VISY BOARD PTY LTD v THE HONOURABLE GARETH EVANS THE ATTORNEY

discretion by primary judge not to make the order sought.

Trade Practices Act 1974 ss. 29, 50, 77, 80, and 81

Administrative Decisions (Judicial Review) Act 1977 ss. 5 and

VISY BOARD PTY LTD v THE HONOURABLE GARETH EVANS THE ATTORNEY

GENERAL OF THE COMMONWEALTH "OF AUSTRALIA and ANOR.

Administrative Law - judicial review - appeal from the

dismissal of an application for an order of review of

decision of Trade Practices Commission to discontinue its

proceedings - whether decision amounted to an unlawful fetter or abdication by the Commission of its duty under the Trade

Trade Practices Act 1974 ss. 80 and 81 Administrative Decisions (Judicial Review) Act 1977: ss. 5 and 16

VISY BOARD PTY LTD v TRADE PRACTICES COMMISSION and ORS

Practice and Procedure - whether court as _ presently constituted should hear appeal - whether a fair-minded

observer might entertain a reasonable apprehension of bias by

Practice and Procedure - principles to be taken into account

in an appeal against the exercise of a discretion by primary

Federal Court Rules: Order 22 Rule 2(1){d); Order 35 Rule

A.P.M. INVESTMENTS PTY LTD v TRADE PRACTICES COMMISSION and ors

Practice and Procedure - appeal against refusal of primary judge to release undertakings - third such application for release - whether circumstances had arisen to justify the

fresh exercise of a discretion by the primary judge.

On appeal from a single judge of the Federal Court of

to Ninth Respondents as Trustees for Leigh-Mardon Pty. Ltd.) and Third to Tenth

On appeal from a single judge of the Federal Court of Australia.

On appeal from a single judge of the Federal Court of

) ) VICTORIA DISTRICT REGISTRY ) No. VG 308 of 1983 ) )

On appeal from a single judge of the Federal Court of

Australia. Between: A.P.M. INVESTMENTS PTY. LIMITED Appellant and 5 TRADE PRACTICES COMMISSION First Respondent ° and _

FRANCIS ELFVERSON (Fifth to Eighth Respondents as Trustees for Leigh- Mardon Pty. Ltd.) and ARTHUR KEVIN Second to Ninth

Coram: Sweeney, Lockhart & Sheppard JJ. Place: Melbourne

There are four appeals presently before the Court and it will be helpful to a separate consideration of each of them

to set out the history of the events which have given rise

Fibre Containers Ltd (FCL) is the target company for two competing takeover bids made in May 1983, the first by SCI Packaging Pty Ltd (SCI) and the second by APM Investments Pty. Ltd. (APM). The APM bid gave rise to two applications

to the court pursuant to s. 50 of the Trade Practices Act

1974 (the Act), one of which, application VG84 of 1983 was commenced by the Trade Practices Commission (the TPC) on 20 May 1983, seeking injunctions to prevent the takeover of FCL by APM, alleging that it would represent a breach of s. 50 of

the Act because of the addition it would make to the

substantial power already enjoyed by APM in the relevant markets in which APM, SCI and FCL are alleged to operate. In the second such application (VG82 of 1983) issued on 19 May

1983, SCI sought declarations that the acquisition by APM of

the FCL shares would constitute a contravention of s. 50 and that the pricing policy adopted by APM constitutes a contravention of s. 46 of the Act, and other consequential

Before commencing application VG84 of 1983, the TPC obtained undertakings to it by SCI and from APM to produce

the effect of maintaining the status quo until the matter

In an affidavit sworn on 20 May 1983 Mr Krascum, an officer of the TPC, said that enquiries on behalf of the TPC indicated that FCL was seriously considering each of the proposed offers, so that there was a serious prospect of a take-over of FCL by either SCI or APM. On 17 May 1983 the TPC had decided that APM should be notified that it considered APM's proposed acquisition of FCL would breach s.50 of the Act. There have been fluctuations in the

attitudes of the parties from time. to time but that opinion

When the application came on for directions on 23 May

1983, before Mr Justice Northrop, undertakings were given to

the Court on behalf of APM, SCI, SCI Operations Pty Ltd, and FCL, and also on behalf of: Leigh-Mardon Pty Ltd; Associate Nominees Pty Ltd; Francis James Burke, Peter Becker, and

William Gibson (as trustees for Leigh-Mardon Pty Ltd); and

Arthur Kevin Smith; all of whom are substantial shareholders in FCL and all but the last of whom are closely connected with Amatil Ltd. I will follow the course adopted by Mr Justice Woodward in referring to these substantial

shareholders in FCL, who are closely connected with Amatil

The recital to the corrected order of 23 May 1983 was in

"Upon the following undertakings being given by the First Respondent, S.C.I. Operations Pty. Ltd. and S.C.I. Packaging Pty. Ltd.:-

A.P.M. Investments Pty. Ltd., S.C.I. Operations Pty. Ltd. and S.C.I. Packaging Pty. Ltd. each by their respective Counsel undertake to the Court that they and any related corporations will not, prior to the hearing or determination of Application No. VG84 of 1983 or until further order, acquire or take any further

steps to acquire any shares in the capital of Fibre Containers Ltd.

AND upon the following undertakings being given by the Second to Ninth Respondents:- +

that until the determination of these proceedings or further order -

1. The Third to Ninth Respondents will not sell to or accept any offer from A.P.M. INVESTMENTS PTY. LTD. (A.P.M.) (or any related corporation of A.P.M.) or S.C.I. PACKAGING PTY. LTD. (S.C.I.) or any related corporation of S.C.I.) to purchase any shares held by them or

2. The Second to Ninth Respondents will not aid, abet, counsel or procure A.P.M. (or any related corporation of A.P.M.) or S.C.I. (or any related corporation of S.C.I.) to acquire directly or indirectly any shares in FIBRE CONTAINERS LTD. or in any way be knowingly concerned in or a party to any = such acquisitions.

AND subject to the making of an appropriate Declaration by the National Companies and Securities Commission to enable effect to be given to the undertakings herein pursuant to the Companies (Acquisition of Shares) (New South Wales) Code."

The order then set out the directions which were given.

(The first respondent was APM, the second respondent was FCL, and the third to eighth respondents were Amatil. The

The directions given on 23 May 1983 were designed to enable the trial of the application to commence on 18 July 1983. Various other directions hearings and interlocutory applications took place, and appeals were instituted, with

In its amended statement of claim the TPC gave particulars of the markets which it said were involved and

on en gn en ee a ne re ee cree rn nee ee fe rere ee ee wee oe oe

APM owns 40% of the issued capital of James Hardie Containers Limited, a consumer of approximately 25%

APM owns the whole of the issued capital of Containers Limited, a consumer of approximately 2.2%

APM owns 6 of the 8 mills which produce paperboard in Australia, which 6 mills represent approximately 72% of the paperboard manufacturing capacity in

Detailed particulars of these allegations were set out under the headings, "Distribution", "Pricing Policies" and "Acquisitions". APM is in a position to control or dominate the

APM proposes to acquire all of the issued shares in

That acquisition would, or would be likely to substantially strengthen the power of APM to control or dominate the paperboard market in contravention of s. 50(1)(b) of the Act and/or result in APM being, or being likely to be in a position to control or dominate the paperboard

Further or in the alternative, the acquisition of the FCL shares would result in APM being, or being likely to be in a position to control or dominate

12. Amatil own approximately 71% of the issued capital

otherwise amended, APM admitted that it proposed to make : : offers to the shareholders of FCL to acquire their shares,

and this intention on its part has never wavered. It is

unnecessary for present purposes to give details of its

stated willingness to increase the amount offered for each

In their amended defence dated 29 July 1983, Amatil stated that if and when APM made offers to acquire all of the issued capital of FCL they would consider whether or not they would accept those offers in respect of the shares in FCL which they owned or held, which amounted to 74% of its 1ssued

capital. By leave, given by consent on 31 January 1984,

"The AMATIL Respondents admit that the Firstnamed Respondent... [A.P.M.] . . . has made an offer to purchase all the issued shares in the capital of Fibre Containers, but neither they nor any one of them intend to accept such offer or any other offer by the Firstnamed Respondent to purchase the said shares or by any other means to permit the Firstnamed Respondent to acquire all or any of the said shares held or beneficially owned by any of the AMATIL shareholders."

