Re Btr Plc and Btr Nylex Limited v Westinghouse Brake and Signal Company (Australia) Limited; Ian Edric Prowse; Hawker De Havilland Limited and Australian Securities Commission [1992] FCA 55 (21 February 1992)

FEDERAL COURT OF AUSTRALIA

Re: BTR PLC and BTR NYLEX LIMITED
And: WESTINGHOUSE BRAKE and SIGNAL COMPANY (AUSTRALIA) LIMITED; IAN EDRIC
PROWSE; HAWKER DE HAVILLAND LIMITED and AUSTRALIAN SECURITIES COMMISSION
No. V G376 of 1991
FED No. 47
Corporations - Administrative Law - Tribunals - Corporations
(1992) 10 ACLC 296
7 ACSR 122
(1992) 106 ALR 35
(1992) 15 AAR 100
(1992) 34 FCR 246
(1992) 26 ALD 1

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart(1), Beaumont(1) and Hill(2)JJ.

CATCHWORDS

Corporations - deemed acquisition of relevant interest in shares by upstream acquisition - s.728 of the Corporations Law - conditional exemption from s.615 of the Corporations Law - condition that valuation of underlying corporations' shares include control premium - s.731(d) of the Corporations Law - condition that price be highest of a range of values - condition that valuation take into account confidential information - whether conditions valid.

Administrative Law - s.43(2) of the Administrative Appeals Tribunal Act 1975 - short delay by Tribunal in giving reasons - whether error of law thereby.

Administrative Law - s.43(1) of the Administrative Appeals Tribunal Act - Tribunal's power to redraft conditions rather than remit.

Tribunals - s.43(2) of the Administrative Appeals Tribunal Act 1975 - short delay by Tribunal in giving reasons - whether error of law thereby.

Corporations - s.1330 of the Corporations Law - to what extent appropriate for Australian Securities Commission to intervene in proceedings.

HEARING

SYDNEY
21:2:1992

Counsel and Solicitors Mr A.S. Myers QC and
for Applicants: Ms M.L. Warren instructed by Clayton Utz

Counsel for First, Second Mr A. Archibald QC with

and Third respondents: Mr R. Strong

Solicitors for First and Corrs Chambers Westgarth

Second respondents:

Solicitors for Third Allen, Allen and Hemsley

respondent:

Counsel and Solicitors Mr C.T. Pagone instructed by

Fourth respondent: Australian Securities Commission, Legal

Division

ORDER

Appeal allowed.

Order that the decision of the Administrative Appeals Tribunal be set aside and the matter remitted to the Administrative Appeals Tribunal for decision in accordance with law.

The respondents, other than the fourth respondent, pay two-thirds of the applicants' costs. No order for the costs of the fourth respondent.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

On 20 September 1991, BTR PLC ("BTR"), one of the applicants, announced the making of a take-over bid in the United Kingdom for the share capital of Hawker Siddeley Group PLC ("Hawker Siddeley"). Each of BTR and Hawker Siddeley is incorporated in the United Kingdom. Hawker Siddeley, directly or through subsidiaries, held 72.85% of the issued share capital of Hawker de Havilland Limited, a company incorporated in Australia, ("Hawker de Havilland") and 85% of the issued share capital of Westinghouse Brake and Signal Company (Australia) Limited ("Westinghouse"), another Australian company. It would seem that Hawker Siddeley held as well other assets.

2. The making of such a bid attracted the operation of s. 615 of the Corporations Law ("the Law") and, unless the subject of an exemption from the operation of that section granted pursuant to s. 728(1) of the Law, would have been illegal. Accordingly, prior to the making of the bid, the solicitors for the applicants applied to the fourth respondent, the Australian Securities Commission ("the Commission"), for an exemption from compliance with s. 615 of the Law. The initial application was made on a "no names" basis. On 25 September 1991, the Commission granted an exemption to the applicants and their associates from compliance with s. 615 in respect of the take-over offer, subject to conditions. Those conditions are set out in the judgment of Beaumont J, which we have had the advantage of reading, and need not be repeated.

3. On 31 October and 1 November 1991 respectively, Westinghouse and Hawker de Havilland applied to the Administrative Appeals Tribunal ("the Tribunal") for a review of Commission's decision. Both companies are listed on a stock exchange in Australia. Mr Prowse, the remaining respondent, is a shareholder in Westinghouse who joined in the application to the Tribunal.

4. The hearing, before a Tribunal comprising O'Connor J. (President), Mr B.J. McMahon (Deputy President) and Mr W.G. McLean (Member), commenced on 21 November 1991 and continued for five days. By the time the hearing was completed, the Tribunal had been informed that BTR had acquired 71.09% of the shares in Westinghouse and Hawker de Havilland, and had declared its offer to be unconditional.

5. On 27 November 1991, the Tribunal announced its decision in the matter, confirming the exemption but substituting different conditions. These conditions are likewise set out in the judgment of Beaumont J. and need not be repeated. It did not, however, publish the reasons for its decision until 11 December 1991.
Relevant Provisions of The Corporations Law

6. Section 615 of the Law provides relevantly as follows:

"(1) Except as provided by this Chapter, a
person shall not acquire shares in a company if:
(a) any person who:
(i) is not entitled to any voting shares
in the company; or
(ii) is entitled to less than the
prescribed percentage of the voting
shares in the company;
would, immediately after the acquisition,
be entitled to more than the prescribed
percentage of the voting shares in the
company; or
(b) any person who is entitled to not less
than the prescribed percentage, but less
than 90%, of the voting shares in the
company would, immediately after the
acquisition, be entitled to a greater
percentage of the voting shares in the
company than immediately before the acquisition.
...
(4) A person shall not offer to acquire, or
issue an invitation in relation to, shares
in a company if the person is prohibited
by subsection (1) from acquiring those shares."

7. By virtue of s. 615(7), the prescribed percentage is twenty percent.

8. For present purposes, "acquire" and cognate expressions are given content by s. 51(1) of the Law by reference to the acquisition of a relevant interest in shares. The expression "relevant interest" is dealt with in Ch.1 Part 1.2 - Division 5 of the Law. It is not in dispute that an acquisition of shares by BTR in Hawker Siddeley would constitute an acquisition of the shares in Hawker de Havilland and Westinghouse.

9. Section 728(1) of the Law provides as follows:

"The Commission may, on application by the person or persons
concerned or by a person or persons included in the class or classes
of persons concerned, by writing, exempt a specified person or
persons, or a specified class or classes of persons, subject to such
conditions (if any) as are specified in the exemption, from
compliance, either generally or in a particular case or classes of
cases, with this Chapter or a specified provision or provisions of
this Chapter."

10. In considering whether to grant an exemption, the Commission is directed by s.731 to take certain matters into account. That section provides as follows:

"In exercising any of its powers under section 728 or 730, the
Commission shall take account of the desirability of ensuring that
the acquisition of shares in companies takes place in an efficient,
competitive and informed market and, without limiting the generality
of the foregoing, shall have regard to the need to ensure:
(a) that the shareholders and directors of a company know the
identity of any person who proposes to acquire a substantial
interest in the company;
(b) that the shareholders and directors of a company have a
reasonable time in which to consider any proposal under which
a person would acquire a substantial interest in the company;
(c) that the shareholders and directors of a company are supplied
with sufficient information to enable them to assess the
merits of any proposal under which a person would acquire a
substantial interest in the company; and
(d) that, as far as practicable, all shareholders of a company
have equal opportunities to participate in any benefits
accruing to shareholders under any proposal under which a
person would acquire a substantial interest in the company;
but nothing in this section requires the Commission to exercise any
of its powers in a particular way in a particular case."

The decision subject to appeal

11. Before the Tribunal, as indeed before us, it was conceded that the present was a proper case in which exemption should be granted. The matter in controversy was whether that exemption should be subject to conditions, and if so, what those conditions should be.

12. The Tribunal was of the view that conditions should be imposed upon the granting of the exemption. It did so on the basis that conditions were expected by BTR and that it was appropriate that conditions should be applied. Its reasoning, on this aspect of the matter, was contained in the following paragraph:

"They were expected by BTR when the first approach to the ASC was
made. They were always in the contemplation of the ASC, according
to the evidence of Mr Cockburn, a senior officer of the ASC. It was
never intended that BTR should be exempt for all time from its
obligations under Chapter 6. What was intended to be achieved was
simply to postpone the fulfilling of those obligations until such
time as the HSG bid had been launched and had reached a 20 per cent
acceptance level. It was not practical for BTR to bid for Hawker
and Westinghouse at the same time as it was launching its bid for
HSG. Accordingly, conditions were imposed by the ASC (as Mr
Cockburn said) to replicate the situation. Certainly it was in the
mind of Westinghouse and Hawker, during the consultations that were
held after the event, that conditions should be imposed."

