Australian Pipeline Limited (ACN 091 344 704) v Alinta Limited

Dealings Involving AGL And Alinta 10 It is necessary to set out in more detail the history of dealings involving AGL and Alinta that have given rise to the proceedings.

The Takeover Offers 11 On 13 March 2006, AGL announced a proposed takeover bid for shares in Alinta. AGL's takeover bid was detailed in a Bidder's Statement issued by AGL on 24 April 2006. 12 On 20 March 2006, Alinta announced a conditional takeover bid for shares in AGL. At that time, Alinta held approximately 19.9 per cent of the issued shares of AGL. On 31 March 2006, a subsidiary of Alinta lodged with the Commission a Bidder's Statement in relation to offers to acquire shares in AGL. The consideration was to be 1.773 shares in Alinta for every AGL share sold as a consequence of accepting the offer. The offers were to open on 18 April 2006 and close on 31 May 2006. By the end of business on 26 April 2006, as the result of acceptance by AGL shareholders of Alinta's offers, Alinta held in excess of 20 per cent of the issued shares of AGL.

The Heads of Agreement 13 Between 8 am and 9 am Eastern Australian Time on 26 April 2006, Heads of Agreement were signed on behalf of AGL and Alinta. By the Heads of Agreement, AGL and Alinta acknowledged that they had agreed all the key terms of the agreement as set out in it and intended that they be immediately legally bound to the performance of those terms. Nevertheless, they agreed that the terms would be restated in a Merger Implementation Agreement and other relevant transaction documents to give effect to the transaction contemplated by the Heads of Agreement. The form of those transaction documents was to be more precise, but not different in effect, from the Heads of Agreement, and AGL and Alinta agreed to use all reasonable endeavours to agree to the Merger Implementation Agreement by 31 May 2006, or such later date as they may agree in writing. The Heads of Agreement were to terminate automatically if the Merger Implementation Agreement had not been entered into by 31 May 2006 or such later date as the parties agree in writing. 14 By s 608(3)(a) of the Corporations Act, a person has the relevant interests in any securities that a body, in which that person's voting power is, above 20 per cent has. However, certain acquisitions of relevant interests in units are exempt from the prohibition in s 606. Thus, under s 611, an acquisition that results from the acceptance of an offer under a takeover bid, as defined in the Corporations Act, are exempt. 15 By reason of Alinta's holding of more than 20 per cent of AGL's issued shares, Alinta is taken, by the operation of s 608(3)(a), to have the same relevant interest in units in the Trust as AGL had. Thus, if Alinta acquired more than 20 per cent of the voting power in AGL and thereby acquired AGL's relevant interest in units of the Trust, albeit more than 20 per cent of the units, that acquisition by Alinta would be exempt, by the operation of s 611. 16 APL asserts that Alinta acquired a relevant interest in AGL's units in the Trust when AGL and Alinta entered into the Heads of Agreement. Alinta answers that assertion by saying that it had already acquired more than 20 per cent of the voting power of AGL under its takeover bid prior to entering into the Heads of Agreement. Thus, it will be necessary to determine whether or not Alinta had a relevant interest in more than 20 per cent of the voting power of AGL prior to 8 am on 26 April 2006.

The Transaction Instruments 17 On 1 June 2006, AGL and Alinta published a joint media release saying that they had signed a Merger Implementation Agreement to formalise the Heads of Agreement. The media release asserted that, at the completion of the transaction proposed by the Heads of Agreement and the Merger Implementation Agreement: · AGL's energy business would be wholly owned by existing AGL shareholders and would include a 33 per cent interest in Alinta's Western Australian retail and cogeneration business, with an option to move to 100 per cent over five years. · An enlarged Alinta would be 54 per cent owned by Alinta's current shareholders and 46 per cent owned by AGL's current shareholders. In addition, the enlarged Alinta would own AGL's infrastructure assets and asset management business. 18 A Merger Implementation Agreement was in fact executed by AGL, Alinta, Alinta Merge Co Limited ('Merge Co') and AGL Energy Limited ('AGL Energy') on 1 June 2006. That agreement recites that the parties had entered into it to record 'in a fuller and more precise way' the terms upon which they propose to implement the Transaction. 19 Transaction was defined as meaning: · the implementation of the Alinta Scheme, the AGL Scheme, the Merge Co Buy-Back and the issue of AGL Energy shares as contemplated by the Implementation Agreement; · the restructure of AGL Energy contemplated by the Implementation Deed; and · the internal restructure of the Alinta WA business and the sale of a 33 per cent interest in that business to AGL Energy as contemplated in the Heads of Agreement. The AGL Scheme was defined as a scheme of arrangement for the transfer of AGL shares to Merge Co and Alinta Scheme was defined as a scheme of arrangement for the transfer of Alinta shares to Merge Co. The consideration for the transfer of AGL shares included Converting Shares in Merge Co, which were to be bought back by Merge Co in consideration for the issue of shares in AGL Energy, referred to as the Merge Co Buy-Back, thereby achieving the result stated in the media release of 1 June 2006. The restructure of AGL Energy and the internal restructure of assets of Alinta were preconditions designed to ensure that result. 20 The terms of the instrument of 1 June 2006 are not presently relevant because, on 22 June 2006, the same parties entered into several other instruments, one of which was identical to that of 1 June 2006 in all material terms, save as to several dates. Four instruments were entered on 22 June 2006 to give effect to the Transaction ('the Transaction Instruments'). They were as follows: · Merger Implementation Agreement ('the Implementation Agreement'). · Transaction Implementation Deed ('the Implementation Deed'). · Relationship Deed ('the Relationship Deed'). · Regulatory Deed ('the Regulatory Deed'). It will be necessary, in due course, to analyse the effect of those several instruments in some detail.

The Commission Declaration 21 It is clear that, as at 22 June 2006, Alinta had a relevant interest in AGL's units in the Trust, pursuant to acceptances of its takeover offers. Accordingly, even if, as APL contends, the effect of the Implementation Agreement would have been that Alinta acquired a relevant interest in AGL's units in the Trust, there was no contravention of s 606 because Alinta already held that relevant interest. 22 However, on 4 August 2006, Alinta's relevant interest in AGL fell below 20 per cent as a result of: · the exercise of withdrawal rights under s 650E of the Corporations Act in relation to its takeover offers, and · the recision of contracts arising as a result of acceptances of Alinta's takeover offers to shareholders of AGL. As a consequence, as from that time, Alinta ceased to have a relevant interest in AGL's units in the Trust. 23 Nevertheless, APL contends, Alinta and Merge Co continued to have a relevant interest in AGL's units in the Trust, by reason of the terms of the Implementation Agreement, the Relationship Deed and the Regulatory Deed or any one or more of them. Alinta and Merge Co respond that, even if the effect of those instruments was to give Alinta and Merge Co a relevant interest in AGL's units in the Trust, they are entitled to rely upon a declaration under s 655A(1) of the Corporations Act made by the Commission on 3 July 2006 ('the Commission Declaration'). 24 Under s 655A, the Commission may declare that Chapter 6 applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration. By the Commission Declaration, the Commission declared that Chapter 6 of the Corporations Act applies to Alinta in respect of an agreement of the kind referred to in Schedule B and units in the Trust, as if s 609(7) of the Corporations Act was omitted and replaced with a provision that relevantly provides that a person does not have a relevant interest in securities merely because of an agreement, if the agreement is conditional on a scheme of arrangement approved by the Court under Part 5.1 taking effect and does not restrict disposal of the relevant securities for more than four months from the date when the agreement is entered into. 25 Schedule B relevantly provides as follows: 'The Merger Implementation Agreement between [Alinta], [AGL], [AGL Energy] and [Merge Co] dated 22 June 2006 that is conditional on a Part 5.1 scheme of arrangement between AGL and its members taking effect.' Apart from the question of whether the Transaction Instruments gave Alinta a relevant interest in AGL's unit in the Trust, there was considerable argument concerning whether the Commission Declaration was effective to exempt that effect from being a contravention of s 606.

The Acquisitions 26 Between 16 August 2006 and 22 August 2006, Trewas Pty Limited ('Trewas'), a wholly owned subsidiary of Alinta, acquired 28,591,144 units in the Trust, representing approximately 10.25 per cent of the issued units. Trewas acquired a further 4,221,500 units in the Trust on 31 August 2006 pursuant to a placement made by the Trust.

The Panel 27 On 21 August 2006, APL applied to the Panel in relation to the Commission Declaration and the acquisitions that occurred between 16 August 2006 and 22 August 2006. On 22 August 2006, the Panel made interim orders preventing Alinta or its associates from acquiring further units in the Trust or dealing with the units already acquired. On 31 August 2006, the Panel varied those orders to permit Alinta to participate in the placement by the Trust, pursuant to which it acquired further units. 28 The Panel declined to make any finding of contravention of the Corporations Act as contended for by APL but, on 2 September 2006, made a declaration of unacceptable circumstances under s 657A(2)(a) in relation to the acquisitions of 16 to 22 August 2006. On 7 September 2006, the Panel ordered that all of the units acquired by Trewas be vested in the Commission, on trust, for sale. The Panel made no determination concerning the Commission Declaration. Alinta applied to the Panel under s 657EA of the Corporations Act for review of the declaration of unacceptable circumstances and for review of the orders for divestiture. 29 Pursuant to s 657EA, on 20 September 2006, the Panel, differently constituted, made the Panel Declaration, on the basis that the acquisitions of 16 to 22 August 2006 were unacceptable: · having regard to their effect on the control or potential control of the Trust; and · because they constituted, or gave rise to, contraventions of s 606 of the Corporations Act. 30 The form of the Panel Declaration, which is dated 20 September 2006 is slightly curious, in the sense that the instrument is not, in its terms, a declaration. Rather, it records that the Panel had decided to make a declaration. However, the parties have treated the instrument as a declaration under s 657A, that circumstances in relation to the affairs of the Trust, being the Acquisitions, constituted unacceptable circumstances. 31 The relevant provisions of the Panel Declaration are as follows: '5. The Panel finds that the Acquisitions constituted, or gave rise to, a contravention of section 606 of the Corporations Act. 6. The Panel also finds that the Acquisitions, when considered in the context of the relief granted by [the Commission], the forthcoming Schemes and the existing holding of 83,668,630 units in [the Trust] by AGL, have, or are likely to have, an effect on the control or potential control of [the Trust]. 7. The Panel considers that it is not against the public interest to make a declaration of unacceptable circumstances in relation to the [First] Acquisitions and the affairs of [the Trust]. 8. The Panel has considered the desirability of the acquisition of control of units in [the Trust] taking place in an efficient, competitive and informed market, and other purposes of the Takeovers Chapters of the Corporations Act as set out in section 602 of the Corporations Act. Having considered these issues, the Panel has decided to make a declaration under section 657A of the Corporations Act that the Acquisitions are unacceptable circumstances having regard to the fact that the Acquisitions constituted, or gave rise to, a contravention of section 606 of the Corporations Act, and the effect of the Acquisitions on the control or potential control of [the Trust].' The Panel then made the Panel Orders on 24 September 2006. 32 The Panel Orders included an order that the units in the Trust acquired by Trewas on or between 16 and 22 August 2006 and under the placement made by the Trust on 31 August 2006 and 1 September 2006 be vested in the Commission to be held by the Commission on trust for sale. The Commission was directed to retain an investment bank or licensed stockbroker to sell the units for a cash sum and to account to Alinta and Trewas for the proceeds of sale, net of cost fees and expenses by the Commission in complying with the Panel Orders. Alinta was ordered not to acquire any relevant interest in any further units in the Trust prior to the implementation of the Schemes or the expiry of the Implementation Agreement.

