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EMMA ARMSON[*]
[This article examines the position of the Takeovers Panel in light of the scope for judicial review of its decisions. In 2000, the role of the Panel was transformed to make it the primary forum for resolving disputes during a takeover bid. However, opportunities for judicial review have the potential to compromise this role. The first judicial review cases reinforced these concerns in invalidating two Panel decisions. Following this, the Panel’s jurisdiction was amended significantly and the High Court subsequently upheld its constitutional validity. The recent decision of the Full Court of the Federal Court in CEMEX Australia Pty Ltd v Takeovers Panel further strengthens the Panel’s position in regard to judicial review of its decisions.]
CONTENTS
As an administrative body, the Takeovers Panel (‘Panel’) is subject to judicial review of its decisions under the Commonwealth Constitution and the Administrative Decisions (Judicial Review) Act 1977 (Cth) (‘ADJR Act’).[1]
Consistent with the rule of law, this is necessary to ensure that the Panel does not act outside the law in exercising its powers to resolve disputes arising during a takeover bid.[2] However, it also creates a tension due to the potential for conflict with the rationale for the Panel. In 2000, the Panel (instead of the courts) was given the role of deciding takeover disputes during a takeover.[3] This was done because it was considered that ‘[r]emoving tactical litigation and disputes from the courts would lead to a more timely resolution of those matters reducing costs for the parties involved.’[4] The overarching goal was to allow takeover disputes to be resolved efficiently so that shareholders can decide on the merits of the takeover.[5]
This raises the crucial question of whether the Corporations
Act 2001 (Cth) (‘Corporations Act’)
strikes an appropriate balance between the role of the Panel and the courts in
achieving these aims.
The Panel comprises legal and commercial experts in the
area of
takeovers.[6]
Its primary role is to decide whether there are unacceptable circumstances in
relation to a takeover based upon the policy underlying
the takeover provisions
in chapter 6 of the Corporations
Act.[7] This policy is
reflected in the purposes of chapter 6, which are principally to ensure
that acquisitions of shares ‘take place
in an efficient, competitive and
informed market’[8] and that
members of the target company or listed managed investment scheme each have
sufficient information and time to make a
decision[9] and ‘a reasonable
and equal opportunity to participate in any benefits’ under the takeover
bid.[10]
The policy underpinnings of the Panel’s powers were one of the key reasons
why the High Court of Australia upheld the constitutional
validity of the Panel
in Attorney-General (Cth) v Alinta
Ltd
(‘Alinta’).[11]
In Alinta, the High Court held that the Panel does not exercise judicial
power in declaring that circumstances are unacceptable because they
constitute a
contravention of the Corporations
Act.[12]
As pointed out by Kirby J in that case:
it was open to the Federal Parliament to conclude that the nature of takeovers disputes was such that they required, ordinarily, prompt resolution by decision-makers who enjoyed substantial commercial experience and could look not only at the letter of the Act but also at its spirit, and reach outcomes according to considerations of practicality, policy, economic impact, commercial and market factors and the public interest.[13]
To achieve these policy objectives, chapter 6 of the Corporations
Act contains detailed legislative requirements for the conduct of
takeovers. These provisions are based upon a central prohibition against
a
person acquiring a ‘relevant interest’ that increases their
‘voting power’ in a company to more than 20
per
cent,[14]
unless one of the exceptions
applies.[15] This central
prohibition operates using a series of defined terms designed to capture
influence over the voting of shares. The meaning
of the key term ‘voting
power’ is defined by reference to the proportion of the total votes
attached to the company’s
voting shares in which a person and their
‘associates’ hold a ‘relevant
interest’.[16] As a general
rule, a person has a ‘relevant interest’ in shares if they hold
them, can exercise or control the right
to vote attaching to them, or can
dispose of or control the power to dispose of
them.[17] A person’s
‘associate’ is defined to include a second person with whom the
primary person is proposing to act in
concert in relation to the company’s
affairs.[18]
One of the key
exceptions to the central prohibition enables the purchaser
(‘bidder’) to make an offer to buy the shares
of all the
shareholders in the company that it is seeking to control (‘target
company’).[19]
Chapter 6 sets out detailed requirements in relation to the terms of the
takeover offers and information to be disclosed, including
a structured system
of time limits for the provision of information and payment in respect of the
offers.[20]
Disclosure to target shareholders in relation to the takeover is chiefly
provided in the bidder’s statement and target company’s
statement,
which are frequently updated with supplementary statements by the bidder or
target company respectively.[21]
There is a separate liability regime prohibiting misleading or deceptive
statements in takeover disclosure
documents[22] and there are general
market misconduct provisions applying to misleading or deceptive conduct in
relation to takeover
announcements.[23] In addition, a
person is required to disclose whether they have acquired or disposed of a
‘substantial holding’ in a
company (which is satisfied where the
person and their associates have relevant interests in five per cent or more of
the voting
shares in the
company)[24] or, if they have a
substantial holding, that there is a movement of at least one per cent in
relation to this holding.[25] This
disclosure must be made within two business days after the person becomes aware
of the information or, if it is during a takeover
bid, by 9:30 am on the
next trading day.[26]
These
detailed legislative requirements create significant opportunities for
litigation to be used as a strategy to affect the outcome
of a takeover bid.
There are considerable incentives for this given the conflicting interests of
the chief protagonists in a takeover
bid, namely, the bidder and the directors
of the target company. These arise chiefly from the likelihood that the
directors of the
target company will lose their positions if the takeover is
successful.[27] To minimise the
opportunity for the tactical use of litigation, the Corporations
Act places significant restrictions on the courts’ role in order
‘to make the Panel the main forum for resolving disputes
about a takeover
bid until the bid period has
ended.’[28]
First, s 659B(1) contains a limitation clause that restricts access to a
‘Court’ (principally the Federal Court of Australia and state
or
territory Supreme Courts)[29] during
the takeover bid period, only allowing governmental authorities to commence
court proceedings in relation to the takeover
bid at that
time.[30]
Secondly, where it is found that there has been a breach of the
Corporations Act and the Panel has refused to make a declaration
of unacceptable circumstances, s 659C limits the orders that a court can
make following the end of a bid
period.[31]
In such a case, the court cannot exercise its powers under the
Corporations Act to unwind a transaction and can only use those
powers to make remedial orders involving the payment of
money.[32]
Notwithstanding
these limitations, there are significant opportunities for review of Panel
decisions. Under the Panel’s system
of internal review, parties can seek
review of a Panel decision by a Review
Panel.[33] Panel decisions are also
subject to judicial review through a number of different avenues. Significantly,
the limits on court proceedings
in relation to the takeover bid discussed above
do not affect the ability to challenge Panel decisions which is mandated under
s 75(v) of the
Constitution.[34]
Section 75(v) empowers the High Court to grant three specified remedies against
Panel
members,[35]
namely, mandamus (compelling them to perform a duty), prohibition (a restraining
order) or an injunction (which could be used to
prevent Panel members acting
outside their
power).[36]
Panel decisions are consequently subject to judicial review under s 75(v)
during the takeover bid
period,[37] as well as following the bid in the Federal Court under s 5 of the
ADJR
Act.[38]
An open-ended process of judicial review has the potential to disrupt the
takeover process. This could thwart a takeover bid given
the significant
financial stakes for the bidder in making an offer to purchase all of the
remaining target shares in light of the
associated risks and timing pressures of
litigation. Consequently, speed and certainty in takeover decisions are crucial
to the effective
operation of the regime. This is particularly important given
that the threat of a takeover provides a strong incentive for directors
to
ensure that the company is operating
efficiently.[39]
Given this, one of the key aims of the Corporate Law Economic Reform Program reforms of the Takeovers Panel was to allow the target company’s shareholders to decide the merits of a takeover bid.[40]
It was intended that this would be achieved by removing the opportunity for parties to bring court proceedings in order to delay or stymie the bid and instead by placing takeover disputes before a commercial body set up to hear matters quickly and informally.[41]
Applications for judicial review of Panel decisions consequently have the
potential to undermine the purpose of the current system
of takeover dispute
resolution.
The first two judicial review proceedings in the Glencore
cases resulted in the Panel’s declarations and orders being
invalidated.[42] Following these
cases, there were two significant developments in relation to the Panel’s
powers. First, the Panel’s
jurisdiction was amended substantially in the
Corporations Amendment (Takeovers) Act 2007
(Cth) (‘2007
amendments’).[43] Secondly,
the High Court subsequently upheld the constitutional validity of the Panel in
Alinta.[44]
The recent decision of the Full Court of the Federal Court of Australia in
CEMEX Australia Pty Ltd v Takeovers
Panel (‘CEMEX (Full Court)’) built upon
these two developments in further strengthening the Panel’s position in
the context of judicial review
challenges.[45] However, the
question remains whether the situation in the Glencore cases could be
repeated in the future.
This article analyses whether an appropriate balance
is being achieved between allowing judicial review of Panel decisions and
preventing
strategic litigation. Part II provides a detailed background on
the judicial review proceedings that have occurred since the Panel was given its
expanded powers
in 2000. In Part III, the article discusses the
implications of the recent Full Federal Court case, CEMEX (Full
Court), for both the Panel’s powers and the application of judicial
review to its decisions. Part III starts with a focus on the Panel’s
powers, particularly the role of contraventions of the Corporations
Act, the Panel’s jurisdiction to make orders and its ability to
delegate certain tasks to the Australian Securities and Investments
Commission
(‘ASIC’) under those orders. It then examines the approach adopted
by the Full Federal Court in relation to
two key judicial review grounds under
the ADJR Act, namely, errors of law and the ‘no
evidence’ ground. Part IV analyses the earlier decisions in the
Glencore cases in light of subsequent developments to consider whether
similar difficulties could still arise. The article concludes in Part
V with a
discussion of the impact of each of these matters upon the role of the courts in
future judicial review cases.