13. The Tribunal also took the view that nothing in s. 629 of the Law (which excludes from the operation of s. 615, inter alia, the acquisition of shares in a listed Australian company, where that acquisition resulted from the acceptance of a take-over bid) required a contrary conclusion, on the basis that it could be assumed that the legislature had taken a conscious decision that the exemption from the obligation to make an offer to minority shareholders should not extend to cases such as the present involving what is conveniently referred to as "upstream foreign acquisitions". The Tribunal said:

"To give an unconditional exemption would be quite contrary to the
evident intention of s.629, particular having regard to its history
and to the tightening of its terms compared with paragraph 12(k) of
the Code. This paragraph simply excluded from the general
obligations now to be found in Chapter 6 of the Law `an acquisition
of shares in a company as a result of the acquisition of shares in
another corporation that are listed for quotation on the stockmarket
of a stock exchange'. The advantage previously given to a foreign
offerer for a foreign parent target is quite specifically taken away
by the words of s. 629. It is not necessary to inquire why this
change was brought about. The terms of the Law are clear. Unless
the conditions of paragraph 629(b) are met, then the general
prohibition of s. 615 will continue to apply."

14. The Tribunal then embarked upon a consideration of the conditions imposed by the Commission, rejecting an argument that it was too late to alter those conditions as they had been relied upon by BTR. It is unnecessary here to set out what the Tribunal said. We have dealt with its reasoning in dealing with the various submissions put by the applicants.
The submissions

15. Senior counsel for the applicant submitted that the decision of the Tribunal should be set aside and that the matter be alternatively remitted to the Commission or to the Tribunal with or without directions as to the manner in which the exemption should be granted.

16. The submissions fell into four broad categories. First, it was submitted that in imposing any conditions at all upon the exemption which all parties acknowledged should be granted the Tribunal erred in law. Second, it was submitted that the Tribunal should not have disturbed the conditions imposed by the Commission, as these had been relied on by the applicant in making its bid in the United Kingdom in relation to Hawker Siddeley. Third, it was submitted that if conditions were to be imposed, in the form of requiring the applicant to make a take-over offer to outside shareholders in Hawker de Havilland and Westinghouse, ("the compliance bid") the Tribunal erred in law in requiring that offer to contain certain terMs Finally, it was submitted that rather than defining the terms and conditions of the compliance bid, the Tribunal should have remitted the matter to the Commission for redrafting.

17. In support of the first broad submission the following specific submissions were raised:

* The Tribunal erred in law in failing to give reasons at the
time of delivering its decision, notwithstanding that reasons
were supplied in writing thereafter. The failure so to do
vitiated its decision.
* The Tribunal erred in law in holding that the applicants, in
order to avoid breaching s. 615 of the Law were required by
the Law to make the compliance bid.
* The Tribunal erred in law in holding the provisions of
s.731(d) applicable to the facts of the present case.
* The Tribunal erred in law in holding that the applicants had
not relied upon the conditions attached by the Commission to
the granting of an exemption. Given such reliance the
conditions imposed by the Commission should stand.

18. In support of its alternative submission that the conditions imposed for the making of the compliance bid were bad in law the applicants submitted:

* Condition 2(i), in adopting as the relevant
starting period the date of the expert valuer's
report, was unreasonable.
* Condition 2(ii) in its reference to "materially
adverse government intervention" was uncertain
and unreasonable.
* That the requirement in condition 5(c)(iii),
that if the expert gives a range of valuations
the price to be adopted as the offer price was
to be the highest figure in the range, was
contrary to the evidence and unreasonable.
* That the requirement that the expert shall have
full and unencumbered access to all information
available to the directors or management was
wrong in principle.
* That the requirement that the price at which the
offer was to be made was to include a control
premium (condition 5(c)(i)) was wrong in law.
* That in rejecting the applicants' submission
that the offer be conditional upon the
applicants attaining acceptance of such number
of shareholders as would permit the compulsory
acquisition provisions of the Law to be brought
into operation the tribunal erred in law.
* That the conditions imposed by the Tribunal
purported to bind persons not parties before it
and over whom the Tribunal had no jurisdiction.

The failure to give reasons

19. As appears from the judgment of Beaumont J, the Tribunal did not fail to give reasons ultimately. What it did, in the interests of the urgency of the matter, was to hand down its decision in writing and defer the delivery of its reasons until a date approximately two weeks later.

20. Although we are of the view that it would be preferable for the Tribunal in all cases to give its reasons at the time of publishing its decision, we agree with Beaumont J. and for the reasons he has given, that by not doing so in the circumstances of the present case there was no error of law.
Whether the Tribunal erred in holding that the applicant was required to make an offer to avoid breach of s. 615 of the law.

21. Senior counsel for the applicants sought to dissect the language of the Tribunal's reasons to demonstrate that the Tribunal had failed to understand the nature of the task before it. Our attention was drawn to passages which suggested that the Tribunal was of the view that there was an obligation, even in the case of proposed upstream foreign transactions, to make take-over offers to minority shareholders. The high point, from the point of view of the present submission, was to be found in a discussion of evidence surrounding the fixing of a mechanism for arriving at the price to be offered to the minority shareholders of the Australian public companies. The Tribunal said:

"A number of witnesses gave evidence, which we accept, that the
fixing of a price by the ASC is unique. Normally an offeror would
fix its own price. A valuer would later be called in by the target
to report in connection with the preparation of the Part B
statement. In the present circumstances, we believe it was
appropriate for the ASC to take it upon itself to settle a mechanism
so as to ensure that any bid to be made was bona fide. The bid is
to be made as a condition of the granting of the exemption. Had the
exemption not been granted the bid would have been necessary from
the outset. Because it is required as a condition of the exemption,
it was referred to as a compliance bid." (Emphasis added).

22. The legislation does not proceed upon the basis that what is proscribed is the "acquisition" of shares in a company carrying the entitlements referred to in s. 615(1) of the Law unless a take-over bid is made for the remaining shares. Rather it makes it illegal, inter alia, to "acquire" such shares unless the circumstances are such as to fall within the exceptions to s. 615. In a case such as the present the only relevant exception would be the obtaining of an exemption under s. 728. Thus the Tribunal was incorrect in its use of the words underlined. But it does not follow from this that the applicant is entitled to succeed.

23. The appeal to this Court from the Tribunal is an appeal "on", that is to say limited to, a question of law: Administrative Appeals Tribunal Act 1975, s. 44(1). But it will not be enough for an applicant to demonstrate that the Tribunal mis-stated the law in the course of its reasons, if that mis-statement could not have affected its decision. The task of the Court on an appeal under s. 44(1) is essentially to undertake judicial review of the Tribunal's decision. An immaterial error of law will not vitiate the decision of the Tribunal: Waterscheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555 at 566, Cavell v Repatriation Commission (1988) 9 AAR 534 at 539.

24. In the present case, it is evident from the passage cited above, as indeed throughout the reasons of the Tribunal, that the Tribunal did not misconceive the task before it. The applicant had sought an exemption from the prohibition in s. 615 of the Act. The Commission had granted an exemption under s. 728, subject to conditions. It was the decision of the Commission which was referred to the Tribunal for review. That review entailed, in the way that the case was run before the Tribunal, the questions whether any conditions should be imposed upon the granting of the exemption, and if so what conditions. In our view the reasons of the Tribunal as a whole make it clear that these were the issues which were considered, and if, as it would seem, the Tribunal misstated the law as to the legislative scheme of Chapter 6 of the Law, that misstatement in no way affected the way the Tribunal approached these issues.

25. It follows, accordingly in our opinion, that the decision of the Tribunal that conditions be imposed upon the granting of the exemption to the applicant was not vitiated by any error of law on the part of the Tribunal.
The application by the Tribunal of s. 731

26. The Tribunal, both in concluding that it was appropriate to require a take-over bid to be made by the applicants for the shares in Hawker Siddeley and Westinghouse and in framing the conditions applicable to such a bid, relied explicitly upon the applicability of s. 731 and in particular s. 731(d) of the Law.

27. The present legislation introduced few changes of substance to the law relating to takeovers that existed under the earlier regime, at the centre of which was the Companies (Acquisition of Shares) Act, 1981, an Act of the Commonwealth Parliament and the equivalent legislation of each State, namely, the Companies (Acquisition of Shares) (Application of Laws) Acts of 1981. Neither the previous legislation nor Chapter 6 of the Law makes any general statement of the philosophy or objects of the regulation of takeovers. However, s. 731 of the Law (s. 59 of the previous legislation) directs the Commission, in exercising its powers either under s. 728 to exempt persons from compliance with Chapter 6 or under s. 730 to modify the operation of the chapter, to have regard to certain matters including "the desirability of ensuring that the acquisition of shares in companies takes place in an efficient, competitive and informed market", and the need to ensure: (a) that the shareholders and directors of a company know the identity of any person who proposes to acquire a substantial interest in the company; (b) that the shareholders and directors of the company have a reasonable time in which to consider any proposal by which a person would acquire a substantial interest in the company; (c) that the shareholders and directors of a company are supplied with sufficient information to enable them to assess the merits of any proposal under which a person would acquire a substantial interest in the company; and (d) that, as far as practicable, all shareholders of a company have equal opportunities to participate in any benefits accruing to shareholders under any proposal under which a person would acquire a substantial interest in the company.