THE ISSUES AND THE ANSWERS 33 The issues raised in the Takeover Proceeding, as I apprehend them, and my conclusion may be summarised as follows: (1) Whether Alinta had a relevant interest in AGL's units in the Trust, by reason of acceptances of its takeover offers, prior to entry into of the Heads of Agreement: Yes. (2) If not, whether the Heads of Agreement give Alinta a relevant interest in AGL's units in the Trust: Does not arise, but probably no. (3) Whether as at 4 August 2006, when, following withdrawal of acceptances, Alinta ceased to have a relevant interest in 20 per cent of AGL's shares, the Commission Declaration had the effect that Alinta did not have a relevant interest in AGL's units in the Trust: that raises two sub-issues as follows: (3.1) Whether the Transaction Instruments were conditional upon Court approval of a scheme under Part 5.1: Yes. (3.2) Whether any restriction on AGL's disposition of its units in the Trust, by reason of the Transaction Instruments, extended beyond the period of four months: No. (4) If the Commission Declaration did not have the effect that Alinta did not acquire a relevant interest in AGL's units in the Trust, whether the Transaction Instruments gave Alinta a relevant interest in AGL's units in the Trust. That raises two sub-issues as follows: (4.1) Whether Alinta has power to control the disposition of or has an enforceable right in respect of AGL's units: No (4.2) Whether AGL is an associate of Alinta in relation to the units: No 34 The issues that arise in the Judicial Review Proceeding, as I apprehend them, and my conclusion may be summarised as follows: (1) Whether the Panel erred in concluding that the Acquisitions during August contravened s 606: this issue is resolved by issues (3) and (4) in the Takeover Proceeding: Yes. (2) Whether the Panel misinterpreted s 657A(2)(a) in concluding that the relevant circumstances were unacceptable, having regard to their effect on control or potential control of the Trust: this issue raises several sub-issues as follows: (2.1) Whether the Panel erred in basing its conclusion on the likely effect rather than the actual effect of the relevant circumstances: No. (2.2) Whether the Panel erred in considering the possible future, as distinct from the present, effect of the relevant circumstances: No. (2.3) Whether the Panel failed to have regard to considerations to which it was obliged to have regard: No. (3) If the answer to issue (1) is 'Yes' but the answer to issue (2) is 'No', whether the Panel's conclusion that the relevant circumstances were unacceptable, having regard to their effect on control or potential control of the Trust, can stand: Yes. (4) If the answer to issue (1) is 'Yes' and the answer to issue (3) is also 'Yes', whether the Panel's orders can stand, notwithstanding its erroneous conclusion that there was a contravention of the Corporations Act as referred to in issue (1): Yes. (5) Whether, in deciding to make orders under s 657D, the Panel failed to have regard to considerations to which it was obliged to have regard: No. (6) Whether the Panel Declaration or the Panel Orders involved the exercise by the Panel of the judicial power of the Commonwealth: No 35 It follows from those conclusions that both the Takeover Proceeding and the Judicial Review Proceeding should be dismissed. My reasons for concluding that the issues should be resolved as indicated above are set out below.

ALINTA'S INTEREST IN AGL BEFORE THE HEADS OF AGREEMENT 36 Acceptances of Alinta's offers to AGL shareholders were processed by Computershare Investor Services Pty Ltd ('Computershare'). A daily acceptance summary sheet generated by Computershare from information contained in the database maintained by Computershare in relation to acceptances of Alinta's offers demonstrates that, during the course of 26 April 2006, acceptances in respect of 175,261 shares in AGL were processed, with the result that, at the end of that day, Alinta held 91,291,570 shares, which represented 20.02 per cent of the issued capital. The number of shares that were the subject of acceptances processed on 26 April 2006 represented 0.04 per cent of the issued shares. 37 Of the 175,261 shares: · 7 acceptances in respect of 18,810 shares were CHESS broker initiated acceptances, · 77 acceptances in respect of 107,507 shares were CHESS offeror initiated acceptances, and · 50 acceptances in respect of 48,944 shares were issuer sponsored acceptances. 38 CHESS is the Clearing House Electronic Sub-register System operated by ASX Settlement and Transfer Corporation Pty Ltd ('ASTC'), a prescribed CS facility for the purposes of Chapter 7 of the Corporations Regulations, which deals with financial services and markets for the purposes of settling transactions in shares, such as shares in AGL. 39 APL attaches some significance to the differences in processing required for those three categories of acceptances. Alinta's Bidder's Statement specified different procedures according to the manner in which shares were registered. The shares that were the subject of CHESS broker initiated acceptances or CHESS offeror initiated acceptances were shares on a CHESS sub register. The Bidder's Statement provided that if shares were on a CHESS sub register, the holder, in order to accept, must either: · instruct the controlling participant to accept the offer, or · complete, sign and return the acceptance form enclosed with the Bidder's Statement. The Bidder's Statement also provided that if the shares were on AGL's issuer sponsored subregister, the holder must, to accept, complete the acceptance form enclosed with the Bidder's Statement. The Bidder's Statement also provided that signed acceptance forms must be sent to Computershare at a Melbourne GPO box or be delivered to Computershare at a specified address in Abbotsford, a suburb of Melbourne. A self addressed postage prepaid envelope was also enclosed with the Bidder's Statement. 40 In addition, instructions were endorsed on the acceptance form enclosed with the bidders statement. The instructions as to how to accept the offer on the back of the form were as follows: 'If your AGL shares are held in an Issuer Sponsored Holding, simply complete and return this form to the Alinta GH Registry… If your AGL shares are in a CHESS holding, you may contact your Controlling Participant directly… with instructions to accept the offer. If you do this, you will need to sign and return this Transfer and Acceptance Form to your Controlling Participant. If you want Alinta GH to contact your Controlling Participant on your behalf via the CHESS system, sign and return this form to the Alinta GH Registry… If you sign and return this Transfer and Acceptance Form to the Registry either in respect an Issuer Sponsored Holding or so that contact may be made with your Controlling Participant on your behalf, you warrant to Alinta GH… that you accept the Offer and acknowledge the effect of your acceptance…' [Original emphasis] 41 The front of the acceptance form contained the following: 'ACCEPTANCE OF THE OFFER

If you sign and return the form, and have not specified a lesser number of shares in the box below, you will be deemed to have accepted the Offer in respect of all your AGL Shares (including any additional AGL shares registered as held by you at the date your acceptance is processed (despite any difference between that number and the number specified above)).

I/We accept the offer made by Alinta GH for ………. AGL Shares only.

If you hold your AGL Shares in a CHESS holding…, to accept the Offer you can either:

· Instruct your Controlling Participant directly -… or · Authorise Alinta GH to contact your Controlling Participant on your behalf, which you can do by signing and returning the form. By signing and returning the form you will be deemed to have authorised Alinta GH to contact your Controlling Participant directly via the CHESS system. … I/we accept the Offer made by Alinta GH in respect of Shares in AGL I/we hold and I/we agree to be bound by the terms and conditions of the Offer (including the instructions as to acceptance of the offer on the back of this form) and transfer all of my/our AGL Shares to Alinta GH for the above consideration.' [Original emphasis] 42 As I have indicated above, for Alinta to have acquired more than 20 per cent of the issued shares in AGL on 26 April 2006, it must have acquired at least 65,784 shares. APL contends that the Court could not be satisfied, on the balance of probabilities, that acceptances in respect of 65,784 shares had been processed on 26 April 2006 prior to Alinta and AGL entering into the Heads of Agreement. APL accepts that delivery of the 50 acceptances in respect of 48,944 shares to Computershare was sufficient to constitute acceptance in respect of that number of shares. However, APL contends that there was no acceptance in respect of 107,507 shares that were the subject of the 77 CHESS offeror initiated acceptances until those acceptances were processed and that the Court cannot be satisfied that processing was completed prior to the Heads of Agreement being entered into. 43 In the ordinary course of business, the contents of the Computershare GPO box specified in the bidders statement are delivered to Computershare's office by 8 am. There is no basis for concluding that any of the acceptances that were received on 26 April 2006 were received by Computershare after 8 am. However, APL contends that receipt of the acceptance forms by Computershare was not sufficient, because further processing was required and the evidence does not establish, on the balance of probabilities, that processing of the further acceptances had been completed prior to entry into of the Heads of Agreement. That contention involves an examination of the functions of ASTC. 44 Section 653A(b) of the Corporations Act provides that, if regulations made for the purposes of that provision set out any requirements for the manner in which the acceptance of an offer must be complied with, an acceptance of the offer is effective only if it is made in that way. Regulation 7.11.24 provides that, if the ASTC operating rules include provisions determining when a proper ASTC transfer takes effect, those provisions have effect for the purposes of Division 4 of Part 7.11 of the Corporations Regulations. A proper ASTC transfer relevantly means an ASTC regulated transfer effected through a prescribed CS facility operated by the ASTC and in accordance with the operating rules of the ASTC. 45 Rule 14.14.1 of the ASTC operating rules relevantly provides that, if a bid is made under a takeover bid in relation to shares, at any time during the period of the bid, the shares are in a participant sponsored holding and, before the end of the period of the bid, the participant sponsored holder instructs the controlling participant to accept the bid, the controlling participant must initiate the acceptance under Rule 14.14 within the times specified in Rule 14.14. In addition, acceptance of a bid under a takeover bid for shares that, at the time of acceptance, are held in a CHESS holding must be initiated by a valid originating message that is transmitted to ASTC by the controlling participant for the holding. Such a message also initiates a takeover transfer of the shares specified in the message. Further, ASTC will then reserve the number of shares specified in the message in an offer accepted sub position in favour of the participant bidder for the takeover bid. 46 A controlling participant in relation to a CHESS holding means the participant that has the capacity to transfer shares from the relevant holding. There are various categories of participants. A participant sponsored holding is a CHESS holding of a participant sponsored holder. A participant sponsored holder is a person that has a current sponsorship agreement with a participant. A sponsorship agreement is one that complies with the ASTC Operating Rules. 47 Regulation 14.17 provides that a takeover transfer of shares in relation to a takeover bid may be completed by a valid message that is transmitted to ASTC by the participant bidder for the takeover bid. A message is an electronic message of a kind specified in a document made by ASTC that provides detailed information about protocols, message formats and security features for communications between facility users and ASTC for use in CHESS. 48 The evidence does not enable me to be satisfied one way or the other as to whether a valid message had been transmitted to ASTC by or on behalf of Alinta in respect of the 77 acceptance forms in question, prior to the entry into of the Heads of Agreement. 49 However, notwithstanding that I am not able to be satisfied as to that matter, I consider that, prior to the entering into the Heads of Agreement, Alinta had acquired a relevant interest in the shares that were the subject of those acceptance forms. That was the effect of s 608 of the Corporation Act, having regard to the terms of the Bidder's Statement and the acceptance forms that were completed and delivered to Computershare no later than 8 am on 26 April 2006. 50 A person has a relevant interest in shares if the person has the power to exercise, or control the exercise of, a right to vote attached to the shares, or has power to dispose of, or control the exercise of, a power to dispose of the shares. Power or control includes, under s 608(2), power or control that is indirect and power or control that is, or can be, exercised as a result of, or by means of, an agreement and a power or control that is or can be made subject to restraint or restriction. 51 Notwithstanding that the processing required under the ASTC Operating Rules may not have been completed prior to the entry into of the Heads of Agreement, the terms of the 77 acceptance forms completed on behalf of the respective holders of shares in AGL were such as to give Alinta a relevant interest in all of the shares that were the subject of those acceptances. By completing and delivering the acceptance form to Computershare, Alinta was placed in a position where it had power to dispose of, or control the exercise of, the power to dispose of the shares that were the subject of the acceptance form. It follows that, prior to entering into of the Heads of Agreement on 26 April 2006, Alinta had a relevant interest in the units in the Trust held by AGL. Accordingly, there was no contravention of s 606, even if, by the Heads of Agreement, Alinta would otherwise have acquired a relevant interest in AGL's units in the Trust.

