The Broken Hill Proprietary Company Ltd v National Companies & Securities Commission

[1986] FCA 243

CATCHWORDS

ADMINISTRATIVE LAW - application for interlocutory injunction

pending hearing of ap'plicatlon for an order of review - declslon

of National Companies and Securlties Commlssion to allow

cross-examination of witnesses during Cpmmission hearing - whether

decision involved a breach ef the rules of natural justice or

improper exercise of power - reluctance of Court to interfere with

procedural decisions of an administrative tribunal.

Adminlstrative Decisions (Judicial Review) Act 1977

ss.5(1)(a) and (e), 5(2)(a),(b) and (c)

Companies Code

Companies (Acquisition of Shares) Code 5.60

National Companies and Securities Commission Act 1979

55.36, 37 and 38

Securities Industry Code

THE BROKEN HILL PROPRIETARY COMPANY LIMITED

and

NATIONAL COMPANIES AND SECURITIES COMMISSION and

BELL GROUP LIMITED and BELL RESOURCES HOLDINGS PTY LIMITED and

AMBASSADOR NOMINEES PTY LIMITED

VG No. 221 of 1986

Woodward J.

5 June 1986

Melbourne

IN THE FEDERAL COURT OF AUSTRALIA	1
)

VICTORIA	DISTRICT	REGISTRY	)	VG No. 2 2 1 of 1986
)

GENERAL DIVISION	)
1
BETWEEN:

THE BROKEN HILL PROPRIETARY

COMPANY LIMITED Applicant

and

NATIONAL COMPANIES AND

SECURITIES	COMMISSION	First	Respondent
and

BELL	GROUP	LIMITED	Second	Respondent
and

BELL RESOURCES

HOLDINGS PTY LIMITED Third Respondent

and

AMBASSADOR NOMINEES

PTY LIMITED Fourth Respondent

MINUTES OF ORDER

COURT: Woodward J.

DATE: 5 June 1986

PLACE: Melbourne

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THE COURT ORDERS THAT:

1. The application for interlocutory relief be refused.

2. The interim injunction granted by Jenkinson J on 2 June 1986 be discharged.

L

3. The applicant pay the respondents' costs, including

reserved costs, of this application.

(m: Settlement and entry of orders is dealt with by 0.36 of

the Federal Court Rules).

IN THE FEDERAL COURT OF AUSTRALIA	)
)
VICTORIA DISTRICT REGISTRY	1 VG No. 2 2 1 of 1986
)

DIVISION	GENERAL	1
)
BETWEEN:

THE BROKENI HILL PROPRIETARY

Applicant LIMITED COMPANY

and

NATIONAL COMPANIES AND

SECURITIES	COMMISSION	First	Respondent
and

BELL GROUP LIMITED Second Respondent

and

BELL RESOURCES

HOLDINGS PTY LTD Third Respondent

and

AMBASSADOR NOMINEES

PTY LTD Fourth Respondent

COURT: Woodward J.

m: 5 June 1986

PLACE: Melbourne

REASONS FOR JUDGMENT

This is an application for an interlocutory injunction, pending the hearing of an application for an order of review pursuant to the Administrative Decisions (Judicial Review) Act

1977 ('the AD(JR) Act') of a decision of the National Companies

and Securities Commission ('the Commission'). The decision arose

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in the course of a public hearing by the Commission into the

clrcumstances of, and conduct relating to, an acquisition of

shares in the applicant company ('BHP') by an associated company

of Elders IXL Ltd ('Elders') and a contemporaneous acquisition of

convertible bonds and preference shares in the Elders group of

companies by BHP.

-

The decision challenged is one which would permit

counsel for Bell Resources Holdings Pty Ltd and other related

companies ('Bell') to cross-examine certain witnesses subpoenaed

by the Commission who are officers of BHP or persons otherwise

involved on behalf of BHP in the transactions.

The matter is one of some importance, but it also

requires urgent attention. It was fully argued yesterday and

today and I think it best that I give judgment now, dealing with

all the issues which appear to me to be significent.