This amendment reflected the changed attitude of Amatil to the APM offer, of which more anon. The change in turn

led, as we shall see, to the TPC indicating 1ts abandonment ef its allegation that FCL threatened and intended to

recommend to its shareholders that they accept APM's offer.

On 20° July 1983 Woodward J had before him a notice of motion, in VG84 of 1983, by FCL, seeking that it be released from paragraph 2 of the undertaking which it had given to the court on 23 May 1983 insofar as 1t related to SCI, to enable it to "sound SCI out" about the possibility of a revised offer to it by SCI. FCL's application was opposed, for aiffering reasons, by the TPC, APM and SCI, and it was

On 27 and 28 July S.C.I's application for a joint hearing of VG82 of 1983 and VG84 of 1983 was heard by

By further notice of motion dated 11 August, which was heard by Woodward J. on 17 August, FCL and Amatil sought orders that they be released from their undertakings in relation to SCI, and that SCI and its related corporations be released from the undertakings given by them to the court on 23 May 1983. The TPC stated that it did not oppose these releases, provided that FCL and Amatil remained bound by

their undertakings not to negotiate with APM until the TPC's

s. 50 proceedings had been determined. SCI supported the

His Honour published reasons for judgment on the motion on 22 August 1983 but postponed making any orders until 24 August 1983 when he ordered the release of all parties from the undertakings given on 23 May 1983, and accepted a fresh

undertaking from FCL and Amatil not to finalize any proposed

APM appealed against the order made on 24 August 1983, and on 21 September 1983 a Full Court of this court constituted by Smithers, Fitzgerald & Jenkinson JJ allowed

the appeal and set aside the order of 24 August 1983.

On 10 October 1983 APM was given leave to amend its defence filed in VG84 of 1983. The substance of the amendment, as set out in paragraph 17A, was to foreshadow

that, if it were successful in acquiring the shares in FCL,

APM would dispose of about half of FCL's productive capacity.

This idea of splitting FCL was first considered by APM in early September as a course to be pursued 1f the Full Court were to dismiss the appeal against the order of 24 August 1983 and release all undertakings. APM had discussed the proposal with the TPC and had been encouraged by the TPC

reaction, although the TPC had indicated that, before

expressing any approval, it would need to know who was to

APM did not tell FCL, Amatil, or SCI of the splitting proposal and in the event the Full Court allowed the appeal. However APM then decided that it would seek from FCL and Amatil their reaction to its proposal to split the company after acquisition. APM's object was to secure a generally agreed release from all undertakings, and enable a prompt result to be achieved by a free bidding match in the market place, thus avoiding the necessity for further protracted

litigation. The proposal was eventually totally rejected by

Amatil, and APM applied to amend its defence again by

deleting all reference to such a proposal. This amendment

Amatil reacted strongly to the news of APM's plan to split FCL's capacity, if its offer were accepted. In his affidavit of 12 October 1983, Mr Peter Becker, Chairman of Directors of FCL and of Leigh-Mardon Pty Ltd anda director

the First Respondent [APM] including the heading thereto 1s in the following terms:

'INTENTIONS OF INVESTMENTS REGARDING THE BUSINESS OF THE COMPANY

It is the present intention of Investments - (a) to continue the business of the Company in its present basic form;

ree en ren ae ee ge ne ere tee -- - es --- wee ewe eee

(b) not to make any major changes to the business of the Company, including any redeployment of the fixed assets of the Company;

(c) not to close any of the existing operating plants of the Company; and

(dad) to continue the employment of the present employees of the Company.'

9. The intentions of the First Respondent, as expressed in paragraph 17A of its Amended Defence are directly contrary to the intentions of the First Respondent as expressed in sub-paragraphs 16(a) and (b) of the said Part A Statement and represent a significant and fundamental change in the intentions of the First Respondent as

10. In my opinion publication of the intentions of the First Respondent as expressed in its Amended Defence will have an extremely serious adverse effect on the business of the Second Respondent [FCL], upon the morale of its employees and upon the relations of the Second Respondent with its customers and consequently its ability to compete effectively in its market. In this regard I have read the affidavit of George Castan, a Director of S.C.I. Operations Pty. Limited and S.C.1I. Packaging Pty. Limited dated 7th October, 1983 and filed herein and agree with the opinions expressed therein as to the impact which the publication of the intentions of the First Respondent is likely to have on the business of the Second Respondent, the value of that business and upon its employees.

11. In all of the circumstances and having regard to the intentions of the First Respondent as expressed in paragraph 17A of its Amended Defence and to the contents of the affidavit of Stanley David Martin Wallis sworn on 28th September, 1983, the Third to Eighth Respondents have now decided not to sell their shares in the Second Respondent to the First Respondent. That decision has been made with the knowledge of the contents of an affidavit of Stanley David Martin Wallis which I am informed and verily believe the First Respondent intends to file in this Honourable Court tomorrow.

12. I say further that when on 23rd May, 1983, the Second to Ninth Respondents gave to this Honourable Court the undertakings more particularly set out in the Order of the Honourable Mr. Justice Northrop of the same date, they did so having regard, inter alia, to the circumstances then prevailing which circumstances included the intentions of the First

Respondent as expressed in its Part A Statement identified in paragraph 8 of this my Affidavit. The intentions of the First Respondent as now expressed are such that, when added to the circumstances referred to in my affidavit of 1lith August, 1983, filed herein and in the affidavit of Francis James Burke sworn on the same date and filed herein, the overall circumstances have now so changed that had they been known to or reasonably foreseeable by the Second to Ninth Respondents on 23rd May, 1983, which they were not and could not be the said undertakings would not have been

given." Mr Wallis the managing director of APM, in his affidavit

of 28 Septembér 1983, had set out APM's decision to sell

Mr Castan, a director of SCI, in his affidavit of 7

October 1983 referred to a letter dated 28 September from the solicitors for APM to those of FCL advising them of the proposed amendments to APM's defence, setting out the plan to dispose of about haif of FCL's business and continued as

"11. 2.0.2. + « « « The application foreshadowed in that letter was the first time there had been any indication by APM that it proposed that if it acquired the whole of the shares in FCL it would break up or dismember FCL's business.

12. I consider that the implications of the aforesaid statement of intention by APM are enormous. The nature of the cardboard container industry is such that if the proposed amendment, setting out as it does APM's intentions, becomes a matter of public knowledge the business of FCL will suffer immediate and irreparable damage as it would lose customers who would wish to ensure that their contracts for future purchases were made with a company which was going to continue carrying on business in the form Known to and accepted by the customer. In my opinion the ways in which FCL will suffer damage if

this publicity occurs are many and various and I have no doubt that the loss of trade by FCL will be massive and quick. I estimate that within six months the trade of FCL will have been substantially reduced and that this reduction will probably occur progressively over that period. In addition I believe that many employees will seek other employment because of the necessary uncertainty as to the future of the business of FCcL.

When the undertakings were given to the Honourable Mr. Justice Northrop on the 23rd May, 1983, and at the time SCI made uts previous application to be joined as a party in these proceedings the factual basis underlying the proceedings was much different from that which will exist when APM's intentions are made public. At that time SCI and APM were proposing to bid for the whole of the issued capital in FCL on the basis that FCL would continue in the form and carry on 1ts business as it had hitherto. The proposed amendment by APM contemplates a dismembering of FCL which has significance not only in relation to the attractiveness of FCL to a bidder, but also in relation to the effect of section 50 of the Trade Practices Act in such circumstances. Whilst a target company (the business of which will be carried on by the acquirer) will suffer substantial damage "if it so remains a target company for a lengthy period a target company in respect of which a potential acquirer states 1t will be cut in half will suffer a much greater loss of trade very quickly. _ At the time of giving the said undertakings SCI had assumed that if APM acquired the FCL shares it would retain the whole of the business of FCL and I believe that was the assumption of most people in the paperboard industry. Had SCI know at the time at give its undertakings that APM would announce its intentions to break up and dismember FCL's business this would have been a vital factor in SCI's consideration in relation to its offer to acquire shares in FCL and the giving of the undertaking.

In consequence of the amendment I am informed by SCI's legal advisers and do verily believe that the evidence which will need to be called in the application and the issues which will need to be canvassed will be substantially increased as it will be necessary for the matter to proceed on the basis of alternative analyses, namely:

{a) The identification of the market and the position in it if APM acquires the whole of the

issued capital in FCL and maintained its business in its present form.

