Palmer Leisure Coolum Pty Ltd v Takeovers Panel [2016] FCA 1445 | Case summary

GREENWOOD J: 1 These proceedings are concerned with two originating applications. Judgment was given in each of them on 24 December 2015: Palmer Leisure Coolum Pty Ltd v Takeovers Panel [2015] FCA 1498 ("principal judgment"). The remaining question to be addressed in each proceeding is the determination of the costs of each proceeding as between the parties. 2 At [2] to [12] of the principal judgment, I describe the questions in issue in relation to the first proceeding (QUD 1075 of 2015) in these terms: 2 The first (No. 1075 of 2015) is an application by, put simply, interests associated with Mr Clive Palmer. The applicants are Palmer Leisure Coolum Pty Ltd ("PLC"), Coeur De Lion Investments Pty Ltd ("Investments"), Coeur De Lion Holdings Pty Ltd ("Holdings"), Closeridge Pty Ltd ("Closeridge") and Mr Clive Palmer. 3 Those applicants seek an order under the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the "ADJR Act") setting aside a decision of the Takeovers Panel (the "Panel") made on 6 November 2015 under s 657C(3)(b) of the Corporations Act 2001 (Cth) (the "Act") to extend the time within which an entity called "The President's Club Limited" ("TPC" or "the Club entity") may make an application under s 657A of the Act to seek, from the Panel, a declaration that particular circumstances are "unacceptable circumstances" in relation to its affairs. 4 TPC made such an application on 26 June 2012. 5 It did so on the footing that in or around July 2011, PLC then known as Queensland North Australia Pty Ltd ("QNA") acquired a "relevant interest" in 41.4% of the issued shares in TPC by acquiring 98% of the issued shares in Holdings (Closeridge acquiring the remaining 2% of the issued shares in Holdings) which, in turn, owned 100% of the issued shares in Investments which, in turn, owned 41.4% of the issued shares in TPC. The second aspect of the circumstances said by TPC to be the basis of its application to the Panel under s 657A of the Act was a further acquisition in March 2012 by which PLC acquired a further 2.9% of the issued shares in TPC. Both of these acquisitions were said, by TPC, to involve contraventions of s 606 of the Act which has the effect of prohibiting acquisitions of relevant interests in issued voting shares in a company from 20% or below to more than 20% subject to the exceptions contained in s 611 of the Act. 6 Accordingly, TPC contended that the first acquisition of 41.4% of the issued shares in TPC contravened the Act and the second acquisition was also a contravening acquisition. These circumstances were said to be the circumstances upon which the Panel was called upon, under s 657A, to make a declaration of "unacceptable circumstances" having regard to the effect the circumstances "have had, are having, will have or are likely to have" on the control or potential control of TPC: see s 657A(2)(a). 7 Other contentions were also advanced in support of the application made by TPC on 26 June 2012: contended contraventions of s 621(3), s 631(1) and s 636 of the Act. 8 When TPC made its application on 26 June 2012, it did so out of time because s 657C(3)(a) requires such an application to be made within two months "after the circumstances occurred". However, s 657C(3)(b) confers a discretionary power upon the Panel to determine that such an application may be made within a "longer period". 9 On 6 November 2015, the Panel exercised that power and extended the time for the making of the Club entity's application under s 657A to the date upon which it actually made the application, namely, 26 June 2012. 10 Thus, by operation of the exercise of the power and the decision of the Panel, TPC's application, which would otherwise have been out of time, was rendered a legally competent application within s 657C for the purposes of s 657A. 11 The applicants contend that the Panel fell into a series of errors of law in reaching that decision. A number of grounds of error within the meaning of s 5(1) of the ADJR Act are relied upon to make good that contention. Later in these reasons I will set out the various contentions of the applicants in that regard. 12 The second aspect of the first application (that is, No. 1075 of 2015) is that the applicants contend that the Panel fell into error in making, on 17 November 2015, interim orders under s 657E of the Act in terms that PLC, Investments, Holdings and Closeridge and each of their respective associates "must not exercise, or allow the exercise of, voting rights that attach to shares any of them hold in TPC if, in aggregate, the votes would exceed 20% of the total votes that may be cast": Order 1. The Panel made a further order that if, notwithstanding Order 1, any voting rights in respect of the shares specified in Order 1 over 20% are exercised, TPC must disregard those votes in excess of 20%: Order 2. 