28. These requirements are expressed in a modified fashion in s. 732 of the Law which relates to declarations of unacceptable acquisitions or unacceptable conduct and requires that one of the four matters mentioned earlier be demonstrated before the declaration is made.

29. It is clear from the Law that, provided the necessary territorial nexus is present, the general prohibition on certain acquisitions imposed by s. 615 may extend to acquisitions which occur outside Australia, and the persons acquiring the shares in the target company are not Australian residents or bodies incorporated in Australia. Because of the extended definitions in the Law of "acquire" in relation to shares (ss. 9 and 51(1)), "associate" (ss. 10 - 17) and "relevant interest" (ss. 9 and 30 - 45), an acquisition of shares of a foreign company can indirectly produce an acquisition of shares in an Australian company and a change in entitlement to voting shares in that company: c.f. NCSC v Brierley Investments Limited (1988) 14 NSWLR 273. In this event, a contravention of the Law occurs unless the Commission grants an exemption under s. 728 or a modification under s. 730. See also North Flinders Mines Limited v Hartogen Energy Limited (1988) 52 SASR 1, a decision of Jacobs J. of the Supreme Court of South Australia.

30. Section 731 of the Law is based on the recommendations of the Eggleston Committee made in the Eggleston Report, (Second Interim Report, February 1969, Command No. 144) which was the second interim report to the Standing Committee of Attorneys-General relating to disclosure of substantial shareholdings and takeover bids. Section C of the report relates to takeover bids and refers in paragraph 16 to the oft cited general principles that were adopted in the Companies Codes which preceded the Law and in the Law itself. The fourth general principle mentioned in the Eggleston Report states:

"that so far as is practicable, each shareholder should have an
equal opportunity to participate in the benefits offered."

31. The explanatory memorandum which accompanied the Corporations Bill 1988 (Cth) states (in cl. 2247) that the principles set out in s. 731 derive from the recommendations of the Eggleston Committee. The philosophy behind the four principles in s. 731 was also spelt out in the 1978 Formal Agreement which led to the establishment of the Companies Schemes later replaced by the scheme established by the Law and associated legislation. Paragraph A of the preamble to the Formal Agreement requires that in relation to companies and securities laws:

"... there should be uniformity both in those laws and in their
administration in the States and Territories of Australia in order
to promote commercial certainty and bring about a reduction in
business costs and greater efficiency of the capital markets and
that the confidence of investors in the securities market should be
maintained through suitable provisions for investor protection."

32. Section 731 is directed to a market for shares in Australia and plainly has in mind a domestic or Australian acquisition of shares. Its language is inapplicable to an upstream takeover. The section thus reflects the Eggleston Report which plainly was not directed to a takeover of that kind. It is, as Needham J. described its predecessor (s. 59 of the Companies Acquisition of Shares (NSW) Code) in O.P.S.M. Industries Limited v National Companies and Securities Commission (1982) 7 ACLR 192 at 196, "a philosophical section", in that in our opinion the essence and spirit of it applies to takeovers, including those of an upstream kind, in the sense that shareholders in the downstream company should have the benefits of the kind to which s. 731 is directed.

33. While, therefore, the Tribunal erred in finding s. 731(d) directly applicable to a foreign upstream bid, that error alone would not have affected the outcome of the present case since the Tribunal would, in any event, have been required to consider the philosophy which s. 731 clearly demonstrates in determining whether to impose as a condition of exemption the making by BTR of a take-over bid for Hawker Siddeley and Westinghouse. Thus, it is difficult to see how this error could have affected the outcome of the case.

34. We deal later with the more substantial issue of whether this philosophy, in the circumstances of the present case, permitted or compelled the imposing of a condition for the making of a take-over bid at a price determined as a fair value, bringing into account any control premium and taking into account confidential information.
Whether the Tribunal should have refused to disturb the Commission instrument on the basis of reliance by BTR.

35. In support of this submission, it was argued that the Commission instrument had been relied upon by BTR, had been publicised in the market place and provided the background to trading in the shares of the relevant Australian companies.

36. This submission was made to the Tribunal, which rejected it on the basis that the bid for Hawker Siddeley was made before the instrument drafted by the Commission was issued. It was submitted that this was contrary to the evidence.

37. The evidence before the Tribunal was that the Commission had told BTR that it would grant an exemption at a time prior to the making of the United Kingdom bid by BTR. The solicitors for BTR sought the advice of the Commission using codenames. The Commission was advised that events had occurred in the United Kingdom which necessitated the announcement of the take-over offer in that country earlier than expected. An agreement was reached in principle that take-over offers would be made for the Australian companies. No detailed conditions had then been drafted. The offer in the United Kingdom was made on 20 September 1991 and the instrument of exemption was dated 25 September 1991. In these circumstances it was open to the Tribunal to find, indeed it was inevitable that it would find, that BTR had not relied upon the conditions determined by the Commission.

38. It is no doubt true that, after the publication of the Commission instrument, trading occurred in Australia in relation to the shares in the Australian companies. But such trading took place against the background of legislation which permitted a party, if dissatisfied with the conditions imposed by the Commission, to seek review of them by the Tribunal. The applicants have demonstrated no error of law in the decision of the Tribunal to undertake a review of the conditions imposed by the Commission.
The conditions imposed by the Tribunal

39. We turn now to consider whether the terms of the particular conditions imposed demonstrated any error of law. Before doing so, however, we note that s. 728 confers upon the Commission a discretion, not only as to whether an exemption is to be granted but also as to the conditions, if any, which may be imposed. Subject to the matters referred to in s. 731, which, where appropriate, are to be taken into account, the Tribunal's discretion is confined only by the subject matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40; (1986) 162 CLR 24 at 40 per Mason J.

40. It is not for this Court to substitute its opinion for that of the Tribunal. The role of the Court is limited to reviewing whether the exercise of discretion by the Tribunal miscarried by virtue of some error of law. Such an error may be demonstrated, for example, if it appears that the Tribunal took into account some irrelevant matter in exercising its discretion, or failed to take into account some matter which it was bound to take into account. In the present case, most of the submissions proceeded on the basis that the manner of exercise of the discretion by the Tribunal was so unreasonable that no reasonable decision-maker could have reached the decision: Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223. A decision made so unreasonably must, of its nature, have involved the decision-maker in an error of law, albeit that the principle of law applied may well not have been stated.
Condition 2(i)

41. Condition 2(i) makes the offers the subject of the conditions imposed by the Tribunal, conditional upon no "prescribed" occurrence having taken place between the date of the valuation and the close of the take-over period in relation to the scheme. The expression "prescribed occurrence" is used in its defined sense (s. 603) to comprehend:

"(a) any one or more of the provisions of the constitution of the
target company or of a subsidiary being altered in any of the
ways mentioned in subsection 193(1);
(b) the target company or a subsidiary resolving to reduce its
share capital in any way;
(c) the target company or a subsidiary making an allotment of, or
granting an option to subscribe for, any of its shares, or
agreeing to make such an allotment or grant such an option;
(d) the target company or a subsidiary issuing, or agreeing to
issue, convertible notes;
(e) the target company or a subsidiary disposing, or agreeing to
dispose, of the whole, or a substantial part, of its business
or property;
(f) the target company or a subsidiary charging, or agreeing to
charge, the whole, or a substantial part of its business or
property;
(g) the target company or a subsidiary resolving that it be wound up;
(h) the appointment of a provisional liquidator of the target
company or of a subsidiary;
(j) the making of an order by a court for the winding up of the
target company or of a subsidiary;
(k) the target company or a subsidiary being placed under official
management; or
(m) the appointment of a receiver, or a receiver and manager, in
relation to the whole, or a substantial part, of the property
of the target company or of a subsidiary;"

42. It could scarcely be in dispute that if the case be an appropriate one for the requirement that BTR bid for the remaining Australian shares in which it had no interest, such a bid would, of necessity, be conditional upon the non-occurrence of matters of the kind set out above. For the applicants, however, it was submitted that the condition should be so framed that the requirement for the bid to proceed was conditional upon no such matter occurring or having occurred, not merely from the date of the valuation, but from the earlier date of the initial announcement of the United Kingdom take-over.

