Case: Brierly Investments Ltd v Australian Securities Commission (1997) 78 FCR 255
Outcome: referred to
Under s 657A(1) of the Act, which is in Part 6.10, the Panel may declare circumstances in relation to the affairs of a company to be unacceptable circumstances. Section 657A(1) of the Act expressly provides that the Panel may make a declaration of unacceptable circumstances even in the absence of a contravention of the Act. It follows that the Panel's functions under s 657A include a supervisory role in respect of conduct that is lawful but perceived to be inconsistent with the objects of Chapter 6, as stated in s 602 (see Brierly Investments Ltd v Australian Securities Commission (1997) 78 FCR 255 at pp 261-262). 35 The effect of s 657A(2) of the Act is that the Panel may declare circumstances in relation to the affairs of a company to be unacceptable circumstances if it appears to the Panel that the circumstances are unacceptable, having regard to the effect of the circumstances on : &#8226; the control, or potential control , of that company or another company; or &#8226; the acquisition, or proposed acquisition , by a person of a substantial interest in that company or another company. The Panel may also make a declaration if it appears to the Panel that circumstances constitute or give rise to a contravention of Parts 6, 6A, 6B or 6C. However, the Panel may only make a declaration if it considers that doing so is not against the public interest and after taking into account any policy considerations that the Panel considers relevant. 36 Under s 657D(1) of the Act, the Panel may make an order under s 657D(2) if it has declared circumstances to be unacceptable under s 657A. However, there are restrictions upon the making of such an order. The Panel must not make an order if it is satisfied that the order would unfairly prejudice any person. Further, under s 657D(1), before making an order, the Panel must give, both to the parties to a proceeding before the Panel and to the Commission, as well as to each other person to whom a proposed order relates , an opportunity to make submissions to the Panel about the matter. 135 The Panel, of course, is expressly empowered by s 657A(1) to make declarations notwithstanding that there has been no contravention of the Act. Part 6.10 of the Act provides flexibility in the regulation of the acquisition of shares in circumstances where the literal operation of the regulatory regime is either unnecessarily restrictive or ineffective to achieve the object of Chapter 6. It is clear enough that the regime involving the Panel is designed to ensure regulation of the acquisition of shares over and above the provisions contained in the balance of Chapter 6 ( Brierley Investments Ltd v Australian Securities Commission (1997) 78 FCR 255 at 261). The Panel made its declaration because, notwithstanding compliance by Glencore and the Banks with the disclosure regime prescribed by the Act, the purposes of Chapter 6, as expressed in s 602, were not achieved. That is precisely the circumstances for which s 657A provides. It is not unreasonable for the Panel, if its decision was otherwise lawful and authorised, to reach that conclusion. The fact that participants in the market do not necessarily make disclosure of cash settled swaps does not necessarily mean that the failure to do so is not unacceptable. 136 I consider that the Panel erred in concluding that the relationship between Glencore on the one hand and the Banks on the other, by reason of the swaps, was such that the Shares in the company held by the Banks should be taken into account in determining whether Glencore had acquired or was acquiring a substantial interest in the Company. I also consider that the Panel erred in concluding that circumstances consisting of the non-disclosure, during the Non-disclosure Period, of the swaps and the relevant interest held by Glencore had an effect on the control or potential control of the Company, or on the acquisition by Centennial of a substantial interest in the Company, that was unacceptable. Having regard to those conclusions, it appears to follow that neither the Declaration nor the Orders can stand. 137 However, the parties have requested that I make no orders until they have had the opportunity of considering the conclusions that I have reached. Accordingly, I propose to stand the matter over for further submissions as to the appropriate orders after the parties have had a reasonable opportunity of considering my conclusions and my reasons for those conclusions. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 22 March 2006 Counsel for the Applicant: Mr T.F. Bathurst QC, Mr M.J. Leeming and Mr J.R.J. Lockhart Solicitor for the Applicant: Atanaskovic Hartnell Counsel for the First Respondent: Mr R. Strong Solicitor for the First Respondent: Freehills Counsel for the Third Respondent: Mr S. Gageler SC and Mr M.S. Henry Solicitor for the Third Respondent: Australian Securities and Investments Commission Date of Hearing: 9 February 2006 Date of Judgment: 22 March 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/274.html