3 At [17] to [22] of the principal judgment, I describe the questions in issue in relation to the second proceeding (QUD 1077 of 2015) in these terms: 17 The second application (No. 1077 of 2015) is an application by the Panel, as plaintiff (by operation of the Federal Court (Corporations) Rules 2000 under the Corporations Rules), for an order that the time within which the Panel may make a declaration under s 657A of the Act in relation to the affairs of the Club entity be extended pursuant to s 657B of the Act to four weeks from the date of the determination of this application to the Court. 18 Section 657B provides that the Panel can only make a declaration under s 657A within three months after the circumstances (that is, the circumstances which would be the subject of a declaration of "unacceptable circumstances") occur or one month after the application under s 657C for the declaration was made, whichever of those two time periods ends last. 19 Plainly enough, three months after the circumstances relied upon by TPC (assuming a latest date of March 2012) expired in June 2012. A period of one month from 26 June 2012 as the extended date for the application expired on 27 July 2012. Thus, the Panel cannot make a declaration that the relevant circumstances are "unacceptable circumstances" under s 657A unless the last limb of s 657B is successfully invoked. As to that limb of the section, s 657B also provides that the Court may, on application by the Panel, extend the period within which the Panel can make a declaration under s 657A. 20 The defendants to the Panel's application for a Court ordered extension of time are the interests associated with Mr Clive Palmer which are the five applicants in Application No. 1075 of 2015. The Club entity is the sixth defendant to the Panel's application and the Australian Securities and Investments Commission ("ASIC") is the seventh defendant to the Panel's application. 21 The interests associated with Mr Palmer, as defendants to that application, contend for reasons which will be identified later in these reasons, that there is no proper basis upon which an order extending time ought to be made under s 657B. In very large part, they say, putting the essence of the contention in my own terms, that the statutory purpose of the relevant sections which fall within Chapter 6 of the Act is such that there is an obvious statutory immediacy to intervention by the Panel and a similar immediacy is necessarily inherent in a consideration of whether additional time ought to be afforded to the Panel by the Court for making a declaration under s 657A. They say, in effect, that having regard to the very substantial amount of time which has gone by between the date when the relevant circumstances occurred (at the latest March 2012) and the date of the Panel's application filed on 25 November 2015, the statutory purpose sought to be achieved by Chapter 6 of the Act cannot be served by now making an order to extend time for the making of a declaration under s 657A by the Panel. 22 Thus, the order ought not to be made as it cannot serve the statutory purpose. 4 In the result, the challenge by PLC, Investments, Holdings, Closeridge and Mr Clive Palmer (using the abbreviations adopted in the paragraphs quoted above) under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the "ADJR Act") to the decision of the Takeovers Panel to extend time as described in para 3 of the principal judgment quoted in [2] of these reasons was dismissed. The costs were reserved for later determination. In QUD 1077 of 2015, the Court ordered that the time within which the Takeovers Panel may make a declaration under s 657A of the Corporations Act 2001 (Cth) (the "Act") in relation to the affairs of The President's Club Limited (the "Club") be extended pursuant to s 657B of that Act to six weeks from 24 December 2015. The costs were reserved for later determination. 5 On 6 January 2016, directions orders were made for the filing of written submissions by the parties in relation to the disposition of the costs in each proceeding. The parties have filed written submissions in accordance with those directions. The disposition of the costs is to be dealt with on the papers in accordance with the directions. 6 These reasons address orders to be made in disposition of the costs of each proceeding. 