43. The same submission had been made before the Tribunal which rejected it on the basis that the happening of any such occurrence would have been taken into account by the valuer in making his valuation. It may be remarked that there was no evidence before the Tribunal, or for that matter before us, which suggested that any such event had occurred in the period in question, the valuation report having, in the meantime, been obtained.

44. Implicit in the Tribunal's rejection of the submission is that the matters that are "prescribed occurrences" are matters which are relevant only in so far as they affect value. But that is not so. Some of them go as well to the very nature of the assets indirectly acquired through the share acquisitions. For example, the agreement to dispose of the whole or a substantial part of the target company's business, if at full value, may have no impact at all upon the valuation made, but would substantially change the nature of the target company. So too, the making of a winding up order by the Court may not necessarily affect the valuation of the target company's shares but could destroy the status of the target company as a going concern. To require a person in the position of BTR to proceed with a bid in such circumstances would seem manifestly unfair.

45. The policy behind requiring a compliance bid to be made is clear enough. It is to ensure that minority shareholders (or those who would otherwise have had no opportunity to dispose of their shares) are afforded the same advantages as are obtained by the remaining shareholders. In the circumstances of the present case, therefore, it is to ensure that the advantages available to the shareholders of HSG in being able to accept the offer made to them by the applicant are, pro tanto, offered to the shareholders of the two underlying Australian public companies. If there has been no substantial change in the circumstances of the underlying public company between the date on which BTR set its price for the upstream bid and the date when the Australian take-overs are finalised, then not only will BTR pay no more than a proper price, having regard to the terms of its United Kingdom bid, but also it will have done so for a comparable asset, namely, a share which carries with it an indirect interest in the underlying Australian companies. However, once such an occurrence occurs, that occurrence might very well result in a change in the nature of the indirect interest, which change may, but not necessarily will, be compensated for by a variation in the price which the applicant will be required to pay.

46. In these circumstances, to stipulate as the starting point for the application of the condition, the date of the valuer's valuation would be an unreasonable exercise of the discretion conferred under s. 728. On the present facts, there being the possibility that a prescribed circumstance could have occurred prior to the date of the valuer's report, (this is not to suggest that such a circumstance had in fact occurred) the only reasonable condition would be one which took as its starting point a date such as the date of the announcement of the UK offer. That was the date on which, it may be assumed, BTR set the price which it was willing to pay to the shareholders of HSG for their shares in that company, carrying with them ownership of a substantial parcel of shares in the underlying Australian companies.
Condition 2(ii)

47. The applicant criticised the use of the words "materially adverse" as being vague and nonsensical. It was said, that as drafted, the condition did not exonerate BTR from proceeding with a bid for the Australian shares where there was government intervention which prohibited the offerer from acquiring the shares, where such intervention was not "materially adverse government intervention".

48. It is easy to be critical of the drafting of the condition. However, should the example arise of government intervention prohibiting the acquisition, we have no doubt that a court in construing the condition would have little difficulty in interpreting it as intended to cover all cases where government intervention led to prohibition, all such cases being of their nature "materially adverse government intervention". The role of this Court is not to embark upon a fine analysis of the draftsmanship of the terms of the conditions attaching to the exemption, it is to ensure that the Tribunal has not erred in law in the exercise of its discretion.
Condition 5(c)(iii)

49. Condition 5 is directed at the mechanism which is to be employed to ascertain the price at which BTR is required to make its compliance bid. In brief substance it requires the appointment of an expert who is to assess the price on a basis that is fair and reasonable to the offerees and including an appropriate share in any control premium. If the valuer arrives at a range of values the price is to be taken to be the highest such value.
The requirement that the price be the highest of the range of values

50. In explaining its decision to require the highest such value to be adopted, the Tribunal criticised the approach taken by the Commission which had required the averaging of two expert valuations and indicated that at least five different approaches to valuation could be valid, being a discounted cash flow, capitalisation of future maintainable profits, notional realisation of assets, value of net tangible assets (on a going concern basis), and capitalisation of future maintainable dividends. The Tribunal continued:

"Unless the same methodology is adopted by the 2 experts the range
of values could have as much in common as apples and pears. Even
more so, a mean average of a range arrived at on disparate premises
would be as valid as an average between an apple and a pumpkin. In
instructing the valuer, it is necessary to give some guidance as to
the method to be adopted. Furthermore, if a range is produced, the
only fair result must be the top of that range."

51. There is a difficulty in logic apparent from the last sentence quoted. If the expert, rather than arriving at a single price which he considers to be fair and reasonable, provides instead a range of figures meeting that criterion (all derived from a single method of valuation), it must follow that the expert is of the opinion that each and every figure within the range is fair and reasonable. How then can it be said that the highest figure in the range produces "the only fair result"? All that can be said is that that figure produces the highest result for the benefit of the offerees, and within the range the most disadvantageous result for BTR. However, by hypothesis, each figure in the range produces a fair result.

52. For the respondents it was argued that the Tribunal was responding to evidence of an expert valuer in arriving at this conclusion. We were taken to that evidence. What the expert in substance said was that he would arrive at a valuation by a particular method and then check the valuation by reference to another method or methods. He then said that it would be completely inappropriate to average valuations obtained by different methods. Rather, he said, in such a case, he would take the highest of such figures.

53. The Tribunal appears to have misunderstood in part the effect of this evidence, at least if regard is had to the drafting of the conditions. The conditions appear to have been drafted so as to require the expert to adopt one method of valuation only, being that which is the most appropriate. The expert's evidence had nothing to do with the propriety or otherwise of averaging a range of values obtained by the one method of valuation. Common sense, however, would suggest that the fairest result would be obtained by taking an average of values if obtained by the one method of valuation.
The requirement that the value take into account confidential information and a control premium (if any)

54. The condition was also attacked on the basis that the expert was to have full access to, and presumably therefore take into account in arriving at his fair and reasonable valuation, "all material information (both positive and negative)" to the extent that such information is available to the directors and management of the target company and irrespective of whether such information was publicly available.

55. It was submitted that ordinary commercial take-overs are carried out on the basis of publicly available data. To require that internal management information be used as a basis of determining a valuation (and thereby a price) would be in the result uncommercial and by implication therefore unreasonable.

56. There appears to have been no evidence before the Tribunal as to the manner of calculation of the offer price for the shares in Hawker Siddeley or as to whether in calculating this price the applicant had regard to confidential information of Hawker de Havilland and Westinghouse. The Tribunal made no finding of fact that such information was, in fact, used.

57. Application of the philosophy behind s. 731(d) would suggest that the offer to be made to shareholders in Hawker de Havilland and Westinghouse be made on terms that ensure that if any benefits are granted to shareholders of Hawker Siddeley relevant to the holding of that company directly or indirectly in the Australian public companies, that benefit be available to the shareholders of Hawker de Havilland and Westinghouse. Conversely, if no benefit were offered to the shareholders of Hawker Siddeley, that would be a relevant fact for the Tribunal to take into account in determining whether, as a condition of exemption, BTR should be required to make a bid at all and certainly as to the terms on which such a bid should be made. It may be noted that the concept of benefit includes, but is not limited to, the question of price.

58. In some cases (we are unable to say whether the present is such a case) it will be a simple matter to determine how much of the consideration to be paid to the shareholders of the upstream company relates to its holding in an underlying company. The simple case is where the only asset of the upstream company is its holding of shares in the underlying company. In that simple case, any benefit to the shareholders of the upstream company will be apparent. The price to be offered to the holders of the shares in the underlying company will then be the same price offered to the holders of shares in the upstream company.

59. In other cases, however, the question whether there is a benefit and the quantum of that benefit will not be apparent. The present is probably such a case.

60. In our view, it is incumbent upon the Commission or the Tribunal, in the event of an application for review being made to it, to consider whether a benefit will accrue by the acquisition, otherwise proscribed, to the shareholders of the upstream company related to the holding by that company, directly or indirectly, of the prescribed percentage or greater of shares in the relevant Australian company. This the Tribunal did not do in the present case and its failure to take into account this relevant matter is an error of law vitiating its decision.

61. If the decision-maker concludes on the material before it that a benefit will accrue to the holders of the shares in the upstream company, then it would ordinarily be appropriate that an exemption would, if granted, be conditional upon the making of a take-over bid for the shares in the underlying Australian company. Of course, there may be other relevant matters in a particular case which the decision-maker will take into consideration.

62. Where the decision-maker forms the view that the exemption should be conditional upon the making of a take-over bid, the question will then arise as to the price at which that bid should be pitched. If the quantum of the benefit to the shareholders of the upstream company related to its holding in the relevant Australian company can be ascertained, then that should fix the price. Evidence of the process by which the upstream bid was calculated may well assist. Where the decision-maker has concluded that there was a benefit, but the evidence does not permit quantification of that benefit, then the decision-maker may conclude that any such benefit would be appropriately made available to the shareholders of the underlying Australian public company if the bid were required to be made at a price determined by reference to the fair value of the shares in the Australian public company.