The first judicial review proceedings in relation to the Panel’s
expanded powers arose from decisions to make a declaration
of unacceptable
circumstances and orders against Glencore International AG
(‘Glencore’) in relation to the non-disclosure
of certain
transactions.[46] The transactions
involved the shares of Austral Coal Ltd (‘Austral’), which were
subject to a takeover bid by Centennial
Coal Company Ltd
(‘Centennial’). At a time when Glencore had an interest in nearly 5
per cent of Austral’s shares,
it entered into cash-settled equity swap
transactions (‘equity derivative transactions’) relating to another
7.4 per
cent with two investment banks
(‘banks’).[47] Under
these transactions, Glencore did not acquire any interest in the Austral shares
or have the right to require the banks to undertake
any action involving their
acquisition, holding or
disposal.[48] Instead, the
transactions involved an arrangement where the banks agreed to pay to Glencore
‘an amount equal to the difference
between the value of [the] given number
of [Austral shares] at the time of the closing out of the swap and the value of
those equity
securities at the time when the arrangement was entered
into.’[49] However, consistent
with their internal policies and commercial practice, the banks acquired an
equivalent number of Austral shares
in order to hedge their risk
exposure.[50] The equity derivative
transactions were not disclosed to the market until 14 days after the first
transactions took
place.[51]
Notwithstanding that
Glencore was not legally required to disclose the equity derivative
transactions,[52] the initial Panel
and Review Panel made a declaration of unacceptable circumstances and orders.
Although the Panels differed as to
the exact time at which unacceptable
circumstances existed and in relation to the detail of the orders, both made a
declaration and
orders based upon the deficiency in information available to the
market as a result of the non-disclosure of the
transactions.[53] The Review Panel
ordered Glencore to offer to sell shares in Austral to any shareholder who had
sold their shares during the period
of non-disclosure and indicated that it
might order the banks to sell shares to Glencore if it received more acceptances
than it
could
satisfy.[54]
Glencore
then sought judicial review of this decision. In Glencore
International AG v Takeovers Panel (2005) 220
ALR 495 (‘Glencore (First Application)’), a
single judge of the Federal Court recognised that the ‘court should be
slow to interfere with a decision of the
panel, in circumstances where the
market is significantly volatile by reason of the currency of takeover
offers.’[55]
However, Emmett J found that these circumstances did not apply and ordered that
the Review Panel’s declaration and orders be
quashed due to jurisdictional
error.[56] Emmett J held that the
Review Panel had not made a determination as to the effect of the circumstances
that it had found to be unacceptable
and that such a finding was required to
make a declaration under s 657A(2) of the Corporations
Act.[57] At that time, s
657A(2) provided that:
The Panel may only declare circumstances to be unacceptable circumstances if it appears to the Panel that the circumstances:
(a) are unacceptable having regard to the effect of the circumstances on:
(i) the control, or potential control, of the company or another company; or
(ii) the acquisition, or proposed acquisition, by a person of a substantial
interest in the company or another company …
In addition, Emmett J
found that the Panel had erred by not identifying the particular interests
affected by the relevant circumstances
when it exercised its power to make
orders under s 657D(2)(a).[58]
Section 657D(2)(a) at that time empowered the Panel to make any order (except
one requiring compliance with the
law)[59]
that ‘it thinks appropriate to … protect the rights or interests of
any person affected by the circumstances’.
Responding to the judgment
in Glencore (First Application), a second Review Panel in
Re Austral Coal Ltd 02(RR)
(‘Austral 02RR (Second Review)’) made a
series of findings in relation to the effect of the non-disclosure of the equity
derivative transactions in light
of the effect of the subsequent announcement of
the transactions on the
market.[60]
The second Review Panel found that the price at which the banks acquired the
shares to hedge the derivative transactions would have
been higher had
Glencore’s position been disclosed, that Glencore benefited from the lower
prices paid by the banks and that
shareholders selling their shares on the
market were correspondingly adversely
affected.[61]
In Glencore International AG v Takeovers
Panel (‘Glencore (Second Application)’),
Emmett J invalidated the declaration of unacceptable circumstances and orders
made by the second Review
Panel.[62]
A different order was
made by the second Review Panel. The second Review Panel required Glencore to
pay $1 330 280 to ASIC —
comprising the estimated difference in
share value resulting from the non-disclosure and ASIC’s costs — to
be distributed
equally to all shareholders who sold the shares during the time
that Glencore had not disclosed the equity derivative transactions
to the
market.[63]
Emmett J found in Glencore (Second Application) that the
second Review Panel had erred in law in finding that Glencore had acquired a
‘substantial interest’ in the target
shares during the
non-disclosure period.[64] It was
also found that the Panel erred in finding that the relevant circumstances had
an effect on the control of Austral by Centennial
or on Centennial’s
acquisition of a substantial interest in
Austral.[65]
These findings invalidated the Panel’s orders, although Emmett J
considered that there were also other grounds upon which they
would have been
invalid.[66]
The
Glencore cases provided an unfortunate start to judicial review of Panel
decisions following the 2000 reforms. They generated substantial
concerns that
the Panel’s jurisdiction had been interpreted too narrowly for it to
perform its role effectively.[67]
This was recognised by further legislative changes designed to remove many of
the limitations placed on the Panel’s decision-making
in the
Glencore
cases.[68]
The cases also raised the spectre of a strategic pattern of parties seeking
court intervention during the takeover bid period, contrary
to the policy
underlying the Panel
reforms.[69]
This was due to the outcome of the cases and the fact that the application in Glencore (First Application) was made during the takeover bid period under s 75(v) of the Constitution.[70]
Notwithstanding that Emmett J placed some limits on the extent to which there should be intervention during the takeover bid in Glencore (First Application),[71]
these were not as strong as those applied in relation to the Panel’s
counterpart in the United Kingdom.
Although it now has a statutory
basis,[72] the UK system of takeover
dispute resolution operates differently from that in Australia. These
differences primarily relate to the
more extensive powers of the Panel on
Takeovers and Mergers (‘UK Panel’) and its ability to make and
enforce its own
takeover
rules.[73]
Despite these differences, the Australian and UK Panels apply similar principles
designed to ensure equal treatment of target shareholders,
an informed market
and proper conduct by target
directors.[74]
Both systems also rely upon a non-judicial body to deal with takeover matters
efficiently and with the benefit of specialist commercial
expertise in place of
the courts.[75] Given this, the
following approach of judicial restraint in relation to reviewing UK Panel
decisions, which was established by Sir
John Donaldson MR in the England and
Wales Court of Appeal in R v Panel on
Take-Overs and Mergers; Ex parte
Datafin plc, should also be applied in the Australian context:
in the light of the special nature of the panel, its functions, [and] the market in which it is operating … I should expect the relationship between the panel and the court to be historic rather than contemporaneous. I should expect the court to allow contemporary decisions to take their course, considering the complaint and intervening, if at all, later and in retrospect by declaratory orders which would enable the panel not to repeat any error and would relieve individuals of the disciplinary consequences of any erroneous finding of breach of the rules. This would provide a workable and valuable partnership between the courts and the panel in the public interest and would avoid all of the perils to which [the panel] alluded.[76]
Following the Glencore decisions, significant changes were made to ss 657A and 657D in the 2007 amendments to the Corporations Act. There were three key amendments to the Panel’s power to make a declaration of unacceptable circumstances in s 657A. First, the precondition to this power in s 657A(2)(a) was amended to make it clear that it is the role of the Panel to satisfy itself as to the effect or likely effect of the relevant circumstances.[77] Section 657A(2) now provides that:
The Panel may only declare circumstances to be unacceptable circumstances if it appears to the Panel that the circumstances:
(a) are unacceptable having regard to the effect that the Panel is satisfied the circumstances have had, are having, will have or are likely to have on:
(i) the control, or potential control, of the company or another company; or
(ii) the acquisition, or proposed acquisition, by a person of a substantial
interest in the company or another company …
Secondly, a new paragraph
was inserted in s 657A(2) to provide an additional basis upon which the Panel
can make a declaration. The new s 657A(2)(b) empowers the Panel to make a
declaration if it appears to the Panel that the circumstances ‘are
otherwise unacceptable …
having regard to the purposes of [chapter 6] set
out in section
602.’[78]
Finally, the old s 657A(2)(b) became s 657A(2)(c) and now includes
references to both the past and future tense in relation to the circumstances
constituting or giving rise to a contravention
of the relevant provisions of the
Corporations
Act.[79]
In addition, the
Panel’s power to make orders in s 657D(2)(a) was transformed in the 2007
amendments to allow an en globo (or collective) assessment of loss
if the Panel is satisfied that the rights of ‘a group of persons’
have been
affected.[80]
This section also allows the Panel to protect any rights or interests of
affected persons and not just those affected by the relevant
circumstances.[81]
Section 657D(2) now provides that:
The Panel may make any order (including a remedial order but not including an order directing a person to comply with a requirement of Chapter 6, 6A, 6B or 6C) that it thinks appropriate to:
(a) if the Panel is satisfied that the rights or interests of any person, or
group of persons, have been or are being affected, or
will be or are likely to
be affected, by the circumstances — protect those rights or interests, or
any other rights or interests,
of that person or group of persons …
The
Panel’s power to make a declaration of unacceptable circumstances in
relation to a contravention of the Corporations Act subsequently survived
constitutional challenge in
Alinta.[82]
Although the High Court’s decision was limited to the Panel’s power to make a declaration under the pre-2007 version of s 657A(2)(c), the reasoning in Alinta leaves little doubt that the Panel would also not be exercising judicial power by acting under any part of its current jurisdiction provided by s 657A.[83]
The decision under judicial review in the CEMEX cases was the Review
Panel’s declaration in Re Rinker Group Ltd
02R (‘Rinker 02R (Review
Panel)’).[84] The
declaration of unacceptable circumstances and the orders were in relation to
statements made by CEMEX Australia Pty Ltd (‘CEMEX’)
in the context
of its takeover bid for Rinker Group Ltd
(‘Rinker’).[85] Although
CEMEX announced on 10 April 2007 that its offer was ‘CEMEX’s best
and final offer, in the absence of a superior
proposal’, it subsequently
announced on 7 May 2007 that it would allow Rinker shareholders to retain the
benefit of a dividend.[86] This was
contrary to the ‘truth in takeovers’ policy released by ASIC, which
requires a bidder to clearly convey that
it is reserving the right to change its
mind if it is to depart from a ‘last and final’
statement.[87] The policy was
considered by the Review Panel to be a ‘fundamental policy consideration
in takeovers
regulation’.[88]
The Review
Panel found that the circumstances were unacceptable on two bases. First, it
found that the circumstances were unacceptable
in relation to ‘the effect
… on … the control or potential control of Rinker’ or
‘the acquisition or
proposed acquisition by CEMEX of a substantial
interest in Rinker’ under
s 657A(2)(a).[89]
The Review Panel concluded that CEMEX’s departure from its 10 April
announcement had a significant effect on the control of
Rinker.[90] This was because there
was an increased level of acceptances by shareholders in the target company
following the 7 May announcement,
which was considered to be largely the result
of the improved takeover offer consideration (shareholders being allowed to
retain
the
dividend).[91]
Secondly, the
declaration of unacceptable circumstances was based upon the new s 657A(2)(b),
concerning the effect of the circumstances on the purposes of the takeover
provisions set out in s 602 of the Corporations
Act.[92]
The Review Panel found that the departure from the initial announcement on
10 April undermined the existence of an informed market,
as the market had been
misled as to the status of the offer after the initial announcement and had
accordingly not been given sufficient
information to assess the merits of the
offer.[93] Rinker shareholders had
also been prevented from having a reasonable and equal opportunity to share in
the benefits arising from
the offer as they had ‘lost the opportunity to
include as part of their decision to sell the information that the offer
consideration
might be
improved.’[94]
Accordingly, the Review Panel ordered that CEMEX pay an amount equal to the
dividend to each Rinker shareholder who sold their shares
between the 10 April
and 7 May
announcements.[95]
Applications
for judicial review of the Review Panel decision were unsuccessful both at first
instance before Stone J in CEMEX Australia Pty
Ltd v Takeovers Panel (‘CEMEX
(First
Instance)’)[96]
and before the Full Federal Court in CEMEX (Full
Court).[97] Significantly,
both Stone J and the Full Federal Court relied upon the High Court’s
endorsement of the Panel in Alinta in upholding the Review Panel’s
decision.[98]
In particular, the Full Federal Court pointed to the approach adopted by Gleeson
CJ, Kirby and Hayne JJ in Alinta in relation to the Panel’s
expertise and role in resolving takeover
disputes.[99]
Gleeson CJ in Alinta emphasised
[t]he constitution of the Panel, the way in which it is intended to go about its business, the way in which it informs itself about matters that arise for its consideration, and the nature of the considerations according to which it acts or declines to act …[100]
Hayne J also referred to the fact that the Panel may take policy considerations into account.[101] In the clear statement of the Panel’s specialist role quoted above in Part I,[102]
Kirby J recognised the particular expertise of Panel members and summarised its approach to decision-making.[103]
As in the Glencore matters, the declaration of unacceptable circumstances made by the Review Panel in the CEMEX matter did not relate to a contravention of the Corporations Act. However, this was not an option for the Review Panel in the CEMEX matter as the High Court had not yet overturned the majority decision of the Full Federal Court in Australian Pipeline Ltd v Alinta Ltd (‘Alinta (Full Court)’).[104]
In that case, the majority of the Full Court held that a Panel declaration
based upon a contravention of the Corporations Act involved the
exercise of judicial power and so was invalid under Chapter III of the
Constitution.[105] As a
result, the Panel stopped accepting applications in relation to such
contraventions.[106] This was the
reason that the Review Panel decision in Rinker 02R (Review
Panel) explicitly stated that it had found that the circumstances were
unacceptable for reasons that did not include a contravention of
the
Act.[107]
Perversely, CEMEX
argued that the Panel was required to consider whether its conduct
constituted a contravention of the Corporations
Act.[108] It contended that
the Panel had consequently failed to take into account a relevant consideration
or had otherwise improperly exercised
its power under ss 5(1)(e) and 5(2) of the
ADJR Act.[109] This
was based upon two key arguments. First, it was argued that the purpose of
ensuring that takeovers take place in an informed
market in s 602(a)
required the Panel to consider whether there had been misleading statements
contrary to ss 670A and 1041H of the Corporations
Act.[110] Secondly, CEMEX
relied upon the majority view of the Full Federal Court in Alinta
(Full Court) that, in the context of ‘a plethora of legal
requirements’, it is ‘unrealistic’ to expect to determine the
acceptability of circumstances without finding whether the conduct contravened
those requirements.[111]
The
Full Federal Court made it clear that the Panel is not required to consider
whether there has been a contravention of the Corporations Act in
determining whether there are unacceptable circumstances under s
657A.[112]
It emphatically rejected the above arguments on the basis that they were neither
supported by the express wording of s 657A nor by its purpose or underlying
policy as discussed by the High Court in
Alinta.[113]
The Full Court gave four reasons for this. First, s 657A(1) clearly states
that the Panel may make a declaration of unacceptable circumstances
‘whether or not the circumstances constitute
a contravention of a
provision of this Act’.[114]
Secondly, the Panel must be satisfied of only one of the matters set out in ss
657A(2)(a), (b) or (c), with a contravention of the Act only referred to in
sub-s (c).[115] Thirdly, s
657A(3)(a) only requires the Panel to have regard to chapter 6, whereas the
prohibition against misleading statements in takeover documents
in s 670A (and
the more general prohibition in s 1041H) falls outside that
chapter.[116] It follows from the
Full Court’s reasoning that this provision does not in any event require
the Panel to consider whether
there has been a contravention of chapter 6.
Fourthly, the Full Court relied upon the High Court’s reasoning in
Alinta to emphasise that, even when making a declaration in relation to a
contravention of the Act, the Panel has regard to broader
considerations.[117] That is, the
Panel’s role is to determine whether, in its opinion, the conduct
constitutes unacceptable circumstances in light
of the relevant
‘commercial, policy and public interest
factors’.[118]
The Full Court also referred to the decision of Emmett J in Glencore
(Second Application), which emphasised that the provisions
relating to unacceptable circumstances in part 6.10 of the Corporations
Act provide flexibility ‘where the literal operation of the
regulatory regime is either unnecessarily restrictive or ineffective
to achieve
the object of [the takeover provisions in] Ch
6’.[119]
The challenge to the Panel’s orders in the CEMEX cases included
a similar argument to that made successfully in the Glencore cases. That
is, CEMEX contended that a causal link had not been established between the
unacceptable circumstances and the effect
on the rights or interests of the
affected person or group of persons for whom the order was
made.[120]
This argument was rejected by the Full Federal Court on the basis that, unlike s
82 of the Trade Practices Act 1974 (Cth), s 657D(2)
does not require a causal nexus between the conduct and affected
person(s).[121]
The Full Court also made it clear that the amendments to s 657D(2)(a)
following the Glencore cases mean that the Panel does not need to
consider whether any particular shareholder is affected by the conduct in
question.[122]
Instead, the Panel only needs to satisfy itself that the order is appropriate to
protect the rights or interests of the group of
affected
persons.[123]
This is in addition to the requirements in s 657D(1), which include that the
Panel has made a declaration of unacceptable circumstances
and that the order
would not unfairly prejudice any
person.[124] All of these
requirements were satisfied in this case, with the nexus between the orders and
the circumstances established by the
finding that the market was misinformed and
that Rinker shareholders selling shares during the relevant period had been
affected
by the unacceptable circumstances because they had lost the opportunity
to trade in an efficient and informed
market.[125]
In
a second line of argument, CEMEX argued that the Panel had taken an incorrect
approach in valuing the loss of this opportunity
as a 100 per cent
certainty.[126] Although the Court
indicated that ‘[o]rdinarily it might seem inappropriate to value a lost
chance at 100%’, it found
that the reasoning of the Panel demonstrated
‘a rational basis’ for the Panel’s