The purpose of the hearing was, in summary, expressed to

be "to determine whether the Commission should be satisfied that

the circumstances and conduct did not contravene the Companies

U, the Companies (Acquisition of Shares) Code and the

Securities Industry Code." The Commission also declared its

intention to inquire into the conduct of the persons concerned in

the transactions in order to determine whether it should exercise

its powers under s.60 of the Companies (Acquisition of Shares)

U to declare conduct, or the acquisition of shares,

"unacceptable".

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As the inquiry got under way, the Commission made

several rulings on the rights of parties to be represented and to

cross-examine witnesses. The historical picture is confused

because there have already been proceedings in both the High Court

and the Victorian Supreme Court (Fullagar J) to determine whether

the Commission should hold its hearings in public and, in so far

as any part of the hearings were I to be in private, what rights of

representation should be accorded.

However the upshot of these proceedings has been that

the bulk of the hearings are being held in public and the rulings

concerning these hearings, so far as they are relevant f o r present

purposes, have been as follows.

On 23 April, in the course of a comprehensive ruling

about the rights of various parties to be present during

anticipated private sittings and to be represented, the Commission

said,

"In regard to the appllcation made on behalf of the

Bell Group, the Commission rejects the argument

that the interests of Bell in the enquiry are the

same or equal to the interests of Elders and BHP.

If Bell wishes to adduce evidence it should inform

counsel assisting the Commission who, if satisfied

by the relevance of the evidence, will ensure that

it is brought before the Commission. The Bell

Group and its legal advisers will be allowed to be

present whilst this evidence is given and to

examine and re-examine any witnesses so called.

The Commission may also permit Bell to examine

specified witnesses where the Commission is first

satisfied that there is material not otherwise

known by which the witness may be usefully

examined. The Commission may impose conditions in

this event limited by reference to time	or	the
specific issues.

No further right of intervention by Bell shall be

allowed at this time."

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When Bell's application to cross-examlne was renewed on

2 June, the Commisslon began by referring back to and re-reading

the middle paragraph of its earlier ruling. It also referred to

the judgment of Fullagar J in the Supreme Court of Victoria,

delivered on 16 May, dealing with the rights of BHP and Elders to

be present at proposed private sittings of the Commission. In the

course of that judgment, Fullagar J had said,

"The requirements of natural justice depend

upon Inter alia the circumstances of the case and

the nature of the enquiry, as well as on the rules

under which the tribunal is acting and the subject

matter that it is being dealt with; see News

Corporation case, (1984) 52 ALR 417 at 427.

In the surrounding circumstances of the

present case, where BHP is the subject of an extant

and fiercely contested takeover offer, larger than

any in the nation's history, by company a

controlled by Mr Holmes a Court and where the air

is thick with allegations and cross-allegations

between the raider and the target, it may well be

argued that, for example, to call at a public

enquiry or hearing a person such as Mr Holmes a

Court himself, without allowing mmediate

cross-examination by BHP and Elders, i a denial of

natural justice for one or other or both of those

companies. Likewise, it may be argued that it

would be unjust and a denial of natural justice of

Mr Holmes a Court and his company to take evidence publicly from some highly placed officer of BHP or

of Elders without giving to Mr Holmes a Court or

his company the same protection and right. It

might be argued, for example, that the rights

involved in these circumstances include the legal

rights to have the takeover matters freely decided

by the shareholders, without influence from

untested oral and public declarations by one side or the other. I simply do not know. I do not decide, at this moment, any such question because

it has not been fully argued before me, but I am

certainly prepared to reserve liberty to apply and to reserve it to all parties if necessary, despite the fact that the original relief sought by the

plaintiffs must be refused."

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Against this background the Commission invited and heard detailed submisslons, at the end of which	t made a rullng in the
following terms,

"The commission has considered the arguments

that were put and believes that since the former

ruling which I quoted was given, circumstances have

changed to some extent. First of all a great deal

of additional evidence has appeared which has

thrown a somewhat different light on some of the

matters. Second,- there has been astrong

cross-examination of Mr Holmes a Court by both BHP

and Elders in which specifically Mr Samuel was

quoted I think by Mr Hayne and ... Mr Sher .....

