Trade Practices Commission v A.P.M. Investments Pty Ltd

[1983] FCA 334

I N T H E E‘EDERAL COURT O F AUST1W.LIA 1

- 1

V I C T O R I A	D I S T R I C T	E G I S T R Y	1	N o .	VG R 4 of	3983
)

D I V I S I O N	G E N E R A L	1
BETWEEN:

T R A D E P R I i C T l C E S C O > i l ~ I I S S i O N A p p l J c a n t

and

Y

A . P .M. INVESTEiEXTS PTV. L I M I T E D First R e s p o n d e n t

F IBRE C O N T A I N E R S L i M I T E D Second R e s p o n d e n t

LEIGI-I-MARDON PTY. L I I* ILTED Th i rd R e s p o n d e n t

A S S O C I A T E D N O M I N E E S P T Y . L L i 4 I T C D Fourth R c s F o n L e n t

F R A N C I S BECKER	J A M E S PETER	BURKE	F i f t h	R e s p o n d e n t
S i x t h	R e s p o n c l c n t

W I L L I A M G I B S O N Seventh R e s p o n d e n t

and

JOHN F R P J J C I S C L F V E R S O N E i g h t h B e s p o n d e n t

F i f t h t o E1ght.h R e s p o n d e n t s z s

T r u s t e e s for LEIGI I -YARDON PTY. L IMITED

and

A R T I l U R	K F V I N	S M I T H	N i n t h	R e s p o n d e n t
-
ORDER

JUDGE MAKING ORDER : Woodward J .

OR ER WHERE MADE DATE OF : 15 N o v e m b e r 1983

: Melbourne

I

THE COURT ORDERS THAT:

1. T ‘ h e n o t i c e of m o t i o n be dismissed

2.	C o s t s be	reserved.
3 .	Llbe r ty	be reserved t o a11 par t i e s t o apply

f o r t.he f ’ l x l n q of a f u r t h e r d ~ r e c t i o n s

hearing.

I N THE FEDERAL COUR'T OF AUSTRALIA )

1

V L C T O R I A	D I S T R I C T	K E G I S T R Y	)	N o . VG 84 of 19133
)

G E N E R A L	D I V I S I O N	-	)
BETWEEN:

TRADE P m c ' r I c E s COMMISSION Applicant

and

A . P . M . I N V E S T M E N T S P T Y . L T M I T E D F i r s t R e s p o n d e n t

P I B I I E C O N T A l N E R S L I M I T E D Second R e s p o n d e n t

LEIGH-MARDON PTY. LIMITED 'Third R e s p o n d e n t

A S S O C I A T E D N O M I N E E S P T Y . L I M I T E D F'ourch R e s p o n d e n t

F K M J C I S B E C K E R J A M E S BURICE F i f t h R e s p o n d e n t

P E T E R S i x t h R e s p o n d e n t

W I L L I A M G l B S O N Seventh K e s p o n d e n t

and

JOHN FRAXCIS ELLWERSON E i g h t h R e s p o n d e n t

F l f t h t o Elghth R e s p o n d e n t s a s

Trustees for LEIGH-b'AR1)ON P T Y . L I M I T E D

and

ARTLIUR K E V I N S M I T H N i n t h R e s p o n d e n t

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

DATE:	15 N o v e m b e r	1983
-

REhSONS FOR JUDGMENT -

This i s the t h i r d t l m e t he C o u r t has been asked t o

ant these proceedlngs l a s t May. r eleases from undertaklngs g iven a t the c o m m e n c e m e n t of

The h l s to ry of the proceedings, and

of the two e a r l l e r appl lca t ions , 1 s s e t o u t fully i n ~ u d g m c n t s (as

v

- 2 -

ye t un repor t ed ) de l ive red by me on 2 2 August 1983 and by t h e l3111

Cour t (Smi thers , F l tzgera ld and Jenkinson JJ. ) on 21 September

1983. Jn these reasons , 1 s h a l l s e t o u t in summary forln l u s t

enough	of	t h a t	h i s t o r y	t o	p u t	t h e	p r e s e n t	application	lnCo
con tex t .

Fibre CoRtainers Ltd. ( 'FCL' ) i s t h e t a r g e t company for

two competing takeover bids made l a s t May. 'Fhe f l r s t was by

S . C . I . Packaging Pty. Ltd. ( ' S C I ' ) and the s cond by A.P.M.

Investments Pty. Ltd. ( ' A P N ' ) ) . The APM b i d h a s g i v e n r i s e t o t w o

a p p l l c a t i o n s t o the Cour t pu r suan t t o s . 5 0 of t h e T r a d e P r a c t l c e s

A c t 1974 ( ' t h e A c t ' ) . The a c t l o n in whlch t h e p r e s e n t n o t l c e of

motion is brouqhL has been commenced by the T rade P rac t i ces

Comnlsslon ( ' T P C ' ) . I t s e e k s i n j u n c t l o n s t o p reven t he t akeove r

of FCL by APM, a l l e g i n g t h a t it would r e p r e s e n t a breach of s . 5 0

of the Ac t because o f t he subs t an t i a l power a l ready en joyed by APM

i n t h e r e l e v a n t m a r k e t s in which APM, S C 1 and FCL o p e r a t e . I n t h e

o t h e r a c t i o n (VG No. 82 of 1983) S C I i s s e e k l n g d e c l a r a t i o n s t h a t

the proposed APM takeover would c o n s t i t u t e a breach of s .50 o f t h e

Act. S C I a l s o s e c k s o t h e r e l i e f p u r s u a n t o o t h s r s e c t i o n s o f

t h e A c t , n o t r e l e v a n t f o r p r e s e n t p u r p o s e s .

,

These two ac t lons were ca l l ed on t o g e t h e r I n a s e r l e s o f

d i r e c t i o n s h e a r i n g s b e g l n n i n g on 23 May 1983. I t was n o t u n t l l 2 8

J u l y t h a t it was dec lded by t he Cour t ha t hey shou ld no t be

c

.

- 3 -

hea rd toge the r - as had been requested by SCI w l t h t h e s u p p o r t o f

FCL but opposed by APM. Reasons fo r t h l s dec l s ion were pub l i shed

on August	4.
B e f o r e t h e f i r s t d i r e c t i o n s h e a r i n g l n t h e p r e s e n t

m a t t e r , t h e TPC sought undertakings from APM, S C I and FCL which

would have the f fec t o f f reez ing the two takeover b lds un t l l

a f t e r t h e TPC c a s e a g a i n s t APM had been determined.

These undertakings were g iven on behalf of all t h r e e

companies and also on b e h a l f o f t h e t h i r d t o n in th r e sponden t s ,

s u b s t a n t i a l s h a r e h o l d e r s in FCL, all h u t t h e l a s t o f whom a r e

closely connected wlth Amatl Ltd. l I t 1 s convenient to r e f e r t o

t h e t h l r d t he unde r t ak ings t o e ighth respondents as ' A m a t i l ' . The prec ise forms of

n o t t o deal i n t h e s h a r e s o f FCL a r e n o t r e l e v a n t

fo r p re sen t shareholders pu rposes . remajned I t should however be noted that FCL and I t s

f ree t o dea l w i th any b ldde r fo r its s h a r e s

o t h e r t h a n APM and S C I .