orders.[127] That is, the Panel
had not erred in considering the value of the final dividend to be the
‘most logical and best estimate’
of the value of the lost
opportunity given that there was evidence that market price had increased to
reflect the amount of the dividend
after the
announcement.[128] Consistently
with its position in relation to
s 657D(2)(a),[129]
the Full Federal Court emphasised that s 657D(2)(a) does not require the
Panel ‘to make an evaluation of each shareholder’s
reliance, or to
determine the value of each individual’s lost
chance.’[130]
The Court set a high threshold for the circumstances in which it would have
intervened in relation to this matter, indicating that
‘[t]he position
would have been quite different if the purportedly protective order had been
totally disproportionate to any
rational view of the lost
opportunity’.[131]
CEMEX
also challenged the Panel’s ability to delegate to ASIC the function of
determining who should be paid under the Panel’s
orders.[132] Had it succeeded,
this would have necessitated significant changes to the current operation of the
Panel.[133]
As recognised in CEMEX (Full Court), the Panel does not
have significant resources and relies upon ASIC to provide staff and support
facilities.[134] The Full Federal
Court found that the orders did not involve an impermissible delegation of power
as they did not require ASIC to
exercise the powers of the Panel under s
657D(2)(a).[135] That is, ASIC was
not determining the appropriate order or satisfying itself of the nexus between
the rights of the persons affected
and the unacceptable
circumstances.[136] Rather, the
Panel’s orders determined that the affected shareholders were Rinker
shareholders who had sold shares during the
relevant period and determined the
amount they should be paid, with ASIC only determining whether a claimant was
entitled to be paid.[137]
The grounds of judicial review under the ADJR Act can provide a
fertile basis for objections to the Panel’s decisions. One of the more
significant issues for the Panel is whether
decisions on the construction of
takeover documents and announcements like those in the CEMEX matter can
be challenged successfully. In this case, both of the grounds of ‘error of
law’ and ‘no evidence’
relied upon were rejected on the basis
that they involved an attack on the Panel’s factual findings, which were
immune from
judicial
review.[138]
First, CEMEX
argued that the Review Panel had made an error of law under s 5(1)(f) of
the ADJR Act in its construction of the bidder’s statement
and certain later documents, including supplementary bidder’s statements
and the ‘best and final offer’
statement.[139] The Full Federal
Court agreed with Stone J that CEMEX’s arguments were challenging the
Panel’s findings of fact rather
than raising a question of
law.[140]
However, the Full Court came to this conclusion only after examining the
question of construction
involved.[141]
As had been
concluded by the initial and Review Panels and Stone J at first
instance,[142] the Full Federal
Court found that the documents made it clear that CEMEX had preserved its
contractual entitlement to decrease the
cash amount payable to Rinker
shareholders under the takeover offer by the amount of any subsequent
dividend.[143] Consequently, any
waiver of this contractual entitlement would ordinarily have involved a
variation to the offer, which had been
recognised by CEMEX when it filed a
variation notice under s 650D of the Corporations Act to allow
Rinker shareholders to retain the earlier interim
dividend.[144] Significantly, the
Full Court considered that the Review Panel had approached this issue ‘not
merely as one of the proper construction
of a document, but as a matter of
market
practice.’[145]
In support of this, the Court referred to an extract from the Review
Panel’s analysis, which included the following:
The review panel considers that CEMEX followed usual practice by including in its notice of variation on 10 April the improved offer consideration that resulted by allowing Rinker shareholders to retain the benefit of the interim dividend. As the initial panel noted, it accords with market practice and common understanding that allowing the benefit of a dividend to be retained improves the offer consideration. The review panel thinks it is also a variation.[146]
As a result, the Full Court concluded that the question before the Review
Panel was not just one of the terms or construction of a
document.[147] This meant that it
was a question of fact, rather than one of law, and was consequently not subject
to judicial
review.[148]
Secondly,
the Review Panel’s decision was challenged under s 5(1)(h) of the
ADJR Act.[149] CEMEX
argued that there was ‘no evidence’ to support the Panel’s
findings that the departure from its original
announcement had a causal effect
on the control of Rinker or upon the informed market principle in s 602 of the
Corporations
Act.[150] Setting out the
circumstances in which this ground could be successful, the Full Federal Court
stated that ‘it is enough to
show an absence of material from which the
decision-maker could reasonably be satisfied that the particular matter was
established.’[151]
Importantly, the Court emphasised the fact that it is necessary to bear in mind
the commercial expertise and role of the Panel in
relation to this
issue.[152] It recognised, as did
Emmett J in Australian Pipeline Ltd v Alinta
Ltd (‘Alinta (First
Instance)’),[153]
that the Panel must necessarily speculate when trying to work out what would
have happened if the relevant circumstances had not
existed.[154]
Although
the Panel is required to and has the expertise to engage in speculation
regarding the effect of the circumstances on the
market, the Full Court
emphasised that the Panel cannot speculate without any foundation for its
conclusion.[155]
Such speculation had not occurred here, however, because there was evidence
supporting the Panel’s finding that one of the
largest shareholders had
accepted the takeover offer due to CEMEX allowing shareholders to retain the
final
dividend.[156]
In addition, the Panel’s expertise was considered to be a sufficient basis
for its finding that the acceptance by that particular
shareholder was likely to
have persuaded other shareholders to accept the
offer.[157]
The Court drew similar conclusions in relation to the Panel’s findings
concerning the causal effect on control and its use
of the increased amount of
acceptances and trading volumes after the initial announcement on 10
April.[158]
As discussed above in Part II(A), the decisions in the Glencore cases generated significant concerns about the potential for the Panel’s role to be undermined as a result of the narrow interpretation given to the powers bestowed upon it by the legislature. The outcome in CEMEX (Full Court) demonstrates clearly the benefits of the 2007 amendments to the Panel’s jurisdiction.[159] As these changes were made in light of the Federal Court decisions in Glencore (First Application) and Glencore (Second Application), it is not surprising that many of the conclusions in those cases would have been different had the amendments been in place at that time. However, the question remains whether the difficulties encountered in the Glencore matters could arise in future cases. In order to examine this issue, the following discussion analyses the conclusions drawn in the Glencore matters and considers whether the outcomes would have been different if the 2007 amendments were already in force and CEMEX (Full Court) had already been concluded.
One of the key difficulties arising from the declarations of unacceptable circumstances in the Glencore cases resulted from Emmett J’s conclusion in relation to s 657A(2)(a) of the Corporations Act. That is, Emmett J found that s 657A(2)(a) (prior to amendment) required the Panel to make a determination as to the effect of the relevant circumstances (in that case, the non-disclosure of the equity derivative transactions entered into between Glencore and the banks).[160] The subsequent change to s 657A(2)(a) in the 2007 amendments would have significantly improved the position of the Review Panels, as they would instead have only been required to satisfy themselves as to the effect or likely effect of the circumstances.[161]
However, it is possible that the challenges to the Review Panel decisions
in the Glencore cases may still have succeeded on judicial review
grounds, in light of findings that suggest that Emmett J may have also found
that
the Panels had not demonstrated a sufficient basis for their conclusions in
relation to the unacceptable
circumstances.[162]
That is, in Glencore (First Application), it was concluded that the Review Panel had not attempted to determine the different decisions shareholders would have made had the equity derivative transactions been disclosed.[163] Similarly, in relation to the reliance of the second Review Panel’s declaration upon the effect of the circumstances on Centennial’s takeover bid,[164]
Emmett J found in Glencore (Second Application) that it
was unclear why the Panel had made the conclusions it had in relation to the
effect on the timing and extent of the success
of Centennial’s bid and the
price at which this was
achieved.[165]
The
main weakness identified in the second Review Panel’s declaration flowed
from Emmett J’s interpretation in Glencore (Second
Application) of the meaning of ‘substantial interest’ in s
657A(2)(a), which was not at that time defined in the Corporations
Act. In particular, Emmett J concluded that ‘interest’ in
this context must refer to ‘an interest in relation to voting
shares in a
company, voting shares in a listed body or voting interests in a listed managed
investment
scheme.’[166]
It was also found that ‘the concept of substantial interest entails an
interest that can be a relevant interest or a positive
power or right in
relation to voting
shares.’[167] This narrow
interpretation of the meaning of substantial interest was clearly rebutted in s
602A of the Act, which was inserted by the 2007 amendments following the
Glencore cases:
A reference in [chapter 6] to a substantial interest in a company, listed body or listed managed investment scheme is not to be read as being limited to an interest that is constituted by one or more of the following:
(a) a relevant interest in securities in the company, body or scheme;
(b) a legal or equitable interest in securities in the company, body or scheme;
(c) a power or right in relation to:
(i) the company, body or scheme; or
(ii) securities in the company, body or scheme.