RELEVANT INTEREST UNDER THE HEADS OF AGREEMENT 52 Section 606(1) of the Corporations Act relevantly provides that a person must not acquire a relevant interest in issued voting shares in a company if: · the company is a listed company; and · the person acquiring the interest does so through a transaction in relation to shares entered into by or on behalf of the person; and · because of the transaction, that person's or some other person's voting power in the company increases from 20 per cent or below to more than 20 per cent. 53 APL contends that the effect of the Heads of Agreement was to give Alinta a relevant interest in AGL's units in the Trust, independently of the operation of s 608 of the Corporations Act. That contention requires an examination of the terms of the Heads of Agreement. While it is not necessary for me to draw a conclusion on this question having regard to the conclusion reached above concerning the acceptances delivered to Computershare, I shall express my opinion on this question. 54 By clause 16 of the Heads of Agreement, AGL and Alinta agreed to work together in good faith to determine the most efficient structure or structures to effect the implementation of the transactions contemplated by it, including the most efficient structure or structures to effect the Transaction contemplated. They acknowledged that their current preferred structure was independent schemes of arrangement structured in the manner described in Schedule 12 to the Heads of Agreement. They agreed and acknowledged that they would enter into Transaction Documents that were customary for a transaction of the nature contemplated by the Heads of Agreement, including a Merger Implementation Agreement, which would specify conditions precedent, including all necessary shareholder and Court approvals. 55 The structure of steps set out in Schedule 12 can be summarised as follows: · Merge Co would be formed with issued shares held equally by nominees of AGL and Alinta, · interdependent and inter-conditional schemes of arrangement would be propounded and reorganisation of the assets of Alinta and AGL would be effected, with the result that, following implementation of those arrangements, Alinta's assets would include AGL's 30 per cent interest in the Trust. The parties ascribed to those assets a value specified in Schedule 9 of the Heads of Agreement. The value ascribed in Schedule 9 to 30 per cent of the units in the Trust was $363 million, of a total value of all of Alinta's assets, following implementation, of $6,450 million. 56 By clause 15, the parties agreed on the aggregate number of shares in Merge Co that would be issued to shareholders of AGL upon the implementation of the AGL Scheme and the number of shares in Merge Co that would be issued to Alinta shareholders following the implementation of the Alinta Scheme. 57 By clause 21, Alinta was prohibited from disposing of a number of assets, including AGL's units in the Trust. That prohibition was to operate from completion of the Transaction until the day that is one year after that completion. Significantly, there was no express restraint on AGL disposing of its units in the Trust prior to implementation of the Transactions. 58 Clause 23 of the Heads of Agreement provided that the transfer of the Alinta Scheme Assets (a term defined in clause 4 to include AGL's units in the Trust) was not conditional on approvals from any public authority. However, if Alinta were required to dispose of or cannot take an ownership interest in, any of the Alinta Scheme Assets because of an order of a public authority, AGL Energy, then a subsidiary of AGL, was to have a call option to acquire that asset, exercisable at any time in the three month period after it was notified of the requirement to dispose of the asset. 59 By clause 25, the parties agreed to comply with Schedules 5 and 6. By Schedule 6, AGL agreed that it would not initiate or participate any negotiations or discussions with respect to any expression of interest, offer or proposal by any person, other than Alinta, to acquire or become the holder of, or otherwise have an economic interest in, all or a substantial part of AGL's assets or businesses. However, that prohibition was not to prevent AGL from making normal presentations to brokers, portfolio investors and analysts in the ordinary course. Further, the prohibition was not to impose any obligation on AGL to the extent that, in the opinion of the AGL directors, the performance of the obligations would involve a breach of the fiduciary duties of the AGL directors or would be unlawful on any other basis. 60 In clause 30 of the Heads of Agreement, the parties referred expressly to AGL's units in the Trust by providing that their obligations in relation to those units were to be subject to the parties obtaining, if necessary, '[ASIC] relief' within three months. No such relief was obtained. They also agreed that the Heads of Agreement did not confer any control over voting rights attached to AGL's units in the Trust. 61 APL contends that Alinta acquired a relevant interest in AGL's units in the Trust upon entering into the Heads of Agreement because: · Alinta controlled AGL's exercise of AGL's power to dispose of the units by the operation of the provisions summarised above; · the Heads of Agreement gave Alinta an enforceable right in relation to the units by reason of those provisions; and · on performance of the Transaction as contemplated by the Heads of Agreement, Alinta would have a relevant interest in the units. 62 I do not consider that those provisions had the effect that Alinta was in a position to control the exercise of AGL's power to dispose of its units in the Trust. Further, I do not consider that, as a result of the Heads of Agreement, AGL had given to Alinta an enforceable right in relation to AGL's units that would give rise to a relevant interest on the part of AGL if the rights conferred by the Heads of Agreement were enforced.

RELEVANT INTEREST UNDER THE TRANSACTION INSTRUMENTS

The Transaction Instruments 63 It is desirable first to describe the relevant provisions of the Transaction Instruments in more detail.

Implementation Agreement 64 By clause 2 of the Implementation Agreement, AGL agreed to propose the AGL Scheme, Alinta agreed to propose the Alinta Scheme and Merge Co agreed to perform its obligations as contemplated by both schemes. Clause 3 contains conditions precedent for both the AGL Scheme and the Alinta Scheme. Clause 3.1 deals with the AGL Scheme and clause 3.2 deals with the Alinta Scheme. They are complementary and in similar terms. 65 Under clause 3.1(g)(ii), the obligations of AGL and Merge Co were to be subject to the satisfaction of a condition precedent that, during the period from 26 April 2006 to 8 am on the Second Court Date, AGL would not dispose of assets or whose book value is in aggregate greater than $45 million. It is common ground that AGL's units in the Trust had a value in excess of $45 million. 66 Second Court Date was defined as the first day of hearing of an application made to the Court for orders under ss 411(4)(b) and 411(6) of the Corporations Act approving the schemes. The term effective in relation to the schemes was defined as the coming into effect of the order of the Court under ss 411(4)(b) and 411(6). Scheme implementation date meant 10 days after the Scheme Effective Date. Transaction Implementation Date also meant 10 business days after the scheme effective dates, which were to be the same day. 67 A condition precedent imposes no obligation. However, clause 3.9 provided that each of AGL and Alinta agreed to use its best endeavours to procure that each of the conditions precedent in clauses 3.1 and 3.2, as the case may be, would be satisfied as soon as practicable, including, to negotiate in good faith and to use best endeavours to agree the terms of the Relationship Deed, the Regulatory Deed, and the Implementation Deed as soon as practicable. However, clause 3.7(b) provided that Alinta alone had the benefit of the condition precedent in clause 3.1(g) and that any breach or non-fulfilment of such condition could be relied upon only by Alinta, which was entitled in its sole and absolute discretion to waive the breach or non-fulfilment. 68 Under clause 3.17, if a condition precedent contained in clause 3 was not satisfied or waived by the date specified for satisfaction of that condition, or if the Scheme Effective Date had not occurred by 31 December 2006, or such later date as AGL and Alinta might agree, AGL and Alinta were required to consult and to negotiate in good faith, with a view to determining whether the Transaction may proceed by way of alternative means or methods or whether to extend the date for satisfaction of the relevant condition precedent. 69 Clause 17 provided that, during the period from 26 April 2006 to the Transaction Implementation Date, AGL would carry on the AGL Infrastructure Businesses in the ordinary course of business, consistent with the business practices of the AGL Group. AGL Infrastructure Businesses were defined as all businesses and activities undertaken by AGL, other than the AGL Energy Business. 70 Under clause 17(f), AGL promised to maintain the businesses and assets that comprise the AGL Infrastructure Assets. AGL Infrastructure Assets was defined as including AGL's units in the Trust. By clause 17(g), AGL promised to use its reasonable endeavours to ensure that no AGL Infrastructure Material Adverse Change occurred, to the extent that such event or occurrence was within the control of AGL. There would be an AGL Infrastructure Material Adverse Change if there was a diminution of the value of the AGL Infrastructure Businesses of $450 million or more. Further, by clause 17(m), AGL promised to carry on its business consistently with the AGL Asset Management Plans in place on 26 April 2006. There is no direct evidence of the content of any AGL Asset Management Plan, a term defined as meaning AGL's asset management plans and current budgets. Finally, by clause 17(h), AGL promised that it would preserve its relationships with customers, suppliers, licensors, licensees, joint venturers and others with whom it has business dealings. 71 Clause 27(c) of the Implementation Agreement provided that AGL must ensure that it participates in the Trust's dividend reinvestment plan in respect of the distribution for the period to the Transaction Implementation Date, to a sufficient extent so as to maintain its unit holding in the Trust at 30 per cent. 72 Clause 28 of the Implementation Agreement dealt with termination. Relevantly, the Implementation Agreement could be terminated by either AGL or Alinta at any time prior to the commencement of the hearing of the application to the Court to approve the schemes on the Second Court Date, if the Court finally determined to refuse to make any order convening the scheme meetings or any order approving the schemes, or if the AGL shareholders do not approve the AGL Scheme or the Alinta shareholders do not approve the Alinta Scheme. Importantly, the Implementation Agreement was also to terminate automatically if any of the Relationship Deed, the Regulatory Deed or the Implementation Deed was not executed by each of the parties to it by 22 June 2006. That last provision is significant in relation to Alinta's contention that all of the Transaction Instruments must be considered together in order to determine their effect and the effect of the Commission Declaration. 73 Clause 22 of the Implementation Agreement contained a prohibition, for so long as the Implementation Agreement was on foot, against a party doing anything with a view to a transaction that, if completed, would mean that a person other than Alinta would acquire a relevant interest in, or become the holder of more than 5 per cent of AGL shares, or the holder of a substantial part of or a material part of the business, property or assets of AGL or any of its subsidiaries. There was a corresponding prohibition in relation to Alinta. Further, clause 22 also contained a prohibition against entering into, continuing or participating in negotiations or discussions with any person regarding such a transaction. The prohibitions in clause 22 did not apply to the extent that they restricted a party from taking or refusing to take any action with respect to such a transaction, provided that that party's directors determine that failing to respond to the proposed transaction would be likely to constitute a breach of the directors' fiduciary or statutory obligations.

