressed in paragraph 17A of its Amended Defence and to the contents of the affidavit of Stanley David Martin Wallis sworn on 28th September, 1983, the Third to Eighth Respondents have now decided not to sell their shares in the Second Respondent to the First Respondent. That decision has been made with the knowledge of the contents of an affidavit of Stanley David Martin Wallis which I am informed and verily believe the First Respondent intends to file in this Honourable Court tomorrow.
12. I say further that when on 23rd May, 1983, the Second to Ninth Respondents gave to this Honourable Court the undertakings more particularly set out in the Order of the Honourable Mr. Justice Northrop of the same date, they did so having regard, inter alia, to the circumstances then prevailing which circumstances included the intentions of the First Respondent as expressed in its Part A Statement identified in paragraph 8 of this my Affidavit. The intentions of the First Respondent as now expressed are such that, when added to the circumstances referred to in my affidavit of 11th August, 1983, filed herein and in the affidavit of Francis James Burke sworn on the same date and filed herein, the overall circumstances have now so changed that had they been known to or reasonably foreseeable by the Second to Ninth Respondents on 23rd May, 1983, which they were not and could not be the said undertakings would not have been given."
Mr Wallis the managing director of APM, in his affidavit of 28 September 1983, had set out APM's decision to sell about half of FCL's business.
Mr Castan, a director of SCI, in his affidavit of 7 October 1983 referred to a letter dated 28 September from the solicitors for APM to those of FCL advising them of the proposed amendments to APM's defence, setting out the plan to dispose of about half of FCL's business and continued as follows:-
"11. . . . . . . . . The application foreshadowed in that letter was the first time there had been any indication by APM that it proposed that if it acquired the whole of the shares in FCL it would break up or dismember FCL's business.
12. I consider that the implications of the aforesaid statement of intention by APM are enormous. The nature of the cardboard container industry is such that if the proposed amendment, setting out as it does APM's intentions, becomes a matter of public knowledge the business of FCL will suffer immediate and irreparable damage as it would lose customers who would wish to ensure that their contracts for future purchases were made with a company which was going to continue carrying on business in the form known to and accepted by the customer. In my opinion the ways in which FCL will suffer damage if this publicity occurs are many and various and I have no doubt that the loss of trade by FCL will be massive and quick. I estimate that within six months the trade of FCL will have been substantially reduced and that this reduction will probably occur progressively over that period. In addition I believe that many employees will seek other employment because of the necessary uncertainty as to the future of the business of FCL.
13. When the undertakings were given to the Honourable Mr. Justice Northrop on the 23rd May, 1983, and at the time SCI made its previous application to be joined as a party in these proceedings the factual basis underlying the proceedings was much different from that which will exist when APM's intentions are made public. At that time SCI and APM were proposing to bid for the whole of the issued capital in FCL on the basis that FCL would continue in the form and carry on its business as it had hitherto. The proposed amendment by APM contemplates a dismembering of FCL which has significance not only in relation to the attractiveness of FCL to a bidder, but also in relation to the effect of section 50 of the Trade Practices Act in such circumstances. Whilst a target company (the business of which will be carried on by the acquirer) will suffer substantial damage if it so remains a target company for a lengthy period a target company in respect of which a potential acquirer states it will be cut in half will suffer a much greater loss of trade very quickly.
14. At the time of giving the said undertakings SCI had assumed that if APM acquired the FCL shares it would retain the whole of the business of FCL and I believe that was the assumption of most people in the paperboard industry. Had SCI known at the time it give its undertakings that APM would announce its intentions to break up and dismember FCL's business this would have been a vital factor in SCI's consideration in relation to its offer to acquire shares in FCL and the giving of the undertaking.
15. In consequence of the amendment I am informed by SCI's legal advisers and do verily believe that the evidence which will need to be called in the application and the issues which will need to be canvassed will be substantially increased as it will be necessary for the matter to proceed on the basis of alternative analyses, namely:
(a) The identification of the market and the position in it if APM acquires the whole of the issued capital in FCL and maintained its business in its present form.
(b) The identification of the market and the position in it where 50% of the business of FCL is in some way dismembered and 'sold' to an as yet indeterminate and unidentified purchaser.