As a result, although s
602A responds to the above findings in Glencore (Second
Application), it unfortunately does not provide any guidance as to what
would be sufficient to establish a substantial interest. The Explanatory
Memorandum to the Bill containing proposed s 602A instead only reinforces the
clear desire of the Parliament to provide the Panel with the flexibility to
determine if an interest
meets this threshold:
The definition is intended to ensure that the term ‘substantial interest’ is broad enough to encompass new and evolving instruments and developments in takeovers and to deter avoidance of the purposes of the takeovers law.[168]
Although this comment does not refer explicitly to the Glencore
situation, it is consistent with the second Review Panel’s approach in
relation to the equity derivatives in the Glencore cases. The second
Review Panel concluded that, although Glencore did not have a relevant interest
or voting power in Austral shares
as a result of the transactions, Glencore had
a substantial interest due to its ‘de facto control’ over the 7.4
per cent
of Austral shares that the banks had purchased to ‘hedge’
(or offset) the risk resulting from the
transactions.[169] This was due to
the commercial imperative for the banks to purchase shares to counterbalance the
ensuing
risk.[170]
Notwithstanding that there was no legal requirement for Glencore to disclose the
transactions due to the finding that the banks and
Glencore were not
associates,[171] it was concluded
that there was a substantial interest based upon the number of Austral shares
purchased by the banks and the effect
of the transactions in producing a
misinformed market.[172]
The
Panel has since made it clear in its guidance note on Equity
Derivatives (‘Guidance Note 20’) that it
considers equity derivatives may result in a substantial interest ‘even
though they give rise only to an economic
interest.’[173]
Due to the deliberately imprecise nature of s 602A, it is difficult to say with
certainty whether a future court would disagree with the second Review
Panel’s interpretation
of ‘substantial interest’ accepted in
Austral 02(RR) (Second Review) and supported by Guidance
Note 20. However, if this issue arose again in the future, it
could be expected that the court would make its decision in light of the
guidance
in the Explanatory Memorandum. This suggests that the court would be
likely to take a broader approach than was adopted in Glencore
(First Application) and Glencore (Second
Application), as suggested in the Explanatory Memorandum, to be
consistent with the policy underlying the takeover
provisions.[174]
Many of the concerns raised in the Glencore decisions relating to the Review Panels’ orders were specifically addressed in the 2007 amendments. In Glencore (First Application), Emmett J found that the Review Panel had not determined in what manner any right of any person was affected and that the orders consequently applied whether or not any such person would have acted differently had the disclosure been made.[175] When CEMEX (First Instance) was decided, Stone J made it clear that this argument could no longer be sustained in light of the 2007 amendments.[176] This is because s 657D(2)(a) of the Corporations Act now only requires the Panel to satisfy itself as to the effect of the circumstances on a group of persons and allows it to make orders to protect any of the rights or interests of those persons, not just those affected by the circumstances.[177]
The concern raised in Glencore (First Application) in
relation to the fact that persons who sold shares on the market during the
non-disclosure period had not been consulted in relation
to the
orders[178] is also no longer
relevant. This is because s 657D(1)(a) now only requires the Panel to give
an opportunity to make submissions ‘to each person to whom a proposed
order would be directed’
rather than each person to whom it
relates.[179]
The Full Federal
Court in CEMEX (Full Court) concluded that, following the
2007 amendments, s 657D(2)(a) does not require a causal nexus to be established
between the unacceptable circumstances and their effect on the rights or
interests
of the affected
persons.[180]
However, the Full Court also found that the orders cannot be ‘totally
disproportionate to any rational view’ of the effect
of the unacceptable
circumstances.[181] It is possible
that Emmett J would have considered the orders in Glencore (First
Application) to be totally dispropor-tionate. This is due to Emmett
J’s finding that the Review Panel had failed to have regard to the market
price of the target company’s shares when the orders may have required
Glencore to purchase
them.[182]
In Glencore
(First Application), the finding that the Review Panel had not
identified the particular interests or rights affected led Emmett J to conclude
that the
Panel had not balanced appropriately the interests of Glencore and the
affected persons.[183] As a
result, Emmett J concluded that the Panel had not addressed properly the
question whether Glencore had been unfairly prejudiced
under s 657D(1) of the
Corporations
Act.[184] Emmett J
similarly suggested in Glencore (Second Application) that
the orders would have been invalidated in any event due to the second Review
Panel’s failure to consider whether the orders
would be unfair if they
were only based upon the effect of the circumstances on the control of Austral
by Centennial (and not on
the acquisition of a substantial interest by
Glencore).[185]
With
respect to unfair prejudice, Stone J found in CEMEX (First
Instance) that to satisfy s 657D(1) it was sufficient for the Review
Panel to conclude that the relevant Rinker shareholders had sold their shares in
a market that was
not efficient and informed (and had in making their decision
to sell lost the opportunity to consider information relating to the
offer
consideration), to determine the ‘most logical and best estimate’ of
the value of this opportunity and to compare
this to the benefit that CEMEX had
received as a result of its
actions.[186] Although this
reasoning is based upon the application of the new jurisdiction for the Panel
under current s 657A(2)(b),[187] a
similar approach could be applied in relation to the findings of the second
Review Panel in Glencore (Second Application). That is, the
second Review Panel’s conclusions in relation to the effect of the
non-disclosure of the derivative transactions
on the Austral shareholders in
essence involved a finding that the market had been
misinformed.[188]
Accordingly, the lost opportunity identified by the second Review Panel was
the opportunity to trade in a fully informed
market.[189] The second Review
Panel then made an order based upon the benefit it estimated that Glencore had
derived as a result of the finding
that the shares were being traded in the
market at a lower price than would have been the case if the market had been
fully
informed.[190]
It
might similarly be argued that the reasoning of Stone J in CEMEX
(First Instance) in relation to the approach to making orders more
generally could also be applied to the situation in the Glencore cases.
As in the case of the Full Federal Court, Stone J in CEMEX (First
Instance) did not find any errors in the steps that the Review Panel had
taken in making its orders.[191]
Those steps were summarised as identifying the group of persons affected and
their interests that were affected by the conduct, making
a finding relating to
the value that could be attached to those interests and concluding that an
appropriate order was to compensate
those persons for that
amount.[192] As discussed above in
relation to unfair prejudice, this is consistent with the approach that was
adopted by the second Review Panel
in Austral 02RR (Second
Review).[193]
Of all of the 2007 amendments, the insertion of the new basis for a declaration of unacceptable circumstances in s 657A(2)(b) of the Corporations Act would likely have had the most significant impact in the Glencore cases. As mentioned above, s 657A(2)(b) allows a declaration to be made if it appears to the Panel that the circumstances
are otherwise unacceptable (whether in relation to the effect that the Panel is satisfied the circumstances have had, are having, will have or are likely to have in relation to the [target] company or another company or in relation to securities of the company or another company) having regard to the purposes of [Chapter 6] set out in section 602 …
This would have allowed the Panels in the Glencore cases to have made a declaration in relation to the lack of an ‘efficient, competitive and informed market’ under s 602(a) (either instead of, or in addition to, the bases upon which the declarations were made in those decisions). In Guidance Note 20, released in April 2008, the Panel has made it clear that the non-disclosure of long positions in equity derivatives (that is, where the investor benefits from an increase in the price of the underlying security) above the five per cent threshold in a takeover context can give rise to unacceptable circumstances.[194] The Panel concludes in Guidance Note 20 that:
By creating the economic incentive to hedge and then by controlling the
unwinding, the taker of a long equity derivative position (even one that is cash-settled) may affect the market in the underlying securities, for example by bringing about a reduction in the ‘free float’ of the company [in this context, the shares available for the bidder to purchase under the takeover]. Such an effect on the supply (and perhaps therefore the price) of the securities may, in turn, affect:
(a) control or potential control of the company
(b) the acquisition or proposed acquisition of a substantial interest in the company or
(c) the efficient, competitive and informed market for control of the
company’s voting
securities.[195]
In
Guidance Note 20, the Panel makes it clear that the
consequences of a failure to disclose such derivative transactions may be a
declaration and orders
to disclose the equity derivatives, to dispose of any
securities and/or (taking into account the effect on third parties) to cancel
any
agreements.[196]
Assuming that an application to the Panel is brought before the end of the
takeover bid period, a Panel order to cancel the derivative
transactions would
be more straightforward than the orders made in the Glencore matters.
This is because the purpose of the order would be to ensure that the takeover
proceeded, as far as possible, in a way as
if the unacceptable circumstances had
not occurred.[197]
Overall, the
developments in the law since the Glencore cases raise the possibility
that the Review Panel decisions in those matters may have survived judicial
review had they been decided
after the CEMEX cases. Such a conclusion
would be even more likely had the Review Panels in the Glencore cases
based the declaration of unacceptable circumstances upon the new jurisdiction in
s 657A(2)(b), relying on the purposes of the takeover provisions set out in
s 602. This was explicitly recognised by Emmett J in Glencore
(Second Application):
The Panel made its declaration because, notwithstanding compliance by Glencore and the Banks with the disclosure regime prescribed by the Act, the purposes of Ch 6, as expressed in s 602, were not achieved. That is precisely the circumstances for which s 657A provides. It is not unreasonable for the Panel, if its decision was otherwise lawful and authorised, to reach that conclusion.[198]
Judicial review is constitutionally mandated in relation to the Panel (and
all other federal decision-makers) under s 75(v) of the Constitution.
There will always be an ongoing tension between this and the policy rationale
underlying the Panel in seeking to avoid litigation
being used to affect the
outcome of a takeover bid. As this tension can never be resolved, the challenge
is to ensure that there
is an appropriate balance between the role of the courts
and the Panel.
The Full Federal Court’s decision in CEMEX
(Full Court) evens up the scales by putting the Panel in a
stronger position than it had been following the Glencore cases. It
builds upon the clear endorsement of the Panel’s expertise by the High
Court in Alinta and subsequently by Stone J in CEMEX (First
Instance).[199]
In addition, CEMEX (Full Court) confirms that the 2007 amendments to the Panel’s jurisdiction have allowed the Panel to focus upon the policy underlying the takeover provisions.[200]
The decision to allow the Panel to delegate to ASIC the function of
determining who should be paid under the Panel’s orders
also avoids the
need for a significant restructure of its staffing and resources.
In relation
to the Panel’s jurisdiction, the Full Federal Court in CEMEX
(Full Court) has made it clear that the Panel is not required to
consider whether there has been a contravention of the Corporations
Act under s
657A(2).[201]
Although this followed from the reasoning of the High Court in
Alinta, it is nonetheless useful for the Full Federal Court to have come
to this conclusion. Similarly, the CEMEX decision demonstrates that the
2007 amendments to the Panel’s power to make orders were successful in
avoiding the need for
the Panel to consider the effect of the unacceptable
circumstances on individual persons.