(ob) The identification of the market and the position in it where 50% of the business of FCL is) in some way dismembered and 'sold' to an as yet indeterminate and unidentified purchaser.

16. As SCI 1s not only the proprietor of a paper mill,

put also. through an interest in Cargo Newpak, a company with an interest in the converting industry

tn which FCL operates, SCI not only has an interest in the issues which arise from the proposed amendment but also may be affected if any decision or determination of the Court is made on the basis of the proposed amendment.

17. Further, having regard to the change in circumstances brought about by the proposed amendment, SCI submits that it 1s appropriate and, indeed necessary, for the parties who gave the undertakings on the 23rd May, 1983, to be released from those undertakings as the factual substratum which brought about those undertakings has now

A third application for release of the undertakings

given to the court on 23 May 1983 was made by SCI by notice of motion dated 7 October 1983. Whereas the TPC had opposed the first application for release, and had not opposed the second application for release so long as FCL and Amatil remained suitably bound by undertakings not to negotiate with or sell to APM, it consented to SCI's application for all undertakings to be lifted. However senior counsel for the TPC stated that if APM were to acquire the FCL shares, the TPC would seek divestiture. Woodward J began hearing the motion on 13 October 1983. The application was supported by

On 17 October 1983, while the third application for release was proceeding before Woodward J, the board of directors of Amatil Limited passed the resolution "that the Company will not sell its shares in Fibre Containers Ltd to APM Investments Pty Ltd or to any of its related corporations

at any time or in any circumstances or for any price."

In the course of the hearing of the third application for release, it was submitted on behalf of SCI and FCL that the TPC should discontinue VG84 of 1983 since Amatil's

decision not to sell its shares to APM had rendered the

application unnecessary and academic. Mr Williamson OC., for

TPC, indicated to his Honour that his client would not take

"The view of the Commission is that the question of futility is something to be- judged by the court. The Commission can have its own views, whatever they may be, but its own views may well be wrong. If there were a decision by this Court arising out of the present application which indicated futility, well that of course is something which the Commission must then respond to. Indeed, if there are any indications by the Court in terrorem one way or the other the Commission would clearly have to give the most' serious consideration to any such indications.

That is not to say that the Commission wishes to avoid making a decision if one is called for but its position is that its overwhelming desire is to do what seems to be fair to ali the interests that are involved. But within the context of the main application, that is certainly if it is taking the initial proceedings and certain things follow from that, and that means inevitably the Commission 1s opposed to APM so long as APM proposes to proceed, but in that context wants to follow such course as is fair to APM, as is fair to

Smorgon, as is fair to FCL, 1t appears that is insoluble to them."

FCL and Amatil indicated a willingness to consent to judgment. for injunctions in the terms sought by the TPC in its application in VG84 of 1983, but the TPC declined to move

Prior to reserving judgment on 19 October 1983 his Honour had said that if, having had a chance to study the material that had been put to the court the TPC wished to

take any different stand from the one it had so far indicated

"and to firm up its position one way or the other", he would

not regard it as discourteous to the court if an indication

of that were given, so that the court could be reconvened.

The TPC re-stated its position in a telex addressed to several parties, including Visy Board Pty Ltd (VB) and dated 27 October 1983, when the hearing of the third application for release had been completed but before his Honour had delivered judgment. The major field of VB's operation was

the conversion of paper board into fibre containers. It stated, inter alia:

"As you are aware, the Commission has not opposed the release of all parties from their undertakings in the proceedings recently before Woodward J. The Commission did however state that if the judge were minded to release the parties 1t would wish to

preserve its option to proceed for divestiture if APM were successful in acquiring FCL. The judge has reserved his decision on the question of the undertakings. You may be aware also that during the course of these recent proceedings the suggestion was made that the Commission should discontinue its proceedings against APM because FCL had resolved not to sell to APM and discontinuance would be followed by immediate sale to SCI. The Commission stated to the court and confirms with you that it is not its intention to discontinue its proceedings against APM and that 1f APM is released from its-undertaking and proceeds to acquire FCL it

will proceed for divestiture pursuant to section 81 6£f the Act. The Commission would not institute

November 1983. In his reasons for judgment his Honour said:

"Although the role of the TPC has now been adverted to in open court, I do not believe that I should say anything to influence it in the performance of its statutory functions, and nothing I have said should be read as having that intention."

VG249 of 1983, the appeal" by SCI from Woodward J's judgment of 15 November 1983, came on for hearing on 13 December 1983. On 12 December 1983 FCL and Amatil filed in VG249 of 1983 a notice of motion returnable before the Full

Court on 13 December 1983. It sought the following orders:

"lL. That pursuant to Order 3 Rule 3 of the Federal Court Rules time for service of this notice of motion be abridged.

. 2. An injunction restraining the fourth to tenth ' respondents -- [Amatil and Arthur Kevin Smith] -- by themselves, their servants or agents or otherwise howsoever from entering into a contract to sell, directly or indirectly any

shares registered in their names ar the names of one or more of them in the capital of Fibre Containers Limited to the second respondent. -- [ie. APM] --.

3. An injunction restraining the third respondent -- [FCL] -~ by itself, its servants or agents or otherwise howsoever from aiding, abetting, counselling or procuring or in any way being directly or indirectly, knowingly concerned in or a party to:-

(a) the acquisition by the second respondent of any shares in its capital or any of its assets;

(b) the sale by the fourth to tenth respondents or any of them of any shares in its capital to the second respondent.

Paragraphs 2 and 3 were in the same terms as the final relief sought by the TPC in VG84 of 1983 against FCL, Amatil

During the course of opening the SCI appeal on 13 Decenber 1983, Mr O'Callaghan Q.C., for SCI, referred to the Amatil resolution of 17 October 1983 and again submitted that if it was firm it had rendered VG84 of 1983 futile and the

After the luncheon adjournment on 13 December 1983 Dr Griffith Q.C. for FCL and Amatil referred to the statements

made before Woodward J that FCL and Amatil would submit to

judgment by way of injunctions in the terms sought by the TPC

"But the difficulty is the commission up until the time we proceeded to court this morning has still not indicated either it was prepared to make terms of settlement with us whereby we bound ourselves -not to sell to APM - and I indicated as a matter of open offer to the commission we are prepared to do

prepared to give an undertaking to the TPC "not to sell to APM ever". Alternatively, they were prepared to give an undertaking that they would not sell to APM without giving to the TPC whatever notice was stipulated. He then referred to the notice of motion filed on 12 December 1983 in which FCL

and Amatil sought to move for judgment against themselves because of the TPC's reluctance to so move. He stated that if the TPC were to move for judgment against his clients, his clients would consent to such a judgment and would pay the TPC's costs, including any costs which the TPC may be ordered

to pay in favour of another party. He desired to "tender a

letter written yesterday by the Crown Solicitor to the Trade Practices Commission which states what is in effect my

Mr Williamson responded by indicating that the TPC desired to move for judgment against FCL and Amatil with the orders for costs proposed by Dr Griffith and for leave to

discontinue against APM. Mr O'Callaghan then applied for an

adjournment of the hearing of the appeal to enable the forshadowed motion by the TPC to be brought before a single

judge. The adjournment was granted over APM's opposition.

On 14 December 1983 the TPC took out two notices of motion in VG84 of 1983 both made returnable on 15 December. In the first notice it sought the relief which Mr Williamson had foreshadowed to the Full Court on 13 December 1983 that he proposed to seek. The second notice of motion sought leave to discontinue against all parties with the same order for costs against FCL and Amatil. On 14 December 1983 when it was realised that s. 80(1) of the Act aid not permit a consent judgment unless the court could be satisfied that the facts justifying it had been established, which was not possible without an extensive hearing, the TPC decided to seek leave to discontinue against all parties as set out in

When the matter came before Woodward J on 15 December 1983 the TPC proceeded only on its second notice of motion. Discontinuance of proceedings is dealt with by Order 22 of the Federal Court Rules, the relevant rules of which provide that, at the stage reached in VG 84 of 1983, after the close of pleadings, a party making a claim for relief may " aiscontinue a proceeding so far as concerns the whole or any

part of any part of any claim for relief made by him at any

On 15 December 1983, before Woodward J, Mr Williamson ' referred to the Amatil resolution of 17 October and to the statements made to the Full Court by Dr Griffiths on 13 . December, and informed the Court that in recognition of what the TPC perceived to be the commercial reality of the " situation, it no longer wished to continue its proceedings to ' restrain APM, which will not, by reason of Amatil's attitude,

APM opposed the application arguing that leave to |- discontinue should not be granted or only granted on the most stringent terms. Mr Shaw Q.C. submitted that if leave were to be granted to the TPC it should be on the condition, inter } alia, that the TPC undertook not to take any fresh action against APM if APM succeeded in acquiring FCL shares.