63. The decision-maker may then require the appointment of a valuer to determine the fair value of those shares. The valuer, appointed as an expert, will ordinarily not require instructions as to the method of carrying out this task. Whether it is appropriate to have regard to confidential information will depend on the circumstances of the case. It would not, having regard to the underlying philosophy of the Eggleston principles, be appropriate in every case. Indeed, it would be only if the decision-maker concluded on the facts that those who fixed the price of the upstream bid had access to such material that a valuation of the underlying public company shares should take such material into account.

64. In the present case, the Tribunal reached no such conclusion and accordingly we are of the view that the decision to require the valuer to take into account confidential material was unreasonable.

65. These same principles are applicable when considering the release of the so-called "control premium".

66. It is important to understand what this "premium" means. No individual share in a company carries any premium at all. If the fair value of one share in a company is to be ascertained by a valuer, that valuer will arrive at the valuation by reference to the appropriate valuation method (whether by capitalising profits or yields or by reference to the assets of the company) on the basis, if all shares in the company are ordinary shares, that each share has the same value. However, a parcel of shares carrying control may have a special value in that a hypothetical willing, but not too willing, purchaser would be prepared to pay more for those shares precisely because the parcel carries with it control. What percentage of shares constitutes control for this purpose may depend upon the facts of the particular case.

67. Accordingly, a direction to a valuer to determine the fair value of shares in a company would have the result that no regard would be had to a control premium precisely because that valuation is not a valuation of a particular parcel of shares.

68. If regard be had to the philosophy inherent in the Eggleston principles then, as we have indicated, it is necessary to determine whether there will be a benefit given to the shareholders in the upstream company relative to the holding of that company in the underlying Australian company. That benefit may be by way of a premium over and above the fair value of the shares in the upstream company reflecting the extra value of the upstream company constituted by a control premium attaching to its holding of shares in the underlying Australian company.

69. If the decision-maker determines that such a benefit will be given and that it reflects a control premium relative to the parcel of shares in the underlying company and the rights of control which attach to that parcel then, but only then, would it be reasonable to fix the price at which the take-over offers are to be made so as to confer upon the holders of shares in the underlying company, so far as possible, the same benefit as will be conferred upon the holders of the upstream company.

70. In the present case, the Tribunal made no finding that any such benefit would be forthcoming to the shareholders of Hawker Siddeley. Nor, in consequence, did it find that such benefit was related to any control premium attaching to Hawker Siddeley's interest in Hawker and Westinghouse. Rather, the Tribunal left it to the expert valuer to determine whether any control premium was appropriate. In so doing, the Tribunal erred in law.
Failure to permit the offer to be subject to conditions appropriate to compulsory acquisition.

71. The applicant, before the Tribunal, had sought the addition of a condition relating to the compulsory acquisition level referred to in s. 701 of the Law, in effect by permitting it to withdraw its offers to the minority shareholders unless it achieved an acceptance level of 90% of shares from 75% of the shareholders so as to entitle it to use the compulsory acquisition procedures set out in Division 6 of Part 6.5 of Chapter 6 of the Law. In rejecting the insertion of such a condition the Tribunal said:

"Having regard to the Eggleston principles, we consider that this
would not be an appropriate condition in the present circumstances.
There is not a significant number of shareholders involved. There
may be many good reasons why some of them would not want to sell,
particularly the institutional investors. To introduce such a
condition at such a late stage, would frustrate the general approach
which we consider to be correct in the present circumstances. It
could effectively prevent selected shareholders who wanted to sell
from participating in the benefits that should be available to all
shareholders. We do not consider that the adverse consequences to
BTR of failure to obtain 100 per cent acceptance from the minority
shareholders is outweighed by these considerations on their behalf,
having regard to the conditions of s 731."

72. This passage was the subject of criticism by the applicants. It was submitted that even assuming that the Eggleston principles enshrined in s. 731 were applicable to an upstream acquisition, the Tribunal had failed to identify which of those principles it had in mind. It was said that it was hard to see the relevance of the fact that there was not a significant number of shareholders involved. If taken literally, the passage may suggest, it was argued, a confusion between the shareholders in the upstream company and those in the downstream company. However, on balance we do not think that any error of law vitiating the Tribunal's decision in this regard exists.

73. Whether s. 731 does or does not apply to an upstream acquisition, it is clear that s. 731 reflects philosophical principles which the legislature regarded as of general significance. Those philosophical principles suggest that, in the case of an upstream bid, it will be relevant to take into account the desirability that shareholders in the downstream company have equal opportunities to participate in any benefit accruing to the shareholders of the upstream company relating to the holding of shares by that company, directly or indirectly in the downstream company. It was, therefore, relevant to balance on the one hand that matter, against any detriment which might accrue to BTR if bound to purchase shares in the Australian companies, notwithstanding that it was ultimately unable to acquire 100% of the shares. That was the task which the Tribunal undertook. The decision it reached was for it to reach, not for this Court.
Whether the Tribunal purported to bind persons who were not parties to the proceedings before it.

74. The instrument as framed by the Tribunal can perhaps be read as imposing obligations upon Hawker de Havilland and Westinghouse (incidentally parties to the proceedings before the Tribunal) as well as the directors and management of those companies and the expert. However, that is not the true intent of the instrument. What the instrument does is define the conditions upon which the exemption for BTR's acquisition is to be granted. It imposes no conditions upon any party. If the compliance bids proceed in accordance with the instrument, with the co-operation of the target companies, and their directors and management (and there is no reason to suppose that it will not) the conditions will have been complied with. If for some reason the target companies or their directors and management did not supply information to the expert, or the expert were not to act in accordance with the conditions imposed, then it would be open to BTR to return to reopen the matter of the conditions imposed. No error of law can be shown in this respect.
Whether the Tribunal should have remitted the matter to the Commission to redraft the appropriate conditions.

75. Before the Tribunal there was argument as to whether the powers granted to the Commission under s. 728 could, having regard to the terms of s. 109ZB(1), be re-exercised by the Commission so as to impose a new set of conditions different from those originally propounded by it. The Tribunal found it unnecessary to determine this issue and as it was not argued fully before us, we too express no opinion on the matter. We will assume, as indeed the Tribunal probably assumed, that such power did in fact exist.

76. The Tribunal took the view that the urgency of the matter required that the Tribunal address for itself the terms and conditions appropriate for the making of the compliance bid. In so doing it expressed the warning that:

"...this should in no way be taken as an indication that this
Tribunal is prepared to embark in the future upon a course of
redrafting instruments which may contain any imperfections or
undesirable elements. It is not normally the practice of this
Tribunal to displace that drafting function of the decision maker.
The circumstances of this case must be regarded as special and
unique."

77. For the applicant it was submitted that the Tribunal erred in three respects. First, it was said that the Commission was the statutory authority vested with the discretion under s. 728 and if it had erred the decision should have been remitted to it. Second, it was said that there was no evidence or submission by any party before the Tribunal that the Commission could not have dealt with the matter expeditiously. Third, it was said that the Commission was an expert body and should have been directed to exercise that expertise afresh, guided by the views of the Tribunal.

78. There is no substance in this submission. Once the Tribunal was seised of the matter it had, for the purpose of its review, all the powers and discretions conferred upon the Commission by the Law: Administrative Appeals Tribunal Act 1975 (Cth), s. 43(1). That sub-section gave to the Tribunal a discretion to decide to vary the decision of the Commission or to remit the matter for reconsideration by the Commission in accordance with its directions or recommendations. Indeed, the applicants conceded that the Tribunal had power to draft the instrument itself. The Tribunal chose, having regard to the commercial urgency of the matter, to embark upon the task of drafting the instrument itself. Although it made no reference to the expertise of the Commission or the availability of the Commission to undertake the task expeditiously, it can not be assumed that it was unaware of these matters. Its warning in the passage cited, shows that the Tribunal took the view that it was embarking upon a course which it would not ordinarily pursue and for reasons of the urgency which it perceived. No error of law has been disclosed which would entitle this Court to now require the Tribunal, acting as it did within power, to remit the matter to the Commission to do once again that which the Tribunal has assayed.
The role of the Commission

79. There remains one matter. The Commission is a respondent both to the application to the Tribunal for review of the Commission's decision granting the exemption under s. 728(1) of the Law and to this appeal. Counsel for each party, including the Commission, made submissions in writing to us, presented written outlines of argument and, on the hearing of the appeal, made oral submissions. Counsel for the Commission, properly in our view, advanced arguments relating to this Court's jurisdiction and powers in cases of this kind, construction of certain sections of the Law and the powers of the Commission under sections of the Law with which this case is concerned. The Court expressed the view to counsel for the Commission that, where proceedings under the Law involve issues of a purely commercial nature and where the other parties are well able properly to adduce evidence and make submissions on all relevant facts to the Court, the Commission should not assume the role of an active party and present substantive arguments with respect to those issues. The position is different where a commercial issue arises but is not fully or properly canvassed by the other parties. The position is also different where cases raise issues of national significance, questions of construction of the Law or the procedures the Commission should follow under the Law. Plainly the Commission has a vital role to play with respect to those questions. This is not intended to be an exhaustive statement of the circumstances in which the Commission should or should not assume the role of an active party, as the Law has been in operation for a short time only, indeed a little more than twelve months, and it is not possible at this stage to state more definitively the Commission's role in cases arising under that law. The Commission is a national body of considerable importance. It is responsible for the enforcement of the Law, a responsibility recognised by the legislature in s. 1330 of the Law which empowers the Commission to intervene in any proceedings relating to a matter arising under the Law. As cases arise from time to time the role of the Commission will become more clearly defined.