7 The Takeovers Panel (the "Panel") and the President of the Panel are the first and third respondents to the proceedings commenced by PLC (and its related entities) and Mr Palmer: QUD 1075 of 2015. The Panel is the plaintiff applicant in the extension of time proceedings: QUD 1077 of 2015. The Panel (including the President) says that as to its engagement as a party in the PLC proceedings, it complied with the principle identified in The Queen v The Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13. In Hardiman, the relevant Tribunal (the Australian Broadcasting Tribunal ("ABT")) took the unusual step of contesting the prosecutors' case for the grant of relief in the form of the constitutional writs (sought against the ABT) by presenting substantive argument on the merits. At pp 35 and 36, the Court (Gibbs, Stephen, Mason, Aickin and Wilson JJ) said this: In cases of this kind the usual course is for a tribunal to submit to such order as the court may make. The course which was adopted by the Tribunal in this Court is not one which we would encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal. 8 The Panel says that consistent with that principle, it was available to assist the Court but did not make substantive submissions or assume the role of a contradictor of PLC's case. 9 The Panel says that the nature of its limited role is not a consideration, in the exercise of the discretion under s 43 of the Federal Court of Australia Act 1976 (Cth), that ought to deprive it of the benefit of an order for the payment of its costs when appearing and properly discharging its role: see Kaycliff Pty Ltd v Australian Building Tribunal (1989) 19 ALD 315 at 316 per Morling J ("Kaycliff"); Cairns Port Authority v Albietz [1995] 2 Qd R 470 at 478 per Thomas J. The Panel says that it has not unnecessarily added to the costs. It says that where, as here, the applicants have been unsuccessful and the Panel has acted within the Hardiman principle, costs should follow the event with the result that the unsuccessful applicants should pay the Panel's costs. 10 The PLC entities and Mr Palmer say that even though they failed to make good their contentions, the Court nevertheless accepted that the reasoning of the Panel reflected a basis for concern on the footing that, for example, the Panel had in one part of its reasons used the phrase "ongoing unacceptable circumstances" (rather than "ongoing effects" of relevant circumstances) suggesting at least, a failure on the Panel's part to appreciate the important distinction drawn by the Full Court in Queensland North Australia Pty Ltd v Takeovers Panel (2015) 230 FCR 150; [2015] FCAFC 68, and on the further footing that the Court found some of the considerations taken into account by the Panel "odd": [149], [153] principal judgment. 11 However, the Court explained, and found, that the reasons of the Panel, read as a whole, recognise that the Panel members properly understood the reasoning of the Full Court and did not fall into error: [150] - [151], principal judgment. Ultimately, the PLC applicants were simply unsuccessful in making good their various contentions. 12 The PLC applicants also contend that the Panel, by its written reply submissions of 18 December 2015 (at [2] to [13]), responded as to the merits of the applicants' case as set out in the applicants' substantive written submissions of 14 December 2015. They say that the Panel's reply submissions did no more than duplicate, in substance, the submissions made by ASIC (as contradictor). They also say that the Panel also sought to make submissions in reply ([14] to [17] of the submissions of 18 December 2015) to submissions put on by the Club notwithstanding that the Club was neither an applicant for relief nor a contradictor. The PLC applicants say that because the Panel elected to go beyond its "proper role" in these two respects and adopted, in part at least, an adversarial role, the Court is entitled to (and should as a matter of discretion under s 43) deny the Panel the benefit of an order for the payment of its costs by the applicants so as to reflect the "undesirability" of the Panel going beyond its proper role and to discourage the Panel from adopting such a course in proceedings where its decisions are challenged. 13 In proceedings QUD 1075 of 2015, the Panel (including the Panel's President) was joined as a party by the PLC applicants. The Panel (and the President) appeared as of right. They are entitled (subject to what follows) to an order for costs because they were brought to Court by the PLC applicants, incurred legal costs in doing so and the applicants failed to make good the grounds of challenge to the legality of the Panel's decision-making. The position might be otherwise, in all the circumstances, where the Panel assumes the role of an adversary or otherwise exceeds its proper role or causes unnecessary costs to be incurred. 14 As to the claims made by the PLC applicants, the Panel (and the President) simply said this: "… the First and Third Respondents appear only for the purpose of submitting to such order as the Court may make. The First and Third Respondents make no submissions on the merits of the matters in dispute. The First and Third Respondents stand available to assist the Court as required". In the Panel's proceeding for an extension of time, the Panel put on reply submissions. It was entitled to do so in its own action without offending the Hardiman principle. By those reply submissions, the Panel sought to correct perceived errors contained in the submissions of the PLC parties as to the position taken by the Panel in its earlier submissions. The Panel's reply submissions also responsively address matters going to the principal relief it sought in its own application. I am satisfied that the Panel should have its costs of and incidental to proceeding QUD 1075 of 2015 as against the PLC applicants. 