Counsel for the TPC informed his Honour such a condition

would not be acceptable to the TPC. It was prepared to surrender any right to pursue an injunction to prevent the an acquisition of FCL shares or assets by APM but it was not prepared to give up the right to bring an action for

Woodward J, in his judgment on the application for Leave

"I am satisfied that the application should be granted, on terms that TPC pay APM's taxed costs and undertakes not to institute any further proceedings for injunctions, or otherwise seek, to prevent the purchase of shares in FCL by APM. The words 'or otherwise seek' are within the spirit, though not the words, of the undertaking offered by TPC. I think some such addition is necessary. Such an undertaking would not prevent a later application for divestiture if TPC saw fit to bring it. I shall make the agreed order for costs against the second to eighth respondents.

Because I believe the parties should have an opportunity to consider the precise wording of the undertaking to be given by TPC as a condition of

"leave to discontinue, I shall make no formal order

now. I shall sit again at a time convenient to the parties."

Later on 22 December 1983, after the parties had agreed

upon the precise wording of the undertaking to be given by

"UPON THE TRADE PRACTICES COMMISSION UNDERTAKING to the Court that iat will not, prior to the expiration of twelve (12) months after the date upon which it files a notice of discontinuance herein and thereafter, until further order, institute any further proceedings seeking injunctions restraining the acquisition by A.P.M. Investments Pty. Limited er any company related thereto (hereinafter referred to as ''APM') of shares in Fibre Containers Limited and will not otherwise seek to prevent such an acquisition, save that the Trade Practices Commission does not hereby give any undertaking not to institute proceedings seeking orders in the event that such an acquisition takes place, for the divesture by A.P.M. of any shares acquired by it, direcly or indirectly, in Fibre Containers Limited,

1. The Applicant have leave to file a Notice of Discontinuance of the Application herein.

2. The costs of the firstnamed Respondent of and incidental to the Application herein and

Applications No. VG 150 of 1983 and No. VG 249 of 1983 in this Honourable Court, (including all reserved costs) be taxed and when taxed paid by the Applicant.

3. The costs of the Trade Practices Commission of and incidental to the Application herein and Applications No. VG 150 of 1983 and No. VG 249 of 1983 in this Honourable Court (including all reserved costs) be taxed (if not otherwise agreed) and when taxed (or so agreed) paid by the second, third, fourth, fifth, sixth, seventh and eighth Respondents together with any costs which the Applicant may have to pay to the firstnamed Respondent pursuant to

APM has appealed against this judgment of Woodward J.

and that appeal (VG308 of 1983) as one of the four appeals

with which we have to deal. By order of Woodward J, this

judgment was stayed until the hearing and determination of

In the course of the hearing before Woodward J on 15

December 1983 VB sought leave to intervene, which was

refused. However, his Honour heard VB as amicus curiae.

At the same time VB served and filed an application

(VG281 of 1983) pursuant to s. 5 of the Administrative

Decisions (Judicial Review) Act 1977 ("the ADJR Act") for an order of review in respect of the decision of the TPC to seek leave to discontinue its action against APM in which it

sougnt, inter alia, an order that the decision to do so be

(A NE nN NG A Tt ee A A MI A ee me ge ee ee = - wee

On 20 December 1983 Woodward J heard VG281 of 1983 and reserved judgment, which was delivered on 22 December 1983, dismissing VB's application, with costs. VB has appealed against this judgment, and that appeal (VG303 of 1983) is

In the meantime, on 20 December 1983, Woodward J. had delivered judgment in VG232 of 1983 dismissing an application dated 9 November 1983 in which VB, pursuant to s. 5 of the ADJR Act, had sought an order of review of the decision of the Attorney-General of the Commonwealth of Australia ("the

Attorney General"), not to institute proceedings against SCI

under s. 50 of the Act in respect of its take-over bid for FCL in May 1983. VB has appealed against this judgment and

that appeal (VG302 of 1983) is another of those appeals.

The four appeals (VG249 of 1983, VG302 of 1983, VG303 of 1983 and VG308 of 1983) were listed for hearing on 18 January

The four appeals have been heard separately. This outline of the history of the matters will be helpful in considering each of them separately. I turn first to the appeal VG302 of 1983 'instituted by VB and naming as

On 20 January 1984 the court announced that this appeal was dismissed with the costs of the Honourable The Attorney-General to be paid by the appellant and the costs of

any other party to be reserved and that reasons for judgment would be given in due course. In its application, VB sought a review of the decision

of the Attorney-General not to institute proceedings against

SCI under s. 50 of the Act in respect of SCI's proposed

acquisition of shares in FCL. VB sought an order quashing or setting aside that decision and an order requiring the Attorney-General to make the decision the subject of these

In August 1983 VB had a meeting with the TPC at which 1t unsuccessfully endeavoured to persuade the TPC to institute s. 50 proceedings against SCI. On 19 October 1983 Woodward J reserved his judgment on SCI's application for release of the

undertakings given to the court on 23 May 1983. The TPC had

consented to that application. On 25 October 1983, before the delivery of judgment on SCI's application, VB wrote a letter to the Attorney-General. It also wrote to the TPC in

similar terms. At about the same time VB issued its own

proceedings pursuant to s. 81 of the Act against both SCI and

The letter from VB to the Attorney-General of 25 October

Re: Proposed Acquisition of the Share Capital of Fibre Containers Limited ("FCL") by A.P.M. Investments Pty. Ltd. ("APM") or Smorgon Consolidated Industries ("SCI")

-The conversion of paper board into fibre containers

is the major field of operation of Visy Board Pty. Ltd. ("Visy"). A major competitior in that activity is FCL. Unless relief 1s granted on the basis of a contravention of Section 50 of the Trade Practices Act 1974 ("the Act"}, FCL will be acquired by either APM or SCI. It is the clearly

held view of Visy that a takeover by either company will contravene Section 50 of the Act.

Substantially all paper board used by Visy and other companies engaged in the manufacture of fibre containers in Australia is supplied by APM or SCI. Both APM and SCI are already associated with companies engaged in the conversion of paper board into fibre containers.

The Trade Practices Commission ("the Commission") has recognised the dangers inherent in the proposed acquisition by APM of FCL and has proceeded accordingly under Section 50 of the Act ain the Federal Court to restrain the takeover exercising its power to do so under Section 80 (1A).

Identical proceedings have not been instituted against SCI yet it appears to us that the consequences of a SCI takeover of FCL in both the paper board and fibre container markets will be no different to an APM takeover. The company which acquires FCL will thereby put itself in a position to control or dominate both the supply of paper

of fibre containers made from paper board. The acquirer will be in a position to control or

dominate each market because it will be able to control prices and take its profit from which-ever activity (paper board manufacture or the

a ee renrete terrence emmnneanee oe tne ends - enrhemeraneines

manufacture of fibre containers) it chooses. It will also be able to dictate the prices in each market which will necessarily be followed by competitors. In either case Visy and all other converters which are reliant on SCI and APM for their supply will be at an extraordinary price disadvantage as the acquirer, whether it be APM or SCI, will have the capacity to control and dictate prices for the supply of paper board, and also for containers. That development will stifle real competition, not only to the detriment of competitors in the fibre containers market such as Visy, but also to the detriment of the public. Whether an economist would describe the likely outcome of the proposed FCL acquisition by APM or SCI as a dqduopoly or monopoly does not matter, because the acquisition would give the acquirer control or dominance of the relevant markets to an extent which will contravene Section 50 of the Act.

Put simply, each and every reason that APM's acquisition of FCL would breach Section 50 of the Act applies with equal force to an acquisition of FCL by SCI.