Implementation Deed 74 The parties to the Implementation Deed were AGL, Alinta, Merge Co, AGL Energy and Numar Pty Ltd ('Numar'). Numar is a subsidiary of Merge Co. After reciting various arrangements that had been made between AGL and Alinta, including the reorganisations contemplated by the parties, the Implementation Deed recited that, by entering into it, AGL and Alinta had agreed to procure that all other steps which were required to be implemented in connection with the Alinta Scheme, the AGL Scheme and the Merge Co Buy-Back would be implemented. By clause 2, the parties acknowledged that their objectives into entering into the Implementation Deed were to: · record 'in a fuller and more precise way' the terms and conditions upon which they propose to implement the Transaction; and · procure that all steps required to be implemented in connection with the Transaction would be implemented in accordance with the Timetable. 75 Timetable is defined as meaning the timetable set out in Attachment D to the Implementation Deed. Clause 2.2 provides that, despite anything else in the Implementation Deed or the Implementation Agreement or any of the other Transaction Instruments, the parties must do all things within their respective power or control to ensure that each of the steps in Attachment A takes place in the sequence set out in Attachment A, so as to enable the Timetable to be met. In addition, clauses 3.1 and 4.1 impose obligations on AGL and Alinta to procure that all of the steps set out in Attachments B and C, respectively, take place in the sequence in those attachments, so as to enable the Timetable to be met. Attachment A sets out 34 detailed steps to give effect to the Transaction, Attachment B sets out 20 steps to give effect to the AGL Energy internal restructure and Attachment C sets out 11 steps to give effect to the Alinta internal restructure. 76 Attachment D sets out a timetable, the relevant items in which are as follows: · First Court Hearing - 2 August 2006; · Court Order lodged with Commission - 3 August 2006; · Dispatch of notices of scheme meetings - 14 August 2006; · Scheme meetings - 14 September 2006; · Second Court Hearing - 15 September 2006; · Effective Date of Schemes - 15 September 2006; · Transaction Implementation Date - 2 October 2006. On 18 August 2006, an amending deed was entered into by the parties to the Implementation Deed. By the amending deed, the timetable was amended, relevantly to provide for the following items: · Dispatch of notices of scheme meetings - 1 September 2006; · Scheme meetings - 6 October 2006; · Second Court Hearing - 9 October 2006; · Transaction Implementation Date - 25 October 2006. 77 Clause 10 of the Implementation Deed provided that, if the Implementation Agreement terminated, the Implementation Deed was to terminate automatically. Further, a material breach of the Implementation Deed, taken in the context of the Transaction as a whole, before the Second Court Date, was to be deemed to be a material breach of the Implementation Agreement and the provisions of clause 28 of the Implementation Agreement were to apply accordingly.

Relationship Deed 78 The parties to the Relationship Deed were Merge Co, AGL Energy, AGL and Alinta. The Relationship Deed recited that Merge Co and AGL Energy and other parties had entered into the Implementation Deed, which required the parties to that instrument to take the steps that need to be taken to implement the Transaction. The Relationship Deed also recited that Merge Co and AGL Energy had entered into the Relationship Deed in order to record their agreement with respect to the ongoing relationship between AGL Energy and Merge Co, and their respective subsidiaries, following the implementation of the Transaction. 79 By clause 2, the parties acknowledged that the Implementation Deed set out the steps required to bring about the completion of the Transaction and that their objectives in entering into the Relationship Deed were to set out aspects of the ongoing relationship between the AGL Energy Group and the Merge Co Group following the implementation of the Transaction. The effect of the Transaction was to be that AGL would be a member of the Merge Co Group. 80 By clause 25.9(b), the parties agreed that, where the Relationship Deed obliged or purported to oblige Merge Co, or any of its subsidiaries, to act or to refrain from acting, or otherwise specified or purported to specify the obligations of such companies, Merge Co would procure each member of the Merge Co Group to act or refrain from acting, in accordance with the Relationship Deed and otherwise comply with its obligations under the Relationship Deed. Under clause 25.12(b), each party agreed to do anything the other party reasonably asks to give effect to the intentions of the parties and the objectives of the Relationship Deed and the Transaction, as contemplated by it.

Regulatory Deed 81 The parties to the Regulatory Deed were Merge Co, AGL, Alinta and AGL Energy. The Regulatory Deed recited that the parties had entered into the Implementation Agreement and had entered into the Regulatory Deed to record their agreement as to the consequences on the Transaction, if a Regulatory Trigger occurs. Under clause 2, the Regulatory Triggers are as follows: · If, before the date of the Scheme Meetings, a regulatory authority (as defined) issues a requirement that prohibits Alinta or Merge Co from acquiring ownership of any Alinta Scheme Asset, or which prohibits the AGL Scheme from being implemented if such an asset forms part of the assets owned by AGL at the time of the AGL Scheme is implemented; · If, before the date of the Scheme Meetings, a regulatory authority obtains an injunction preventing the AGL Scheme from being implemented if such an asset forms part of the assets of AGL at the time the AGL Scheme is implemented; · If, before 4 August 2006, the Australian Competition and Consumer Commission has not given informal clearance to allow the AGL Scheme to be implemented on the basis that all of the Alinta Scheme Assets form part of the assets owned by AGL. 82 Clause 3 required Merge Co and Alinta to give written notice to AGL and AGL Energy as soon as possible after becoming aware of the occurrence of a Regulatory Trigger. Under clause 4, if such a notice does not relate to units in the Trust held by AGL, the parties must proceed with the Transaction on the basis that the AGL Infrastructure Assets comprise all of the assets included in the definition of that term in the Implementation Agreement, other than the assets to which the notice relates. That is to say, the parties must proceed with the Transaction on the basis that the term AGL Infrastructure Assets does not include the assets to which the notice relates. 83 However, under clause 5, if such a notice relates to AGL's units in the Trust, then AGL must notify Alinta whether or not it elects to proceed to completion of the Transaction and whether, if it does elect to proceed, completion is to be on the basis that clause 4 applies to AGL's unit in the Trust. That is to say, AGL may elect whether to proceed on the basis that AGL Infrastructure Assets include the AGL's units or excludes the units.

Power to Control Disposition or Enforceable Right 84 APL contends that, by reason of clauses 3.1(g)(ii), 3.9, 17(f), 17(g), 17(h), 17(m), 22 and 27(c) of the Implementation Agreement, Alinta controlled AGL's exercise of AGL's power to dispose of its units in the Trust, within the meaning of s 608(1)(c) of the Corporations Act. APL also contends that, by reason of those provisions, Alinta had an enforceable right within the meaning of s 608(8)(b)(ii) in relation to AGL's units in the Trust and that, on performance of the transactions contemplated by the Implementation Agreement, Alinta and Merge Co would have a relevant interest in AGL's units within the meaning of s 608(8) of the Corporations Act. 85 Clause 17(f) does not specifically require AGL to maintain ownership of its units in the Trust. It would have been a simple matter to impose an express obligation on AGL to retain the assets or maintain an interest in the assets. However, the clause simply requires AGL to maintain the businesses and assets that comprise the AGL Infrastructure Assets. I conclude that the reference is to the maintenance and keeping up of those businesses and assets as infrastructure assets. The context of clause 17(f) within clause 17 tends to support that construction. Thus, clause 17(c) refers to the keeping of authorisations in full force and effect, clause 17(g) prohibits damaging the business, clause 17(h) requires the preservation of relationships and clause 17(i) deals with the application of insurance proceeds. When the parties wished to refer to acquisition or disposal of companies, businesses or assets they used that kind of language, as in clause 3.1(g)(i) and (ii). Clause 3.1(g)(ii) specifically addresses the topic of disposal and clause 17(f) must therefore be addressed to something else. 86 In the Heads of Agreement, the parties acknowledge that AGL's units in the Trust had a value of $363 million. Even if the whole of the parcel were disposed of for no consideration, there would not be an AGL Infrastructure Material Adverse Change within the meaning of clause 17(g). 87 The effect of clause 27(c) is simply to ensure that Alinta will receive the benefit of distributions from the units in the Trust. Any excess in the distributions above the amount specified would be for the benefit of AGL, pursuant to the cash sweep in clause 14B. Under that provision, AGL is entitled to undertake 'a cash sweep of AGL' immediately prior to completion and Alinta is entitled to undertake a cash sweep of the WA retail business immediately prior to completion. 88 I do not consider that the provisions of the Implementation Agreement, upon which APL relies, confer any enforceable rights on Merge Co in relation to units in the Trust. While the effect of clause 27(c) might give Merge Co rights to ensure that it receives part of the value of any distribution from the units in the Trust, it does not follow that that creates an enforceable right in relation to the units themselves. Similar observations apply in relation to the restrictions contained in clause 22 of the Implementation Agreement. 89 APL also contends that Alinta and Merge Co have a relevant interest in AGL's units in the Trust because: · AGL was obliged to act in accordance with the Relationship Deed. · The Relationship Deed implied or confirmed that Alinta and Merge Co have the power to control AGL's exercise of power to dispose of AGL's units in the Trust within the meaning of s 608(2)(b)(ii) because, if AGL did not hold those units at the time of the implementation of the Schemes, AGL would be in breach of the Relationship Deed. · AGL was prohibited from disposing of its units in the Trust, since that would be contrary to the intentions of Alinta and AGL expressed in the Relationship Deed and would not give effect to those intentions. 90 Obligations were expressed in the Relationship Deed by reference to Merge Co Group, which is defined as meaning Merge Co and its subsidiaries immediately following completion. That was to exclude AGL Energy and its subsidiaries, but was to include the companies listed in Schedule 4 and, where the context requires any one of those companies. Schedule 4 refers to APL, described as 50 per cent, and the Trust, described as 30 per cent. Schedule 4 also refers to AGL. 91 APL contends that the Relationship Deed is thus premised upon AGL's 30 per cent holding of units in the Trust being held by AGL at the time of the implementation of the Transaction. It says that, if AGL did not hold 30 per cent of the units in the Trust at the time of the implementation of the Transaction, AGL would be in breach of the Relationship Deed. APL says that Schedule 4 provides expressly that AGL's 30 per cent holding of units in the Trust must form part of Merge Co Group. It says that, although the Merge Co Group definition refers to companies listed in Schedule 4, that is a drafting error, given the reference to the Trust as to 30 per cent. 92 Finally, APL contends that the Regulatory Deed is premised on the basis that Alinta could restrain AGL from disposing of its units in the Trust, otherwise than in accordance with the Regulatory Deed. Thus, if a regulatory authority does not object to the units in the Trust becoming an asset of Merge Co, following the implementation of the Transaction, the parties must proceed with the Transaction on the basis that the AGL Infrastructure Assets must include AGL's units in the Trust. Accordingly, so the argument goes, if AGL were to dispose of any of its units in the Trust prior to implementation of the Transaction, AGL would be in breach of clause 4. APL also contends that clause 5 is premised on the basis that, if AGL elects to proceed to implement the Transaction, it must hold the units in the Trust on implementation of the Transaction. If it were to dispose of any part of the units in the Trust it would be in breach of clause 5. 93 Clause 7 of the Regulatory Deed provides that AGL Energy is to have a right of first refusal to acquire AGL's units in the Trust at any time during the period of 12 months following completion of the Transaction. APL contends that that provision further cements the prohibition on AGL disposing of its units in the Trust without Alinta's approval. APL says that, since AGL is prohibited from disposing of a part or all of its units in the Trust, Alinta and Merge Co have the power to control AGL's ability to dispose of the units and that Alinta and Merge Co therefore have a relevant interest in the units under the Regulatory Deed. 94 However, I consider that the Regulatory Deed does no more than address the effect of a failure to obtain relevant regulatory clearance: its operation is purely mechanical. The requirement that the parties must proceed with the Transaction is to prevent a party relying on non-satisfaction of the conditions precedent set out in clauses 3.1(b) and 3.1(d) of the Implementation Agreement. The Regulatory Deed does not prevent AGL from disposing of units in the Trust. 95 Rather, the regime for disposal of AGL Infrastructure Assets is contained in the Implementation Agreement and requires that the proceeds of any such disposition be retained as part of the AGL Infrastructure Assets, thereby ensuring that the net merger value and share ratios continue to be maintained, notwithstanding disposal of any of the AGL Infrastructure Assets. Under clause 5 of the Regulatory Deed, AGL has a choice whether to activate clause 4 in relation to units in the Trust and but clause 5 says nothing about whether AGL must retain the units. Clause 7 only operates if the units in the Trust do in fact form part of the AGL Infrastructure Assets at completion: clause 5 expressly contemplates that they may not.