The reasons why t h e r l v a l b i d d e r s , APM and S C I , were

prepared t o o f f e r p a r a l l e l u n d e r t a k i n g s i n t he c l r cums tances

desc r ibed seem clear enough. It no doub t su i t ed APM t o c o n t e s t

t h e 'TPC's act lon before waglng i t s coiiunerclal b a t t l e . And

al'ihough S C I was not a p a r t y t o t h e a c t i o n , it wanted t o e n s u r e

t h a t t h e TPC con t inued t he ac t ion , and It hoped t o be j o i n e d i n

it . This expla ins i t s w i l l m g n e s s t o become i n v o l v e d l n t h e

g i v l n g of pa ra l l e l unc ie r t ak lngs . I t is n o t so c l e a r why FCL and

Amat i l were p repa red to o f f e r unde r t ak ings , and th i s 1 s a ques t ion

t o which I s h a l l r e t u r n l a t e r . W h a t e v c r t h e m o t l v a t i o n of t h e

p a r t l c l p a n t s may have b e e n , t h e f a c t r e m a l n s t h a t s u c h

undertaklngs were offered t o and accepted by the Court .

On J u l y 20 the Cour t cons ldered a not lce of motlon f rom

FCL a s k i n g t h a t it be re leased f rom so much of i t s undertaking as

would enable It t o sound S C I o u t a b o u t t h e p o s s l b l l i t y o f a

r e v i s e d o f f e r . a p p l i c a t l o n was T h e m a t e r i a l a d d u c e d s u p p o r t i n t h a t o f

minimal, it was opposed, for differing reasons , by

t h e TPC, %PM and S C I , and it was r e fused .

A fu r the r no t i ce o f mot ion was heard on August 1 7 . T n l s

t ime FCL and Amatll sought reLease from a l l p a r t s o f t h e i r

under tak ings so f a r as n e g o t i a t i o n s w1th SCI were concerned. To

quote from my judgment of 22 August,

-

“They a l s o make it c l e a r t h a t h e y h a v e no

wlsh o r i n t e n t i o n t o n e g o t l a t e w i t h APM w h i l e t h e

T P C m a i n t a i n s t h a t a t a k e o v e r b y APM would

c o n s t l t u t e a breach of S . 5 0 of t h e Act and t h e

Court has made no c o n t r a r y f i n d l n g . They t h e r e f o r e

s a y t h a t undertaklng it i s unnecessa ry t ha t hey be bound by

or by i n j u n c t i o n n o t t o n e g o t l a t e w l t h

.?.PM, b u t h e y o f f e r s u c h a n u n d e r t a k l n g l f it 1 s

r e q u i r e d . I s h o u l d make it p l - a l n t h a t t h l s

unwi l l ingness t o n e g o t i a t e w l t h APM I n p r e s e n t

c i rcumstances was a l s o c l e a r l y l n d i c a t 2 d by Mr.

McComas i n h i s J u l y a p p l l c a t l o n .

The TPC h a s changed I t s a t t l t u d e t o t h e

a p p l l c a t i o n . I t now says t h a t It does not oppose

t h e making of t h e o r d e r s o u g h t 1-11 t h e n o t i c e of

motion, provided Fibre ConLainers remain sui tably

bound by u n d e r t a k i n g s n o t t o n e g o t l a t e w l t h APM.

Y

P e r h a p s p a r t l y b e c a u s e o f t h ~ s c h a n g e o f

a t t i t u d e by t h e TPC, and certainly because of

cont inulng assurances by the TPC t h a t it in t ends LO

proceed wlth assume, as a takeover i t s a c t i o n by APM remains a realistic a g a l n s t APM ( s o long, I

p o s s i b i l l t y ) , S C I now f e e l s f r e e t o s u p p o r t t h e

appl ica t lon and has done so.

I n opposed only by APM. I' t h e r e s u l t , t h e r e f o r e , t h e a p p l i c a t l o n i s

I n r e a c h l n q t h e c o n c l u s i o n t h a t h e a p p l l c a t l o n s h o u l d

be granted and FCL l e f t f r e e t o negot ia te wi th SCI , I p l a c e d g r e c t

emphasis on the posl t lon of FCL as t h e i n n o c e n t t a r g e t of takeover

b ids , runn lng a ser lous r i s k o f damage i n t h e c o u l s e of p r o t r a c t e d

c o u r t proceedlnqs and having no r e d r e s s a g a l n s t a n y o t h e r p a r t y

f o r t h a t pena l i zed damage. I f e l t t h a t FCL and Amatil "should not be

f o r havlng complled, In a r e s p o n s i b l e way, wi th a

r e q u e s t of the gove rnmen t r egu la to ry au tho r i ty , t he T P C , t o

m a i n t a l n t h e l r p r e s e n t s h a r e h o l d i n g p o s l t l o n a t a t ime when t h e

TPC was i n v e s t l g a t i n g t h e s i t u a t l o n and i n s t l t u t l n g p r o c e e d i n g s " .

I accep ted t he a rgumen t t ha t t he re cou ld be no compulsion on FCL

t o c o n s i d e r a takeover bid from APM and , s lnce l was s a t l s f l e d

that Amatl l cons ide r had reached a f i r m c o n c l u s l o n t h a t It would not

such an o f f e r , I be l i eved it should be free to d e a l

l awfu l ly w l th argumenL t h a t a change of mlnd i t s own p r o p e r t y . e f f e c t , I n I accep ted t he

on t h e p a r t 01 Amatll about i t s

w l l l l n g n e s s t o s e l l i t s s h a r e s i n FCL t o AP!4 cons t i t u t ed such a

change of c l r c u m s t a n c e s t h a t , t o g e t h e r w i t h t h e p r o b a b i l l t y o f

l o s s e s h e l n g s u s t a m e d by FCL and I ts sha reho lde r s as a r e s u l t o f

de layed sa le and a long per iod of u n c e r t a i n t y , it j u s t i f l e d

- 6 -

r e l e a s e from t h e r e l e v a n t u n d e r t a k l n g s . I was a l s o i n f l u e n c e d by

t h e f a c t t h a t t h e p a r t y which had sought hose undertak~.ngs, the

TPC, no longer requlred them.

In t he even t , 1: orde red t he r e l ease o f 311 p a r t i e s from

t h e i r u n d e r t a k i n g s , b u t went on t o a c c e p t a f r e s h Undertaking from

FCL and Amatil n o t t o f i n a l i z e a n y sale o f s h a r e s t o APH.

On appea l t o t h e F u l l C o u r t t h l s o r d e r was quashed. Two

d i s t inc t r ea sons fo r t h i s can be i den t l f i ed f rom the ]udqmcn t s

handed down b y t h e C o u r t . I n t h e f i r s t p l a c e , t h e a c c e p t a n c e o f

t he f r e sh ~ n ~ u n c t i o n unde r t ak ing was seen as a m o u n t i n g , i n e f f e c t , t o a n

a g a l n s t APM. RPM had not been heard on that issue;

and If a hea r ing had occur red , t he re cou ld have been no ce r t a in ty

as t o i t s outcome. Secondly , a l though the o r ig ina l under tak ings

were o f f e red and accep ted "un t i l f u r the r o rde r " , t he Cour t he ld

that they should only have been re leased I f new and unforeseeable

c i rcumstances had a r l scn s lnce they were accep ted , and i f t he

i n t e r e s t s of l u s t i c e r e q u i r e d t h e l r r e l e a s e . T h i s w a s

p a r t i c u l a r l y so because the under tak lngs , be lng rec iproca l , had a

strong contractual. element In them. The Ful l Court found Chat

t he re were in f a c t no new and unforeseeable c i rcumstances, and the

i n t e r e s t s o f j u s t l c e w e r e s t r o n g l y i n f a v o u r o f t h e u n d e r t a k l n g s

belng maintained.