The Commission is a statutory body responsible for the administration and enforcement of the Act. Indeed that is its sole purpose. The Minister had both a supervisory and an independent enforcement function in relation to the administration and enforcement of the Act. Pursuant to Section 80 (1A) only the Minister or the Commission can obtain an injunction against APM and SCI to prevent them proceeding with the proposed acquisition of FCL; and Likewise pursuant to Section 77 only the Minister or the Commission can institute penaity proceedings for a contravention of Section 50. In these circumstances, in each matter involving Section 50, the Commission and the Minister have a duty under the Act to make a decision as to whether Section 50 proceedings should be instituted and if so, against whom. The duties of the Commission and the Minister arise from the conferral of exclusive power upon them in relation to Section 50 proceedings which is to be exercised for the public benefit and for the purposes of enforcement of the Act. The duties must be performed according to law, bearing in mind the purpose for which the power was conferred and the reasons why it was entrusted to the Minister and the Commission and denied to private litigants.

We therefore request and require that the Minister, in exercise of his statutory power, make a decision

(a) institute proceedings against SCI in relation to its proposed contravention of Section 50 of the Act;

(bo) apply under Section 80(1) and (1A) of the Act for an injunction restraining SCI from acquiring, directly or indirectly any shares in the capital, or any assets of FCL.

This matter raises important and fundamental questions relating to the efficacy and enforcement of the Act. The matter is also one of urgency. There is a real risk that a takeover of FCL by SCI may occur if SCI and FCL are released from their respective undertakings which may occur by reason, inter alia, of there being no proceedings against SCI by the Minister or by the Commission. If this occurs, SCI will then be free to proceed to acquire FCL. We therefore request that a response by telex or in writing advising us of the minister's Gecision be given, on or before 5.00 p.m. on Thursday, 27th October, 1983. If no response has

been received by that time, the writer will endeavour to telephone the Secretary to the

Attorney General at 10.00 a.m. on Friday morning, 28th October, 1983 to ascertain the Minister's decision in this matter.

specifically requested and authorised the forwarding of this letter.

We enclose a copy of the letter which we have this day sent to the Commission. We have instructed our Solicitors to forward copies of our letter to you and to the Commission, to the Solicitors' acting for APM and SCI.

On 27 October the Attorney-General replied by telex:-

"Re: Acquisition of the share capital of Fibre Containers Ltd. by APM Investments Pty. Ltd. or

I refer to your letter dated 25 October 1983 requesting me to institute proceedings against Smorgon alleging a contravention of Section 50 of the Trade Practices Act, and applying for and injunction restraining Smorgon from acquiring, directly or indirectly, any shares in the capital, or any assets of Fibre Containers. I note that you have sent a similar letter to the Trade Practices Commission.

Whilst injunction proceedings alleging breaches of Section 50 of the Trade Practices Act can be taken by either the Attorney-General or the Trade Practices Commission, the prime responsibility for

enforcement of the Act lies with the Commission. Although private litigants may not seek injunctions

to restrain acquisitions allegedly in breach of Section 50, divestiture applications pursuant to Section 81 of the Act may be made py any interested party. Accordingly, your company, if it felt it could establish a contravention of Section 50, could indicate to Smorgon that 1£ Smorgon proceeded to acquire Fibre Containers, your company could institute proceedings pursuant to Section 81.

I could not.make any decision whether to institute proceedings against Smorgon as you request without having adequate opportunity to consider the very complex factors relating to such proceedings. It would certainly not be possible for me to reach such a conclusion within the strict time Limits you

carefully considered the position of Smorgon in this matter, and has concluded that the acquisition by Smorgon of Fibre Containers, if it occurred, would not contravene Section 50. I understand the Commission's decision 1s based on advice from senior counsel.

In the absence of compelling reasons to the contrary I would adopt the same view as that taken by the Commission. Accordingly, I do not propose

to institute proceedings against Smorgon in respect of its possible acquisition of Fibre Containers.

Since you have forworded copies of your letter to the solicitors acting for APM and Smorgon I have

After setting out the letter and telex Woodward J began

his consideration of the application before him, as follows:

"The complaint made by the applicant about this ' reply of the Attorney-General is that it represents an abdication of responsibility. It 1s said that the Minister relied entirely upon a decision made i by a subordinate body, the Trade Practices Commission, ('the TPC'), and failed to address his own mind to the problem placed before him. It was readily conceded that the Attorney-General was entitled to give as much weight as he chose to any material or opinions advanced by the TPC or other subordinates, but it was urged that, once the matter was drawn to his attention, he was required by law to direct his mind to 1t and make his own decision upon it.

This result was said to, flow from the combined effects of the TP Act and the ADJUR Act.

(b) give directions to the Commission in connexion with the performance of its functions or the exercise of its powers under this Act .... and the Commission shall comply with any directions so

(2) Any direction given to the Commission under sub-section (1) shall be 1n writing and the Minister shall cause a copy of the direction to be published in the Gazette as soon as practicable after the direction is given.

80. (1) Subject to sub-section (1A), where, on the application of the Minister, the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute

(a) a contravention of a provision of Part IV Or Vi sees

the Court may grant an injunction in such terms as the Court determines to be appropriate.

(1A) A person other then the Minister or the Commission is not entitled to make an application under sub-section (1) for an injunction by reason that a person has contravened or attempted to contravene or is proposing to contravene, or has been or is proposing to be involved ain a

sought to rely on several parts of s. 5, but none of the others added anything to the scope of paragraphs (1)(e) and (2)(a) and (b). These are in

'5. (1) A person who is aggrieved by a decision to which this Act applies .... may apply to the Court for an order of review in respect of the decision

(e) that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it

(2) The reference in paragraph (1)(e) to an improper exercise of a power shall be construed as including a reference to

(a) taking an irrelevant consideration into account in the exercise of a power;

(ob) failing to take a relevant consideration into account in the exercise of a power;

Section 16 of the ADJR Act is also relevant for present purposes. It provides,

'16. (1) On an application for an order of review in respect of a decision, the Court may, in its discretion, make all or any of the following orders;

eR REE ER RRR E Serene Sere rene ema an oo ~_- - =e ee ee ee ee eee Owe

(a) an order quashing or setting aside the decision .....

(b) an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit ....'

Counsel for the applicant argued that the Attorney-General had made a decision not to take action under s. 80(1) of the TP Act without addressing his mind to the matters in issue at all. He had simply adopted tne decision of the TPC without giving it any independent consideration. This, they said, was clearly an abdication of his

exercise of the power conferred on him by s. 80 of that Act in that he had failed to take into account all relevant considerations other than the TPC's decision.

Counsel for the Attorney-General did not argue that the applicant was not an aggrieved person within the meaning of s. 5 of the ADJR Act. Nor did they argue that the Attorney~General's telex of 27 October 1983 did not record a decision within the meaning of that section. What they did contend was that the decision contained in the telex, when properly understood, was a perfectly proper decision. Alternatively, they argued that if the decision was defective in any way, then the Court, in the exercise of its discretion under s. 16 of the ADJR Act, should make no orders."

His Honour then proceeded to a detailed analysis of the

construed as an answer to the letter, and sent, with

great courtesy, within the drastic time limit set out in the

"The Minister is saying in effect - 'You have asked for an urgent decision. I could not make a decision in your favour in the time you have given me and, in any event, the TPC has carefully considered your request and has ruled against you. I can see no reason in the material you have put before me, or in what I otherwise know of the

Et er a Rl ea - _~ sae: oF A ne a nt en Mae et fe a a ee ee ae

matter, to lead me to a different conclusion. I therefore refuse your request'.

I believe that, on a fair reading of the Attorney-General's telex, that is the substance of his decision. I believe it was a proper decision and provided no grounds of review under s. 5 of the ADJR Act.

Even if I am wrong in that conclusion, and the Minister's telex meant just what was contended by the applicant, I would exercise my discretion against making any order in this case. That I have such a discretion to 'refuse relief notwithstanding , that the statutory preconditions to a grant of relief are satisfied', is clear from the decision of a Full Court of this Court in Lamb v Moss and Brown (unreported, 12 October 1983)."