AGL as Associate of Alinta 96 APL also contends that, by reason of the Transaction Instruments, AGL, Alinta and Merge Co are associates for the purposes of Chapter 6 of the Corporations Act. APL says that each of the Transaction Instruments is an agreement for the purposes of controlling or influencing the conduct of the affairs of the Trust within the meaning of s 12(2)(b) of the Corporations Act. Further, APL says that, pursuant to the Transaction Instruments, AGL, Alinta and Merge Co are acting, or proposing to act, in concert in relation to the affairs of the Trust within the meaning of s 12(2)(c) of the Corporations Act. Accordingly, APL contends, as a consequence and pursuant to s 610, Alinta and Merge Co have the same voting power in relation to AGL's units in the Trust as AGL had. 97 Under s 610(1) of the Corporations Act, a person's voting power in a designated body is to be determined by dividing the number of votes attached to shares in which the person or any associate of the person has a relevant interest, by the total number of votes attached to all voting shares in the designated body. That fraction is then converted into a percentage. The prohibition in s 606 is against acquiring a relevant interest if, because of a transaction in relation to relevant securities entered into by, or on behalf of that person, that person's, or someone else's, voting power increases from 20 per cent or below to more than 20 per cent, or from a starting point that is above 20 per cent. The effect of s 12(2) in relation to the Trust is that AGL is an associate of Alinta if: · AGL is a person with whom Alinta has, or proposes to enter into, an agreement for the purpose of controlling or influencing the conduct of the affairs of the Trust; or · AGL is a person with whom Alinta is acting, or proposing to act, in concert in relation to the affairs of the Trust. 98 AGL and APL are parties to a Pipeline Development Agreement, which governs the commercial relationship between AGL, as a developer of gas transmission pipelines, and APL, as responsible entity for the Trust, as an investor and acquirer of gas transmission pipelines. The Pipeline Development Agreement sets out the rights and obligations of the parties in respect of the development of gas transmission pipelines and the acquisition of those assets. Under the agreement, AGL must offer to the Trust at least 20 per cent of the aggregate ownership interests in a proposed PNG Australian Pipeline. AGL and APL have also agreed that they will jointly seek out and examine the opportunities to acquire businesses. The Pipeline Development Agreement sets out the nature and manner in which the parties will act jointly. Further, AGL has the first right of refusal to provide pipeline management services to the Trust in respect of any pipeline which the Trust acquires or develops. During the term of the Pipeline Development Agreement, the Trust cannot sell or dispose of any high pressure gas transmission pipelines that it owns in Australia without first offering its interest to AGL. 99 APL says that, by clause 3.1(g)(ii) of the Implementation Agreement, AGL is prevented from disposing of any rights in the proposed PNG Australian Pipeline, notwithstanding that under the Pipeline Development Agreement, AGL must offer at least 20 per cent of the aggregate ownership interests in the proposed PNG Australian Pipeline to the Trust. Further, APL says that clause 3.1(g)(ii) of the Implementation Agreement prevents AGL from disposing of any high pressure gas transmission pipeline, notwithstanding that under the Pipeline Development Agreement AGL must, on or prior to practical completion of such pipeline, offer to sell the interests to the Trust. Finally, APL says that clause 3.1(g)(iv) of the Implementation Agreement prevents AGL from entering into or varying an agreement in relation to the provision of pipeline management services by AGL, notwithstanding that, under the Pipeline Development Agreement, AGL has the first right of refusal to provide pipeline management services to the Trust in respect of any pipeline that the Trust acquires or develops. Clause 3.9 requires AGL to use its best endeavours to comply with those obligations. 100 One of the conditions precedent referred to in clause 3(g)(iv) is that neither AGL or any subsidiary of AGL enters into or varies any agreement or arrangements which are material in the context of the AGL Infrastructure Businesses. 101 APL points to clauses 17(a), 17(f), 17(h) and 17(m) as containing agreements with respect to the affairs of the Trust. APL says that, although there is no specific mention of the Trust in any of those paragraphs, there are in fact arrangements in place between AGL and the Trust which would be covered by those paragraphs of clause 17. APL also points to the provisions of the Relationship Deed and the Regulatory Deed to which reference has been made above. APL says that those provisions constituted agreements for the purpose of controlling or influencing the conduct of the Trust's affairs and acting in concert in relation to those affairs. 102 Clause 2 of the Regulatory Deed refers to the event of a regulatory authority issuing an order or requirement that prohibits Alinta or Merge Co from acquiring ownership of any or part of any Alinta Scheme Asset. That term means the assets, companies and businesses referred to in Part A of Schedule 2, including all assets, right, property and contracts necessary to conduct or operate those assets, companies and businesses. One of the assets referred to in Part A is Agility. That appears to refer to the business of Agility Management Pty Limited, a subsidiary of AGL, which is a party to a pipeline management agreement with APT Pipelines Limited, which is probably a part of the Trust. There appears to be an assumption in APL's reasoning that the assets necessary to conduct the Agility business include AGL's units in the Trust. None of the arrangements, however, are in evidence and it difficult to draw any firm conclusion one way or the other on that question. 103 None of the Transaction Instruments requires Alinta or AGL to cause the Trust or APL to do anything. A fortiori, nothing required Merge Co to do anything. The Regulatory Agreement is essentially a mechanical document, which enables the AGL Infrastructure Assets to be defined, once it is clear whether regulatory approvals will be obtained or not. It cannot and does not confer on Merge Co any greater rights than Merge Co derives under the Implementation Agreement. Merge Co has more substantive rights under the Relationship Deed. However, those rights are all commercial and relate to allocation of liability for ongoing litigation, claims and the like. 104 Similarly, none of the Transaction Instruments involves Alinta and AGL agreeing to cause AGL to do anything in relation to the affairs of the Trust. Further, the interests of AGL and Alinta are opposite. The object of the Transaction Instruments is to achieve the merger and demerger of their respective interests so as to create two new groups out of the two existing groups with a different mix of assets and businesses. It may be that AGL and Alinta are acting in concert with a view to achieving that end. However, they are not acting in concert in relation to the affairs of the Trust. 105 Merge Co is a party to the Transaction Instruments but only as the tool of AGL and Alinta. It is the vehicle whereby the merger and demerger of AGL and Alinta are to take place. Thus, Merge Co will become the holding company and the Schemes involve the shareholders of each of Alinta and AGL transferring their shares to Merge Co, in consideration of the issue of shares in Merge Co. However, as indicated above, certain of those shares will be bought back in consideration of the issue of shares in AGL Energy, thereby creating the two new groups. In that context, Merge Co could not be said to be aligned with, or acting in concert with, either AGL or Alinta. 106 Section 608(8)(b)(ii) has the effect, that if at any time AGL has a relevant interest in units of the Trust, AGL has given Alinta an enforceable right in relation to the units, Alinta would have a relevant interest in the units if that right were enforced, Alinta is taken already to have that relevant interest in the units. However, there is no provision of the Transaction Instruments whereby any enforceable right with respect to units in the Trust is given to Alinta such that, if the right is enforced, Alinta would have an interest in the units of the Trust. Similarly, there is no provision that would give Merge Co such an enforceable right. It cannot be said that the performance of any of the Transaction Instruments would give Merge Co or Alinta a relevant interest in the units of the Trust. Neither Merge Co nor Alinta has an enforceable right to ensure that AGL continues to hold its units in the Trust. 107 More particularly, clauses 3.1 and 17 of the Implementation Agreement do not give Alinta any power to control disposal of units in the Trust. While clause 27(c) gives Merge Co some right, by way of ensuring that Merge Co receives part of the value of any distribution, it does not give rise to an enforceable right in relation to any units in the Trust. Further, that clause relates to securities to be issued, not existing securities. The most that can be put by APL is that there is an underlying assumption in clause 27(c) that AGL will continue to hold 30 per cent of the units in the Trust. 108 Clause 22 of the Implementation Agreement, in substance, prevents the parties soliciting offers concerning a competing transaction, which is defined, in the case of AGL, as a transaction that would have the effect that a person other than Alinta would acquire a relevant interest in more than 5 per cent of AGL's shares or become the holder of a substantial part or a material part of the business, property or assets of AGL or any of its subsidiaries. In the Heads of Agreement, AGL's units in the Trust are valued at $363 million. That asset would not be regarded as a substantial or material part of the business, property or assets of AGL, which is valued at in excess of $9 billion as at 22 June 2006. Further, as indicated above, there is a qualification that the clause would not restrain disposal of any assets of AGL if the directors were under a fiduciary duty to do so.