- 7 -

Each member o f t h e F u l l Cour t , I n deciding t h a t t h e

o r d e r m u s t be quashed, made clear h l s vlews as t o t h e p o s s l b l c

a l t e r n a t l v f t h a t a l l p a r t i e s c o u l d b e r e l e a s e d u n c o n d l t l o n a l l y

from t h e i r u n d e r t a k l n g s , thus l e a v i n g t h e two c o n t e s t a n t s f o r FCL

f r e e , f o r t h e t i m e b e i n g , t o p u r s u e t h e i r b i d s i n t h e I n a r k e t

place.

Their Honours were c lear ly opposed to such a course

(whlch i s the one I am now being urged t o follow) because of t h e

i m p o r t a n c e t h e y p l a c e d o n t h e c o n t r a c t u a l n a t u r e of t h e

undertaklngs agrecd to b y t h e p a r t i e s a t t h e o u t s e t o f t h e c a s e ,

t h e a b l l i t y oE t h e p a r t i e s t o foresee the type of developments

whlch had in f a c t o c c u r r e d , a n d t h e i n ~ u s t i c e which would be done

t o APM i f it w e r e f o r c e d t o b i d f o r FCL s h a r e s at. a t ime when it

s t l l l had the T P C ' S ac t ion hanging over i t s head.

I t is c l e a r t h a t I m u s t , i n t h l s p r e s e n t a p p l l c a t i o n ,

t a k e t h e F u l l C o u r t ' s d e c i s i o n as my s t a r t i n g p o i n t . I n s o f a r a s

it involves a r u l i n g on a ques t ion of l a w , I am of course bound by

t h a t r u l i n g . I n s o f a r a s it l n v o l v e s t h e e x e r c i s e of a d i s c r e t l o n ,

j n p l a c e reoper! o f my e x e r c ~ s e o f d i s c r e t l o n , I b e l i e v e t h a t I can only

the m a t t e r l f i t i s -shown t h a t s u b s t a n t i a l new

cons ide ra t ions have emerged which the Fu l l Cour t d ld no t have

b e f o r e it and which a r e s u f f l c l e n t l y c o g e n t t o ~ u s t i f y such a

reopening. If I am s a t l s f l e d t h a t s u c h new c o n s l d e r a t ~ . o n s c x l s t ,

t hen I t h i n k I mus t r econs lde r t he who le d l sc re t lona ry l s s u e fo r

myself and, wll i le givlng proper respect to t h e views of chc Full

- 8 -

Court as t o what m a t t e r s a r e m a t e r i a l and how much welght each

should be glven, I must make up my own mind on t h o s e matters. In

o t h e r w o r d s , i f t h e o c c a s l o n i s one f o r t h e f r e s h e x e r c i s e o f

d i s c r e t l o n , t h e n I m u s t e x e r c i s e my own discretion, a f t e r

ca re fu l ly cons ide r lng t he v i ews o f t he F u l l C o u r t ; I should not

merely ask myself , "What would the Fu l l Cour t have dec ided i f

t h e s e	new	cons ide ra t ions had been be fo re i t ? "
D
1 t u r n now t o c e n s i d e r t h e f i r s t o f t h e two i s s u e s I

have 3dent iEled - w h e t h e r t h e r e a r e s u E f l c l e n t new c o n s i d e r a t l o n s

t o ~ u s t i f y the f r e s h e x e r c i s e o f a d l s c r s t l o n .

The f i r s t new c i r cums tance r e l i ed upon by S C l wzs Al ' i l ' s

amendment of i t s d e f e n c e t o t h e T P C ' s a c t i o n . The subs tance 0 2

t h e amendment was t o f o r e s h a d o w t h a t i f it were s u c c e s s f u l in

acqu l r lng the sha res i n F ib re Con ta ine r s , RPM would r e t a l n no more

t h a n h a l f t h e p r o d u c t i v e c a p a c i t y , i n t h e form of manufacturing

p l a n t s , o f t h e company. This p roposa l was made i n t h e h o p e o r

e x p e c t a t i o n t h a t it would be a c c e p t a b l e t o Amatil, a n d t h u s t o

FCL, and would s u f f i c l e n t l y m o l l i f y the TPC t o c a u s e it t o

d i s c o n t l n u e I t s a c t i o n . I n t h e v e n t , t h e p r o p o s a l was t o t a l l y

re jected by Amati l , and RPM h a s a p p l i e d t o amend i t s defence aga ln

b y d e l e t l n g all r e f e r e n c e t o such a proposa l .

I .

- 9 -

A qood d e a l o f e v i d e n c e ' c o n c e r n ~ n q t h i s m a t t e r was put

be fo re me. Some of It was I n a f f l d a v l t form b u t t h a t was l a r g e l y

supplemented by evldence from the witness box. 1 have no reason

to doub t fo l lowing f ind lngs t he t ru th fu lness o f any o f the wltnesses , and I make t h e

of f a c t m t h e l i g h t o f a l l t h e t e s t l m o n y .

1. The i d e a o f s p l l t t i n g FCL was Eirst s e r j o u s l y c o n s i d e r e d

by APM 111 ea r ly Sep tember , a f t e r a rgumen t i n t he F u l l Court and

before	judgment.
2 . I t was decided upon a5 t he alm to b e p u r s u e d i f t h e P u l l

Court were t o r e l e a s e a l l u n d e r t a k l n g s . N e c e s s a r y resolul-Ions t o

enable this cour se to be fo l lowed were passed G ~ I 20 Septeiraer and

confirmed on the morning of 2 1 September, a few h o u r s b e f o r e t h e

F u l l court handed down 1t5 d e c i s l o n .

3 . APM h a d e a r l l e r s o u n d e d o u t t h e T P C a b o u t t h e

Commlss ion ' s l i ke ly r eac t lon t o a p r o p o s a l t h a t APM s h o u l d , a f t e r

a c q u i r i n g FCL, d ispose o f about ha l f i t s p roduc t ion capac i ty . APN

had been encouraged by the TPC r e a c t i o n t o t h e p r o p o s a l , a l t h o u g h

TPC had indlcated (and has s l n c e t o l d t h e C o u r t ) t h a t , b e f o r e

expressing any approval , it would need t o know l u s t who was

a c q u i r i n g t h e o t h e r h a l f o f t h e b u s l n e s s .

4. . APM dld not inform FCL o f t h i s c o n t l n g e n c y p1 an wh~.ch

w a s t o t a k e e f f e c t i f t h e P u l l C o u r t r e l e a s e d a l l u n d e r t a k i n g s .

In

t he

even t

t he

Full

Court

c l l d

no t

d o

so.

However

APN

t h e n

v

- 10 -

d e c i d e d t h a t , i n a n y & v e n t , it would approach PCL f o r a r e a c t l o n

t o its proposal t o s p l i t the company a f t e r a c q u i s l t l o n . I ts

mot ive fo r domg so was t o s e c u r e an agreed re lease f rom a l l

undertakings, and enable a prompt r e s u l t t o be achieved by "a f r e e

bi.ddlng match" f o r f u r t h e r p r o t r a c t e d l l t i g a t i o n . i n t h e market p l ace , t hus avo id ing t he necess l ty

*

5. The approach was made by Mr. U.W. R o g e r s , s o l l c l t o r f o r

APM, to Mr. W.R. McComas, i d i r e c t o r o f , a n d s o l l c l t o r f o r , FCL.