15 As to QUD 1077 of 2015, the Panel says that although the discretion under s 43(2) is unqualified, it should be exercised according to the principle that, as a successful party, the Panel should have its costs against those who resisted the relief sought in the proceeding: costs should follow the event; Oshlack v Richmond River Council (1998) 193 CLR 72 at [51] ("Oshlack"), McHugh J and at [3] per Brennan CJ; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [25], Gleeson CJ, Gummow, Hayne and Crennan JJ. The Panel says that it was required to be the applicant by s 657B of the Act. The Panel says that it addressed the arguments put against it by the PLC parties. It says that there is no reason to deny it the costs it incurred in bringing a successful application. 16 The PLC parties (defendants in QUD 1077 of 2015) make a number of submissions in answer. 17 First, they say that no order for costs was sought by the Panel either in written or oral submissions during the course of the proceeding, against any of the named defendants. However, since the Panel now seeks an order for costs in response to the directions orders of 6 January 2015, the appropriate order, in the exercise of the discretion, is that the Panel and the defendants should each bear their own costs. 18 Second, the PLC parties say that the Panel's application to the Court was made necessary because s 657B of the Act casts an obligation on the Panel to make a declaration under s 657A (should it be minded to do so) within three months after the circumstances occur or one month after the application under s 657C for the declaration is made (whichever of those two possibilities ends last) although the Court may, under s 657B, "extend the period on application by the Panel". They say that the Panel, in this case, was compelled to make an application to the Court to seek an extension of the period (by operation of the Act) whether or not the application was opposed by the PLC defendants. Thus, they say, the PLC defendants ought not be required to pay the Panel's costs when the Panel had to incur the costs of an application in any event if a declaration was to be made in conformity with s 657B for the purposes of s 657A. 19 Third, the PLC parties say that the Panel's application raised difficult questions of principle because no reported case supported an extension of time having regard to the long delay between the "relevant circumstances" and the application before the Court. Further, the PLC parties say that a large part of the "delay" was attributable to the Panel's conduct in maintaining an earlier decision which was found by the Full Court to be affected by error. The PLC parties say that in these circumstances, they properly raised matters in opposition to leave being granted. They say that their written and oral submissions were of assistance to the Court in ventilating matters to be considered by the Court in determining whether leave ought to be granted to the Panel. 20 Fourth, the PLC parties say that at the time of the application to the Court, the Panel had not determined that a final declaration of unacceptable circumstances ought to be made for the purposes of s 657A of the Act or that orders pursuant to s 657D of the Act should be made. They say that the application was, in effect, interlocutory. They also say that the Court ought not make an order to the effect that the defendants contribute to the costs of the Panel in circumstances where the Panel's investigations were ongoing and, by its application, the Panel sought leave to further consider whether it should make a declaration and orders for the purpose of s 657A and s 657D of the Act. 21 Fifth, the PLC parties say that in none of the earlier reported cases considered by the Court where the Panel has been granted further time for the purposes of s 657D of the Act has an order been made that the Panel be awarded its costs of the application. Notwithstanding that the question of costs ultimately lies within the Court's unfettered discretion (which must, of course, be exercised judicially) and the manner of its exercise depends upon the particular circumstances before the Court, the PLC parties say that no order for costs ought to be made against them. They say that the Panel's application was made necessary simply because the Panel had not made a determination within the time prescribed by s 657B of the Act and, having regard to the operation of the legislation, it was necessary for the Panel to obtain leave. 