Conclusion as to the Transaction Instruments 109 It follows, in my opinion, that there was no contravention of s 606 by reason of AGL, Alinta, Merge Co, AGL Energy and Numar entering into the Transaction Instruments, because no relevant interest was acquired because of the Transactions, either by Alinta or by Merge Co.

THE COMMISSION DECLARATION 110 In any event, Alinta answers the assertion that the acquisitions in August contravened s 606 by reliance upon the Commission Declaration. APL contends, on the other hand, that the Commission Declaration did not preclude contravention by Alinta and Merge Co because: · it applies only to Alinta and not to Merge Co, · it applies only to the Implementation Agreement, · it does not operate retrospectively. Therefore, APL contends, the Commission Declaration did not excuse a contravention arising from entering into the Heads of Agreement, the Merger Implementation Agreement of 1 June 2006, the Relationship Deed or the Regulatory Deed. 111 For the reasons indicated above, I do not consider that Merge Co acquired a relevant interest in AGL's units in the Trust by reason of any of the Transaction Instruments. It does not matter, therefore, that the Commission Declaration applies only to Alinta. 112 Further, it is not correct to say that the Commission Declaration applies only to the Implementation Agreement entered into on 22 June 2006. Rather, it applies in respect of an agreement of the kind referred to in Schedule B of the Commission Declaration. Thus, it applies in respect of an agreement of the same kind as the Implementation Agreement dated 22 June 2006. A question arises as to the effect of the further words contained in Schedule B 'that is conditional on a Part 5.1 scheme of agreement between AGL and its members taking effect'. It is not clear whether those words further qualify the kind of agreement, in respect of which the Commission Declaration applies, or whether they are simply descriptive of the Implementation Agreement dated 22 June 2006. It may be significant, although it is difficult to see what significance the fact might have, that the words were added by the Commission to the form of declaration sought on behalf of Alinta. 113 Finally, it is not to the point to say that the Commission Declaration does not operate retrospectively. The contention is that Alinta acquired a relevant interest as from 22 June 2006 and that, when the Commission Declaration came into effect, it already had that interest. However, the effect of the Commission Declaration is that, as from 3 July 2006, Alinta does not have a relevant interest if the prerequisites of the modified s 609(7) are satisfied. If they were, there was no contravention of s 606 by reason of the acquisitions, which occurred in August and September 2006. 114 The Commission Declaration is only effective in excluding Alinta's relevant interest in AGL's units in the Trust if the Implementation Agreement is conditional on a Part 5.1 scheme of arrangement between AGL and its members taking effect. APL contends that none of the provisions that restrict AGL's ability to dispose of its units in the Trust is itself conditional upon the AGL Scheme being approved or taking effect. Further, APL says, if the AGL Scheme was not approved, the Implementation Agreement would continue in operation and the restrictions on AGL's ability to dispose of its units in the Trust would continue with it. 115 In addition, it was a condition of the Commission Declaration that any restriction on the disposal of AGL's units in the Trust be limited to a period of four months. APL contends that the Implementation Agreement restricted the disposal of the Units for more than four months from the date when the Implementation Agreement was entered into. In particular, APL says as follows: · the restrictions on dealings in the units extend to 31 December 2006 or such later date as the parties agree; · the Implementation Agreement has a handwritten endorsement that states that, for the purposes of the Implementation Agreement, the date of the Implementation Agreement is 1 June 2006; · the restriction in clause 3.1(g)(ii) operates for the period from 26 April 2006 until 8 am on the Second Court Date, which could be as late as 31 December 2006, if not later; · by reason of the Heads of Agreement, the Merger Implementation Agreement dated 1 June 2006, and the Implementation Agreement, the restrictions on dealings in units in the Trust commenced on 26 April 2006. 116 I consider that all of the Transaction Instruments must be construed together as giving rise to a single Transaction, albeit one that involves a series of interrelated sub-transactions. Each of the Transaction Instruments cross-refers to the others. In particular, the Implementation Agreement cannot be considered in isolation. It was to terminate automatically if any of the other Transaction Instruments was not executed on the same day. By the operation of clause 28.5, in the event of termination, the Implementation Agreement was to be void and have no effect. 117 It is clear that, once the Transaction Instruments were entered into by all of the parties to them, the Heads of Agreement and the Merger Implementation Agreement of 1 June 2006 were to have no further effect. Under clause 33.10 of the Implementation Agreement, the parties agreed that the Transaction Instruments were to embody the entire understanding of the parties and constitute the entire terms agreed between them and were to supersede any prior agreement between them. Clause 33.10(b) specifically provided that the Implementation Agreement was to prevail to the extent of any inconsistency with the Heads of Agreement. I do not regard that provision as being inconsistent with the notion that, once the Transaction Instruments had been entered into, they embodied the entire understanding of the parties and constituted the entire terms agreed upon between them in relation to the Transaction, as defined, including all of the matters that were the subject of the Transaction Instruments.

Implementation Agreement not Conditional on AGL Scheme 118 The essence of APL's contention is that none of the provisions that are said to restrict AGL's ability to dispose of its units in the Trust are themselves conditional on the AGL Scheme being approved or taking effect. However, that contention ignores the language of the Commission Declaration. The requirement is that a relevant agreement be conditional on a scheme of arrangement. Clause 3.1(a) of the Implementation Agreement states unequivocally that the obligations of AGL and Merge Co to implement the AGL Scheme are subject to the condition precedent that the AGL Scheme and the Alinta Scheme become effective by a specified date. Under clause 3.17, if that condition precedent is not satisfied or waived by the relevant date, AGL and Alinta were to consult and negotiate in good faith with a view to determining whether the transaction may proceed or whether to extend the date. If they are unable to reach agreement, then under clause 3.17(b), either party is entitled to terminate the Implementation Agreement without any liability to the other parties. 119 While the language of clauses 3.1(a) and 3.17 is not precisely in the terms of the Commission Declaration, I consider that a fair reading of those provisions supports the conclusion that the Implementation Agreement, together with the other Transaction Instruments, constituted an arrangement that was conditional upon a scheme of arrangement approved by the Court taking effect. It is clear that an agreement may satisfy that requirement, even though it does not restrict disposal of the relevant securities. Otherwise, the requirement that the agreement must not restrict disposal for more than four months from the date when the agreement is entered into would be otiose. I consider that the requirement of the Commission Declaration for conditionality is satisfied by the Implementation Agreement and the other Transaction Instruments.

Restrictions continued for more than 4 months 120 APL's contention that any restriction contained in the Implementation Agreement extended for four months from the date when it was entered into is based on the provisions of the Implementation Agreement that provide that the conditions had to be satisfied by 31 December 2006. However, that contention ignores the specific and particular provisions of the Implementation Deed, which was a prerequisite for the Implementation Agreement being effective. The endorsement that the date of the Implementation Agreement is, for the purposes of the agreement itself, to be 1 June 2006, is irrelevant. It would be open to the parties to agree, on the day on which they reach agreement, that, for the purposes of their agreement, they are deemed to have agreed at some earlier date. However, the date of the agreement is still the date when it becomes binding. 121 In substance, the Transaction was a single one, binding on the parties, albeit one that required a series of sub-transactions to be completed to give effect to the joint intentions of the parties. All of the Transaction Instruments must be taken into account and read together for the purposes of determining their legal effect. Accordingly, it would be erroneous to ignore the effect of one of those Transaction Instruments, namely the Implementation Deed. When the Transaction Instruments were entered into on 22 June 2006, if there was a restriction on disposal of AGL's units in the Trust, the restriction did not extend beyond the Second Court Date. 122 Originally, the Second Court Date was to be 15 September 2006, which was less than four months from 22 June 2006. The Implementation Deed was subsequently amended by substituting 9 October 2006 as the Second Court Date. Either way, the Acquisitions took place at a time when any such restrictions on disposition arising from the Implementation Agreement, or any of the Transaction Instruments, did not go beyond the period of four months from 22 June 2006. 123 The Commission Declaration applied in respect of an agreement of the kind referred to in Schedule B. It was not limited to the Implementation Agreement dated 22 June 2006. I consider that s 609(7), as modified by the Commission Declaration, was satisfied in relation to any interest in the units in the Trust held by AGL. My conclusion is that, at no time during August 2006, was Alinta or Merge Co to be taken to have a relevant interest in AGL's units in the Trust by reason of any of the Transaction Instruments or by the operation of the Heads of Agreement or the Merger Implementation Agreement dated 1 June 2006. It follows that there was no contravention of s 606 by reason of Alinta acquiring units in the Trust during August 2006.

The Panel Declaration 124 The Panel concluded that the Implementation Agreement restricted disposal by AGL of its units in the Trust and gave Alinta a relevant interest in the units. Further, it held that the Implementation Agreement did not limit the period of restriction to a period of less than four months. Rather, the Panel concluded, AGL was restricted from disposing of its units until 31 December 2006, or such earlier time as the Second Court Date occurred. The Panel found that the Second Court Date was not set and could not be determined from the Implementation Agreement at any time. The Panel concluded, therefore, that the Implementation Agreement did not satisfy the requirements of s 609(7) as modified by the Commission Declaration. Accordingly, the Panel concluded that the Acquisitions constituted a contravention of s 606. For the reasons that I have already stated, I consider that that conclusion was erroneous. 125 However, the Panel also considered the relevant circumstances on the basis that its conclusion concerning the Commission Declaration was erroneous. The Panel considered, quite independently of the application of s 657A(2)(b), the possible application of s 657A(2)(a). Accordingly, the Panel considered whether the acquisitions of 16 to 22 August 2006 ('the Acquisitions'), in the context in which they occurred, constituted unacceptable circumstances within s 657A(2)(a), having regard to their effect on the control, or potential control, of the Trust. 126 The Panel concluded that the Acquisitions, when considered in the context of the units in the Trust already held by AGL, the proposed Schemes and the relevant interest in AGL's units that Alinta would have following implementation of the Schemes, had, or were likely to have: · increased the degree of control Alinta will have over the Trust if the Schemes were approved; · affected the potential control of the Trust; and · further deterred any rival bidders who may have considered bidding for control of the Trust prior to the Schemes. The Tribunal therefore concluded that the Acquisitions were unacceptable, having regard to the effect of the Acquisitions on the control, or potential control, of the Trust. The Panel concluded that the manner in which the Acquisitions occurred was not conducive to an efficient, competitive and informed market for the control of securities of the Trust and that all holders of units in the Trust did not have a reasonable and equal opportunity to share in the benefits that may flow from the Acquisitions.