They met i n Sydney and, a f t e r a n extensive d i s c u s s l o n , M r . Rogers

was l e f t w l t h t h e i m p r e s s i o n t - h a t t h e A R 4 proposal would a t l e a s t

r e c e i v e s y m p a t h e t i c c o n s i d e r a t l o n . h i s I n a f f l d a v l t t h c o n

s u b l e c t , on which he was n o t cross-examlned, Mr. Rogers said

"We had a wlde ranqlng discussion. In p a r t l c u l a r ,

I s a l d t o him t h a t AP'M was a n x i o u s t o t r y t o o b t a l n

some r e s o l u t i o n o f t h e a c t i o n . I s a i d t h a t APM

b e l l e v e d t h a t I f it were t o amend i t s defence so

t h a t it e x p r e s s e d a n i n t e n t l o n t o r e t a l n o n l y a b o u t

half Fibre Conta lners L lnuted (FCL) ' S f i b r e box

b u s i n e s s , t h l s r e s u l t would or mlght be achlevable

so long as t h e p r o p o s a l t h a t APM would r e t a i n o n l y

h a l f t h e b u s i n e s s was no t unaccep tab le t o FCL aiid

t h e A m a t i l McComas s h a r e h o l . d e r s . I s u g g e s t e d t o Mr.

t h a t it was i n the i n t e r e s t s o f t h e P C L

sha reho lde r s t o have two b idders for the shares and

appeared he to aqree . I t h e n s a l d t h a t t h e

p r o p o s a l w o u l d b e f r u i t l e s s t h e i f A m a t i l

sha reho lde r s were no t p repa red to dea l w l th APM l n

the c l rcumstances proposed. I t 1 s my r e c o l l e c t l o n

t h a t M r . YcCornas lnformcd me t h a t h e b e l l e v c d PCL

and t h e Amat11 shareholders had no o b j e c t l o n t o

d e a l i n g wlt l l APM, p r o v l d e d t h e d l f f l c u l t l e s w i t h

t h e Applicant could be overcome, b u t t h a t t h l s was

l u s t h i s personal view and he would have to obtaln

i n s t r u c t l o n s from h i s c l l e n t . "

..

"The followi'nq morning I r ece lved a t e l e p h o n e c a l l

from Mr. McComas. H e informed me t h a t Mr. Becker

was on ho l ldays b u t he had made con tac t w l th hlm.

Mr. PlcComas t o r ead lng the p roposed s t a t e d t h a t Iunatll had no o b j e c t l o n t o

the proposed course and would not oppose It s u b ~ e c t

antendments to t h e d e f e n c e . "

6. M r . Roge r s ' a f f ldav l t hen goes on t o r e l a t e a s e r l e s 01

l a t e r	t e l e p h o n e	c o n v e r s a t i o n s	w i t h	Mr.	McComas	I n	whlch	Xr.
D

McCcmas passed on t o him c o n c e r n e x p r e s s e d b y some s n1.or

execut lves of FCL a b o u t t h e d i f f l c u l t i e s which FCL would f a c e when

the news a b o u t t h e p r o p o s e d s p l l t t l n g of t h e company became

p u b l i c .

7. However It was o n l y a f t e r P.PM had formally amended i t s

de fence , by l eave o f t he Cour t , on 10 Octobe r t ha t t he Amat i l

d i r e c t o r s o f FCL f i n a l l y r e s o l v e d t h a t h e y would n o t c o n s i d e r

s e l l i n g t h e n s h a r e s t o any b u y e r who would sp l l t t h e company.

At f i r s t s l g h t lt might appear as though Amatll had

de l ibe ra t e ly a l lowed APM t o c o m l t l t s e l f p u b l i c l y t o this course

o f s p l l t t l n g FCL before informmg APM t h a t no such s t ep would even

be considered by t h e p r e s e n t o w n e r s o f t h e s h a r e s i n FCL. There

would seem to have been ample time for Amat l l t o h a v e t o l d AFY

t h a t it was at. bes t was t lng l t s time w l t h such a proposal and, a t

w o r s t , h a r m l n g specula t ion , FCL b y c r e a t i n q d a n g e r o u s a n d p o l n t l c s s

par t icu lar ly amongs t employees and cus tomers o f FCL,

as t o the company ' s fu tu re . A t e l e p h o n e c a l l t o Mr. liogers,

ask ing llinl to d e l a y t a k m g any p o s ~ t l v e s t e p s a n t i 1 a f t e r ZAmatll

- 12 -

had had proposa l , a f u l l o p p o r t u n i t y t o c o n s i d e r t h e i m p l i c a t i o n s o f the

was a l l t h a t would have been required by way of warn1n.j.

t o APM.

IIowevei It 1 s n o t a l l e g e d by APN t h a t it was

de l lbera te ly mis led by Amat l l ; and M r . Becker, on beha l f of

Amat i l , has exp la lned t ha t a d e c l s i o n was d e l a y e d t o some e x t e n t

by the absence of sen io r Amat i d r r ec to r s . l H e s a a d f u r t h e r t h a t

the i s s u e was seen as be ing too impor tan t for any one p e r s o n t o

communicate a p o s s i b l e o r a n t i c l p a t e d d e c i s i o n t o AP1.1, b u t It was

n o t s e e n a s b e i n g s u f f i c l e n t l y u r g e n t t o r e q u l r e t h e c a l l i n g o f a n

e a r l y Board meeting. The Amat l l dec l s ion was t hus t aken , j n t he

o r d i n a r y c o u r s e o f e v e n t s , a f t e r t h e APM defence had been publ ic ly

amended CO make p r o v i s i o n f o r t h e s p l i t t i n g p r o p o s a l .

I a c c e p t h i s e x p l a n a t i o n o f e v e n t s , \:bile a t t h e same

time no t ing t he r easonab leness of API.1' S e x p e c t a t i o n t h a t i t s

p roposa l would be favourably accepted VJhm made publ ic , and tne

o p p o r t u n i t l e s w h l c h FCL h a d t o p r e v e n t or m l t i g a t e d a m a g e

o c c u r r i n q t o it a s a r e s u l t of t h e APM proposa l . However I am

u n a b l e t o a c c e p t t h e p r e d i c t i o n s of M r . Uecker, Marlaqlng Di rec to r

of FCL,	and Mr.	Castan,	a	d l r e c t o r of	S C 1 ,	t o t h e e f f e c t	t h a t	LTL
,

i s l l k e l y t o suffer grave and I r reparable damage a s J r e s u l t of

APM's proposa l . I t i s t o b e n o t e d t h a t t h e s e p r e d l c t l o n s were

g iven be fo re APM had unequlvocally withdrawn I t s proposa l .

On t h e o t h e r h a n d , I d o a c c e p t h a t f e a r s f o r F C L ' S

c o n t i n u e d p r o f l t a b i l i t y a r e g e n u i n e l y e n t e r t a i n e d , a n d so1ne

a d d i t i o n a l u n c e r t a l n t y must have been creatad by t h e publicity

g iven t o t he p roposa l and t ha t , wha teve r may be s a i d t o s t a f f by

way of renssurance , they will s t l l l be worried by t h e p o s s l b l l l t y

of an APM acqu l s l t i on be inq fo l lowed hy the d i sposa l o f some p a r t

of F C L ' s c a p a c ~ t y a t some tlme. I c a n s e e t h a t s u c h f e a r s may be

p a r t i c u l a r l y s i g n l f l c a n t i n h e a d o f f i c e a r e a s s u c h a s market

research and eve lopment , p roduct research , qua l i ty cont ro l and

account lng.