I see no basis on which this appeal should succeed. Indeed, I respectfully agree with his Honour's conclusions that no ground had been established for review under s. 5 of the ADJR Act. If contrary to that finding, any ground had been established, I would see no reason to challenge his Honour's exercise of discretion to make no order, bearing in mind the tests appropriate to a_review of the exercise of

judicial discretion. (see House v The King (1936) 55 CLR

499; Adam P. Brown Male Fashions Pty Ltd v Philip Morris

Incorporated and Philip Morris Ltd (1981) 55 ALJR 548 and

To hold otherwise, in the circumstances of this case,

would be to put a premium on audacity and add an unwarranted

The Court will hear counsel at a time to be arranged on

en ee ere res wwe en eee ee ee ee - - eae se wet ee en ee en ne ee e ba ° v

the question of the costs of any party other than the

This is an appeal by VB from the judgment of Woodward J delivered on 22 December 1983, dismissing an application by VB for an order of review, in respect of a decision of the TPC, pursuant to s. 5 of the ADJR Act. Although the application filed by VB on 15 December 1983 described the decision differently, and no formal leave to amend was sought or obtained, it was common ground between the parties to the appeal that the matter had proceeded before Woodward J on the basis that the decision in respect of which an order of

discontinue its proceedings ... Lie. VG84 of 1983] -e. against all parties on terms, inter alia,

(a) the second to eighth respondents [FCL and Amatil] pay the costs of the TPC and indemnify it against any costs it is ordered to pay ~- as they had offered to do during the Full Court hearing ---[in VG249 of 1983, on 13 December 1983, before the Court as presently constituted];

(b) the TPC would not issue injunction proceedings that had the effect of restraining APM from acquiring shares in FCL ---."

Before the learned trial judge VB sought, by way of

the TPC and an order "restraining the TPC from further acting

upon or doing any further act or thing to give effect to the

commencement of this Act may apply to the Court for an order of review in respect of the decision on any one or more of the

(e) that the making of the decision was an improper exercise of the power conferred by

(£) that the decision involved an error of law, whether or not the error appears on the record of the decision;

(j} that the decision was otherwise contrary to law.

The reference in paragraph (1)(e) to an improper exercise of a power shall be construed as including a reference to -

(a) taking an irrelevant consideration into account in the exercise of a power;

respect of a decision, the Court may, in its discretion, make all or any of the following orders:

(a) an order quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or from such earlier or later date as the Court specifies;

(a) an order directing any of the parties to

• do, or to refrain from doing, any act or thing the doing, or the refraining from the

doing, of which the Court considers necessary to do justice between the parties."

The hearing proceeded on the concessions that VB was a person aggrieved by the decision and that the decision was of

an administrative character made under an enactment.

Counsel for VB attacked the validity of the decision the

1. In making the decision the TPC had improperly relied upon or taken into account the offer made by FCL and Amatil

to pay its costs and to indemnify it against costs which it

2. The decision to give the undertaking in relation to the seeking of an injunction against APM to restrain it from acquiring FCL shares amounted to an unlawful fetter by the

TPC of its statutory powers, functions and duties under the

Te ern nn ener ne ao s- - o- ---- a mw ee == - - -

3. The decision in the circumstances of the present case amounted to an abdication by the TPC of its statutory

duty under the Act to prevent APM's proposed acquisition of ' shares in FCL.

Part *of the relief which VB sought before the learned trial judge was an order "restraining the TPC from further acting upon or doing any further act or thing to give effect to the said decision." S.16(1)(d) of the ADJR Act was relied upon as the source of the court's power to make such an order. The effect of such an order would be, inter alia, to restrain the TPC from filing a notice of discontinuance, so that if the appeal VG 308 of 1983 failed and the order of Woodward J of 22 December 1983 remained, the TPC would have leave to discontinue, but would be restrained from giving

effect to such leave by filing a notice of discontinuance in

Counsel for VB in the present appeal did not place any reliance upon the precise wording of the undertaking given by the TPC on 22 December 1983, nor did he attack the decision of the TPC made on that day to give the undertaking in that particular form. What he did rely upon was the decision made on 14 December 1983, that as a necessary step to discontinue

its proceedings, the TPC would undertake in general terms not

ee ee ee ee - -.-. -~ - a te ee a a ee ee ee Se ee

to issue further injunction proceedings that may have the

effect of restraining APM from acquiring FCL shares in the

In his reasons for judgment, the learned trial judge

° : "Having carefully considered all the evidence, and the inferences IL am asked to draw from that

evidence, I find that I am left quite uncertain as to whether the offer to pay costs played any part

in the decision of the commission. However I am inclined to the view that it did not.

Certainly the offer was made at a critical time in the course of the Full Court hearing, when the Court, having indicated some reactions to the facts put before it, adjourned at lunch-time in the understanding that the parties would be considering their positions. I have little doubt that the

offer was made in the hope that it would impress the Commission (and perhaps the Court) with the strength of feeling of FCL and Amatil about the matter, and also with the thought that it might just sway the balance of the TPC's judgment on the matter. I am not, however, satisfied that it was

If, for any reason, one were not to adopt the view of the facts to which his Honour was inclined but were to conclude that the costs element in the global offer had some effect on the TPC's decision, I do not think that it was either critical to that decision or that it was an improper

His Honour dealt with VB's second point as follows:

"This second point can be disposed of quickly. in my view it has no substance because under ss. 80 and 81 of the TP Act the TPC has a clear choice whether to proceed by way of application for an injunction to prevent a threatened takeover or to wait and see what happens in the market place and

then move to secure appropriate divestiture. There is no reason in principle why it should not begin the former action, change its mind and discontinue, relying upon its right to sue for divestiture Later if necessary. It would be a normal incident of leave to discontinue in such a case that a Court

would impose the condition that the applicant would not recommence the same action for an injunction. To offer such an undertaking does not represent a

fettering of discretion when the matter is looked ~at within the overall scheme of the TP Act, and I believe that is the proper way to approach the issue."

The third submission to this Court was that the TPC had abdicated its statutory duty under the Act to prevent APM's proposed acquisition of shares in FCL. In my opinion the TPC

was entitled to make the choice to which his Honour referred.

The TPC began its proceedings in VG 84 of 1983 because it then considered, amongst other things, that it was likely that the holders of the shares in FCL would accept APM's

In the fullness of time, on 15 December 1983, the TPC informed the learned trial judge that, in recognition of what it perceived to be the commercial reality of the situation, it no longer wished to continue its proceedings to restrain

APM, which would not, by reason of Amatil's refusal to sell

to it be in a position where it could infringe the Act. In

doing so it was not, in my opinion, abdicating any "statutory duty", but was making a decision which was entirely open to

I respectfully agree with his Honour's conclusions that

no ground had been established for review under s. 5 of the ADJR Act. I would dismiss the appeal, and order that VB pay

The Court will hear counsel at a time to be arranged on

the question of the costs of any party other than the TPC.

When the court sat on 20 January 1984 to begin the hearing of this appeal Mr Shaw Q.C., senior counsel for AFM, submitted that the court, as presently constituted, should not hear it. He foreshadowed an identical submission in

relation to SCI's part heard appeal. (VG249 of 1983).

It was submitted that the court had acted on 13 December in such a way that "a fair-minded person could apprehend that the court had predetermined the outcome of the appeal and

Those matters were said to be whether or not the TPC's

The Queen v Watson (1976) 136 CLR 248; In the matter of an application for prohibition against Justice Margaret Lusink (1981) 55 A.L.J.R. 12, Livesey v The New South Wales Bar Association (1983) 57 A.L.J.R. 420. He submitted that the appropriate test to be adopted was to be found in the judgment of the court in Livesey's case at p.424, in these

words, whether "a fair-minded observer might entertain a

reasonable apprehension of bias by reason of pre-judgment if a judge sits to hear a case at first instance after he has in a previous case, expressed clear views either about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness

whose evidence is of significance on such a question of

Mr Shaw took the court through the transcript of the

hearing in VG249 of .1983 before the court as presently

of, and made comments to Mr O'Callaghan Q.C. in the course of

his opening of the appeal VG249 of 1983 on behalf of SCI. Some of those questions and comments indicated wonder as to why it was that the TPC was seeking to proceed with its application in VG84 of 1983 for an injunction, in view of the attitude of the holders (Amatil) of 74% of the shares in the

Amati] had resolved that they would not sell their shares in FCL to APM or to any of its related corporations at any time or in any circumstances or for any price. With FCL they had taken out a motion seeking judgment against themselves to preclude them from selling to APM. MThey had, on 24 August 1983, given an undertaking to the court that, until the determination of proceedings in VG84 of 1983 or further order, they would not sell their shares to APM. The order made on the basis of this undertaking was set aside in the Full Court, as stated in the earlier history of this case

prepared to accept a final order of the court binding them never to sell to APM, which he said would accord with the commercial reality that the possibility of buying FCL (which the TPC was seeking to prevent by VG84 of 1983) is foreclosed to APM. If the TPC wished, the shareholders were prepared to

give an undertaking to it that they "will not sell to APM

rn mer nt, Penne en te tt ee ee ee ee - mane f ee eee HH eee ne - -

er eR OR ee A ee eel ee eR een een SY RET EA MEE date we

In support of his application that the court should disqualify itself, Mr Shaw submitted that a fair-minded observer could apprehend that the court had prejudged the question whether the TPC's application was futile. He submitted that the application to Woodward J on 15 December was made on the court's suggestion, and "a fair-minded person

would reasonably say it could only have been made on the *

court's suggestion if the court had formed the conclusion

that the application ought not only be made but ought to

One may contrast with these submissions Mr Shaw's own

words, on the afternoon of 13 December, that he took it that the reason for the proposed application by the TPC was "the indication which the members of the court have given in the course of the morning's proceedings that it may be that the

proceedings are futile or academic" (underlining supplied).