16. As SCI is not only the proprietor of a paper mill, but also through an interest in Cargo Newpak, a company with an interest in the converting industry in which FCL operates, SCI not only has an interest in the issues which arise from the proposed amendment but also may be affected if any decision or determination of the Court is made on the basis of the proposed amendment.
17. Further, having regard to the change in circumstances brought about by the proposed amendment, SCI submits that it is appropriate and, indeed necessary, for the parties who gave the undertakings on the 23rd May, 1983, to be released from those undertakings as the factual substratum which brought about those undertakings has now changed significantly."
A third application for release of the undertakings given to the court on 23 May 1983 was made by SCI by notice of motion dated 7 October 1983. Whereas the TPC had opposed the first application for release, and had not opposed the second application for release so long as FCL and Amatil remained suitably bound by undertakings not to negotiate with or sell to APM, it consented to SCI's application for all undertakings to be lifted. However senior counsel for the TPC stated that if APM were to acquire the FCL shares, the TPC would seek divestiture. Woodward J began hearing the motion on 13 October 1983. The application was supported by all parties except APM.
On 17 October 1983, while the third application for release was proceeding before Woodward J, the board of directors of Amatil Limited passed the resolution "that the Company will not sell its shares in Fibre Containers Ltd to APM Investments Pty Ltd or to any of its related corporations at any time or in any circumstances or for any price."
In the course of the hearing of the third application for release, it was submitted on behalf of SCI and FCL that the TPC should discontinue VG84 of 1983 since Amatil's decision not to sell its shares to APM had rendered the application unnecessary and academic. Mr Williamson QC., for TPC, indicated to his Honour that his client would not take this course. He said:
"The view of the Commission is that the question of futility is something to be judged by the court. The Commission can have its own views, whatever they may be, but its own views may well be wrong. If there were a decision by this Court arising out of the present application which indicated futility, well that of course is something which the Commission must then respond to. Indeed, if there are any indications by the Court in terrorem one way or the other the Commission would clearly have to give the most serious consideration to any such indications.
That is not to say that the Commission wishes to avoid making a decision if one is called for but its position is that its overwhelming desire is to do what seems to be fair to all the interests that are involved. But within the context of the main application, that is certainly if it is taking the initial proceedings and certain things follow from that, and that means inevitably the Commission is opposed to APM so long as APM proposes to proceed, but in that context wants to follow such course as is fair to APM, as is fair to Smorgon, as is fair to FCL, it appears that is insoluble to them."
FCL and Amatil indicated a willingness to consent to judgment for injunctions in the terms sought by the TPC in its application in VG84 of 1983, but the TPC declined to move for that relief.
Prior to reserving judgment on 19 October 1983 his Honour had said that if, having had a chance to study the material that had been put to the court the TPC wished to take any different stand from the one it had so far indicated "and to firm up its position one way or the other", he would not regard it as discourteous to the court if an indication of that were given, so that the court could be reconvened.
The TPC re-stated its position in a telex addressed to several parties, including Visy Board Pty Ltd (VB) and dated 27 October 1983, when the hearing of the third application for release had been completed but before his Honour had delivered judgment. The major field of VB's operation was the conversion of paper board into fibre containers.
It stated, inter alia:
"As you are aware, the Commission has not opposed the release of all parties from their undertakings in the proceedings recently before Woodward J. The Commission did however state that if the judge were minded to release the parties it would wish to preserve its option to proceed for divestiture if APM were successful in acquiring FCL. The judge has reserved his decision on the question of the undertakings. You may be aware also that during the course of these recent proceedings the suggestion was made that the Commission should discontinue its proceedings against APM because FCL had resolved not to sell to APM and discontinuance would be followed by immediate sale to SCI. The Commission stated to the court and confirms with you that it is not its intention to discontinue its proceedings against APM and that if APM is released from its undertaking and proceeds to acquire FCL it will proceed for divestiture pursuant to section 81 of the Act. The Commission would not institute similar proceedings against SCI."
Woodward J dismissed SCI's notice of motion on 15 November 1983. In his reasons for judgment his Honour said:
"Although the role of the TPC has now been adverted to in open court, I do not believe that I should say anything to influence it in the performance of its statutory functions, and nothing I have said should be read as having that intention."