However 1 am u n a b l e t o f l n d t h a t t h e r i s k o f s u c h damaqe

t o FCL has been so g r e a t l y i n c r e a s e d by the announcement of t h e

abor t lve p roposa l as t o amount t o a new clrcumstance whlch would

j u s t l f y me i n r e l e a s i n g FCL from i t s under tak ings .

When such an appl lca t ion was l a s t b e f o r e me I s a i d , in

my unreported ~udgment of 22 August,

"Because of t h e u n c e r t a l n t y c r e a t e d by t h e p r e s e n t

litigation, F lb re Con ta ine r s L td . i s l n d a n a e r o f

l o s i n g v a l u a b l e s t a f f and customers. I t seems t n a t

some at tempts have recent ly been made by unnamed

c o m p e t i t o r s t o mal:@ in roads in b o t h a r e a s , although

t h e s e a t t empt s have not been s u c c e s s f u l . There

m u s t , however, ,be some loss Gf conEldence i.n t h e

company due t o t h e u n c e r t a l n t y o f I t s fu tu re and

t h i s can only work t o t h e d e t r l m e n t o f t h e company

and 1 . t ~ gene ra l e f f ec t has no t been cha l l enqed . " shareholders . Aff idavi t ev ldence t o t h l s

.,

.

- 14 -

The ]udglnenCs of the Ful l . C o u r t also a c c e p t e d t h a t some

u n c e r t a i n t y was inev1 tab l . c In cases such a s the p re sen t , and the i r

Honours a id this hould have been foreseen by FCL a t the t ime

when It gave i t s undertakings. I t 1 s c e r t a i n l y c l e a r t h a t SCJ,

t h e o t h e r c o n t e n d e r f o r FCL sha res , has cons lde red (among t h e many

v a r i a t l o n s of courses open to it lf it 1 s s u c c e s s f u l i n i t s b i d )

t h e p o a s i b i l l t y of se l l i ng o f f pa r t o f FCL ' s p roduc t ion capac i ty .

Bu t t he re by SCI a f t e r a i s no ev idence t o sugges t t ha t any such r a t iona l l za t lon

successful takeover would have serious e f f e c t s on

FCL s t a f f .

The o n l y d i r e c t e v l d e n c e o f damaqe l i k e l y t o b e s u f f e r e d

by FCL i n t h e months before this case cou ld be r e so lved , r e l a t ed

t o FCL be ing fo rced to r educe p r l ces by about 1 2 % f o r some 10% of

i t s p roduc t s , t hese be ing m a r e a s which were u n d e r s p e c i a l a t t a c k

from coinpetltors. I am prepared t o b e l i e v e t h a t some p a r t o f t h i s

a g g r e s s i v e c o n d u c t o f c o m p e t l t o r s may have been due t o a n

assessment of FCL'S commercial vulnerabl l i ty while lt i s under a

t akeover c! oud. The evidence, however, does not enable me t o s a y

j u s t how much p a r t t h i s c o n s i d e r a t i o n h a s p l a y e d i n t h e p r l c i n g

bat t le . The i n d u s t r y i s i n a posi t lon over-supply, f and

p r i c e - c u t t i n g	may	appear	t o be	t h e best	(or o n l y ) a v a i l a b l e	method
,

of preserv ing or m c r e a s i n g m a r k e t s h a r e s .

The o t h e r m a t e r i l l b e f o r e t h e C o u r t r e l a t i n g t o a c t u a l

l o s ses by FCL, conce rned t he p ro f i t s wh ich cou ld be made by FCL

s h a r e h o l d e r s lf p r o c e e d s o f s a l e o f t h o s e s h a r e s c o u l d be

i

- 15 -

i n v e s t e d , e v e n a t a cur ren t ly modes t 1 2 % r a t e of I n t e r e s t . SCI

has Ind ica t ed a w l l l i n g n e s s t o b i d $4 pe r sha re when pe rmi t t ed t o

do so. This would g i v e a pu rchase p r i ce o f ove r $38m, which,

i n v e s t e d a t 1 2 % p.a . would brmg in over $4.5m per year . Thls can

be c o m p a r e d w i t h t h e l a s t y e a r ' s a f t e r - t a x p r o f l t o f t h e company,

which was shown a t about $3m i n t h e 1982 Annual Report. So f a r a s

o t h e r p o s s i b l e l o s s e s a r e c c n c e r n e d , It was a r g u c d t h a t I f API.1

were unsuccessful in t h e a c t l o n , and S C I in due coarse found

i t s e l f t h e o n l y b l d d e r I n t h e f l e l d , it c o u l d r e v e r t t o j.ts

p r a s e n t b i d of $3.50 p e r s h a r e o r , I f FCL's worst fears l lad becn

r e a l i z e d and i t s p r o f i t a b l l i t y h a d s u f f e r e d s e v e r c l y , S C I could

reduce I ts Dld s t i l l f u r t h e r , a t a loss t o FCL sha reho lde r s o f

many m l l l i o n s o f d o l l a r s . 'The po in t , t hough specu la t lve , I S

v a l i d l y made.

Opinion evidence was given by t h e managing d i r e c t o r o f

APM, M r . S.D.M. Wal l i s , t o t h e e f f e c t t h a t FCL was n o t l i k e l y t o

s u f f e r a n y s i g n i f i c a n t loss of employees or customers as a r e s u l t

of t h e APM a few years proposa l . H e i n s t anced the APM takeover of Tasm3n-UEB

ago as a p r e c e d e n t s u p p o r t l n g h l s c o n t e n t i o n . A f t e r

hea r ing t he and M r . Castan I f ind ev idence on t ha t sub~ec t f rom M r . Wallis, M r . Becker

myself unable t o s a y t h a t t h e h l s t o r y o f

t h a t m a t t e r a s s i s t s me e i t h e r way i n predicting t h e e f f e c t on FCL

o f t h e p u b l l c a t l o n o f t h e APM proposa l . The d l f fe rences be tween

t h a t c a s e and t h e p r e s e n t a r e t o o g r e a t . T h e r e i s c e r t a i n l y

n o t h i n g 1 n t h e f a c t s a n d s u r r o u n d i n g c l r c u m s t a n c e s o f t h e

Tasman-URB takeover t o cailse me t o d o d b t t h e g e n e r a l c o n c l u s i o n I

- 16 -

h a v e r e a c h e d i n t h e p r e s e n t c a s e - t h a t p r o v l d e d s e n s i b l e s t e p s ,

by way of reassurance , a re t aken by FCL t o c o n t a l n t h e damage, 1

d o n o t s i g n l f l c a n t l y b e l i e v e t h e p u b l l c a t i o n o f t h e a b o r t i v e p r o p o s a l will acid

t o t h e damage which would otherwlse have b en

s u f f e r e d by FCL, a r i s l n q from t h e mere f a c t s of c o n f l l c t i l ~ g

t a k e c v e r o f f e r s and a delayed outcome of t h a t c o n f l i c t .

I t i s f o r t h e s e r e a s o n s t h a t I d o n o t b e l i e v e t h a t I can

t r e a t t h e APM p r o p o s a l a s a new c l r c u m s t a n c e , a r l s l n g s l n c e t h e

judgmen t o f t he Fu l l Cour t , en t i t l i ng m e t o d e p a r t f r o m t h e

d i s c r e t i o n e x e r c l s e d b y t h e F u l l C o u r t .