The court on 13 December was hearing the beginning of Mr O'Callaghan's opening of a case with a long and detailed history. When the possibility was mentioned of the TPC seeking leave to discontinue its application for an injunction against APM, the presiding judge pointed out that "if a course of this general character were adopted the loser in commercial terms would be APM and it should be perhaps

made clear that if there were any question of the court

me A a a i a ee tee ee ee re ttt ee ee es ee er ete

adopting any attitude in relation to the matter, whether by the grant of leave or not we should only consider that after

giving Mr Shaw all due apportunity to be heard in relation to

Shortly afterwards, just before the luncheon adjournment the presiding judge said to Mr Shaw:

"I was merely wanting to say that before any question of leave was discussed that you should have the fullest opportunity and whether you wanted it to begin now or deal with it later it should be preserved for you."

"I am indebted to your Honour for that indication. It was quite unnecessary for your Honour to say so,

It was after the luncheon adjournment that Dr Griffith made his announcement of the attitude of his clients and Mr Williamson stated that the TPC in the light of what Dr Griffith had said would seek leave to discontinue its proceedings against APM generally, once the judgment to which

FCL and Amatil were prepared to consent was in place.

Mr Shaw was then heard in opposition to the application that the appeal should be adjourned to permit the TPC to

issue a notice of motion returnable before a single judge and

eh entt ina adie oer dimen dete nenen ainda aemaeine tamieainententenetemnetenel metnamteltenteietenetentaetehend wen taediiaiialemtatntatahetemmneemnematendiiatendions war)

for a hearing of that motion to take place. In the course of his submissions, the transcript records the following

"Mr Shaw: So the first thing we would say is that it is wrong in our submission, at this stage at any rate, without looking at what the learned judge found and why he found it on the evidence he had available to him, to proceed on the

e basis that: indeed, this is a resolution of the board of Amatil which ought to be treated simply at its face value.

Sweeney J: But this court is not proceeding on the basis of any such finding. The most this court has been asked to do at this moment 1s to adjourn the hearing of the appeal as to the merits of which it has

Sweeney J: It would be wrong, if I may say so without unkindness, to impute to this

court some interim findings because none have been made.

Mr Shaw: I was not - suggesting that. It was merely that the matter has been put to the court on-a particular basis - - -

Sweeney J: And we do not adopt any of what 1s put . to us. We are simply asked to adjourn the hearing of the appeal. If we do so and if you are able to persuade a single judge that the motion should be denied when it is eventually produced, the appeal will come back to us.

Mr Shaw: As I understood it, the reason that the adjournment was being sought was, and Dr Griffith said so innumerable times,

(a) that the resolution was irrevocable and (bj), that there is now this

Sweeney J: If it is of any assistance to you, as at present advised I do not for a

ee en Cet ee Ne I at ene amet ee Aa RN tS a ee ree Fea H

moment subscribe to the view that the offer was irrevccable. I simply have no view, I make no finding of any kind

The proposed adjournment is based, as I apprehend it, on the indication to the court arising out of what Dr Griffith and then Mr Williamson have said to the court; namely, that Mr Williamson proposes to move a notice of motion. If that notice of motion is successful then the further hearing of the appeal will be - - -

I share one thing with you and I appreciate your problem in relation to it, I do not know myself yet what the notice of motion contains, nor do I know what the order of the single judge in point will be yet. But look at the alternatives. If we continue with this hearing you will have possibly all the other parties shut out from the chance of approaching a single judge with a view to getting judgment by consent and leave to discontinue. If we adjourn

the single judge all you lose is time. If it were appropriate an order for costs would be considered.

I am very happy to hear anything you want to put; but it seems a very strong submission to make that we should deny the other parties the opportunity to submit that motion to the court."

When granting the adjournment, the court said that the

views as to the issues raised in the appeal; indeed, we have

In my opinion it cannot be concluded that a fair minded

observer might entertain a reasonable apprehension that "the

court had predetermined the outcome of the appeal and also

After the conclusion of Mr Shaw's submission on 24 January 1984, and very brief replies by other counsel the court announced, after a short retirement, that it did not propose to accede to Mr Shaw's application that it should not hear this appeal (VG308 of 1983) and that it would publish its reasons in due course. Questions of costs were reserved.

In my opinion, the appropriate order is that APM should

pay the costs of the TPC, FCL, Amatil and SCI of and

incidental to this application by APM. Those parties opposed

the application. The application did not effect any saving in time in the hearing of the appeal, a consideration which might have been appropriate to found a limitation on the

Counsel for VB moved that his client be made a party to the appeal, or be granted leave to intervéne or that it be heard as amicus curiae. The court announced that it would hear his submissions on the merits of the appeal, without at that stage deciding the capacity in which he should be heard. In my opnion it is more apropriate to make an order granting leave to be heard as amicus curiae, rather than to grant leave to add VB as a party or give it leave to intervene.

A ae St A te em PR en ee Le en ee me Nae ee nee a oe Mel eth ll Anat a I RARE Pate tat

eee A A AN te ey ee Ne - - - - - ~~ a en tee pt me ek ne Re ee a - ~~ ~= - ~ ed

Woodward J of 22 December 1983 granting leave to the TPC to file a notice of discontinuance in VG84 of 1983, upon the undertaking by the TPC and with the orders in relation to costs which have been set out in full in the history of these cases. As there recounted, a stay of operation of that order was granted by Woodward J until the determination of this

In the judgment under appeal, Woodward J was dealing only with the TPC's motion seeking leave to discontinue VG84

of 1983 pursuant to Order 22 Rule 2({1)(d) of the Federal

His Honour observed that the whole purpose of the TPC's application had been to prevent a sale of shares in FCL to APM and as the TPC had reached a clear view that Amatil would not sell its shares in FCL to APM, it no longer saw the need

to pursue its application, which would be long and costly.

In these circumstances, where the hearing had not yet commenced, and the merits of the application had yet to be determined and APM's costs would clearly have to be paid as a

condition of discontinuance, the TPC's motion would seem, his

motion should not be granted, or only granted on the most

• ~ + we --- - _ te te ee ne oe 8 ee ee ee ee ee ee

have the fruits of its application without having to

discontinue unless it undertook to the court not to bring any

fresh application under the Act, including a claim for

divestiture, if APM succeeded in acquiring FCL shares, and

unless the court ordered that it should pay APM's costs on a

Mr Shaw for APM, had relied upon the passage from the

judgment of Graham J in Covell-Mathews v French Wools Ltd

"The principles to be culled from these cases are, in my judgment, that the court will, normally, at any rate, allow a plaintiff to discontinue if he wants to, provided no injustice will be caused to the defendant. It is not desirable that a plaintiff should be compelled to litigate against his will. The court should therefore grant leave, if it can, without injustice to the defendant, but in doing so should be careful to see that the defendant is not deprived of some advantage which he has already gained in the litigation and should be ready to grant him adequate protection to ensure that any advantage he has gained is preserved."