We think that under those circumstances Bell should be allowed a limited but not unrestricted right of

cross-examination. We propose to allocate half an

hour to Mr Merkel. If he considers it necessary to

go beyond that, we would require a speclfic

justlf ication. "

CMr Hayne was counsel for BHP and Mr Sher for Eldersl.

The time constraint Indicated by the Commission was

immediately accepted by Mr Merkel for Bell.

In the course of further debate, initiated by counsel

for BHP, about possible limitations to be placed on Bell's right

to cross-examine, the Chairman of the Commission said,

"I think I heard you say before, Mr Merkel,

when you made your original submission, that it was

your intention to limit yourself to matters

strictly relevant to Bell's interest in the matters

that have been raised in this inquiry and not to

extend beyond. And so some degree of limitation of

subject matter was in the commission's mind when	it
made that brief decision just now."
After further discussion the Chairman added,

"Well, we do rule that Mr Merkel's

cross-examination is to limited be and ot

unrestricted. It is to be limited to subjects that

are relevant to matters that have been raised in

the hearing and to matters that are demonstrably

withln the interest of Bell."

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On the afternoon of 2 June, shortly after the

Commission's ruling, counsel for BHP obtalned an ex parte order from Jenkinson J in this Court, suspending the operation of the

Commission's decision. On the following day, various Bell

companies were added as respondents pursuant to 5.12 of the AD(JR)

W , and an application was brought to discharge the ex parte

order. That application fail&, and the matter came before me for

hearing on 4 June.

It has been argued by counsel for BHP that the

Commission's rulings amounted to giving Bell the right to pursue

its commercial interests in the course of a hearing which was not

concerned with those interests, and that this amounted to the

pursuit of a "purpose other than a purpose for which the power

Cwasl conferred" within	the meaning of s.5(l)(e) and	( 2 ) ( c ) of the
AD(JR) Act.

I do not accept this submission. When the several

rulings are read together, as they should be, and construed

broadly - as the rulings, and particularly the ex-tempore rulings, of a lay tribunal should be - I can see nothing in them which goes beyond

an acceptance that, because of its close involvement in the affairs leading up to the conduct under investigation, Bell

(a)

may have material for cross-examination of BHP witnesses which

would be of interest to the Commission and not be capable of ready

transfer to counsel assisting the inquiry;

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(b) a requirement that such material should be succinctly

put to witnesses, so as not to be oppressive to them or	wasteful
of the Commission's time; and

(c) a further rgquirement that any cross-examination should

be limited to matters clearly affecting or involving Bell, being

matters which have already been raised before the Commission.

L

Looked at in this way, which I believe to be the correct

way, the reference in the rulings to "the interest of Bell" is

merely another limitation on the right of Bell to cross-examine on

matters of which it has knowledge and which are directly relevant

to the Commission's inquiry. It gives Bell no licence to delve

into extraneous matters, or use the Commission's hearing for any

improper purpose.

Nor, in my view, was the reference in the rulings to

Mr Holmes a Court's cross-examination any evidence of an improper

decision. It is not disputed that Mr Holmes a Court is entitled to be represented for the purpose of cross-examination of BHP

witnesses about conversations and perhaps other issues on which	he
himself was rigorously cross-examined on behalf of BHP.

The Commission, had it wished, might have limited his or

his companies' right o cross-examine to those issues. It

apparently believes it would be assisted by a wider-ranging

approach. And, in any event, in view of the complex nature of

Bell's involvement with BHP in recent months, it would be

difficult to confine cross-examination to actual conversations and

not become involved in other background matters. "his question f

- 8 -

Mr Holmes a Court's cross-examination was a matter proper to be

considered in the Commission's overall approach to the question

whether Bell should be allowed to cross-examine.