Interdependence of Panel's Conclusions 127 The first three grounds of review relied on by Alinta are concerned with the Panel's conclusion that the relevant circumstances were unacceptable because they constituted or gave rise to a contravention of the Corporations Act. I have already concluded that the Panel erred in that conclusion. The next four grounds are concerned with the Panel's conclusion that the relevant circumstances were unacceptable, having regard to the effect of the circumstances on the control, or potential control, of the Trust. 128 Alinta also contends that, whether or not the grounds relating to control or potential control are made out, the consequence of concluding that there was an error concerning contravention is fatal to the Panel Declaration. Alinta contends that the Panel Declaration was based on both contravention of the Corporations Act as well as the effect of the relevant circumstances on control or potential control of the Trust. It says that, if either conclusion is flawed, the Panel Declaration should be quashed or set aside. Further, Alinta says, even if the Panel Declaration is to stand, the Panel Orders were based on the Panel Declaration in circumstances where at least one limb of the basis for it has been shown to be flawed. Accordingly, even if the Panel Declaration of unacceptable circumstances is not to be quashed, the Panel Orders should be quashed. 129 I consider that, on a fair reading of the Panel's reasons, the Panel's conclusion that the relevant circumstances were unacceptable, having regard to their effect on control or potential control of the Trust was reached quite independently of the Panel's conclusion that the relevant circumstances were unacceptable because they constituted or gave rise to a contravention. The Tribunal considered both questions separately and reached its conclusion concerning contravention before embarking on a consideration of the effect of the circumstances on control or potential control. 130 Thus, the Panel said expressly that, even if the Commission Declaration was effective to relieve Alinta of the relevant interest it acquired under the Implementation Agreement, and the Acquisitions did not give rise to a contravention of s 606, the only consequence was that s 657A(2)(b) did not apply. The Panel observed that that would not prevent s 657A(2)(a) from applying and, accordingly, the Panel therefore considered whether the Acquisitions, in the context in which they occurred, constituted unacceptable circumstances under s 657A(2)(a). 131 Further, in the Panel Declaration itself, as indicated above, the Panel first found that the Acquisitions constituted a contravention and separately found that the Acquisitions had or were likely to have an effect on control or potential control of the Trust. I do not consider that the error in the Panel's conclusion concerning contravention of s 606 impugns the Panel Declaration in so far as it is based on a conclusion concerning the effect of the relevant circumstances on control or potential control of the Trust. 132 Further, I consider that the reasons of the Panel make clear that the Panel Orders were made because of the Panel's conclusion that it was desirable to protect the rights and interests of holders of units in the Trust, having regard to the effect of the relevant circumstances on control or potential control of the Trust. The Panel's reasoning makes clear that the decision to make the Panel Orders was not founded upon the Panel's conclusion that there had been a contravention of s 606. I do not consider that the Panel's erroneous conclusion concerning contravention affected the reasoning of the Panel in concluding that it was appropriate to make orders to protect the interests and rights of holders of units in the Trust that were affected by the relevant circumstances, being the acquisitions by Trewas during August 2006.

Effect on Control or Potential Control 133 The first ground relied on by Alinta in impugning the Panel's conclusion concerning the effect of the relevant circumstances on control or potential control is that the Panel had regard to an assessment of the likely effect of the relevant circumstances on control or potential control. Alinta draws attention to a number of paragraphs in the Panel's reasons in which reference is made to the likely effect or effects of the Acquisitions rather than the actual effect of the Acquisitions. On this question, the Panel made submissions consistently with the principles in R v Australian Broadcasting Tribunal; Ex Parte Hardiman (1980) 144 CLR 13 at 36. 134 The Panel concluded that the Acquisitions had or were likely to have, certain consequences. The Panel considered that the requirement for it to look at the effects of the Acquisitions on potential control of the Trust required it to look to the future and assess the likely effects of the Acquisitions in the future, namely, their effect on potential control, as well as those effects on control of the Trust that were currently likely to have occurred. 135 Next, the Panel considered that it was required to look at the likely effects of the Acquisitions on decisions of persons who might have sought to acquire control of the Trust. The Panel considered that such persons would look forward and anticipate the likely effects of the Schemes and that, therefore, the Panel must look at the effects, or likely effects, of the Acquisitions on potential rival acquirers, in light of the prospect of the Schemes being approved and implemented. 136 The Panel considered that the Acquisitions had, or would likely have had, an effect on the control or potential control of the Trust. The Panel observed that APL, as the responsible entity of the Trust, could be removed by unit holders having a simple majority. The Panel considered that AGL's units in the Trust were 'closely tied' to Alinta and that, therefore, only 70 per cent was available to a rival acquirer. The Panel considered that, after the Acquisitions, Alinta 'had its foot on' 40 per cent of the Units. Acquiring 50 per cent out of the remaining 60 per cent of the Units would be a considerably harder task than acquiring 50 per cent out of the remaining 70 per cent, as had been the position prior to the First Acquisitions. 137 The Panel considered that the existence of AGL's holding of units may have deterred some potential bidders for the Trust. However, the Panel considered that any such potential bidders would have been further, and materially, deterred from seeking to acquire AGL's units, or to gain control of the Trust, as a consequence of the Acquisitions. The Panel considered, therefore, that the Acquisitions themselves materially reduced the possibility of any other person bidding for, or gaining control of, the Trust. On that basis, the Panel considered that the Acquisitions had, or were likely to have had, a deterrent effect on the prospects of a rival offer for the Trust. 138 Neither Alinta nor AGL made any clear announcement to the market that AGL was essentially free to sell its units to the highest bidder, and both Alinta and AGL were 'conspicuously… silent on that issue'. The Panel considered, therefore, that the market would be left under the impression that Alinta and AGL had agreed that Alinta would acquire AGL's units. The Panel therefore concluded that the Acquisitions 'did have an effect on control of [the Trust]'. 139 The Panel also considered that the management rights in respect of the Trust would be highly desirable to Alinta. The Panel considered that, following the Acquisitions, and assuming the Schemes were implemented, the prospect of Alinta being able to carry the vote in relation to the changing of the manager of the Trust, even in the face of significant unit holder opposition, would be markedly increased. Accordingly, the Panel considered that the Acquisitions, on that basis, would likely have an effect on the control or potential control of the Trust. 140 Subsequently, the Panel concluded that, in the context in which the Acquisitions occurred, they had an effect on the control or potential control of the Trust for the reasons just summarised. It therefore appeared to the Panel that the circumstances of the Acquisitions were unacceptable, having regard to their effect and, having regard to the matters referred to in s 657A(3). 141 Alinta contends that, in the light of those aspects of the Panel's reasoning, the Panel went beyond determining the particular effect of relevant circumstances on control or potential control of the Trust: the Panel had also determined the particular likely effect of some of those circumstances on those matters. Alinta says that the distinction between effect and likely effect is significant and that the Panel's approach involved reading into the provisions of s 657A(2)(a) words that are simply not there. 142 The use by the Panel of phrases such as 'likely to have an effect' and 'likely effects' should not be considered as if those phrases appeared in a statute. Rather, the phrases must be construed in the context of the reasoning of the Panel, in order to determine whether the Panel misdirected itself as to the prerequisites for the making of a declaration of unacceptable circumstances. The phrase 'likely to have the effect' will in some statutory contexts mean something less than more probable than not and will be satisfied by there being a significant finite of probability or a real chance (Australian Gas Light Company v Australian Competition & Consumer Commission 137 FCR 317 at [342] to [343]. However, I do not consider that, on a fair reading of the Panel's reasons, the phrases in question should be construed as meaning simply that there is a real chance or a significant finite probability. 143 The Panel's power to make a declaration of unacceptable circumstances is enlivened if it appears to the Panel that the circumstances are unacceptable, having regard to their effect on control or potential control. That requires a judgment. The Panel must direct its attention to some specific effect of the circumstances on either control or potential control. The Panel has directed its attention to specific effects, as those effects bear on control or potential control of the Trust. I do not consider that the Panel's use of the phrases in question signifies anything more than the degree of certainty with which it appeared to the Panel that the circumstances have the relevant effect. I consider that a fair reading of the reasons is that the Panel was saying no more than that it appears to the Panel to be more likely than not, that the circumstances in question have had the relevant effect on control or potential control. I do not consider that the Panel misdirected itself in the application of s 657A(2)(a) in this regard. 144 Alinta also contends that the Panel erred by having regard to the future effect of the Acquisitions, rather than the present effect of them, on control or potential control of the Trust. I do not consider that that criticism of the Panel's reasoning is made out, which appears to be an alternative way of impugning the reference to likely effect. The Panel's task is to consider the effect of the circumstances on control or potential control. Potential control must signify a degree of futurity. The Panel turned its mind to the effect that the Acquisitions had, or were likely to have had, on control or potential control. 145 Next, Alinta contends that the Panel misconstrued the word 'effect' in s 657A(2)(a) and the term 'potential control' in s 657A(2)(a)(i). Alinta says that the Panel erred by having regard to the effect of the Acquisitions on hypothetical matters. Thus, the Panel made findings to the effect that the Acquisitions deterred any rival or potential bidders who may have considered bidding for control of the Trust or seeking to acquire AGL's units. Alinta complains that the Panel did not identify any probative material upon which it could base such findings as to that effect or as to the existence of any rival or potential bidders or acquirers. 146 Certainly, there must be some probative material before the Panel upon which it can base a conclusion as to a particular effect (Glencore International v Takeovers Panel (2005) 220 ALR 495 at [99]). However, I consider that the Panel satisfactorily identified the circumstances upon which it based its conclusions. As I have said, it referred to the existence of AGL's holding of units in the Trust as a possible deterrence of some potential bidders and that such potential bidders would have been further, and materially, deterred from seeking to acquire AGL's units or to gain control of the Trust, as a consequence of Alinta's acquisitions of units during August. As an expert tribunal, the Panel is entitled to make an evaluation based upon its experience and expertise as to the effect of particular circumstances. It would not be necessary, for example, for the Panel to identify a particular person who might have been a potential bidder. I do not consider that the Panel made any reviewable error concerning the effect of the Acquisitions on control or potential control. 147 Alinta complains that, at the time of the Acquisitions, there was no certainty that: · the Schemes would be implemented; · AGL would still hold its units in the Trust at the time of implementation of the Schemes; · the AGL units in the Trust would still represent the same percentage of units in the Trust at the time of implementation. That is so. However, the Panel quite properly made an assessment of the likelihood of those matters in the future. Thus, it considered, and gave its reasons why it concluded, that it was likely that the Schemes would be implemented. It gave reasons for concluding why it considered that it was likely that AGL would continue to hold its units. I do not consider that the Panel's consideration of the effect of the Acquisitions, on the assumption that the Schemes would be implemented, involved the Panel having regard to matters beyond s 657A(2)(a)(i). 148 Alinta contends further that the Panel erred in assessing potential control by reference to something that might occur in the future and that the Panel is not entitled to consider hypothetical matters. I do not consider that that criticism has substance. The Panel must engage in speculation in so far as it is endeavouring to determine what would have happened if the relevant circumstances did not exist or occur. Having regard to the Panel's expertise, the making of a judgment as to whether potential bidders would be deterred, is not beyond the Panel's function as contemplated by s 657A(2)(a). 149 The Panel made a finding that the market perceived that the AGL units were not available for purchase. Alinta says that there was no basis for the Panel to find that, because Alinta and AGL made no announcement that AGL was free to sell its units, the market would conclude that AGL's ability to dispose of the units was restricted. However, that is a finding that was open to the Panel, based on its expertise and experience as to the way in which the market would perceive the circumstances. 150 Alinta also complains about the Panel's conclusion that, because Alinta is a significant manager of infrastructure assets, the right to be appointed responsible entity of the Trust would be highly desirable to Alinta. Alinta complains that the Panel had no probative evidence for such a conclusion. I consider that the Panel's inference is a conclusion available to it on the material that it had before it. There was no error. 151 Finally, Alinta complains that the Panel failed to take into account several considerations that Alinta asserts that the Panel was obliged to take into account. While the matters referred to may be relevant considerations to which the Panel could have regard, I do not consider that any of the matters is mandatory, such that failure to have regard to it resulted in reviewable error on the part of the Panel. 152 The first matter is that Alinta offered, on 15 September 2006, to execute a deed poll confirming that the Second Court Date was 9 October 2006, thereby confirming that the period for which disposal of AGL's units in the Trust was restricted was limited to a period of less than four months. While such a matter may have been a relevant consideration for the purposes of considering orders under s 657D, it clearly has no bearing on whether the relevant circumstances were unacceptable. 153 Next, Alinta says that the Panel failed to have regard to the fact that the purpose and effect of the Commission Declaration was to remove any basis for suggesting that Alinta had a relevant interest in AGL's units and that the Commission had not revoked or varied the Commission Declaration. While the terms of the Commission Declaration are relevant for the question of whether or not there was a contravention, there is no basis for concluding that its terms or its existence had a bearing on whether the relevant circumstances, consisting of the Acquisitions in the context in which they occurred, were unacceptable. This question is significantly tied up with the issue of whether, once it is accepted that the Panel erred in concluding that there was a contravention, that has a bearing on whether the Panel independently determined that the relevant circumstances were unacceptable having regard to their effect on control or potential control of the Trust. 154 Alinta also complains that the Panel misconstrued or misunderstood the Commission Declaration. Once again, while that may be relevant to the question of contravention of s 606, it has no bearing on the question of whether, assuming no contravention, the circumstances were unacceptable having regard to their effect on control or potential control of the Trust. 155 Finally, Alinta complains that the Panel failed to have regard to s 609(7) and items 11, 14 and 17 of s 611, which are mandatory considerations by reason of s 657A(3)(a)(ii). It is true that by s 657A(3), in exercising its powers under s 657A, the Panel must have regard to the other provisions of Chapter 6. However, the Panel clearly gave consideration to the provisions in question. It considered the terms of s 609(7), as modified by the Commission's Declaration. It also had regard to the effect of item 11 in s 611, whereby acquisitions pursuant to takeover offers are exempted. Alinta made submissions to the Panel that the Acquisitions were in accordance with the policy and intention of the legislature in introducing item 14 of s 611, which, relevantly, exempts from the prohibition in s 606 acquisitions in a company that result from another acquisition of relevant interests in voting shares in a company that is included in the official list of ASX. Item 17 exempts an acquisition that results from a compromise or arrangement approved by the Court under Part 5.1. It is clear that the Panel had regard to those matters and gave detailed reasons for rejecting Alinta's submission based on those provisions. I consider that Alinta's complaints do no more than seek merits review of the Panel's consideration of the matters in question. 156 I do not consider that any of Alinta's complaints concerning the Panel's decision to make a declaration of unacceptable circumstances have been made out. The Panel Declaration should, therefore, stand, notwithstanding the erroneous conclusion reached by the Panel concerning contravention of the Corporations Act by reason of the Acquisitions.