VG249 of 1983, the appeal by SCI from Woodward J's judgment of 15 November 1983, came on for hearing on 13 December 1983. On 12 December 1983 FCL and Amatil filed in VG249 of 1983 a notice of motion returnable before the Full Court on 13 December 1983. It sought the following orders:
"1. That pursuant to Order 3 Rule 3 of the Federal Court Rules time for service of this notice of motion be abridged.
2. An injunction restraining the fourth to tenth respondents -- (Amatil and Arthur Kevin Smith) -- by themselves, their servants or agents or otherwise howsoever from entering into a contract to sell, directly or indirectly any shares registered in their names or the names of one or more of them in the capital of Fibre Containers Limited to the second respondent. -- (ie. APM) --.
3. An injunction restraining the third respondent -- (FCL) -- by itself, its servants or agents or otherwise howsoever from aiding, abetting, counselling or procuring or in any way being directly or indirectly, knowingly concerned in or a party to:-
(a) the acquisition by the second respondent of any shares in its capital or any of its assets;
(b) the sale by the fourth to tenth respondents or any of them of any shares in its capital to the second respondent.
4. Such other order as the Court deems fit."
Paragraphs 2 and 3 were in the same terms as the final relief sought by the TPC in VG84 of 1983 against FCL, Amatil and Arthur Kevin Smith.
During the course of opening the SCI appeal on 13 December 1983, Mr O'Callaghan Q.C., for SCI, referred to the Amatil resolution of 17 October 1983 and again submitted that if it was firm it had rendered VG84 of 1983 futile and the TPC should withdraw the application.
After the luncheon adjournment on 13 December 1983 Dr Griffith Q.C. for FCL and Amatil referred to the statements made before Woodward J that FCL and Amatil would submit to judgment by way of injunctions in the terms sought by the TPC in its application if the TPC would so move. Dr Griffith said:
"But the difficulty is the commission up until the time we proceeded to court this morning has still not indicated either it was prepared to make terms of settlement with us whereby we bound ourselves not to sell to APM - and I indicated as a matter of open offer to the commission we are prepared to do that."
Dr Griffith went on to say that his clients were prepared to give an undertaking to the TPC "not to sell to APM ever". Alternatively, they were prepared to give an undertaking that they would not sell to APM without giving to the TPC whatever notice was stipulated. He then referred to the notice of motion filed on 12 December 1983 in which FCL and Amatil sought to move for judgment against themselves because of the TPC's reluctance to so move. He stated that if the TPC were to move for judgment against his clients, his clients would consent to such a judgment and would pay the TPC's costs, including any costs which the TPC may be ordered to pay in favour of another party. He desired to "tender a letter written yesterday by the Crown Solicitor to the Trade Practices Commission which states what is in effect my submission now to the court."
Mr Williamson responded by indicating that the TPC desired to move for judgment against FCL and Amatil with the orders for costs proposed by Dr Griffith and for leave to discontinue against APM. Mr O'Callaghan then applied for an adjournment of the hearing of the appeal to enable the forshadowed motion by the TPC to be brought before a single judge. The adjournment was granted over APM's opposition.
On 14 December 1983 the TPC took out two notices of motion in VG84 of 1983 both made returnable on 15 December. In the first notice it sought the relief which Mr Williamson had foreshadowed to the Full Court on 13 December 1983 that he proposed to seek. The second notice of motion sought leave to discontinue against all parties with the same order for costs against FCL and Amatil. On 14 December 1983 when it was realised that s. 80(1) of the Act did not permit a consent judgment unless the court could be satisfied that the facts justifying it had been established, which was not possible without an extensive hearing, the TPC decided to seek leave to discontinue against all parties as set out in the second notice of motion.
When the matter came before Woodward J on 15 December 1983 the TPC proceeded only on its second notice of motion. Discontinuance of proceedings is dealt with by Order 22 of the Federal Court Rules, the relevant rules of which provide that, at the stage reached in VG 84 of 1983, after the close of pleadings, a party making a claim for relief may discontinue a proceeding so far as concerns the whole or any part of any part of any claim for relief made by him at any time, with the leave of the Court.
On 15 December 1983, before Woodward J, Mr Williamson referred to the Amatil resolution of 17 October and to the statements made to the Full Court by Dr Griffiths on 13 December, and informed the Court that in recognition of what the TPC perceived to be the commercial reality of the situation, it no longer wished to continue its proceedings to restrain APM, which will not, by reason of Amatil's attitude, be in a position where it can infringe the Act.