22 As to these submissions of the PLC parties, it is true that the period between the relevant circumstances and the application before the Court is a substantial period. The explanation for the period of time involved lies in the challenges made before the Court to the earlier decision, the Panel's election to support its reasoning and the successful appeal from the primary judge's decision. Although the period of time involved is explained and understood in those terms, nevertheless the period is a substantial period. It is also true that the decision-making on the part of the Panel miscarried for the reasons identified by the Full Court. The Panel sought to uphold its decision before the primary judge and did so successfully. However, the original decision of the Panel and that of the primary judge was ultimately shown to reflect error. It is also true that having regard to the period of time involved between the relevant circumstances and the Panel's further consideration of the application consequent upon the orders of the Full Court, the PLC parties raised matters properly going to the exercise of the discretion to grant or refuse leave. It is also true, irrespective of any question raised by the PLC parties going to the leave issue, that the Panel found it necessary, and was required, to make an application to the Court for an extension of time, by reason of the statutory mechanism adopted in the Corporations Act. 23 The exercise of the discretion under s 43(2) to make an order for costs in the proceedings commenced by the Panel is not informed simply by the principle that costs should follow the event. In these proceedings, there are other considerations, as already mentioned. Those considerations derive from the nature of the application itself under the statute and the particular circumstances going to the question of whether leave, in all the circumstances, ought to be given. 24 Notwithstanding the considerations identified by the PLC parties, it seems to me relevant to keep in mind that the Panel's engagement in connection with the relevant circumstances and the need to make an application to the Court is ultimately an aspect of the underlying conduct in contravention of the Corporations Act. Had the underlying conduct not involved a contravention of the Corporations Act, the Panel would not have incurred the costs of making an application to the Court in order to address the relevant circumstances within the timeframe contemplated by the legislation. On occasions, it is simply not possible for the Panel to address the questions in issue before it within the two periods of time set out in s 657B of the Act, thus making it necessary for the Panel to make an application to the Court as contemplated by s 657B. I am satisfied that, having regard to all of these considerations, it is appropriate to make an order that the PLC parties pay 50% of the Panel's costs of and incidental to the application. 25 As to the costs incurred by ASIC, ASIC seeks no orders for costs in the proceeding commenced by the Panel. In the proceeding commenced by the PLC applicants, ASIC contends that the Panel acted in conformity with the Hardiman principle with the result that ASIC played a role of assisting the parties and the Court in identifying and considering the issues raised by the application. ASIC also contends that not only were the PLC applicants unsuccessful in their various contentions but that they did not pursue, in either the written or oral submissions, grounds 3, 4, 9, 14 and 15 resulting in ASIC incurring costs in addressing grounds which were ultimately abandoned by those applicants. 26 ASIC ought to have its costs of and incidental to proceeding QUD 1075 of 2015 against the PLC applicants. 27 The President's Club contends that it ought to have the benefit of a costs order against the PLC parties (as defendants) in the proceedings commenced by the Panel (QUD 1077 of 2015). The Club says that the PLC defendants were shown to have engaged in contravening conduct and by reason of that conduct the Panel ultimately found it necessary to bring the Court proceedings and join the Club as a party due to its relevant interest in the conduct (and the consequences of the conduct). It says that but for the contravening conduct, the Club would not have incurred the costs of addressing the proceeding. The PLC defendants say that no order was sought by the Club against the PLC defendants and no order was sought generally as between defendants in the Panel's proceeding. To the extent that orders are now sought against the PLC defendants (under the further directions orders) by the Club, the PLC defendants say that the Club supported the Panel's position (and was not itself a contradictor). They say that it was not necessary for the Club to put on submissions in response to the Panel's submissions. They say that the questions agitated by the Panel ought to have been left to the Panel to prosecute. 28 It seems to me that the questions in issue going to whether the Court ought to grant the Panel an extension of the period under s 657B of the Corporations Act were questions to be addressed and agitated by the Panel. Notwithstanding that the Club wanted to be represented and put on submissions on its own behalf so as to address matters perceived to affect its interests, the costs of doing so ought not be the subject of a costs order against the PLC defendants in that action (that is, QUD 1077 of 2015). 