The o t h e r new c i r c u m s t a n c e r l i e d o n b y S C I a s

j u s t i f y l n g t h e f r e s h exercise of a d i s c r e t l o n , was a decls ior , by

A m a t i l , e x p r e s s e d a s a formal r e s o l u t i o n o f i t s Board of

Directors, " t h a t h e Company w i l l . no t s e l l i t s s h a r e s i n Fi.bre

C o n t a m e r s L t d . t o APM Investments Pty. Ltd. or t o any of i t s

r e l a t e d c o r p o r a t l o n s a t any t ime or i n any circumstances or f o r

any price".

...

- 1 7 -

I n c a s t i n g i t s r e s o l u t i o n i n t h e s e t e r m s , A m a t i l ' s Hoard

was de l ibe ra t e ly u s ing t he l anguage OE F i t z g e r a l d J. I n t h e P u l l

C o u r t , when he s a l d ,

'I.. . FCL and the Amat l l shareholders have been

conf lden t enough o f t he i r pos l t i on t o r e j e c t h e

lower S C I b i d . They a r e a l so conf ident enouqh to

a d o p t t h e a t t l t u d e t h a t t h e y w l l l nu t dea l w i th APM

u n t l l it 1s c l e a r e d e i t h e r by t h e C o u r t o r t h e

Trade Practices Commisslon. Azd, t h e damage whrrhlch

is deposed t o i s appa ren t ly not so a c u t e a s t o

cause an presumably mean t h e end announcemenr t h a t h e Amatil. s h a r e s a r e

n o t f o r p r o c e e d l n g s sale t o e l t h e r b i d d e r , a course which would

of both takeovers and the

a n d a n y d a m a g e w h i c h h a s b e e n

o c c a s l c n e d , s t a t e ,

w i t h o u t qualification, e v e n t o o r

t h a t h e A m a t i l s h a r e s a r e n o t f o r

sa1.e t o APM a t any time or In any c i rcumstances or

for any pr ice . There 1s no p resen t r ea son t o doub t

t h a t , l f a t t h e end of t h e TPC a c t l o n APM 1 s f r e e

t o b id and 1 s t h e h i g h e s t b l d d e r , it will have i t s

b i d recommended and accepted."

I do no t t h ink it 1 s n e c e s s a r y t o s e t o u t a l l t h e

c i rcumstances surrounding the making of t h l s r e s o i u t l o n , w h i c h

.-

occurred on 1 7 October 1983, while t h e h e a r i n g b e f o r e me was

proceeding. I t w a s p r e c e d e d b y a n e a r l l e r e s o l u t i o n of October

1 2 which was recorded i n t h e words

' I . . . it w a s r e s o l v e d t h a t i n a l l o f t h e

Circumstances . . . t h e company w i l l no t s e l l i t s

s h a r e s i n F i b r e C o n t a l n e r s L i m i t e d t o APM

Investments Pty, Ltd. . . ."

- 18 -

Mr. Becker qave evidence about the passing of thls resolution and It was because of questions raised In the course of that evldence that speclal meetings of Rmatil were called,

resulting in the final resolution set OUC above.

I am satisfied that the resolution of 17 October 1 s

entirely genuine and not merely a devlce Intended to procure a partlcular result - namely release from undertaklngs - although that is indeed Its purpose. I have no doubt that if there were

some way In wllich Kmatil could blnd ltself even more firmly to the

stand indicated, it would do so. It is deliberately anU

consciously prepared to sacrifice any chance of a futurc profltable APE1 bld, In order to create the posslblllty that it may be able to deal wlth S C I in the immediate future. To achieve thls aim It is quite wl.lling to burn its APM brldges and cut off that retreat.

_.

However, In spite of my satisfaction as to the

genuineness of the Amatll resolution, I do not belleve that 3 t can be accepted without reservation. Company dlrectors cannot blnd themselves or their successors, merely by a resolution as to

future intent, to a course of conduct which may, when the time comes, prove to be not In the best interests of shareholders. If the undertakings are not released, and APM were to reslst the TPC case successfully on the basis of It retaming the whole FCL

l

- 19 -

opera t ion , and I f It were then, on the same b a s l s , t o make t h e

h l g h e s t b i d f o r F'CL shares , Arnat l l would have no commercial 0:

l ega l r edson n o t t o a c c e p t t h a t b l d .

F o r t h l s r e a s o n , a n d i n s p l t e o f ; I m a t i l ' s a d o p t l o n or'

l anguage sugges ted by F i tzgera ld J . , I am unable t o f i n 2 t h a t t h e

h a r d e n i n g o f A m a t i l ' s a t t l t u d e t o an APM b l d ( g i v e n t h a t lt a r l s e s

s o l e l y from the c i r cums tances o f t hese p roceed lngs ) r ep resen t s

such a new c i r cums tance , s ince t he s i t ua t ion w i th wh ich t he Fu l l

C o u r t d e a l t , a s to j u s t i f y me i n r e - o p e n l n g t h e q u e s t l o n o f t h e

undertakings. For the same reason , I am unable t o a c c e p t t h e

subwlssions which were put for SCI and FCL, t h a t , b e c a a s e of

?.matill s s tand , the p roceedings have now become academlc or

f u t i l e . A c c o r d i n g l y , t h l s a p p l i c n t l o n m u s t f a i l .

I n t hese c i r cums tances it becomes unnecessary f o r me t o

decide what I would do I f I were-required t o r e c o n s i d e r t h e who1 e

ques t ion of the under tak ings for myse l f But . I n c a s e t h e m a t t e r

should be t a k e n f u r t h e r , I t h i n k it i s p r o p e r t h a t I should say

something on t h e s u b j e c t .

I a m , of course, bound by t h e F u l l C o u r t ' S r u l i n g t h a t

t r a d i t i o n a l t h e p r i n c i p l e s c o n c e r n i n g i j u n c t i o n s a d

u n d e r t a k i n g s , l a i d down in ca ses such as Chanel Ltd. v - F.W.

Woolworth & C o . Ltd. and O r s . - 1981 1 WLR 485 apply f u l l y t o t h e

p re sen t ca se . A l thouqh the ma t t e r was not a rgued before m e when 1

h e a r d t h e e a r l i e r a p p l i c a t i o n s , I had taken the vlew t h a t t h e s e

- 23 -

proceedings were o u t o f t h e o r d i n a r y , a n d c a l l e d f o r a more

l i b e r a l a p p r o a c h t h a n i s norrual t o t h e m a l n t e n a n c e of

under t ak lngs . In t h e f l r s t p l a c e , t h e u n d e r t a k i n g s h a d b e e n

sought by the TPC i n what I h a d s c e n a s h e l n g t h e l n t c r e s t s of

o r d e r l y and prompt litigation of a complex i s sue , ra ther than the

p r o t e c t i o n o f t h e p r o p r l e t o r y i n t e r e s t s w h i c h m o s t p l a l n t l f f s o r

a p p l i c a n t s	h a v e	i n	mind	when	see lc lng	mter	locutory	m- junc t lons	Or
0

under tak ings . The absence of any provlsion €or r ed res s by way of

damages also seemed t o me t o d l s t i n g u i s h this case f rom the

normal appl lca t lon for l n t e r l o c u t o r y r e l l e f , a s d l d t h e f a c t t h a t

FCL and Amatil hardly seemed t o b e n e c e s s a r y p a r t i e s t o t h e

p r o c e e d i n g s a t all., and S C I was n o t a p a r t y , i n s p i t e o f i t s

e f f o r t s t o b e j o i n e d .