APM opposed the application arguing that leave to discontinue should not be granted or only granted on the most stringent terms. Mr Shaw Q.C. submitted that if leave were to be granted to the TPC it should be on the condition, inter alia, that the TPC undertook not to take any fresh action against APM if APM succeeded in acquiring FCL shares. Counsel for the TPC informed his Honour such a condition would not be acceptable to the TPC. It was prepared to surrender any right to pursue an injunction to prevent the acquisition of FCL shares or assets by APM but it was not prepared to give up the right to bring an action for divestiture of shares or assets so acquired.
Woodward J, in his judgment on the application for leave to discontinue delivered 22 December 1983, said:
"I am satisfied that the application should be granted, on terms that TPC pay APM's taxed costs and undertakes not to institute any further proceedings for injunctions, or otherwise seek, to prevent the purchase of shares in FCL by APM. The words 'or otherwise seek' are within the spirit, though not the words, of the undertaking offered by TPC. I think some such addition is necessary. Such an undertaking would not prevent a later application for divestiture if TPC saw fit to bring it. I shall make the agreed order for costs against the second to eighth respondents.
Because I believe the parties should have an opportunity to consider the precise wording of the undertaking to be given by TPC as a condition of leave to discontinue, I shall make no formal order now. I shall sit again at a time convenient to the parties."
Later on 22 December 1983, after the parties had agreed upon the precise wording of the undertaking to be given by the TPC, Woodward J made the following order:
"UPON THE TRADE PRACTICES COMMISSION UNDERTAKING to the Court that it will not, prior to the expiration of twelve (12) months after the date upon which it files a notice of discontinuance herein and thereafter, until further order, institute any further proceedings seeking injunctions restraining the acquisition by A.P.M. Investments Pty. Limited or any company related thereto (hereinafter referred to as 'APM') of shares in Fibre Containers Limited and will not otherwise seek to prevent such an acquisition, save that the Trade Practices Commission does not hereby give any undertaking not to institute proceedings seeking orders in the event that such an acquisition takes place, for the divesture by A.P.M. of any shares acquired by it, directly or indirectly, in Fibre Containers Limited,
THE COURT ORDERS THAT:
1. The Applicant have leave to file a Notice of Discontinuance of the Application herein.
2. The costs of the firstnamed Respondent of and incidental to the Application herein and Applications No. VG 150 of 1983 and No. VG 249 of 1983 in this Honourable Court, (including all reserved costs) be taxed and when taxed paid by the Applicant.
3. The costs of the Trade Practices Commission of and incidental to the Application herein and Applications No. VG 150 of 1983 and No. VG 249 of 1983 in this Honourable Court (including all reserved costs) be taxed (if not otherwise agreed) and when taxed (or so agreed) paid by the second, third, fourth, fifth, sixth, seventh and eighth Respondents together with any costs which the Applicant may have to pay to the firstnamed Respondent pursuant to paragraph 2 of this Order."
APM has appealed against this judgment of Woodward J. and that appeal (VG308 of 1983) is one of the four appeals with which we have to deal. By order of Woodward J, this judgment was stayed until the hearing and determination of the appeal or until further order.
In the course of the hearing before Woodward J on 15 December 1983 VB sought leave to intervene, which was refused. However, his Honour heard VB as amicus curiae.
At the same time VB served and filed an application (VG281 of 1983) pursuant to s. 5 of the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") for an order of review in respect of the decision of the TPC to seek leave to discontinue its action against APM in which it sought, inter alia, an order that the decision to do so be quashed or set aside.
On 20 December 1983 Woodward J heard VG281 of 1983 and reserved judgment, which was delivered on 22 December 1983, dismissing VB's application, with costs. VB has appealed against this judgment, and that appeal (VG303 of 1983) is another of those four appeals.
In the meantime, on 20 December 1983, Woodward J. had delivered judgment in VG232 of 1983 dismissing an application dated 9 November 1983 in which VB, pursuant to s. 5 of the ADJR Act, had sought an order of review of the decision of the Attorney-General of the Commonwealth of Australia ("the Attorney General"), not to institute proceedings against SCI under s. 50 of the Act in respect of its take-over bid for FCL in May 1983. VB has appealed against this judgment and that appeal (VG302 of 1983) is another of those appeals.
