Trade Practices Commission v Santos Limited

[1992] HCATrans 320

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IN THE HIGH COURT OF AUSTRALIA

Registry No C23 of 1992

B e t w e e n -

TRADE PRACTICES COMMISSION

Applicant

amd

SANTOS LIMITED

First Respondent

SAGASCO HOLDINGS LIMITED

Second Respondent

Application for an injunction

DEANE J

(In Chambers)

Santos 1 4/11/92

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 4 NOVEMBER 1992, AT 4.40 PM

Copyright in the High Court of Australia

MR A_~ CHERNOV, OC:  May it please Your Honour, I appear with

my learned	friend, MR P. JOPLING, for the
applicant.	(instructed by the Australian
Government	Solicitor)

MR D. SHAVIN: If Your Honour pleases, I appear for the

first respondent, Santos Limited. (instructed by

Freehill Hollingdale & Page)

MR M. BIELECKI: If Your Honour pleases, I appear for the

second respondent, Sagasco Holdings Limited.

(instructed by Finlaysons)

HIS HONOUR:	Yes, Mr Chernov.
MR CHERNOV:	May it please Your Honour, at the outset can we

apologize for imposing on the Court sitting at this

hour and on Your Honour, of course. Your Honour,

this is an application for an interlocutory

injunction to restrain Segasco from proceeding with

its - - -

HIS HONOUR:  Mr Chernov, I have glanced through the papers, ··

including the judgment of the Full Court. I have

not had the opportunity of really reading the

judgment of Justice Heerey, but you can assume that

having glanced through the papers I am acquainted

with the nature of .the case. Mr Shavin, can I ask

you this: when is it proposed to send out the

documents to shareholders?

MR SHAVIN: That is not known yet, Your Honour. The

position at the moment is that the Full Court, of

course, handed down its judgment on Monday. The

Australian Securities Commission has extended until

16 November the time within which offer documents

are to be sent. The Board of Santos has not yet

had an opportunity to meet to consider its position

having regard to the judgment of the Full Court.

HIS HONOUR: Well, that means there is no prospect of the

documents going out tomorrow?

MR SHAVIN: No.

HIS HONOUR: Well, in that case, subject to what counsel	might say, the Court will list the application for
special leave for 10.00 am next Friday, that is the
day after tomorrow, on the basis, Mr Chernov, that
it will be interfering with the list in that the appeal listed for that day will have to be put back a little in time and you will be expected to deal
with the application in a maximum of 30 minutes.

MR CHERNOV:  Your Honour, we will be able to do that. It is

a very short point. The special leave point is

Santos 2 4/11/92

either good or it is not, and it is a very short

point.

HIS HONOUR:  I should indicate that what prompts me to take

that unusual course is the view expressed in the

Full Court that the grant or refusal of

interlocutory relief may effectively determine the

whole of the proceedings either way.

Well now, I have said that is the course I

would propose to take. Has anyone at the bar table

any objection to that course?

MR SHAVIN:	No, we do not, if Your Honour pleases.
HIS HONOUR:	In that context there arises the question

whether I should grant an interim injunction.

MR CHERNOV:  Yes, Your Honour. I assume there is still no

undertaking forthcoming from the other side,

notwithstanding the rather expedited hearing of the

special leave application?

HIS HONOUR:  I do not know. Mr Shavin may well not be in a

position to give an undertaking.

MR SHAVIN:  No, Your Honour, we are most reluctant to give

an undertaking for a number of reasons that will

probably already be apparent to Your Honour. We
say it is wholly unnecessary and inappropriate that

we do so.

HIS HONOUR:  Mr Shavin, in the circumstances, it is common

ground that there is an issue to be tried in the

case if it goes ahead. That being so, the question

for me consists of a combination involving a vague

assessment of chances of leave being granted but,

in the context of a day, I think very much the

primary consideration is the balance of

convenience.

Now, in the light of what I extracted from you

at the beginning and the fact that it is only a

day, have you anything to say against granting an

injunction up until 12 noon on Friday?