29 As to the costs incurred by the Club in the proceeding commenced by the PLC applicants (QUD 1075 of 2015), the PLC applicants say that the Court should be astute, as a matter of principle in the exercise of the discretion as to costs, to avoid making a costs order that might have the effect of discouraging a person from seeking ADJR Act review of the Panel's decisions "for fear of being ordered to pay the costs of a party other than the maker of the decision he seeks to impugn" (that is, being ordered to pay the costs of multiple parties) even though a party, such as the Club in these proceedings, is joined by the PLC applicants. The PLC applicants say that this statement of principle is to be found in Kaycliff (see [9] of these reasons), per Morling J at 317 and Harrigan v Department of Health (1986) 72 ALR 293 at 296-7 per Fisher and Jackson JJ (Wilcox J agreeing). 30 The PLC applicants also say that in view of the written and oral submissions put on by ASIC, there was no need for the Club to take any active step in the proceeding. The Club simply ought to have elected to abide by the decision of the Court. The PLC applicants say that by its written submissions, the Club sought to propound, in substance, the same contentions advanced by ASIC and at the hearing the Club adopted the oral submissions made by counsel for ASIC. 31 The PLC applicants also say that an order requiring those applicants to pay the Club's costs would also infringe a rule, the PLC applicants describe as the "normal" or "general" rule, that more than one set of respondents' costs are not awarded against an unsuccessful claimant seeking judicial review of a decision of a body such as the Panel: Sorell Council v State of Tasmania (No 2) [2004] TASSC 101 at [12] - [16] per Blow J citing R v Industrial Disputes Tribunal, ex parte American Express Co Inc [1954] 2 All ER 764 per Lord Goddard CJ, Cassels and Slade JJ; R v Racing Gaming and Liquor Commission; ex parte Tangentyere Council Inc (1988) 91 FLR 62 at 65 per Kearney J; Liverpool City Council v Weir (1984) 58 ALJR 213 at 216 per Gibbs CJ, Murphy, Wilson, Deane and Dawson JJ. 32 The Club says that the PLC applicants joined it as a party to the proceedings. It says that those applicants were unsuccessful and that costs should follow the event consistent with the principle identified by McHugh J in Oshlack at [67] (see [15] of these reasons). The Club says that the applicants were, in effect, seeking to take advantage of voting rights attached to shares acquired in contravention of s 606 of the Corporations Act and thus the Club needed to take steps, by way of representation and the making of submissions, to ensure that its rights were properly protected. The Club says that having regard to the consideration that the PLC applicants had engaged in a contravention of the law which ultimately resulted in the Club needing to protect its position, the PLC applicants should jointly and severally pay the Club's costs of and incidental to the proceeding. 33 I am not satisfied that the authorities relied upon by the PLC applicants establish a universal rule in the terms contended for by them. The particular circumstances of the joinder of the relevant parties seeking an order for costs and all of the circumstances material to the costs question determine the manner of exercise of the discretion in the particular case. It seems to me that the correct approach is to recognise that in the case of the Club, it sought to be represented and make submissions so as to protect an interest it perceived to be affected by the questions in issue in the proceeding. However, its election to take that course, in circumstances where a primary contradictor in the form of ASIC was making the case against the claims for relief by the PLC applicants, suggests that an unsuccessful applicant ought not pay the additional costs, of the Club in agitating its own individual submissions. However, the Club was joined in the proceedings by the PLC applicants. It had an in interest to protect and its need to do so arose by reason of contraventions of the law on the part of the PLC applicants. 34 I accept that the unsuccessful PLC applicants ought not to bear the burden of another full set of party and party costs as incurred by the Club. However, the Club is entitled to a measure of restitution in respect of the costs it quite properly incurred in addressing questions affecting its interests by reason of being joined in the proceedings by the PLC applicants. An order will be made that the PLC applicants pay 50% of the costs of the Club of and incidental to the proceeding. 35 Accordingly, orders will be made in accordance with these reasons. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Palmer Leisure Coolum Pty Ltd v Takeovers Panel

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