"I would respectfully adopt Graham J's formulation of principles so far as 1t goes, but it leaves open the question as to what should be done in a case where leave cannot be granted without some injustice to the respondent, or in which it may not be possible or appropriate to ensure that every

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advantage which the respondent may have gained in in the course of litigation is preserved.

exercise of the Court's discretion in each case, 7 even if the interests of the respondent cannot be fully protected. I do not believe that Graham J. was suggesting that, unless the respondent's rights can be completely protected, an application for discontinuance must be refused. If he was implying that, then I must respectfully decline to follow his Honour to that extent."

In my opinion, his Honour made no error in dealing with the question of the principles relating to the exercise of his discretion in the present case. The observations of Graham J are not to be treated as fettering that discretion,

His Honour then set out the considerations which be took

into account in favour of the applicant as follows:

"(a) it should not Be compelled to litigate, against its will, at great length, and with considerable expenditure of public monies, an action which 1t believes, on reasonable grounds, to be pointless;

(ob) the circumstances which have arisen, and which appear to make further Litigation by it ; unnecessary, were not designed by it; nor could they readily have been foreseen when the Litigation was instituted; -

(c) the merits of the action have not been entered into; there is nothing to suggest that the applicant's case is lacking in good faith or in merit;

i right to pursue the remedy which it 1s presently seeking, namely an injunction to prevent the acquisition of certain shares or assets; (however

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it reserves the right, if it ever becomes appropriate, to bring an action which would probably be based on substantially the same material, seeking a divestiture of shares or assets so acquired); and

(e) the applicant is prepared to submit to an order

for those costs which it would be obliged to pay 1£ its action were being dismissed on its merits at

All of these considerations seem to_me to have been open *

to his Honour on the evidence and none of them is irrelevant.

The main consideration which seemed to his Honour to point against giving leave to discontinue was that "APM's apparently remote chance of bidding successfully for FCL" was further reduced by the fact that APM was subject to the TPC's continuing right to institute proceedings for divestiture, if that apparently remote chance came to pass. His Honour observed that there was already an action on foot by SCI (VG82 of 1983) designed to prevent an APM takeover of FCL. Even the dismissal of VG84 of 1983, if the TPC decided not to prosecute it, would not rid APM of the threat of the proceeding by SCI and, one might add, of the proceeding which

VB had issued pursuant to s. 81 of the Act against APM.

His Honour refused to accept the submissions that costs should be awarded to APM on a solicitor and client basis and that he should require the TPC to undertake not to seek

The TPC had informed the trial judge that the suggested undertaking by it that should not bring any future action against APM for divestiture was unacceptable to it. His Honour did not regard such an undertaking as appropriate.

The TPC had indicated that it was prepared to give an undertaking in relation to any later proceedings for an

His Honour regarded the further conditions of discontinuance which APM had suggested, that unless the TPC could obtain assurances from Amatil that they will not regard themselves "as bound in any way not to sell" to APM and that they will be "willing to consider any offer" APM may make, as conditions which the court had no power to impose, and which he would not consider imposing, as a matter of discretion, 1f

No motion for dismissal of VG84 of 1983 had been brought before his Honour, but he was of opinion that it was not an

His Honour then expressed his conclusions, as follows:

"I can only say that, in my opinion, both common sense and legal principle are in favour of granting leave to discontinue. I say that for the reasons set out in paragraphs (a) to (e) above. I recognize that some hardship will thereby be done to APM and that it will lose some of the advantage

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it gained by entering into interlocking undertakings at the outset of this action. However most of the loss of advantage has been created by the commercial decision reasonably reached by Amatil over which the applicant and the Court have no control. For reasons given above in discussing the 'shadow of illegality', APM would only be Marginally better off in the market place if this action were now dismissed,- and that is the best result it is entitled to argue for in the circumstances that have arisen.

Before concluding these reasons I should say something about APM's contention that the other parties to the action are, by seeking leave to discontinue, achieving indirectly the result that they have so far been denied by the Court - release from undertakings, There is enough merit in this contention to call for a consideration of the matter on that basis.

In my view the application to discontinue has introduced an entirely fresh element to this case requiring me (to use the language of my earlier judgment of 15 November) 'to reconsider the whole discretionary issue for myself and, while giving proper respect to the views of the Full Court [which dismissed the earlier appeal on 21 September 1983.] as to what matters are material and how much weight each should be given, I must make up my own mind on these matters'.

In what I have already said I have had constantly in mind the issues dealt with in that earlier judgment. I was there concerned in particular to compare the relative rights and entitlements of FCL and Amatil (those of SCI being derivative and comparatively less significant) with those of APM. When the rights of the TPC on an application for discontinuance are thrown into the existing discretionary balance, I am satisfied that the application should be granted, on terms that TPC pay APM's taxed costs and undertakes not to institute any further proceedings for injunctions, or otherwise seek, to prevent the purchase of shares in FCL by APM. The words 'or otherwise seek' are within the spirit, though not the words, of the undertaking offered by TPC. I think some such addition is necessary. Such an undertaking would not prevent a later application for divestiture if TPC saw fit to bring it. I shall make the agreed order for costs against the second to eighth respondents."

The principles governing the consideration on appeal of an order made in the exercise of a judicial discretion are

well known (see House v The King (1936) 55 CLR 499; Adam P

Brown Male Fashions Pty Ltd v Philip Morris Ltd (1981) 148

In House v The King, Dixon Evatt McTiernan JJ said (at

ef discretion should be determined is governed by established principles. It is not enough that the

judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, 1f he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate

• court may exercise. its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may aot be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact

In my opinion, the learned trial judge did not act upon a wrong principle, allow extraneous or irrelevant matters to

guide or affect him, mistake the facts, or fail to take into

account any material consideration. The result embodied in

APM was and is faced with problems arising from the TPC's conception of the markets in which APM was said to be operating and APM''s position in those markets, and the view which the TPC took of APM's activities in those markets and of the effect which an APM acquisition of FCL would have. There is no basis for the proposition which underlay APM's submissions that VG84 of 1983 having been commenced, and the various undertakings having been given, APM was entitled as a Matter of justice to insist that VG 84 should proceed to

trial, or that there should be judgment in favour of APM.

APM's decision to split the capacity of FCL and to seek the approval of its plan by the TPC, FCL and Amatil was an

attempt to bring VG84 of 1983 to an early and relatively inexpensive end, and was predicated on the view that it was open to a party, who had given an undertaking, to rely on

changed circumstances and attitudes of parties, so as to

APM was not entitled to immunity from an application for divestiture which the TPC might seek to bring under the Act, if events were to take a course different from the TPC's present and reasonable anticipation, which was the foundation

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Had there been a motion before Woodward J seeking an order that VG 84 of 1983 be dismissed, his Honour would have had available to him the powers set out in Order 35 Rule

"Where the Court makes an order for the dismissal of proceedings or for the dismissal of proceedings so far as concerns any cause of action or the whole

or any part of any claim for relief, the Court may order that such dismissal shall be without prejudice to any right of the applicant or claimant to bring fresh proceedings or to claim the same relief in fresh proceedings."

It seems clear from his Honour' s reasons for judgment, that, had he made an order for dismissal, it would have been expressed to be without prejudice to the right of the TPC to pring proceedings for divestiture. In these circumstances, I find it unnecessary to consider the many cases on res

judicata and issue estoppel to which we were referred. I

would dismiss the appeal, and direct that the TPC submit minutes of orders to give effect to that dismissal. The stay of operation of the order under appeal would remain in force until those minutes had been considered and the appropriate

orders made. I would hear the parties on the question of

This is an appeal by SCI against the judgment of Woodward J. delivered on 15 November, 1983, dismissing its

notice of motion dated 7 October 1983, in which it sought to be wholly released from its undertakings given to the court

on 23 May, 1983, or alternatively that it be released

"(a) To enable S.C.I. Packaging Pty. Ltd. to seek the approval of the National Companies and Securities Commission to vary its Part A Statement dated the 4th May, 1983, in relation to a proposed acquisition of shares in the secondnamed Respondent

and its proposed offers to be despatched in pursuance of the said Part A Statement to increase the offer price per share from $3.50 to $4.

(ob) To enable S.C.I. Packaging pty. Ltd. to seek to obtain from the said National Companies and

Securities Commission variation of the Declaration dated the 29th June, 1983, in relation to the said

Part A Statement, or alternatively a further Declaration in relation to the said Part A Statement."

Woodward J. began his reasons for judgment by observing that this was the third time the court had been asked to grant releases from undertakings given at the commencement of

these proceedings in May 1983. He then briefly sketched the