MR SHAVIN: Perhaps two things, Your Honour: the first is

that if one is to follow the principles
in ••..• Properties, the normal course is that an
injunction would only lie if there is at least some prospect of the appeal succeeding. We would say

that on the face of Mr Hollow's affidavit it is

quite clear that the application for special leave

just does not fall within section 35A because in

Mr Hollow's affidavit he makes it quite clear that

the only error that is being attributed to the

Full Court is the weight that was given to certain

Santos 4/11/92

matters, in other words, the way in which the court

exercised its discretion. There is no question of

law involved at all; it is a question of

discretion. So that, on any view, the application

for special leave is doomed to fail.

disposed to grant an injunction, I probably have instructions to proffer an undertaking until noon Subject to that, if Your Honour was otherwise

on Friday. But, Your Honour, we do say that this

is a quite extraordinary application. This is not

an application for special leave to appeal from a

decision of the Full Court. The order of the

Full Court was a refusal of leave to appeal. So

that if this Court was to accept an application for

special leave, it would be doing so in

circumstances where, if the application for leave

to appeal had been made to and refused by

His Honour Mr Justice Heerey, the Full

Federal Court itself would not be able to entertain

an application for leave.

Your Honour may be familiar with a decision of the Full Court in the Thomas Borthwick case

which - - -

HIS HONOUR:	"Familiar" would be a strong word.
MR SHAVIN:	Perhaps, could I very briefly refer Your Honour

to it? If I could hand to Your Honour a photocopy

of the decision. I hope the photocopy is legible,

Your Honour. We did not have a lot of time to

prepare. This is a decision of the Full Federal

Court in Thomas Borthwick & Sons Pacific Holdings

Ltd & Others v Trade Practices Commission, a court

comprising of Sir Nigel Bowen and Justices Lockhart

and Sheppard.

In this matter, the Full Court had to consider whether the provisions of sections 24 and 25 of the Federal Court Act had the effect of permitting an

application for leave to appeal to be made to a

judge at first instance and then, itself, the

subject of an appeal to the Full Court. The court

decided, both as a matter of construction and a

matter of public policy, that you only had one bite

at the apple. You could make one application~ you

could elect whether to go to the Full Court or

whether to go to a judge at first instance. But if

you went to the judge at first instance you could

not appeal his refusal.

So that if this Court was to grant special

leave, it would have the curious result that

whereas you cannot appeal within the Federal Court

to a refusal of leave, you could come up to this

Court.

Santos 4 4/11/92

HIS HONOUR:  Yes, except it would not be so curious, would

it, in that in an appropriate case this Court could
grant leave to appeal direct from the refusal of a

judge at first instance to grant leave to appeal.

MR SHAVIN:  Save as to the reluctance of this Court, of

course, to interfere with the administration by another court of its business, and this is very purely a matter of practice and procedure. This is

a question as to how the Full Federal Court
determines the manner in which applications for
leave to appeal to it are determined. And

Your Honour may recall what was said by this Court in Paringa Mining v North Flinders Mines where the

Court, consisting of the Chief Justice and

Justices Brennan and Gaudron - perhaps if I could hand Your Honour copies - - -

HIS HONOUR: 

Mr Shavin, I do not want to pre-empt you but I

would be reluctant to express a firm view about
whether or not the Court would be likely to grant

special leave and, in a context where we are

talking about one business day, I really do not

think there is much to be said about the balance of

convenience.

MR SHAVIN: 

Would Your Honour permit me to obtain

instructions?

HIS HONOUR:	I would be grateful if you would.
MR SHAVIN:	Your Honour, I am instructed to proffer an

undertaking to the Court until 12 noon on Friday.
Could I clarify the form of that undertaking,

Your Honour, because there has been some confusion on the material?

A form is set out in a letter which is an

exhibit to Mr Hollow's affidavit which does not, in

fact, reflect the form of the undertaking that was

proffered and accepted in the Federal Court, and

the form of undertaking which we would proffer to

this Court is, in fact, the form that was in fact	proffered in the Federal Court, not that which was
sought in the Commission's letter.

Perhaps, Your Honour, if I could read out a

form of words and, in part, it has been adapted, if Your Honour will pardon my any inelegance: that on

behalf of Santos I put to the Court that it will

not, prior to 12 noon on Friday - would that be a

convenient time, Your Honour?

HIS HONOUR:	Yes.
MR SHAVIN:	On Friday, 6 November 1992:
antes	4/11/92

(a) despatch any offers to acquire shares in

Sagasco Holdings Limited;

(b) make a takeover announcement as defined by

section 603 of the Corporations Law for shares

in Sagasco Holdings Limited; or

(c) purchase any shares in Sagasco Holdings

Limited on market -

where "market" refers to the Australian Stock

Exchange.

Now, Your Honour, I am instructed to proffer

such an undertaking in regard to what has fallen

from Your Honour.

HIS HONOUR:  Thank you, Mr Shavin. Mr Bielecki, have you

anything you want to say in - - -?