The Panel Orders 157 The Panel considered that it was desirable to make orders under s 657D to protect the holders of units in the Trust whose interests had been affected by the relevant circumstances. The Panel considered that the Acquisitions affected the prospect of any person considering whether to offer to acquire AGL's holding of units or to make a bid for all of the units of the Trust. The Panel considered that the rights and interests of holders of units in the Trust, other than Alinta, were affected by the relevant circumstances, having regard to the effect or likely effect, of those circumstances on control or potential control of the Trust. 158 Section 602 of the Corporations Act provides that one of the purposes of Chapter 6 is to ensure that the acquisition of control over voting interests in a listed managed investment scheme, such as the Trust, takes place in an efficient, competitive and informed market. The Panel observed that the Acquisitions did not occur in circumstances where an offer on equal terms was made to all holders of units in accordance with the Chapter 6 or in compliance of any of the exceptions in s 611. The Panel concluded that, as a result, the Acquisitions did not take place in an efficient, competitive and informed market and that the purposes of s 602 were not upheld. The Panel therefore considered that, subject to balancing the rights and interests of other holders of units in the Trust against any unfair prejudice that might arise for Alinta, orders should be made that would be appropriate to protect the interests of such other holders of units. 159 Alinta contended that it would suffer unfair prejudice since the sale contemplated by the proposed orders would depress the price of units in the Trust and cause loss to Alinta, with the consequence that it would not realise proper value for its units. However, the Panel considered whether any prejudice to Alinta was unfairly prejudicial, having regard to the extent of protection of the rights and interests of other unit holders that would be afforded by the proposed orders. The Panel had regard to the following: · Any depression of the market price of units in the Trust would be likely to be temporary. · Alinta had not provided any evidence to suggest that there was a high likelihood that the Schemes would not be implemented. The Panel considered that the terms of the proposed orders would minimise harm to Alinta by minimising the effect of the sale on the market price of units in the Trust. On the other hand, the Panel considered that divestiture was the appropriate order to remedy, most directly, the effects of the Acquisitions. The Panel concluded, therefore, that it was not satisfied that any prejudice caused to Alinta by the proposed orders would be unfair. Mere prejudice from an order is not sufficient. The Tribunal must be satisfied that the order would unfairly prejudice a person. 160 Alinta impugns the Panel Orders on the ground that the Panel failed to take into account certain considerations that Alinta contends the Panel was obliged to take into account. The considerations contended for by Alinta are as follows: · Alinta offered to execute a deed poll confirming that the Second Court Date was 9 October 2006. · The purpose and effect of the Commission Declaration was to remove any basis for suggesting that Alinta had any relevant interest in AGL's units in the Trust by reason of the Implementation Agreement. · If the Schemes do not proceed, Alinta will cease to hold any such relevant interest in AGL's units in the Trust. · As at 8 am on the Second Court Date, Alinta would cease to hold any interest in AGL's units in the Trust. 161 I do not consider that such considerations were mandatory. In any event, they all turn on the fact that any restraint affecting AGL's units in the Trust would come to an end by 9 October 2006, the Second Court Date. Alinta made submissions to the Panel, to which the Panel referred expressly in its reasons, that there was no basis for orders that would require Alinta to dispose of the units acquired pursuant to the Acquisitions when it was not yet known whether it would acquire an interest in AGL's units under the Schemes. A further submission by Alinta, to which express reference was made in the Panel's reasons, was that there would be a risk that Alinta would be unfairly prejudiced by being forced to sell its units in circumstances where the Schemes were implemented and no aggregation of its interests with the AGL units had occurred. Those submissions turn on the fact that any restraint would come to an end on the Second Court Date, namely 9 October 2006. In those circumstances, I consider that the present contentions of Alinta are tantamount to an invitation to engage in merits review of the decision of the Panel to make orders under s 657D.

CONSTITUTIONAL ISSUES 162 Alinta contends that both the Panel Declaration and the Panel Orders are invalid since each of ss 657A and 657D of the Corporations Act is invalid because it involves the Panel, which is not a court within the meaning of Chapter III of the Constitution, exercising the judicial power of the Commonwealth. 163 I have concluded that there was no contravention of the Corporations Act. I have also concluded that the exercise by the Panel of its powers under ss 657A and 657D was not affected by its erroneous conclusion that there had been a contravention. Accordingly, it is not necessary for me to consider contentions advanced on behalf of Alinta that powers to make a declaration of unacceptable circumstances and consequential orders, based on contravention of the Corporations Act, are invalid as involving the exercise of judicial power of the Commonwealth. However, Alinta also contends that the powers conferred by ss 657A and 657D of the Corporations Act are invalid as involving the exercise of the judicial power of the Commonwealth, even if they are not based on a finding of a contravention of the Corporations Act. 164 I do not consider that the Panel Declaration, made under s 657A, adjudicated a dispute about rights or obligations of the parties that had arisen from the operation of the law on past events or conduct. Rather, the Panel Declaration constituted a basis for determining what rights and obligations should be created in the future. The Panel Orders made under s 657D created rights and obligations that, prior to the making of the Panel Orders, did not exist. I do not consider that those exercises of power involve the judicial power of the Commonwealth. There is no basis, therefore, for concluding that they were not a valid exercise of power conferred on the Panel by the Corporations Act (see Tower Software Engineering Pty Limited; Pendant Software Pty Limited v Harwood [2006] FCA 717 at [36] and [37] and Albarran v Members of the Companies Auditors & Liquidators Disciplinary Board [2006] FCAFC 69 at [45] and [49]).

CONCLUSION 165 It follows that each of the proceedings should be dismissed. I would be disposed to make no orders as to the costs of either proceeding but will hear the parties on the question of costs.

I certify that the preceding one hundred and sixty-five (165) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

NSD1710 OF 2006 Counsel for the Plaintiff: Mr P.M. Wood and Ms K.M. Richardson

Solicitor for the Plaintiff: Chang Pistilli & Simmons

Counsel for the First, Second and Fourth Defendants: Mr A.J. Sullivan QC and Mr J.R.J. Lockhart

Solicitor for the First, Second and Fourth Defendants: Blake Dawson Waldron

Solicitor for the Third Defendant: Australian Securities and Investments Commission

Solicitor for the Fifth Defendants: Gilbert + Tobin

Dates of Hearing: 10, 11 and 12 October 2006

Date of Judgment: 20 October 2006

NSD1855 OF 2006 Counsel for the First and Second Applicants: Dr J.E. Griffiths SC and Mr J.K. Kirk

Solicitors for the First and Second Applicants: Blake Dawson Waldron

Counsel for the First Respondent: Mr B. Katekar

Solicitor for the First Respondent: Baker & MacKenzie

Counsel for the Third Respondent: Mr P.M. Wood and Ms K.M. Richardson

Solicitor for the Third Respondent: Chang Pistilli & Simmons

Dates of Hearing: 10, 11 and 12 October 2006

Date of Judgment: 20 October 2006