Slnce I was i n e r r o r I n t a k l n g a more l i b e r a l vlew of

the permanence of these undertakings than 1 s normal, and now

a p p l y i n g i n s t e a d t h e p r l n c i p l e s l a l d down by t h e F u l l C o u r t , 1

t h j n k it m u s t b e s a i d t h a t a l l o r m o s f o r m s t of damage t o t h e

t a r g e t company a r i s l n g f rom uncer ta in ty ds t o I ts f u t u r e , o r t o

i t s sha reho lde r s a r i s ing f rom loss o f an ea r ly oppor tun l ty t o

c o n v e r t h e i r s h a r e h o l d i n g s t o c a s h , m u s t h a v e b e e n f o r e s e e n by

t h o s e p a r t i e s when the undertakJngs were glven. They may n o t have

f o r e s e e n t h e e x t e n t o f t h e p o s s i b l e l o s s e s , b u t they should have

fo re seen -their n a t u r e .

i

- 21 -

Smllar1 .y I ' t h i p k 1c must D e s a id t ha t Amat l shou ld l

have fo re seen t ha t a s i t u a t i o n c o u l d d e v e l o p i n w h i c h it would

make a f i r m d e c l s ~ o n t h a t 1.t would r a t h e r sell nov to S C I t han

w a i t an unce r t a in t m e f o r the p o s s l h l l l t y o f a s a l e t o APM. B o t n

t h e s e c o n c l u s i o n s a r e , I be l i eve , suppor t ed (lf n o t r e q u l r e d ) by a

ca re fu l	r ead inq o f	t h e ~ r	H o n o u r s '	r e a s o n s f o r ~ u d g m e n t	i n	t h e F u l l
Court .

e

If I am r i g h t i n t h u s a p p l y i n q t h e F u l l C o u r t ' S

r e a s o n i n g , q u e s t i o n n o d i s c r e t i o n f c o u l d a r l s e . The

developments were foreseeable and so they cannot provide grounds

f o r r e l e a s e from the unde r t ak ings . If I am wrong and t h e s e

ques t ions could be open for cons idera t lon in t h e x e r c l s e o f a

d l s c r e t i o n , t h e n I woald glve great welght t o the comple re ly

changed posl t ion adopted by Amatll , and thus by FCL, s i n c e t h e s e

p r o c e e d i n g s t a r t e d . I t h l n k t h a t it 1s anomalous t h a t , h a v l n g

reached a f i rm and genulne dec is ion n o t t o sell t o APM, Amatll

should be requi red , w i t h no possibility of r e d r e s s f o r damage

su f fe red , t o awa i t t he ou tcome cf l eng thy C o u r t p roceed ings i n

c a s e , a t t h e end of them, APM should be f ree t o b id and prove ab le

t o persuade Amatl l to change i t s mind.

I h a v e t o s a y , w i t h t h e g r e a t e s t r e s p e c t t o t h e views

expressed by the Fu l l Cour t on t h e s e m a t t e r s of d i s c r e t l o n , t h a t I

s t l l l s e e t h e p o s i t i o n s of PZL and Amati in l a r a t h e r d i f f e r e n t

l ight. from t h a t i n which t h e i r Honours saw them.

- 22 -

The i r Honours d id apprec l a t e t he unusua l pos l t i on of

those companies. Thus Snuthers J . s a i d ,

"There is much t o b e s a i d f o r t h e v i e w t h a t FCL and

S C I should be and should always have been free t o

d e a l w i t h t h e s h a r e s i n FCL. And Indeed, had they

n o t , f o r r e l a t ionsh ip t h e i r own purposes , In t e rvened In t he

be tween t he Comm1.ssion and APY, t hey

would be l n t e r v e n t i o n and have b en so f r e e . B u t f o r t h a t

APM would have been similarly f r e e ,

s u b ~ e c t of c o u r s e , t o t h e p o s s i b i l i t y o f t h e

Commission see lcmg and ob ta in lng an ln te r lozutory

i n j u n c t l c n	t o	r e s t r a i n	It from	proceeding	with	i t s
b i d . I'

Hls Honour r e tu rned t o t h i s p o i n t i n a l a t e r p a s s a g e -

" A p a r t f r o m t h e c i r c u m s t a n c e t h a t , l n s e e k i n g

r e l e a s e , FCL and SCI were In a sense s eek ing t o

depr ive APM of t h e b e n e f i t s p a s s l n g t o i t under the

o r ig lna l r r angemen t fo r r ec ip roca l unde r t ak lngs

and	t o r e g a l n t h e f r e e d o m t h e y f o r f e i t e d t o a c h i e v e
those	under tak ings and presumably p rof l t thereby

t h e r e would be much t o be s a i d f o r FCL b e l n g f r e e

t o dea l w l th whom It chooses , and for S C I t o be

f ree t o b i d f o r t h e s h a r e s . I'

F l t z g e r a l d J. s a i d ,

"NO S ta t emen t o f C la im ye t de l ive red i n t he 'PPC

a c t i o n c o n t a i n s a n y a l l e g a t l o n a g a i n s t FCL, and t h e

only a l lega t ion whlch has been p leaded aga lns t the

A m a t i l s h a r e h o l d e r s i s t h a t h e y t h r e a t e n a n d

i n t e n d t o cons lder acceptance o f an o f fe r by APM

f o r t h e i r s h a r e s l n PCL." [ I t i s t o b e n o t e d t h a t

Amat l l has sought l eave to amend i t s d e f e n c e t o

deny t h i s a l l e g a t i o n , whlch was p rev ious ly no t

denied] .

- 23 -

L a t e r h i s Honour s a l d ,

"The a n c i l l a r y u n d e r t a k i n g s o f FCL and the Amatil

s h a r e h o l d e r s w e r e l a r q e l y i f n o t w h o l l y i r r c l e v a n t ,

e x c e p t p e r h a p s a s i n s u r a n c e t h a t n e l t h e r APM nor

S C I would circumvent I ts undertaklng, and even for

t h a t purpose it i s doub t fu l i f unde r t ak lngs f rom

FCL and the Amari l shareholders were necessary. I t

may be added t h a t It 1s n o t e a s y t o p e r c e i v e why

FCL and the Amat i l sha reho lde r s a r e j o lned I n t h e

TPC a c t l o n , o r i n d e e d why it was p rope r fo r them t o

be jo ined . absence Reference has a l ready been made t o t h e

of pleadings and I do any a l l e g s t l o n s a g a i n s t them I n the

n t fi.nd It obvious how a

sha reho lde r who se l l s o r t h e company In which

s h a r e s a r e s o l d c a n o r d l n a r i l y b e i n c u l p a t e d i n a n y

breach of S. 50 by the pu rchase r o f sha res . "

And l a t e r a g a i n his Honour made t h e o b s e r v a t i o n ,

"If FCL and the Anat11 shareholders had then C1.e.

a t the commencement of p roceedmgs l t aken the l r

c u r r e n t s t a n c e t h a t t h e y d o n o t l n t e n d t o d e a l w l t h

APM whi l e t h a t claim 1 s unresolved, t he TPC pursues i t s c l a i m a g a i n s t it and

it might well have been

t h o u g h t t h a t t h a t was a matter for them and t ha t ,

t h o s e i n c i r c u m s t a n c e s , t h e y s h o u l d n o t b e

e m b r o i l e d i n t h e l i t l g a t i o n . "

The e s s e n t i a l p o u t on which I r e s p e c t f u l l y d i f f e r from

the views of the Full Court is t h a t I f m d It d i f f i c u l t t o s e e

t h a t FCL and Amatil should be equated wlth S C I fo r t he pu rpose o f

cons ide r ing how they came t o e n t e r i n t o u n d e r t a k i n g s a n d w h e t h e r

they should concinue to be bound by them i n t h e s l t u a t l o n a s it

developed. has ,

There was no d l r e c t e v i d e n c e a s t o t h e d e l i b e r a t i o n s o f

FCL and Amati l before they agreed t o be bound. I would have

thought it l i k e l y t h a t h e y g a v e t h e i r u n d e r t a k m g s b e c a u s e t h e

- 24 -

TPC and APM had asked for them, presumably ds a matter of caut ion ,

and Chere seemed t o b e no p o l n t i n n o t a g r e e i n g , i n view of t h e

f a c t t h a t S C I and APH were both giving their undertaklngs whlch

produced the same r e s u l t .