The four appeals (VG249 of 1983, VG302 of 1983, VG303 of 1983 and VG308 of 1983) were listed for hearing on 18 January 1984.
The four appeals have been heard separately. This outline of the history of the matters will be helpful in considering each of them separately. I turn first to the appeal VG302 of 1983 instituted by VB and naming as respondents the Attorney General and SCI.
VB v The Attorney General & SCI (VG No. 302 of 1983)
On 20 January 1984 the court announced that this appeal was dismissed with the costs of the Honourable The Attorney-General to be paid by the appellant and the costs of any other party to be reserved and that reasons for judgment would be given in due course.
In its application, VB sought a review of the decision of the Attorney-General not to institute proceedings against SCI under s. 50 of the Act in respect of SCI's proposed acquisition of shares in FCL. VB sought an order quashing or setting aside that decision and an order requiring the Attorney-General to make the decision the subject of these proceedings in accordance with law.
In August 1983 VB had a meeting with the TPC at which it unsuccessfully endeavoured to persuade the TPC to institute s. 50 proceedings against SCI. On 19 October 1983 Woodward J reserved his judgment on SCI's application for release of the undertakings given to the court on 23 May 1983. The TPC had consented to that application. On 25 October 1983, before the delivery of judgment on SCI's application, VB wrote a letter to the Attorney-General. It also wrote to the TPC in similar terms. At about the same time VB issued its own proceedings pursuant to s. 81 of the Act against both SCI and APM.
The letter from VB to the Attorney-General of 25 October 1983 was in the following terms:
"Dear Sir,
Re: Proposed Acquisition of the Share Capital of Fibre Containers Limited ("FCL") by A.P.M. Investments Pty. Ltd. ("APM") or Smorgon Consolidated Industries ("SCI")
The conversion of paper board into fibre containers is the major field of operation of Visy Board Pty. Ltd. ("Visy"). A major competitior in that activity is FCL. Unless relief is granted on the basis of a contravention of Section 50 of the Trade Practices Act 1974 ("the Act"), FCL will be acquired by either APM or SCI. It is the clearly held view of Visy that a takeover by either company will contravene Section 50 of the Act.
Substantially all paper board used by Visy and other companies engaged in the manufacture of fibre containers in Australia is supplied by APM or SCI. Both APM and SCI are already associated with companies engaged in the conversion of paper board into fibre containers.
The Trade Practices Commission ("the Commission") has recognised the dangers inherent in the proposed acquisition by APM of FCL and has proceeded accordingly under Section 50 of the Act in the Federal Court to restrain the takeover exercising its power to do so under Section 80 (1A).
There is one matter, however, which I would mention specifically. If the Commission had made no application for an injunction but had waited to see whether A.P.M. acquired the shares, it would have been open to it, if it thought it appropriate, to institute proceedings for divestiture and also a penalty. That was something which A.P.M. must always have realised was a possibility. If the judgment of Woodward J. stands, all parties, subject to what I would further say, will be placed in the same position as they were in immediately before the proceedings were commenced and the undertakings given. A.P.M. is free to acquire the shares if it can persuade the Amatil interests to sell to it. The qualification I make to that statement is at the heart of A.P.M.'s resentment at the course of events which has overtaken it. If no proceedings for an injunction had been instituted, it is not improbable that the shares would long since have been acquired by A.P.M. If it fails to acquire them, it will be because between May 1983 when the undertakings were given and the present time, the Amatil interests changed their minds. Thus if it had not been for the proceedings, A.P.M. would have achieved its object albeit that the Commission might have applied for divestiture. A.P.M. feels and will probably always feel that it was the intervention of the Commission and the taint of illegality which its proceedings caused which have placed it in such a difficult position.
I understand fully the resentment which A.P.M. must feel. It is something for which one must have much sympathy. But what has happened is not, in my opinion, due to any wrong conduct on the part of the Commission or any of the other parties to this litigation. It is a consequence of the existence of the Act itself and of its administration by the Commission. As the majority of the High Court in Thomson Australian Holdings Pty. Limited v. The Trade Practices Commission (1981) 148 C.L.R. 150 said (p.164):-
"The appellant is bound to accept any damage to its business which is consequential upon the enforcement by the Commission against the defendants of the provisions of the Trade Practices Act so long as that damage does not constitute an infringement of the appellant's legal rights, if any."