The Commission may have been encouraged to take a broad and realistic, rather than a narrow and legalistic, approach to

its inquiry by the words of FUllagar J in the passage cited above,

even though there is now no extant takeover bid as there was at

the time of his judgment. It is clear that the National Companies

and Securities Commission Act 1979 gives the Commission a wide

discretion as to how it should conduct its inquiries (see s s . 3 6 ,

37 and 38) and it may well believe that it cannot determine the

immediate issues before it without a full understanding of the

takeover battle which provided the occasion, if not the cause, of

the transactions being inquired into.

It has been submitted by counsel for BHP that the

Commission failed to take into account the fact that it is merely

gathering and testing information, not conducting an action

between parties. I can see no evidence of any such

misunderstanding; indeed there are several passages in the

transcript and the rulings which show that members of the

Commission were clearly aware of the proper nature of their proceedings.

Nor do I believe that the Commission has overlooked the

fact that its inquiry could have serious repercussions for BHP and

its officers - even, perhaps, leading to prosecutions.

- 9 -

It must be remembered that BHP does not allege it has

been denied any right to be represented or to cross-examine. It

is, at most, complaining that its witnesses may be subjected to a

second cross-examination after that of counsel assisting the

Commission.

The only harm thg applicant can point to is an

additional series of questions which its witnesses may be asked.

If these are repetitive, harassing or irrelevant, they should be

disallowed. If they elicit	additional information,	the	inquiry
wlll be assisted.

I have thus been ab1 e to find no consideratis on which the

Commission wrongly took into account in making its rulings, and no consideration which it was required to take into account and

omitted. It is not suggested that there was any denial of natural

justice in the way in which the Commission reached its decision -

counsel for BHP had every opportunity to put a full argument, and

did so. It is, however, suggested that the decision itself

constitutes a denial of natural justice, and is thus improper or

contrary to law, because it allows two counsel to cross-examine. assisting and counsel for opposing interests have the right to cross-examine a witness. This is quite different from the case of

two counsel for one party wishing to cross-examine (see Eva Pty

- Ltd v Charles Davis Ltd C1982J .vR 515). In my view there was no

impropriety involved in the rulings in the present case.

- 10 -

I would conclude by saying that the Court should be slow administrative tribunal in the course of a long and complex inquiry. This is particularly so in cases where the tribunal has to intervene in a purely procedural decision made by an

been given, by statute, a wide discretlon as to how it should

conduct its inquiries, subject only to .a a requirement to observe principles of natural justice. Where the tribunal has not denied

any rights, but can only be alleged to have given some participant

a right to which it was not clearly entitled, the Court should be

even more reluctant to intervene. I can find no reason in the

present case to interfere with the Commission's rulings.

The application before me is for an interlocutory

injunction. However the circumstances are unusual. The

Commission must decide whether to exercise its power to make

declarations of unacceptable conduct under s.60 of the Companies

(Acquisition of Shares) Code before about 9 July. To do so it

must, presumably, conclude its hearings some time before that.

There is very little chance of the applicant achieving a further

hearing of this matter before then. Nor has the applicant any

further arguments to put. It is difficult to see what further

evidence it could adduce and its counsel did not point to any when

invited to do so.

Accordingly this hearing, although formally of an

interlocutory nature, has many of the attributes of a final

determination. However I turn to consider together the necessary

questions in interlocutory cases - whether there is a serious

question to be tried and the balance of convenience (see Bullock v

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Federated Furnishinq Trades Society of Australasia (1985) 60 ALR

235 at 241. In my view the applicant’s case, though very well

argued, is not one whlch is likely to succeed after any fuller

deliberation than I have been able to give it. And in view of the

pressures of time, I think the balance of convenience is clearly

in favour of allowing the Commission io proceed along the path

d

which it has determined as being most helpful.

The application for interlocutory injunctions will be

dismissed with costs and the interim injunction granted by

Jenkinson J will be dissolved.

I certify that this and the

ten (10) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon Mr Justice Woodward

Associate

Dated: 5 June 1986

Counsel for the applicant: Mr N.J. Young Solicitors: Arthur Robinson & Hedderwicks Solicitor for the first respondent: Mr G.H. Cantwell

Counsel for the second, third and fourth respondents:

Mr R. Merkel QC and Mr C.M. Maxwell

Solicitors: Arnold Bloch Leibler