Significantly, the Full Court concluded
that the Panel does not need to establish a causal nexus between the
unacceptable circumstances
and their effect on the group of persons but instead
only needs to satisfy itself that the order is appropriate to protect the rights
or interests of the group of affected
persons.[202]
The decisions in the CEMEX cases also reinforce the view of Emmett J in Alinta (First Instance) that, in determining the effect of the relevant circumstances, the Panel can speculate as to what would have happened without those circumstances provided there is a foundation for its conclusion.[203]
In relation to the valuation of the lost opportunity giving rise to the unacceptable circumstances in CEMEX (Full Court), the Full Court emphasised that the Panel did not have to make an assessment in relation to each shareholder’s reliance or lost chance.[204]
The Court also set a high threshold for the circumstances in which it would have intervened in relation to this matter, indicating that it would have come to a different position only if the order had been ‘totally disproportionate to any rational view of the [shareholders’] lost opportunity’.[205]
Although Panel decisions remain vulnerable to judicial review under s
75(v) of the Constitution and under the ADJR Act, the
CEMEX decisions provide important guidance for future decision-making in
this area. The Panel’s use of market practice in informing
its decision
was clearly accepted by the Full Federal
Court.[206]
This was a key factor in the Court’s ruling that the Panel’s conclusions in relation to the bidder’s documents were not subject to judicial review as they involved findings of fact and not questions of law, the latter of which is required to trigger s 5(1)(f) of the ADJR Act.[207]
Similarly, in the context of a ‘no evidence’ claim under s 5(1)(h), the Full Court found that the Panel’s expertise was a sufficient basis for its findings relating to the effect of the circumstances on takeover acceptances and trading in the market.[208]
The question remains whether the difficulties encountered in the
Glencore cases could arise in the future. It is possible that the Review
Panel decisions in the Glencore cases may have survived judicial review
had the cases been decided following the CEMEX cases. This would be even
more likely had the Review Panels based their declaration of unacceptable
circumstances on the overarching
policy of an ‘efficient, competitive and
informed market’ in s
602(a).[209] The differences
between the approaches adopted by the courts in the Glencore and
CEMEX cases demonstrate the significance of the 2007 amendments to the
Panel’s jurisdiction. They also highlight the importance of
the High
Court’s endorsement of the Panel’s specialist expertise and role (in
the Court’s decision upholding the
Panel’s constitutional validity
in Alinta). In drawing upon both of these developments in CEMEX
(Full Court), the Full Federal Court has strengthened the position
of the Panel in any future judicial review cases. The relationship between
the
role of the courts and the Panel has accordingly changed since the
Glencore cases were decided. Although the courts struck an appropriate
balance in the CEMEX cases, the ongoing management of judicial review of
Panel decisions will remain a challenge for all concerned.
[*] BEc, LLB (Hons) (Macq), LLM (UNSW); Senior Lecturer, ANU College of Law, The Australian National University; Visiting Fellow, Faculty of Law, The University of New South Wales.
[1] Constitution s 75(v); ADJR Act s 5. See below nn 34–8 and accompanying text.
[2] On the powers of the Panel, see Corporations Act 2001 (Cth) ss 657A, 657D; see also s 9 (definition of ‘remedial order’).
[3] This change was implemented by Corporate Law Economic Reform Program Act 1999 (Cth) sch 1 item 5 (‘CLERP Act’), repealing and substituting Corporations Act 1989 (Cth) s 82 ch 6 (‘Corporations Law’). See especially Corporations Act s 659AA. For examples of commentary on the changes to the Panel, including their effect on the courts, see Nicole E Calleja, The New Takeovers Panel — A Better Way? (2002); Barbara Mescher, ‘Powers of the Takeovers Panel and Their Effect upon ASIC and the Court’ (2002) 76 Australian Law Journal 119; Emmanuel Hadjidakis, ‘The Takeovers Panel from Toothless Tiger to Sleeping Tiger? Will the Courts Now Advance?’ (2002) 20 Company and Securities Law Journal 59; Michael Hoyle, ‘Some Observations on the Takeovers Panel’ (2002) 20 Company and Securities Law Journal 183.
[4] Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 6. See also Corporate Law Economic Reform Program, Takeovers — Corporate Control: A Better Environment for Productive Investment, Paper No 4 (1997) 32 (‘CLERP 4’).
[5] Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 38; CLERP 4, above n 4, 36–7.
[6] The Panel’s current 54
part-time members include solicitors, company directors, investment or other
bankers, investment or
corporate advisors, barristers and an academic: see
Takeovers Panel, About the Panel: Panel
Members (2009) <http://www.takeovers.gov.au/about.aspx#panel
_members>. They are appointed by the federal government based upon their
knowledge or experience in at least one of the fields
of business,
administration of companies, financial markets, financial products and services,
law, economics, and accounting: Australian Securities and
Investments Commission Act 2001 (Cth) ss 172(2),
(4)–(4A) (‘ASIC Act’). For a study of the
backgrounds of Panel members, see Emma Armson, ‘The Australian Takeovers
Panel: Commercial Body
or Quasi-Court?’ [2004] MelbULawRw 19; (2004) 28 Melbourne
University Law Review 565, 573–7.
[7] See Corporations Act s 657A.
[8] Corporations Act s 602(a). In relation to this purpose, recent studies suggest that there are inefficiencies in the market for corporate control in Australia: see Alan Dignam, ‘The Takeovers Panel, the Market Efficiency Principle and the Market for Corporate Control An Empirical Study’ (2005) 23 Company and Securities Law Journal 58; Darren Henry, ‘Directors’ Recommendations in Takeovers: An Agency and Governance Analysis’ (2005) 32 Journal of Business Finance and Accounting 129. It has also been argued that the purpose has not been achieved, for example, in relation to rival bidders’ access to information about a target company: see Rebecca Langley, ‘Information Access Denied … Is the Australian Takeovers Market Really “Efficient, Competitive and Informed”?’ (2009) 27 Company and Securities Law Journal 344.
[9] Corporations Act s 602(b).
[10] Corporations Act s 602(c); see also s 604(1). These purposes are known as the ‘Eggleston principles’ and originate from Company Law Advisory Committee, Report to the Standing Committee of Attorneys-General on Disclosure of Substantial Shareholdings and Takeovers (1969) 8. For a critique of these principles, see, eg, Justin Mannolini, ‘Convergence or Divergence: Is There a Role for the Eggleston Principles in a Global M&A Environment?’ (2002) 24 Sydney Law Review 336, 336–40, 360; James Mayanja, ‘The Equal Opportunity Principle in Australian Takeover Law and Practice: Time for Review?’ (2000) 12 Australian Journal of Corporate Law 1, 16, 18; Benedict Sheehy, ‘Australia’s Eggleston Principles in Takeover Law: Social and Economic Sense?’ (2004) 17 Australian Journal of Corporate Law 218.
[11] [2008] HCA 2; (2008) 233 CLR 542. The High Court had confirmed the constitutionality of the previous incarnation of the Panel, the Corporations and Securities Panel, in Precision Data Holdings Ltd v Wills [1991] HCA 58; (1991) 173 CLR 167, 190–2 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ).
[12] [2008] HCA 2; (2008) 233 CLR 542, 550, 552 (Gleeson CJ), 552 (Gummow J), 563 (Kirby J), 578–80 (Hayne J), 580 (Heydon J), 599 (Crennan and Kiefel JJ). See also Emma Armson, ‘Judicial Power and Administrative Tribunals: The Constitutional Challenge to the Takeovers Panel’ (2008) 19 Public Law Review 91, 93.
[13] Alinta [2008] HCA 2; (2008) 233 CLR 542, 562.
[14] See Corporations Act s 606(1)(c). The prohibition does not apply where a company is unlisted and has 50 or fewer members: s 606(1)(a). However, it also extends to certain indirect forms of investments that are so traded: see s 604.
[15] Corporations Act s 611.
[16] Corporations Act s 610.
[17] Corporations Act s 608(1).
[18] See Corporations Act pt 1.2 div 2; see especially ss 12(2)(c), 15.
[19] Corporations Act s 611 item 1.
[20] See Corporations Act pts 6.4–6.6; see especially ss 633, 635.
[21] See Corporations Act pt 6.5 divs 2–4; see especially ss 636, 638, 643–4.
[22] See Corporations Act ch 6B; see especially s 670A.
[23] See Corporations Act s 1041H; see especially ss 1041H(2)(b)(ii)–(iii).
[24] Corporations Act s 9 (definition of ‘substantial holding’).
[25] Corporations Act s 671B.
[26] Corporations Act s 671B(6).
[27] This also creates a conflict of interest between the directors of the target company and the company itself: see, eg, Corporations Act s 181; Howard Smith Ltd v Ampol Petroleum Ltd [1974] UKPC 3; [1974] AC 821 (‘Howard Smith’); Darvall v North Sydney Brick & Tile Co Ltd (1989) 16 NSWLR 260; Emma Armson, ‘The Frustrating Action Policy: Shifting Power in the Takeover Context’ (2003) 21 Company and Securities Law Journal 487, 498–500. For a discussion of the effect of Howard Smith on target company directors’ duties, see Nicolette Rogers, ‘When Can Target Directors Legitimately Frustrate a Takeover Bid?’ (1994) 12 Company and Securities Law Journal 207, 217–18.
[28] Corporations Act s 659AA.
[29] Corporations Act s 58AA(1).
[30] Corporations Act s 659B(1).
[31] Corporations Act s 659C(1).
[32] Corporations Act s 659C(2). Under s 659C(1), the court’s jurisdiction is limited to determining whether there has been an offence or contravention, ordering a person to pay a penalty or compensation to another, providing relief from liability or removing any procedural irregularity. See also ss 1318, 1322.
[33] Corporations Act s 657EA. In order to limit review applications to appropriate cases, the President of the Panel must consent to an application if the initial Panel did not make a declaration of unacceptable circumstances under s 657A or an order under ss 657D or 657E: s 657EA(2). For a discussion of the procedures relating to a Review Panel, see CEMEX Australia Pty Ltd v Takeovers Panel [2008] FCA 1572; (2008) 106 ALD 5, 10 (Stone J) (‘CEMEX (First Instance)’).
[34] Corporations Act s 659B(5).
[35] Panel members are clearly
‘officer[s] of the Commonwealth’ as s 75(v) of the
Constitution was used in order to bring the first judicial review
proceedings against a Panel decision: see Glencore International
AG v Takeovers Panel (2005) 220 ALR 495, 498 (Emmett
J) (‘Glencore (First Application)’);
Glencore International AG v O’Bryan
[2005] HCATrans 458 (29 July 2005)
158–60, 255–71 (Heydon J).
[36] These remedies are referred to in this context as the ‘constitutional writs’: see Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82, 92–3 (Gaudron and Gummow JJ), 133–4 (Kirby J), 142 (Hayne J). There is also an ancillary power to grant certiorari (to quash a decision): see, eg, Re McBain; Ex parte Australian Catholic Bishops Conference [2002] HCA 16; (2002) 209 CLR 372, 403–4 (Gaudron and Gummow JJ); see especially at 461–73 (Hayne J).