Although what their Honours there said was directed to a somewhat different problem, it is an apt statement of what has happened here. That must be so when one bears in mind that the Act is not concerned with either benefitting or disadvantaging the companies engaged in a takeover battle. Its purview and purpose are to protect the public interest against a takeover or merger which by s. 50 is made unlawful. If companies engaged in a struggle such as the present are hurt because of the administration of the Act, or if the market for shares is held up because of litigation, consequent upon the Commission's view that there is a threatened breach of the law, that is a consequence which the parties must bear. A fortiori is that the case if circumstances change to the disadvantage of a party by reason of the institution by the Commission of proceedings taken in good faith.
It is for reasons such as I have just mentioned that I would respectfully disagree with that which Smithers J. said in his judgment in the earlier case (49 A.L.R. at p. 485) which seems to me to have been intended to persuade the Commission in a situation such as this to act only after an acquisition has taken place. My own respectful view, for what it is worth, is that the matter will always be one for the Commission to act as it thinks appropriate in the public interest. An application for an injunction is one of the weapons the legislature intended it to have in its armoury. It is a matter for it to determine the circumstances under which it will be used. The propriety of the undertaking offered by the Commission not to take proceedings for further injunctive relief.
It remains to consider whether the Commission acted unlawfully in offering the undertaking not to take further proceedings for an injunction. None of the parties was concerned to argue that matter. For that reason counsel for Visy Board sought to be heard. He contended that his client was entitled to be added as a party because, within the words of Order 6, Rule 8 of the Rules, it either ought to have been joined as a party or was a person whose joinder was necessary to ensure that all matters in dispute might be effectually and completely determined and adjudicated upon. Alternatively, he sought leave to intervene; and as a last resort sought to be heard as amicus curiae. We did not think it necessary to determine whether Visy Board should be added as a party or whether it should be permitted to intervene. But in the absence of any submission on the point by any of the parties we thought it desirable to hear what counsel had to say and this we did.
The substance of the matter relied upon by counsel for Visy Board has caused me some concern. In my opinion more is involved than the bare question whether, by acting as it has, the Commission has unlawfully fettered itself in the future exercise of its discretion and powers. That is because the Court itself becomes involved by reason of its acceptance of the undertaking. As an undertaking to the Court is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking; the Thomson Australian Holdings case (supra at p. 165). The Court added (ibid.):-
"Limitations which affect the court's jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. The court cannot escape such limitations by the expedient of accepting an undertaking in lieu of an injunction. The court cannot put itself in the position of enforcing conduct which it has no capacity to command or compel.
........ ........ ........ ........ ........
In general the court must, in deciding whether it will accept from a defendant an undertaking to which the plaintiff takes no exception, be guided by the principles which apply to the making of a consent injunction, principles which we have already discussed."
In Thomson's case the High Court was concerned with the powers conferred on the Court by s. 80 of the Act to grant injunctions. Section 80 was amended to overcome the decision (Act No. 39 of 1983, s. 3 and Schedule 1). But in relation to a case such as the present it does not seem to me that the power of the Court to accept an undertaking such as that here in question could derive from s. 80 of the Act, whether in its original or amended form.
No argument was addressed to us on this point, but going as it does to our jurisdiction and power, it is necessary to reach a conclusion concerning it. Elsewhere in the judgment of the majority in the Thomson case it is said (pp. 165-166):-
"Nothing we have said is to be taken as throwing doubt on the practice of the courts in accepting undertakings to publish an apology in defamation cases and in accepting undertakings by a defendant to pay a particular account as a basis for assessing damages. In each of these two instances what the defendant undertakes to do is clearly relevant to the court's function in assessing damages - the publication of an apology mitigates damages and the payment of an account has a similar effect."
I do not read what is there said as an exhaustive statement of the circumstances in which a court may accept undertakings which, if in the form of orders, the court would have no power to make. Furthermore, one needs to bear in mind that in the passage earlier cited the judges were referring only to an undertaking "when it is offered as a substitute for a final injunction." The undertaking here in question is not of that kind notwithstanding that it is given as a condition of leave to discontinue the proceedings.