80. The Commission is a body with substantially different functions and powers to many other statutory bodies including for example the Australian Broadcasting Tribunal. In The Queen v The Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 at 35-36 the High Court (Gibbs, Stephen, Mason, Aickin and Wilson JJ.) said that in cases involving the issues of the kind which arose in that case the usual course is for a tribunal to submit to such order as the Court may make and that it was an unusual course for the Broadcasting Tribunal to contest the prosecutor's case for relief by presenting a substantive argument as it sought to do in that case. The Court did not encourage that course and said:

"The presentation of a case in this Court by a tribunal should be
regarded as exceptional and, where it occurs should, in general, be
limited to submissions going to the powers and procedures of the
tribunal."

81. It is considerations of the kind to which the High Court referred in Hardiman that lead us to express the views we have.
Conclusion

82. In our view, the Tribunal's decision should be set aside and the matter remitted to the Tribunal for decision in accordance with law. As the applicants have succeeded in respect of some only of their grounds of appeal, we are of the view that the appropriate cost order should be that the respondents, other than the Commission, pay two-thirds of the applicants' costs.

The applicants, BTR Plc. ("BTR"), a United Kingdom corporation, and BTR Nylex Limited, an Australian subsidiary of BTR, appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal") reviewing a decision of the fourth respondent, the Australian Securities Commission ("the Commission") made under s. 728 of the Corporations Law ("the Law"). The decision of the Commission, made pursuant to s. 728(1) (which empowers the Commission to exempt a person from compliance with any of the provisions of Chapter 6 of the Law) was that the applicants be exempted from compliance with s. 615 of the Law (also in Chapter 6 and which prohibits the acquisition of interests in shares in certain circumstances) but made the grant of the exemption conditional upon the fulfillment of certain conditions. The Tribunal (Justice D.F. O'Connor J.(President), Mr B.J. McMahon (Deputy President) and Mr W.G. McLean (Member)), set aside the Commission's decision, but substituted another exemption with different conditions. The appeal is brought to this Court pursuant to s. 44(1) of the Administrative Appeals Tribunal Act 1975, which provides that a party to a proceeding before the Tribunal may appeal to the Federal Court, on a question of law, from any decision of the Tribunal in that proceeding. The applicants raise several procedural objections to the course of proceedings before the Tribunal. They also contend, on legal grounds, that the Tribunal should have decided that an unconditional exemption be granted; alternatively, the applicants submit, again as a legal question, that the Tribunal should have decided that different conditions be imposed.

2. In order to understand the questions of law which are said now to arise, it is necessary to refer to the background and history of the matter as follows.
The background and history of the matter

3. On 19 September 1991, the applicants, by their solicitors, applied in writing to the Commission for the exemption of BTR from the operation of s. 615 of the Law in respect of a takeover bid then about to be made by BTR. Section 615 provides that, except as provided by Chapter 6, a person shall not acquire shares in a company if, inter alia, any person who (i) is not entitled to any voting shares in the company; or (ii) is entitled to less than the prescribed percentage of the voting shares in the company - would, immediately after the acquisition, be entitled to more than the prescribed percentage of the voting shares in the company. The solicitors for the applicant stated that the need for the exemption arose out of a proposed take-over bid to be made in the United Kingdom by BTR, which, as has been noted, is a United Kingdom corporation, for the share capital of Hawker Siddeley Group Plc, another United Kingdom corporation ("Hawker Siddeley"). Hawker Siddeley held 72.85 per cent of the issued share capital of the third respondent, Hawker de Havilland Limited, an Australian company ("Hawker de Havilland") and 85 per cent of the issued share capital of the first respondent, Westinghouse Brake and Signal Co. (Aust.) Limited, another Australian company ("Westinghouse"). Mr Prowse, the second respondent, is a member of Westinghouse. The solicitors for the applicants then accepted, and it has been common ground at all times, that for the purposes of s. 615, upon BTR becoming entitled to 20 per cent or more of the issued share capital of Hawker Siddeley, BTR would be deemed, by virtue of the operation of the provisions of Division 5 of Chapter 1 of the Law, also to have acquired a relevant interest in the shares held by BTR in Hawker de Havilland and in Westinghouse.

4. As has been said, the exemption was sought pursuant to s. 728(1) of the Law which relevantly provides that the Commission may, on application by the person or persons concerned, exempt a specified person or persons, "subject to such conditions (if any) as are specified in the exemption", from compliance, either generally or in a particular case, with Chapter 6 or a specified provision or provisions of that Chapter, such as, for instance, s. 615.

5. On 20 September 1991 BTR announced the making of the take-over offers ("the take-over offers").

6. On 25 September 1991, the Commission, acting pursuant to s. 728(1), exempted the applicants and their associates from compliance with s. 615 in respect of the take-over offers on the following, inter alia, conditions:

"1. Either BTR Plc or BTR Nylex Limited will make or cause to be
made takeover offers under Chapter 6 of the Law (within 1
(one) month of BTR Plc or BTR Nylex Limited becoming entitled
to 20 per cent or more of the shares in Hawker Siddeley Group
Plc pursuant to the takeover offers announced by BTR Plc on
the 20 September 1991) for all of the voting shares in Hawker
and in Westinghouse, each of which is subject to the following
conditions:
(i) that no prescribed occurrence take place in relation to
the target company between the first public announcement
that the offers will be made and the close of the
takeover period in relation to the scheme under which
the offer is made;
(ii) that there shall be no intervention as regards any of
the proposed offers by any governmental or statutory
body of Australia, other than by the Australian
Securities Commission in the performance of its
functions and duties under the Law;
(iii) that the offers for Hawker Siddeley Group Plc by BTR Plc
become unconditional within three months from the date
of the relevant takeover scheme; and
(iv) that the Treasurer does not, within the time allowed
under that Act, make an order under the Foreign
Acquisitions and Takeovers Act 1975 prohibiting the
acquisition of shares to which the offers relate or
directing their disposal; and
(v) that each offer will remain open for a period that is 3
months from the date of the offer.
and
2. That BTR Plc or BTR Nylex Limited in making the two takeover
offers referred to in Condition 1 shall offer as the
consideration or as an alternative consideration for the
shares of Hawker and Westinghouse an amount of cash or cash
with a share alternative for each share which amount of cash
shall be not less than the average of the mean of a range of
values separately assessed by two independent experts,
acceptable to the Australian Securities Commission, based on
publicly available information concerning the two target
companies.
..."

7. On 31 October and 1 November 1991 respectively, Westinghouse (and Mr Prowse) and Hawker de Havilland applied to the Tribunal for a review of the Commission's decision. The Tribunal commenced the hearing of their applications on 21 November 1991. The hearing continued for five days. At the commencement of the hearing, the Tribunal was informed that BTR had by then acquired more than 20 per cent of the shares in Hawker. Later in the hearing, the Tribunal was informed that BTR had acquired 71.09 per cent of the shares by 22 November and had declared its offer to be unconditional. On 27 November, at the conclusion of the hearing, the Tribunal announced its decision in the matter. As has been said, the Tribunal decided to set aside the Commission's decision. The Tribunal decided to grant the applicants an exemption but upon different conditions, inter alia as follows:

"1. BTR plc (or BTR Nylex Limited if condition 2(iii) is
satisfied) (the "Offeror") will make, or cause to be made,
takeover offers (the "Australian Offers") under chapter 6 of
the Law for all the voting shares (the "Shares") in
Westinghouse and Hawker (each a "Target Company") within 6
weeks (or such longer period as the ASC, the Offeror and the
Target Company may agree) after the date of this Instrument.
2. The Australian Offers must not be subject to any defeating
conditions other than the following conditions:
(i) that no prescribed occurrence takes place between the
date of the expert valuer's report and the close of the
takeover period in relation to the scheme under which
the Australian Offers are made, other than as agreed in
writing between the Offeror and the Target Company;
(Emphasis added)
(ii) that there is no materially adverse government
intervention in relation to the Australian Offers prior
to the close of the takeover period in relation to the
scheme under which the Australian Offers are made by any
governmental or statutory body in Australia which
prohibits the Offeror from acquiring the Shares other
than the ASC in the performance of its functions and
duties under the Law; (Emphasis added)
(iii) that the Treasurer does not, within the time allowed
under the Foreign Acquisitions and Takeovers Act
("FATA") make an order under FATA;
(a) prohibiting the acquisition of the Shares; or
(b) directing their disposal
other than an interim order which is not continued on a
permanent basis.
But if the closing date of the Australian Offers is, or is
extended to, a date later than 6 weeks after the date of those
Offers, the Australian Offers shall automatically become free
free of all such conditions.
3. The Offeror shall use its best endeavours to avoid the
occurrence of the conditions specified in paragraphs (i), (ii)
and (iii) above, and shall make all relevant applications and
expeditiously supply relevant information to any appropriate
government or statutory body and to the Treasurer.
4. Unless the Offeror has received acceptances sufficient to
entitle it to proceed to compulsory acquisition under section
701, the date on which the Australian Offers for the Shares in
the Target Company closes (including any lawful extensions)
shall be upon the happening of the later of these events:
(a) 1 month after the date of those Offers; or
(b) 1 month after the earlier of
(i) the expiry of the maximum time period in which the
Treasurer can make a permanent order under FATA as
referred to in paragraphs (2)(iii)(a) and (b)
without such a permanent order being made;
(ii) the date on which the Offeror is notified that
the Treasurer does not intend to make such a
permanent order;
(iii) the date on which such a permanent order is made.
5. The Offeror shall offer as consideration under the Australian
Offers for the Shares in the Target Company an amount of cash,
(whether or not there is any alternative consideration) for
each such Share which is no less than a price determined in
the following manner:
(a) the ASC shall appoint and instruct one independent
expert to assess a price for the Shares which is fair
and reasonable to offerees. The expert shall be
appointed after consultation by the ASC with the Target
Company and BTR plc;
(b) the expert shall have full and unencumbered access to
all information available to the directors and
management of the Target Company including all material
information (both positive and negative) which cannot
properly be made public at the time of the assessment.
All questions of the expert shall be answered in a bona
fide manner;
(c) the instructions to the expert shall:
(i) require the expert to assess a price for the
Shares which is fair and reasonable to offerees
(including an appropriate share in any control
premium which is assessed by the expert to be
appropriate).
(ii) require the expert to perform its duties as nearly
as practicable as if preparing a report for the
purposes of section 648 of the Law and to comply
as nearly as practicable with policy release 102
and practice note 351 and any other relevant NCSC
and ASC releases, practice notes and policy
statements;
(iii) require the expert to provide its valuation by
reference to the most appropriate valuation
methodology in accordance with the guidelines
referred to in paragraph (ii) above and permit the
expert to provide its valuation in the form of a
range between a lower and a higher value
ascertained by reference to the most appropriate
valuation methodology, but if the expert does so,
the price shall be deemed to be the higher value;
(Emphasis added)
(iv) require the expert to enter into an agreement with
the Target Company to keep confidential the
confidential information of the Target Company and
not to include any such confidential information
in the expert's report without the consent of the
Target Company.
(d) neither the Offeror nor the Target Company shall have
contact with the expert other than in the following
circumstances:
(i) the Target Company may respond to the expert's
questions and requests for information;
(ii) not later than 3 December 1991 each of the Target
Company and the Offeror may address comments in
writing in connection with the valuation to the
ASC which shall provide them to the expert and
copy such comments to the other of them;
(iii) the expert shall provide to the ASC, which shall
provide to the Offeror and the Target Company, a
copy of that part of the final draft expert's
report which describes the operations of the
Target Company and both the Offeror and the Target
Company may provide written comments to the ASC,
within such time as the ASC shall indicate, which
shall pass such comments on to the expert and copy
such comments to the other of them.
6. The Offeror shall include the expert's report in its Part A
Statement. The Target Company shall, in its Part B Statement,
refer to the expert's report as the report under section 648
of the Law. The Instrument shall be deemed to be any
necessary modification or waiver that may be necessitated by
the circumstances.
..."

8. At the time of the announcement by the Tribunal of its decision, the learned President informed the representatives of the parties that the Tribunal would provide reasons for its decision within 28 days. Mr Goldberg QC, appearing for BTR then made the following submissions:

"MR GOLDBERG: Just before the tribunal does adjourn, your Honour,
are you giving oral reasons for this decision, because in my
submission under the act if you are not giving written reasons you
are obliged to give oral reasons for the decision?
HER HONOUR: We are proposing to give written reasons for our decision.
MR GOLDBERG: No, but my submission is, as I understand the act, if
you are giving written reasons you have got the option when you hand
down a decision, which I understand the legislation, either to give
written reasons, or if you do not give written reasons, you give
oral reasons at the time and if you give oral reasons at the time
the parties have the right to request within 28 days of the date
specified written reasons. What I am asking is: are you giving - - -
HER HONOUR: We did not propose to do that, Mr Goldberg. We
proposed to put our reasons into writing as soon as practicable
after today.
MR GOLDBERG: Yes.
HER HONOUR: I will provide them to you. We could have provided
sketchy oral reasons, or a summary of our reasons today, but quite a
number of very substantial matters have been raised and need to be
carefully expressed in the written reasons and we propose to do that
as soon as practicable. It will be fairly soon.
MR GOLDBERG: Yes. Well, I want to make clear what my submission
is. My submission is that if you are making a decision today in a
form of this typewritten document, that I do not think was
typewritten by any of the - it is not one of the documents that was
handed up by the parties - - -
HER HONOUR: No.
MR GOLDBERG: - - - so this represents the decision of the tribunal.
Under the legislation you are obliged to give oral reasons at the
time you make your decision if you are not at that stage in a
position to give written reasons.
HER HONOUR: Well I do not, that is unknown to me. I hear you Mr
Goldberg but that is not a practice that the tribunal has.
MR GOLDBERG: I do not want there to be any misunderstanding. My
submission now is a matter of record that the tribunal ought to give
oral reasons now for their decision.
HER HONOUR: Well we do not propose to today. We are going to give
written reasons and we will leave it at that."

9. The learned President then adjourned the further hearing before the Tribunal. On 11 December 1991, the Tribunal published the reasons for its decision. However, before us, the applicants again press the submission that the Tribunal was bound in law to provide reasons for its decision on 27 November when the Tribunal made its decision. It is convenient to deal with this contention as a preliminary point.
Was the Tribunal bound to provide reasons at the time it made its decision?

10. On behalf of the applicants, reliance is placed upon s. 43(2) of the Administrative Appeals Tribunal Act which, relevantly, provides -

"Subject to this section..., the Tribunal shall give reasons either
orally or in writing for its decision."

11. It is submitted on behalf of the applicants that the Tribunal erred in law in failing to comply with the requirements of s.43(2). They say that the Tribunal refused to provide even oral reasons for its decision. They contend that s. 43(2) is mandatory and requires the Tribunal to provide reasons at least in oral form when delivering its decision and that failure to do so constitutes an error of law. Reliance is placed upon the reasoning in O'Brien v Repatriation Commission [1984] FCA 95; (1984) 1 FCR 472 per Keely and Fitzgerald JJ. at 486 and Dennis Willcox Pty. Ltd. v Federal Commissioner of Taxation (1988) 79 ALR 267 per Jenkinson J. at 276-7.

12. I have difficulty in accepting this analysis.

13. The starting point for a consideration of the applicants' argument is an examination of the provisions of s. 43 of the Administrative Appeals Tribunal Act, which is the governing provision of the statute for present purposes, and which deals with the review powers of the Tribunal as follows:

(1) By s. 43(1), for the purpose of reviewing a decision, the
Tribunal may exercise all the powers and discretions that are
conferred by any relevant enactment on the person who made the
decision and shall make a decision in writing (a) affirming the
decision under review; (b) varying that decision; or (c) setting the
decision aside and (i) making another decision in substitution or
(ii) remitting the matter for reconsideration.
(2) Section 43(2A), which was inserted in 1982, is in these terms:
"Where the Tribunal does not give reasons in writing for its
decision, a party to the proceeding may, within 28 days after
the day on which a copy of the decision of the Tribunal is
served on that party, request the Tribunal to furnish to that
party a statement in writing of the reasons of the Tribunal for
its decision, and the Tribunal shall, within 28 days after
receiving the request, furnish to that party such a statement."