I am no t pe r suaded t ha t FCL o r Amatil obtained any

advan tage i t he r f rom the t o t a l i t y o f t he unde r t ak ings o r f ron

t h e i r own undertakings were concerned, p a r t l c u l a r u n d e r t a k i n g s . So f a r a s t h e t o t a l i t y o f t h e

they were accept lng a lengthy and

u n c e r t a i n d e l a y 111 t he b ldd ing for FCL s h a r e s , a n d a l t h o u g h t h a i

c o u l d e n d w l t h b o t h c o n t e s t a n t s b e i n g u n i n h t b l t e d 111 t h e i r

b iddlng , it was also q u i t e p o s s l h l e t h a t , a t t h e n d o f tine

l i t l g a t i o n , o n i y o n e b i d d e r w o u l d be l e f t i n t h e f l e l d . T h e r e

would seem t o be no good redson why they would no t have p re fe r r ed ,

had t hey had any cho ice i n t he ma t t e r , t o have t he b idd ing t aken

t o a conclus ion then and there . If S C I had been successful, no

problems would have arisen: i f APM h a d s u c c e e d e d , t h e l l t i g a t l o n

would have n e g o t i a t i c n s w i t h nsued and, i f judgment had been given against APM,

SCI could presumably have been resumed.

So f a r a s FCL’s p a r t i c u l a r u n d e r t a k l n g s a re concerned,

g i v e n t h a t S C I and APM would no doubt have exchanged undertaklngs

I anyway, I can on ly agree wi th F i tzgera ld J. t h a t “ t h e a n c i l l a r y

undertaklngs of FCL and the	hma t i l	sha reho lde r s	were	l a r g e l y	i f
n o t w h o l l y i r r e l e v a n t ” .

...

- 25 -

I t can of course be argued that FCL and Amatll should

h a v e s t o o d under tak lnqs . t h e i r g r o u n d a t t h e time and refused t o give any

I have xpressed my v lew, in my ea r l i e r j udgmen t ,

t ha t hey t he con t r a ry v i ew shou ld no t now b e p e n a l i z e d f o r f a i l u r e t o d o so: b u t

is c l e a r l y o p e n .

What I h a v e d i f f i c u l t y i n a c c e p t m g , w i t h d u e r e s p e c t CO

the v iews of the F u l l Court , i s t h a t FCL, as well as S C I , I n t h e

words of relationship between Smithers J . , " f o r t h e i r own p u r p o s e s , i n t e r v e n e d i n t h e

1 the Cormnlssion a d APM", or t h a t FCL' S

under tak lng , " l l k e t h a t o f SCI, was g i v e n d e l i b e r a t e l y t o t h e

C o u r t f o r good commercial reason . . . ' I .

F l t z g e r a i d J . , d e a l i n g w i t h t h l s a s p e c t of t h e m a t t e r ,

I s a i d ,

"The f u r t h e r s u b m i s s i o n t h a t PCL and the Amat i l

sha reho lde r s gave t he unde r t ak lngs mere ly in a

s p l r l t o f c o - o p e r a t i o n a n d w l t h o u t h e e d t o

consequences or a t l e a s t w i t h o u t h o p e o f b e n e f i t

seems t o me f a n c i f u l . "

i

Jenkinson J. s a i d ,

"Each suffered a d e t r i m e n t i n exchange f o r t h e

advantages which the under tak lng of one or more o f

the others con ' ferred on him. There i s i n my

o p i n l o n o t h l n g i n t h e v i d e n c e t o ~ u s t i f y cl

conc lus lon t ha t any o f t he r e sponden t s gave h l s

undsr tak ing for any reason b u t t h a t h e c o n c e i v e d

t h e g i v l n g i n t e r e s t s o f t h e u n d e r t a k i n g t o s e r v e h i s own

b e t t e r t h a n t h e w i t h h o l d l n g o f t h e

undertaklnq. I'

- 26 -

Havlng carefully considered the judgmeilts of the Full Court on the issues of discretion, I still thlnk it is arguable that thls matter has become one which ought to be rcsolvcd in the market place flrst, and in the Court, if necessary, later - rather than the other way around. With the beneflt of hindslght, It may be that this has been so from the outset. A s Pltzqerald J. said,

"Especially in the context of rlval bids, appropriate injunctlons might often be only those which are necessary to ensure the effectiveness of any divestlture order whlch may be made in due

l course. 'I

In saylng this I have not forgotten the unearned benefit

to SCI, or the obvious unfalrness to APM. which would be llkely to

flow from a general release of undertaklngs. APM at any time

since proceedings were first mooted would have been at a

disadvantage in the market place while TPC proceedings were

.-

hanging over it. On the other hand, it would clearly have been improper for the TPC not to have Indicated, at the earljest posslble time, the view it took of the possibility of an APN takeover.

While referring, to the TPC I should perhaps add that it was urged on behalf of SCI and FCL that the TPC should now dlscontinue its action, since Amatil had reached a flrm and

irrevocable decision not to sell its shares to APM and that has rendered the action'unnecessary and academic. Alternatively Mr. IIcComas, for PCL and Amatil, 1ndl.cated a wlllingness to consent to

. .

a ~ u d g i n e n t fo r i n j u n c t l o n s w h i c h w o u l d h a v e t h e f f e c r o f

prevent ing Amatil's Board of D i r e c t o r s froin r e s l l i n g from the

d e c l s i o n it has taken never t o s e l l t o APl.1.

The TPC h a s s a l d t h a t lt will n o t t a k e e i t h e r c o u r s e , a t

l eas t until a f t e r t h i s judgment has been del ivered and considered.

i

N o doubt he TPC has been l n f luenced i n t h l s by t h e r e a s o n s f o r

~udgment of he P u l l Court and by a d e s l r e t o c a r r y o u t I t s

r e s p o n s i b l l l t l e s I n a s even-handed a way as p o s s l b l e .

Although the r o l e o f the TPC h a s now been adve r t ed to i n

open Court, i n f l u e n c e I do not b e l i e v e t h a t I shou ld s ay any th inq t o

it In the performance of I ts s t a t u t o r y f u n c t i o n s , a n d

noth lng I have said should be read a s h a v i n g t h a t l n t e n t l o n .

The main p o i n t s o f t h i s judgment may be summarized as

fol lows: - -

l. I am u n a b l e f i n d t o t h a t t h e r e a r e a n y new

%

circumstances, whlch ave occurred s ince the time d e a l t w i t h b y

t h e F u l l ques t ion of under tak ings . Cour t , wh lch wou ld l u s t i fy t h i s C o u r t i n r e o p e n i n g t h e

2 . If it were appropr i a t e fo r t h l s Cour t t o l ook now a t a l l

i

i	changes	which	ave	occur red	s ince	the	under tak lngs	were	f l r s t
I

given, which in my view It is n o t , I would be cons t ra ined to hold ,

... --