Plainly this Court has power to grant leave to a party to discontinue a proceeding. The very rule pursuant to which that may be done in many circumstances requires the leave of the Court to be obtained before discontinuance may take place. My earlier discussion of the authorities shows that the Court must always be concerned with the terms which ought fairly be imposed upon a party seeking leave. In these circumstances I conclude that Woodward J. had the necessary jurisdiction and power to accept the undertaking in question. To do so was a necessary adjunct to his power to give leave to discontinue. It follows that if the Commission were empowered to give the undertaking, the Court was empowered to accept it.
I turn to the question of the Commission's power. At first sight there appears to be a degree of undesirability in the Commission restricting itself as it has. But that does not assist much in resolving the problem. The question is one of power. The Act is remarkably silent on what the Commission's powers are. By sub-sec. 6A(2) the Commission is constituted a body corporate with perpetual succession. It may acquire, hold and dispose of real and personal property and it may sue or be sued in its corporate name. Section 7 provides for its constitution. Section 28 vests in the Commission certain functions with regard to the dissemination of information, and s. 29 obliges it to comply with certain directions of the Minister. Part VI of the Act is entitled "Enforcement and Remedies." Sections 77, 80 and 81 are to be found in that Part. Section 77 empowers the Commission to recover the pecuniary penalties provided for in s. 76. Section 80 empowers the Commission, amongst others, to apply for an injunction to restrain certain conduct including threatened breaches of the Act. By sub-sec. (1A) no person other than the Minister or the Commission may seek an injunction in respect of a threatened contravention of s. 50. Section 81 empowers the Commission, amongst others, to seek an order of divestiture.
A reading of the Act as a whole, discloses, in my opinion, that the Commission has been constituted along with the Minister, the guardian of the various public interests which the Act is intended to preserve and protect. Furthermore, although the Commission's powers are stated with the economy of language to which I have referred, it seems clear that it was intended to have a wide discretion as to whether it instituted proceedings or not. Nothing in the Act necessarily obliges it to take action in a particular case.
If it has a wide discretion as to whether to institute proceedings or not, it seems to me to follow that it must have an equally wide discretion to decide whether to maintain existing proceedings or to bring them to an end. If in good faith it decides, as it has done here, to bring proceedings to an end, it must also be empowered, again in good faith, to decide upon what basis the proceedings are to be terminated. Once proceedings are instituted by the Commission, it is of course an ordinary litigant. It takes the Court's procedures as it finds them. The rights, obligations and duties which they confer or impose apply to all litigants, whether they be governments or their agencies, corporations or private citizens. All are equal before the law. If justice and fairness dictate that the Commission should in consequence of being given leave to discontinue a proceeding, give up the right to bring further proceedings of a like kind, then it is only right that the Commission, like any other litigant, should have to accept that as a condition of being granted the leave which it seeks.
If the matter is looked at in this way, as in my opinion it should be, then I can see no problem in the Commission giving the undertaking which it has. In his Honour's view the demands of justice required that it be given. It was offered voluntarily by the Commission. I do not see how his Honour's acceptance of it could be said to disclose error. The Commission has not acted unlawfully, in bad faith, or otherwise beyond its powers. In the result I am satisfied that the Commission was empowered to give the undertaking and the Court empowered to accept it. In all the circumstances it was proper that it should have been so given and accepted.
Conclusion
For the foregoing reasons I am of opinion that the A.P.M. appeal should be dismissed. I would order A.P.M. to pay the costs of all other parties in relation to its application that the members of the Court disqualify themselves from hearing the appeal. I would order A.P.M. to pay the Commission's costs of the appeal. I would stand over the question of what other orders for costs should be made for argument in due course.
The Visy Board Appeal
Insofar as the appeal challenged the Commission's decision to seek leave to discontinue the proceedings and to give the undertaking not to institute further proceedings for injunctive relief, I would not wish to add to what I have said in relation to those matters when dealing with the A.P.M. appeal. I did not there deal specifically with the decision to discontinue. But for the reasons given it would seem to me to be impossible to argue that in all the circumstances of this case it was in some way unlawful or improper for the Commission to seek to take that course.