MR BIELECKI:	No, thank you, Your Honour.
HIS HONOUR:	Mr Chernov?
MR CHERNOV:	Your Honour, may I just have one moment to

consult my friend about a couple of points which

are not clear to me?

HIS HONOUR: Certainly.

MR CHERNOV:  Your Honour, I do not want to give the

appearance of looking at the lion's den or getting

my hat, or anything like that, but I am not

certain, Your Honour, as to the ramification - not
the undertakings which the Commission accepted in

the first instance. It is true that they were

proffered in the court below. We want to be

satisfied, Your Honour, about one principal thing.

Your Honour may recall from the material the shares

held by the South Australian Finance Authority, and

essentially the battle or the fight is in relation

to those shares.

We believe the undertaking is adequate, in a

sense that it preserves the status quo in relation

to those shares, but at the expense of holding

Your Honour up unduly, I would like to be certain

that that is the case.

HIS HONOUR: Are you trying to ask Mr Shavin a question

through me?

MR CHERNOV: Well, I am not, Your Honour, because it is not

fair to ask him any more questions. I think I

would like to be satisfied on the material here and

I would need probably two or three minutes to do

that, Your Honour.

Santos 6 4/11/92

HIS HONOUR:	Very well, you go ahead.
MR CHERNOV:	Thank you, Your Honour.  Your Honour may not

have a written form of that undertaking in front of

you, or does Your Honour have one?

HIS HONOUR:  I have not the one - I have in front of me the

one in the letter of 2 November.

MR CHERNOV:  Your Honour, the undertaking which I am

reading, which was proffered to Your Honour - to

the Court - was not to despatch "offers to acquire

shares". The injunction which was sought was to	"restrain the respondent from taking any step to
acquire" et cetera. If that were granted,
Your Honour, that would preclude the respondent from entering into any agreements to do that. The
very limited terminology of the offer, Your Honour,
in our submission, does not - at least on one reading of it - prevent it from so doing, and we would respectfully submit that that is not an
appropriate undertaking to the Court because it leaves Santos free to do the matter that I have
just indicated to Your Honour.

There is, Your Honour will recall, a

57 per cent interest in - - -

HIS HONOUR:	Yes, I appreciate that.
MR SHAVIN:	Your Honour, there are two matters, if I could

respond to my learned friend in this way first:	a
restraint upon us taking any steps prevents us
doing anything in terms of the preparation of our

documents and the Australian Securities Commission,

as Your Honour will have read in the Full Court

papers, has already indicated an extreme reluctance

to us getting any further extension and there is a

great deal of logistical work to be done.

HIS HONOUR:  Mr Shavin, you need not trouble about that.

You need only direct your attention to whether the

undertaking should be extended to make clear that

you will not, within the period of the day plus,

enter into any agreement to acquire shares.

MR SHAVIN:  Your Honour, if we cannot despatch an offer, and

those words are not limited by reference to the

Corporations Law, it seems to me difficult to see how we can make an acquisition and certainly, we

cannot acquire 57 per cent under the Corporations

Law without formal despatch of an offer.

HIS HONOUR:	I follow that.
MR SHAVIN:	In my respectful submission, those words, which have been accepted by the Commission for some three

Santos 7 4/11/92

weeks now - four weeks now - have satisfactorily
precluded us doing anything about which they would

now complain, will be sufficient for another 36

hours.

HIS HONOUR:  Can I press you to this extent: can you, with

the instructions of your client, inform me that the undertaking you offer is understood to preclude you acquiring or agreeing to acquire any shares between

now and 12 noon on Friday?

MR SHAVIN:  Yes, I am so instructed, Your Honour.

HIS HONOUR: Very well. Well, that will be noted in the

transcript.

MR CHERNOV:  Thank you, Your Honour.

HIS HONOUR: Anything else you want to say, Mr Chernov?

MR CHERNOV:	No, Your Honour.
HIS HONOUR:	Very well.  I accept and note the undertaking

proffered by Mr Shavin on behalf of Santos Limited.

I indicate to the parties that the application for special leave will be listed at 10 am this Friday -

that is Friday, 6 November - and that it is so

listed on the basis that the applicant will deal

with the application so far as it is concerned

within a maximum of 30 minutes.

Mr Shavin, can I suggest to you that you make

the document from which you read available to Court undertaking are accurately recorded.

MR SHAVIN: Yes, certainly, Your Honour. Would Your Honour

reserve costs?

HIS HONOUR:  Yes, I reserve costs. We will now adjourn.

AT 5.00 PM THE MATTER WAS ADJOURNED SINE DIE

Santos 8 4/11/92