[37] Glencore (First Application) (2005) 220 ALR 495 is the only one of the three judicial review cases to date in relation to the Panel’s expanded jurisdiction that has involved an application under s 75(v) of the Constitution: see above n 35; Emma Armson, ‘The Australian Takeovers Panel and Judicial Review of Its Decisions’ [2005] AdelLawRw 15; (2005) 26 Adelaide Law Review 327, 336–7.
[38] For a detailed overview of the Australian system of judicial review, see Armson, ‘The Australian Takeovers Panel and Judicial Review of Its Decisions’, above n 37, 334–40.
[39] See, eg, CLERP 4, above n
4, 7–8; Jonathan Farrer,
‘Reforming Australia’s Takeover Defence Laws: What Role for Target
Directors?’ (1997) 8 Australian Journal of
Corporate Law 1, 2–6,
9–10; James Mayanja, ‘Reforming Australia’s Takeover Defence
Laws: What Role for Target Directors? A Reply and
Extension’ (1999) 10
Australian Journal of Corporate Law 162.
[40] See CLERP 4, above n 4, 37; Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 38.
[41] See CLERP 4, above n 4, 36–7; Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 38.
[42] Glencore (First Application) (2005) 220 ALR 495, 512 (Emmett J); Glencore International AG v Takeovers Panel [2006] FCA 274; (2006) 151 FCR 77, 108 (Emmett J) (‘Glencore (Second Application)’).
[43] See below Part II(B).
[44] See above nn 11–13 and accompanying text.
[45] [2009] FCAFC 78; (2009) 177 FCR 98.
[46] Glencore (First Application) (2005) 220 ALR 495; Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77. See also Re Austral Coal [No 2] (2005) 55 ACSR 60, 65–6, 110–14 (Hellicar P, Members G Alexander and H Douglass) (‘Austral 02 (Panel)’); Re Austral Coal [No 2R] (2005) 55 ACSR 114, 132–5 (Ramsay P, Members D Gonski and N O’Bryan) (‘Austral 02R (First Review)’); Re Austral Coal Ltd 02(RR) (2005) 23 ACLC 1797, 1800–1, 1842–5, 1849–50 (Farrell P, Scott DP and Member D Byrne) (‘Austral 02RR (Second Review)’).
[47] See Austral 02 (Panel) (2005) 55 ACSR 60, 85 (Hellicar P, Members G Alexander and H Douglass); Austral 02R (First Review) (2005) 55 ACSR 114, 122 (Ramsay P, Members D Gonski and N O’Bryan). See also Glencore (First Application) (2005) 220 ALR 495, 499–501 (Emmett J); Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 80–2 (Emmett J). The transactions were entered into by a Glencore subsidiary, Fornax Investments Ltd: see Austral 02 (Panel) (2005) 55 ACSR 60, 73–7 (Hellicar P, Members G Alexander and H Douglass). A person is required to disclose their holdings if they and associated persons have a relevant interest in five per cent or more of the shares in a listed company and following any subsequent movements in their holdings of at least one per cent: see Corporations Act s 671B; see also ss 9 (definition of ‘substantial holding’), 10–16, 608, 610.
[48] Glencore (First Application) (2005) 220 ALR 495, 498 (Emmett J).
[49] Ibid.
[50] See Austral 02 (Panel) (2005) 55 ACSR 60, 92–3 (Hellicar P, Members G Alexander and H Douglass). It was concluded that the banks had a strong economic incentive to purchase the Austral shares: at 89; Austral 02R (First Review) (2005) 55 ACSR 114, 122–3 (Ramsay P, Members D Gonski and N O’Bryan); ibid 503.
[51] Glencore (First Application) (2005) 220 ALR 495, 500–1 (Emmett J).
[52] Ibid 500.
[53] See Austral 02 (Panel) (2005) 55 ACSR 60, 65–6 (Hellicar P, Members G Alexander and H Douglass); Austral 02R (First Review) (2005) 55 ACSR 114, 114 (Ramsay P, Members D Gonski and N O’Bryan); Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1800–1 (Farrell P, Scott DP and Member D Byrne).
[54] Austral 02R (First Review) (2005) 55 ACSR 114, 130–1 (Ramsay P, Members D Gonski and N O’Bryan); Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1801 (Farrell P, Scott DP and Member D Byrne).
[55] (2005) 220 ALR 495, 506 (Emmett J).
[56] Ibid 511–12.
[57] Ibid 507.
[58] See ibid 510.
[59] This is to ensure that the Panel (which is not a Chapter III court) does not exercise judicial power contrary to the Constitution: see, eg, Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245, 256–9 (Mason CJ, Brennan and Toohey JJ), 267–9 (Deane, Dawson, Gaudron and McHugh JJ); A-G (Cth) v Breckler (1999) 197 CLR 83, 110 (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ).
[60] (2005) 23 ACLC 1797, 1799 (Farrell P, Scott DP and Member D Byrne).
[61] Ibid.
[62] [2006] FCA 274; (2006) 151 FCR 77, 108. The decision of the second Review Panel required an extension of time by a court under Corporations Act s 657B, which was granted by Finkelstein J in Takeovers Panel v Glencore International AG [2005] FCA 1628; (2005) 55 ACSR 453, 458.
[63] Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1840–2, 1849–50 (Farrell P, Scott DP and Member D Byrne). This amount included $10 000 to meet ASIC’s costs for acting as trustee: at 1850.
[64] [2006] FCA 274; (2006) 151 FCR 77, 99.
[65] Ibid 103 (Emmett J).
[66] Although it was not necessary to consider this question, Emmett J concluded that the Panel’s failure to consider whether it would be unfair to make the orders if they were not based upon a ‘substantial interest’, but rather only based upon the effect on the bidder’s control of the target company, would also have been sufficient to invalidate the orders: ibid 105–6.
[67] See Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 1–2.
[68] See Corporations Amendment (Takeovers) Act 2007 (Cth) sch 1 items 3–4; ibid; CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 17 (Stone J). See also below Part II(B).
[69] See above nn 3–5, 28, 40–1 and accompanying text.
[70] Glencore International AG v O’Bryan [2005] HCATrans 458 (29 July 2005) 156–62 (Heydon J). See also above n 34 and accompanying text.
[71] (2005) 220 ALR 495, 506. See also above n 55 and accompanying text.
[72] Companies Act 2006 (UK) c 46, pt 28 ch 1.
[73] See Emma Armson, ‘Models for Takeover Dispute Resolution: Australia and the UK’ (2005) 5 Journal of Corporate Law Studies 401, 408–9, 419–23.
[74] Ibid 411–19.
[75] Ibid 403.
[76] [1986] EWCA Civ 8; [1987] QB 815, 842. See also Armson, ‘The Australian Takeovers Panel and Judicial Review of Its Decisions’, above n 37, 344–55.
[77] Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 5. For a more detailed discussion of the amendments, see Emma Armson, ‘Before the High Court — Attorney-General (Commonwealth) v Alinta Limited: Will the Takeovers Panel Survive Constitutional Challenge?’ [2007] SydLawRw 19; (2007) 29 Sydney Law Review 495, 498–9.
[78] Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 5. See also below nn 92–5 and accompanying text.
[79] See Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 5–6.
[80] Ibid 6. See CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 17–18 (Stone J); CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 114 (Ryan, Jacobson and Foster JJ).
[81] See Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 6.
[82] See above nn 11–13 and accompanying text.
[83] See Armson, ‘Judicial Power and Administrative Tribunals’, above n 12, 97.
[84] (2007) 64 ACSR 472, 497 (McKeon P, Alexander DP and Member J O’Sullivan).
[85] Ibid 497–506.
[86] Ibid 475–6.
[87] ASIC, Takeovers: False and Misleading Statements, Regulatory Guide 25, August 2002, para 6.
[88] Rinker 02R (Review Panel) (2007) 64 ACSR 472, 491 (McKeon P, Alexander DP and Member J O’Sullivan). See also Re Summit Resources Ltd (2007) 64 ACSR 626, 629 (McKeon P, Lansley DP and Member R Sultan).
[89] Rinker 02R (Review Panel) (2007) 64 ACSR 472, 499–500 (McKeon P, Alexander DP and Member J O’Sullivan). See also above n 77 and accompanying text.
[90] Rinker 02R (Review Panel) (2007) 64 ACSR 472, 489 (McKeon P, Alexander DP and Member J O’Sullivan).
[91] Ibid.
[92] See ibid 500. See also above n 78 and accompanying text.
[93] Rinker 02R (Review Panel) (2007) 64 ACSR 472, 489–90 (McKeon P, Alexander DP and Member J O’Sullivan).
[94] Ibid 490.
[95] Ibid 497. This amount was considered to be the best estimate of the value of the lost opportunity to sell with the information that the offer consideration might be improved and involved a payment of just over $11.2 million: at 494.
[96] [2008] FCA 1572; (2008) 106 ALD 5, 21.
[97] [2009] FCAFC 78; (2009) 177 FCR 98, 123 (Ryan, Jacobson and Foster JJ).
[98] See CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 15 (Stone J); ibid 114–15.
[99] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 115 (Ryan, Jacobson and Foster JJ). The Full Court also noted Crennan and Kiefel JJ’s decision and that Gummow J agreed with Hayne J as well as Crennan and Kiefel JJ. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 8–9 (Stone J); Armson, ‘Judicial Power and Administrative Tribunals’, above n 12, 96–7.
[100] Alinta [2008] HCA 2; (2008) 233 CLR 542, 552, cited in CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 115 (Ryan, Jacobson and Foster JJ).
