Case: Glencore International AG v Takeovers Panel (2005) 220 ALR 495
Outcome: applied
It is important to note that the Panel does not adjudicate on disputed rights, nor does it exercise judicial power to resolve disputes. The distinction between the task of the Panel and the task of a Court such as the Federal Court, was clearly identified by Emmett J in Glencore International AG v Takeovers Panel (2005) 220 ALR 495, where his Honour said at [55] and [56]: "The making of binding declarations of right, by way of adjudication of disputes about rights and obligations that arise from the operation of the law upon past events or conduct, is a classical instance of the exercise of judicial power. However, the declarations for which s 657A provides are not binding declarations of right, in the sense in which that term is used in the context of the exercise of judicial power. The adjudication made by the review panel in the present case was not an adjudication of a dispute about rights and obligations of the parties that had arisen from the operation of the law on past events or conduct. The object of the review panel's declaration and orders was not to resolve a dispute about existing rights and obligations, by determining what those rights and obligations were, but to determine what legal rights and obligations should be created . The orders made under s 657D created rights and obligations that, prior to the making of the orders, did not exist. In that sense, the decisions of the review panel did not involve any adjudication of a dispute about existing rights and obligations. In applying for a declaration and orders, Centennial was not seeking the vindication of any right or obligation. The declaration made by the review panel did not resolve any actual or potential controversy as to existing rights: see, generally, Precision Data Holdings Ltd v Wills [1991] HCA 58 ; (1991) 173 CLR 167 at 188-190; 104 ALR 317 at 325; 6 ACSR 269 at 277." 38 Mr Ehrlich emphasised that the orders which Mr Hoff was seeking before the Panel included a declaration of the acceptance by Pendant Software of the notice of acceptance and transfer from Equity Partners dated 19 April 2006 to be unacceptable circumstances and that such acceptance be declared void. He submitted that if the Panel made a declaration that the transfer, which is the subject of this proceeding, was declared void then a declaration sought in this proceeding would be rendered nugatory. However, it is open to the Panel to make such a declaration for reasons unrelated to the reasons which might move the Court to grant the relief that is open to it in this proceeding. 39 The Panel, pursuant to s 657A of the Act , can declare circumstances in relation to the affairs of a company to be unacceptable circumstances. That opportunity or option is not available to the Federal Court. The Panel can make a declaration of unacceptable circumstances for a reason that it is not open to the Federal Court in respect of a matter on which the Federal Court cannot adjudicate upon. Although the directors reserve the right in this proceeding to allege that they are entitled to refuse registration of the transfer for just cause because of unlawful conduct on the part of Pendant Software the Federal Court cannot approach that matter on the basis of determining whether any conduct of Pendant Software constituted unacceptable circumstances as contemplated by s 657A of the Act . 44 If there be such unacceptable circumstances found which the Panel determines have an effect or consequence upon the transfer from Equity Partners to Pendant Software then that decision or declaration is not impinging upon the jurisdictional turf of the Federal Court. It is a consequence of the Panel undertaking the task identified by Emmett J in par [56] of his judgment in Glencore (supra). It is not the Panel making a decision on, or a declaration in relation to, the issue of the obligation of the directors on 4 or 11 May 2006. The consequence of the Panel's determination may be to remove the substratum of the basis for the registration of the transfer sought by Pendant Software, but that is not because of the Panel assuming the task of the Court or destroying the substratum of the matter before the Court. It is because there is a separate and independent basis for a challenge to the consequences of the carrying out and implementation of Pendant Software's takeover offer. 45 Mr Ehrlich submitted that what was left alive by the interlocutory order I made on 11 May 2006 was the lawfulness of the directors' conduct in relation to the transfer. Assuming for the moment that that submission is correct, it does not follow that the Panel cannot reach a conclusion in relation to the takeover which may equate with the unlawfulness of directors' conduct. It will not be a finding of unlawful conduct such as a Court might make, rather it is as a result of a finding of unacceptable circumstances within a framework of the takeover offer and the Panel provisions of the Act . 46 Accordingly I am not disposed to restrain Mr Hoff from continuing with his application to the Panel. I am also not disposed to dismiss the proceeding as against the first, fourth and fifth defendants or stay the proceeding against them as sought in their motion. Their counsel in argument did not press for dismissal. Mr Hoff and the third defendant are not parties to that motion. The terms of my order on 11 May 2006 leave it open for them to argue that they did not have to agree or consent to the registration of the transfer. Whilst that reservation is still alive it is premature to deal with that motion. Although the first, fourth and fifth defendants are prepared to register the transfer they are not prepared, or it was not clear whether they were prepared, to consent to judgment. There is also the issue of costs and whether Pendant Software was entitled to commence the proceeding having regard to the qualified resolution on 4 May 2006.