The remaining matter relied upon, which seemed to me to be the real matter upon which counsel for Visy Board based his submissions, was the acceptance by the Commission of the costs offer made to it on behalf of the Amatil interests. It was said that this was what triggered the decision to seek leave to discontinue. Not to put too fine a point on it, the substance of the submission was that the Commission had been bought off with an offer to pay costs on a most generous basis. On this aspect of the case I am in complete agreement with the judgment of Lockhart J. I agree particularly with his approach to the problem which involved him in assuming that the costs offer was a factor taken into account by the Commission in deciding to discontinue. It seems to me that that is the reality of the matter. I see nothing unlawful or improper in the Commission having regard to the costs offer in this way. But I make it clear that, although I think it was one of the factors, it was not the only factor or the most important factor. In those circumstances it was perfectly proper for the Commission to take it into account in determining what it should do.
I would dismiss the Visy Board appeal. It should pay the Commission's costs. The question of whether it should pay the costs of any other party should be stood over for later argument.
The S.C.I. Appeal
In my opinion this appeal should be dismissed. My reasons for that view are, however, different from those of the primary Judge. The considerations to which they give rise have caused me to think at times that the appeal should be allowed; but on reflection I think that they lead to the conclusion that it should be dismissed.
Having read his Honour's judgment, it is my respectful conclusion that he allowed what what had been said by the other Full Court to weigh too heavily with him. The factual situation which confronted his Honour was very different from that with which that Full Court had to deal. No longer was there to be any interlocutory restraint on any party, including A.P.M., preventing dealings in the F.C.L. shares. Notwithstanding that the proceedings were to remain on foot, all interlocutory restraints were to go. That is the starting point. The next factor to be weighed in the balance is that the Commission did not oppose the application for the release of the undertakings. Counsel for the Commission said to Woodward J.:-
"The Commission would consent to an order in terms of paragraph 1 of the Notice of Motion, that is the paragraph to the effect that all undertakings be lifted."
Moreover, in the passage already cited from counsel's submission to Woodward J. (supra at pp. 9-10) it is clear that the Commission was looking for guidance from the Court as to whether it should bring the proceedings to an end. It had lost its enthusiasm for them. But it was not prepared to say categorically that they had no further purpose. So, for the time being, they were to remain on foot.
But (and I have remarked on this before when dealing with the disqualification submission) the release of the undertakings would, in all probability, make the proceedings for a permanent injunction academic. There would be no restraint preventing the sale of the shares. The undertakings were given at the behest of the Commission. It no longer wanted them. True it is that the proceedings were to be kept on foot, but so far as the Commission was concerned, they would become an empty vessel. It must have seemed to all parties at that time that it was highly unlikely that they would ever be prosecuted.
In saying what I have, I have not overlooked the reasons for the Commission's attitude. It was the Commission's firmly held belief that the Amatil interests would never sell to A.P.M. If it had not been for that belief the Commission's attitude would undoubtedly have been otherwise.
All so far would tend to lead one to think that his Honour's decision was an erroneous one and ought to be reversed, unless it could be said, that although one might not oneself agree with it, it was not shown that the exercise of his discretion had miscarried.
But it has to be remembered that the proceedings were to be kept on foot. The Commission had not changed its mind that A.P.M. would be in breach of s. 50 of the Act if it acquired the shares. The interlocutory restraints might no longer be required by the Commission because it was confident that the Amatil interests would not sell to A.P.M. But the proceedings would continue and thus remain as a vehicle available to be used for a further interlocutory application for an injunction if the unexpected happened and the Commission learnt of it in time to seek to stop it. Furthermore, the Amatil interests would know this. That very circumstance would tend to dissuade them from selling to A.P.M. If they were to do so, they would know that there was a very real chance that A.P.M. might again be restrained before any transaction could be completed. Again, their attempt to sell would be frustrated; they would be back where they were. This would tend to drive them to the S.C.I. bargaining table and refuse to have anything to do with A.P.M., notwithstanding that its offer might be more attractive.
It is for those reasons that I am of opinion that it was right to refuse to release the undertakings. The S.C.I. appeal should be dismissed. Questions of costs should be the subject of later argument.
Visy Board - Appeal against refusal to review the decision of the Attorney-General.
It remains only to give my reasons for concluding that this appeal should be dismissed. I am in general agreement with the reasons given by Sweeney and Lockhart JJ. and have nothing to add.
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