[101] Alinta [2008] HCA 2; (2008) 233 CLR 542, 576, cited in CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 115 (Ryan, Jacobson and Foster JJ).
[102] See above n 13 and accompanying text.
[103] Alinta [2008] HCA 2; (2008) 233 CLR 542, 562, cited in CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 115 (Ryan, Jacobson and Foster JJ).
[104] [2007] FCAFC 55; (2007) 159 FCR 301. For further analysis of this decision, see generally Armson, ‘Attorney-General (Commonwealth) v Alinta Limited’, above n 77.
[105] Alinta (Full Court) [2007] FCAFC 55; (2007) 159 FCR 301, 392 (Gyles and Lander JJ); cf at 326 (Finkelstein J).
[106] Takeovers Panel, ‘APL vs Alinta Ltd’ (Media Release No 19/2007, 30 April 2007).
[107] (2007) 64 ACSR 472, 477 (McKeon P, Alexander DP and Member J O’Sullivan). See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 12 (Stone J).
[108] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 102 (Ryan, Jacobson and Foster JJ).
[109] Ibid.
[110] Ibid 116.
[111] Ibid. See also Alinta (Full Court) [2007] FCAFC 55; (2007) 159 FCR 301, 394 (Gyles and Lander JJ).
[112] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 116 (Ryan, Jacobson and Foster JJ).
[113] Ibid.
[114] Ibid. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 14–15 (Stone J).
[115] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 116 (Ryan, Jacobson and Foster JJ).
[116] Ibid.
[117] Ibid 116–17.
[118] Ibid 116.
[119] Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 108 (Emmett J), cited in ibid 117. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 15 (Stone J).
[120] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 120 (Ryan, Jacobson and Foster JJ).
[121] Ibid 121–2.
[122] Ibid. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 17–18 (Stone J).
[123] CEMEX
(Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 121–2 (Ryan, Jacobson and
Foster JJ). This approach is consistent with that adopted in relation to the
earlier incarnation
of this power when it was exercised by the court under ss
737 and 739 of the Corporations Law: see CEMEX (Full
Court) [2009] FCAFC 78; (2009) 177 FCR 98, 121–2 (Ryan, Jacobson and Foster JJ);
Australian Securities and Investments
Commission v Yandal Gold Pty Ltd
[1999] FCA 799; (1999) 32 ACSR 317, 355 (Merkel J); Australian Securities
and Investments Commission v Edensor
Nominees Pty Ltd (2001) 204 CLR 559,
576–7, 590 (Gleeson CJ, Gaudron and Gummow JJ). See also CEMEX
(First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 21 (Stone J).
[124] See also CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 121 (Ryan, Jacobson and Foster JJ); Emma Armson, ‘The Australian Takeovers Panel and Unfair Prejudice to Third Parties’ (2004) 16 Australian Journal of Corporate Law 187.
[125] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 122 (Ryan, Jacobson and Foster JJ).
[126] Ibid 120.
[127] Ibid 122.
[128] Ibid. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 19 (Stone J).
[129] See above n 122 and accompanying text.
[130] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 122 (Ryan, Jacobson and Foster JJ). Similarly, Stone J found that the Panel was not required to establish that payment was only made to individuals who have suffered financial loss: CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 17–18.
[131] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 122 (Ryan, Jacobson and Foster JJ).
[132] Ibid.
[133] See ibid 123.
[134] Ibid. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 20 (Stone J).
[135] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 123 (Ryan, Jacobson and Foster JJ). See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 20 (Stone J).
[136] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 123 (Ryan, Jacobson and Foster JJ).
[137] Ibid.
[138] Ibid 119–20.
[139] Ibid 102.
[140] Ibid 119. See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 15–16. Stone J did not consider the ‘no evidence’ ground in her judgment.
[141] See CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 117–19 (Ryan, Jacobson and Foster JJ); see especially at 117.
[142] CEMEX
(First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 16 (Stone J); Rinker
02R (Review Panel) (2007) 64 ACSR 472, 483 (McKeon P,
Alexander DP and Member J O’Sullivan); Re Rinker
Group Ltd 02 [2007] ATP 17 (Unreported, McCann P, Ashforth
DP and Member J Fast, 12 July 2007)
[42]–[46] (McCann P, Ashforth DP and Member J Fast).
[143] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 118–19 (Ryan, Jacobson and Foster JJ).
[144] Ibid 118; see also at 107.
[145] Ibid 119.
[146] Rinker 02R (Review Panel) (2007) 64 ACSR 472, 483 (McKeon P, Alexander DP and Member J O’Sullivan), quoted in ibid 110 and cited at 119.
[147] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 119 (Ryan, Jacobson and Foster JJ).
[148] Ibid, citing Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389, 395 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ). See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 16 (Stone J).
[149] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 119 (Ryan, Jacobson and Foster JJ).
[150] Ibid. This was also argued to involve a decision that no reasonable person could have reached, as contemplated in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223, cited in ibid.
[151] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 119 (Ryan, Jacobson and Foster JJ), citing Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 358 (Mason CJ). See also ADJR Act s 5(3); Australian Retailers Association v Reserve Bank of Australia [2005] FCA 1707; (2005) 148 FCR 446, 587 (Weinberg J).
[152] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 119 (Ryan, Jacobson and Foster JJ).
[153] (2006) 237 ALR 158, 190.
[154] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 119 (Ryan, Jacobson and Foster JJ), citing ibid.
[155] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 119–20 (Ryan, Jacobson and Foster JJ).
[156] Ibid 120.
[157] Ibid.
[158] Ibid.
[159] See above Part II(B).
[160] See Glencore (First Application) (2005) 220 ALR 495, 507–8; Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 103.
[161] See above n 77 and accompanying text.
[162] See ADJR Act s 5(1)(h). Cf above n 156 and accompanying text.
[163] (2005) 220 ALR 495, 503 (Emmett J).
[164] See above n 65 and accompanying text.
[165] [2006] FCA 274; (2006) 151 FCR 77, 102–3.
[166] Ibid 97.
[167] Ibid 98 (Emmett J).
[168] Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 5.
[169] Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1799, 1830 (Farrell P, Scott DP and Member D Byrne). See also Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 89–90 (Emmett J).
[170] Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1810 (Farrell P, Scott DP and Member D Byrne); Glencore (First Application) (2005) 220 ALR 495, 502–3 (Emmett J). See also Takeovers Panel, Equity Derivatives, Guidance Note 20, 11 April 2008, para 22 (‘Guidance Note 20’).
[171] See Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1830 (Farrell P, Scott DP and Member D Byrne); Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 89 (Emmett J).
[172] Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1830 (Farrell P, Scott DP and Member D Byrne); Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 90–1 (Emmett J).
[173] Guidance Note 20 para 8.
[174] See above n 168 and accompanying text.
[175] (2005) 220 ALR 495, 509–10.
[176] [2008] FCA 1572; (2008) 106 ALD 5, 17.
[177] See ibid 17–18; Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 6. See also above nn 80–1 and accompanying text. Cf Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 105 (Emmett J).
[178] (2005) 220 ALR 495, 509 (Emmett J).
[179] Explanatory Memorandum, Corporations Amendment (Takeovers) Bill 2007 (Cth) 6. It was also found in Glencore (Second Application) that a failure to comply with the earlier version of this provision would not have automatically led to invalidity: Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 106–7 (Emmett J).
[180] [2009] FCAFC 78; (2009) 177 FCR 98, 121–2 (Ryan, Jacobson and Foster JJ). See also above n 121 and accompanying text.
[181] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 122 (Ryan, Jacobson and Foster JJ).
[182] Glencore (First Application) (2005) 220 ALR 495, 510. This also suggests that Emmett J would have found in any event that the Review Panel had failed to take into account a relevant consideration, as to which see ADJR Act ss 5(1)(e), (2)(b).
[183] (2005) 220 ALR 495, 510.
[184] Ibid.
[185] [2006] FCA 274; (2006) 151 FCR 77, 105–6.
[186] [2008] FCA 1572; (2008) 106 ALD 5, 19.
[187] For discussion of this, see below Part IV(C).
[188] See above n 61 and accompanying text. See also Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 101–2 (Emmett J).
[189] See Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1799 (Farrell P, Scott DP and Member D Byrne); Glencore (Second Application) [2006] FCA 274; (2006) 151 FCR 77, 84 (Emmett J).
[190] Austral 02RR (Second Review) (2005) 23 ACLC 1797, 1838–42 (Farrell P, Scott DP and Member D Byrne).
[191] [2008] FCA 1572; (2008) 106 ALD 5, 18. See also CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 122 (Ryan, Jacobson and Foster JJ).
[192] CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 18 (Stone J).
[193] See above nn 188–90 and accompanying text.
[194] See Guidance Note 20; see especially paras 9–11, 21–2.
[195] Guidance Note 20 para 24.
[196] Guidance Note 20 paras 48–9.
[197] Corporations Act s 657D(2)(b). See also CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 21 (Stone J).
[198] [2006] FCA 274; (2006) 151 FCR 77, 108. See also above n 119 and accompanying text; CEMEX (First Instance) [2008] FCA 1572; (2008) 106 ALD 5, 15 (Stone J).
[199] See above nn 96–103 and accompanying text.
[200] See above nn 92–5 and accompanying text.
[201] See above nn 112–19 and accompanying text.
[202] See above nn 120–5 and accompanying text.
[203] See above nn 154–5 and accompanying text.
[204] See above n 130 and accompanying text.
[205] CEMEX (Full Court) [2009] FCAFC 78; (2009) 177 FCR 98, 122 (Ryan, Jacobson and Foster JJ). See above n 131 and accompanying text.
[206] See above nn 145–8 and accompanying text.
[207] See above nn 140–8 and accompanying text.
[208] See above nn 157–8 and accompanying text.
[209] See above Part IV(C).
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