14. (The mischief at which this amendment was directed was explained by Mr Viner, Minister for Industrial Relations in the second reading speech as follows (see Hansard, House of Representatives, 22 April 1982 at 1816):

"It is often convenient for the Tribunal to be able to hand down a
decision, with oral reasons for the decision, without the delay
involved in the preparation of a written statement. As the Act now
stands, it is doubtful whether this may be done, even where a
written statement is provided later. Accordingly, clause 33 of the
Bill empowers the Tribunal to give either oral or written reasons at
the time it hands down a decision. If it does not then give written
reasons, it must do so if requested to do so by a party to the
proceedings. This provision is designed to avoid delays that now
occur in the decision of the Tribunal being available in those cases
where it has come to a conclusion at the end of the hearing, but
must now delay the handing down of the decision until reasons for
the decision have been reduced to writing. The change will be of
particular benefit in many social security cases, where an early
decision is desirable.")
(3) By s. 43(2B), also inserted in 1982, it is provided that where the
Tribunal gives in writing the reasons for its decision, those reasons
shall include its findings on material questions of fact and a reference
to the evidence or other material on which those findings were based.
(4) By s. 43(3), the Tribunal is obliged to cause a copy of its
decision to be served on each party to the proceeding. (By s. 43 (5),
as amended in 1982, s. 43(3) applies also in relation to reasons.)
(5) By s. 43(5A), unless (pursuant to s. 43(5B)) the Tribunal specifies
a later date, a decision of the Tribunal comes into operation forthwith
upon the giving of the decision.

15. The present question is one of statutory interpretation. It is clear that s. 43 distinguishes between the Tribunal's decision on the one hand and its reasons on the other. It is also clear from the provisions of s. 43(2) that the Tribunal is bound to give reasons either orally or in writing. Because s. 43(2) does not expressly specify a time within which reasons, whether oral or in writing, must be given, the usual implication, that the Tribunal is bound to provide reasons within a reasonable time of the making of its decision should, in our view, be made. It is well established that, where a statute is silent on the question of the time in which an act is to be performed, an implication will generally be made that the act be performed within a reasonable time (see Koon Wing Lau v Calwell [1949] HCA 65; (1949) 80 CLR 533 per Dixon J. at 573-4; Giris Pty. Ltd. v Federal Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365 per Windeyer J. at 383-4; Neal v Commissioner for Superannuation (1987) 76 ALR 281 at 290-1).

16. In my opinion, no breach of the duty, express or implied, embodied in s. 43(2) has been made out in the present case. It may be accepted that the matter was urgent. But it was also complex. Reasons in writing were given approximately a fortnight after the making of the decision. The applicants have, in my view, failed to demonstrate that this amounted to a delay which went beyond what, in all the circumstances, was a reasonable time for the Tribunal, constituted as it was by three persons, to explain its process of reasoning in a matter which, on any view, was complicated and also of considerable importance.

17. I would add that there is no substance in the suggestion that, in every case, the Tribunal is bound to give oral reasons when making its decision: the language of s. 43(2), to the effect that the Tribunal may give its reasons orally or in writing, is quite to the contrary.

18. (For the sake of completeness, it should be noted that no breach of s. 43(2A) is here alleged. Given its time limits (28 days at each stage), no failure to comply with s. 43(2A) could be suggested.)

19. The authorities relied upon by the applicants are distinguishable. They were concerned with the adequacy of statements of reasons. The present question is concerned only with the time within which the Tribunal is bound to give reasons.

20. In my opinion, the Tribunal was obliged by s. 43(2) to give its reasons, either orally or in writing, within a reasonable time of 27 November 1991. The Tribunal gave its reasons, in writing, on 11 December 1991. The applicants have failed to establish that this was done at a time which went beyond what was reasonable in all the circumstances of the case. No other breach of s. 43 is alleged.

21. It is convenient next to consider two other procedural objections raised on behalf of the applicants.
Should the Tribunal have remitted the matter to the Commission?

22. As has been noted, by s. 43 of the Administrative Appeals Tribunal Act, when the Tribunal sets a decision aside, it is empowered to (i) make another decision in substitution or (ii) remit the matter for reconsideration. It is for the Tribunal to decide, taking into account the relevant considerations, which of these alternative courses is appropriate in the circumstances.

23. The present matter was complex and urgent. It was thus not inappropriate that the Tribunal specify the conditions for the grant of the exemption, rather than remit the application to the Commission for its further consideration. No error of law in the exercise of the Tribunal's adjectival discretion in this regard has been demonstrated.
The position of third parties

24. On behalf of the applicants it is submitted that the Tribunal erred in law by purporting, in its decision, to bind Westinghouse and Hawker de Havilland over whom, the applicants contend, the Tribunal had no authority for present purposes.

25. I have difficulty in accepting this analysis.

26. The application for exemption was made by the applicants to the Commission and, on review, to the Tribunal. In the terms of s. 728, they were the parties to the application. It is true that the conditions imposed contemplate the co-operation of third parties to a limited extent. But it does not follow that the Tribunal is ordering these third parties to do, or not do, anything. If they do not co-operate, it may be that the condition cannot be fulfilled, or that the condition should be varied or discharged. However, this is a matter between the applicants and the Commission and, on review, the Tribunal.

27. I turn now to the substantive grounds of appeal, which are conveniently considered separately.
Was the Tribunal bound not to impose any conditions at all upon the grant of the exemption?

28. As has been noted, s. 728 of the Law empowers, but, of course, does not oblige, the Commission (and thus, on review, the Tribunal) to grant an exemption "subject to such conditions (if any) as are specified in the exemption". It is clear, then, that it is a matter for the decision-maker, taking into account the relevant considerations, whether it is appropriate, in the particular circumstances of the case, to grant, or to refuse to grant, an exemption, and if an exemption is to be granted, whether conditions ought to be imposed. Naturally the applicants do not suggest that an exemption should have been refused outright. The central issue in this litigation is whether, as a matter of substance (if not of form) the exemption should have been refused except upon the fulfilment of certain conditions. This question can only be addressed usefully by reference to the particular conditions in fact imposed by the Tribunal about which complaint is now made. I will thus proceed to consider each condition now in contention in turn. (It should be noted that I have not referred, in these reasons, to certain conditions imposed by the Tribunal in respect of which the applicants made no complaint.)
Condition 1

29. Under this condition, BTR is to make take-over offers for the shares in Westinghouse and Hawker de Havilland. The terms of these offers are specified in other conditions to which reference is made below when considering the particular complaints made by the applicants in those connections. The present condition raises the question whether it was open to the Tribunal, in principle, to require, as a condition of an exemption from s. 615, that BTR make an appropriate offer for the minority (yet significant) shareholdings in the two Australian subsidiaries of Hawker Siddeley.

30. Reference was made by the Tribunal to s. 731 of the Law as follows:

""s 731 In exercising any of its powers under section 728 or
730, the Commission shall take account of the
desirability of ensuring that the acquisition of shares
in companies takes place in an efficient, competitive
and informed market and, without limiting the generality
of the foregoing, shall have regard to the need to ensure;
(a) that the shareholders and directors of a company
know the identity of any person who proposes to
acquire a substantial interest in the company;
(b) that the shareholders and directors of a company
have a reasonable time in which to consider any
proposal under which a person would acquire a
substantial interest in the company;
(c) that the shareholders and directors of a company
are supplied with sufficient information to enable
them to assess the merits of any proposal under
which a person would acquire a substantial
interest in the company; and
(d) that, as far as practicable, all shareholders of a
company have equal opportunities to participate in
any benefits accruing to shareholders under any
proposal under which a person would acquire a
substantial interest in the company;
but nothing in this section requires the Commission to
exercise any of its powers in a particular way in a
particular case."

31. The Tribunal pointed out that the provisions of s. 731 had their origin in the Eggleston Committee Report (February 1969). The Tribunal went on to say"

"S 731 requires the ASC to 'have regard to' the four stated
principles. In a different context, Gibbs C.J. considered that this
phrase required the decision maker 'to take those matters into
account and to give weight to them as a fundamental element in
making his recommendation'... The fourth Eggleston principle, namely
that all shareholders of a company are to have equal opportunities
to participate in any benefits accruing to any shareholders under
any proposal under which a person would acquire a substantial
interest in the company, is a principle that figured largely in the
decision making process and in the review before us. We had regard
to this principle as a fundamental element in our decision. The
concluding words of s 731 make it clear that the application of any
one of the 4 principles is not obligatory in any particular case.
It is however necessary for the ASC (and for this Tribunal) to have
regard to them in the manner indicated by Gibbs C.J."

32. It appears that the Eggleston Committee was concerned primarily with the position of minority shareholders when a "proposal (arose) under which a person would acquire a substantial interest in the company." It is true that s. 731 does not, in terms, address the specific situation which arises here, that is to say, a deemed acquisition of a relevant interest in shares by virtue of an upstream acquisition. But, in my opinion, the language of s. 731 and, of s. 731(d) in particular, is sufficiently general to permit it to be applied, on appropriate terms, to the case of an upstream acquisition of the present kind. The real question for resolution in this instance, a matter to be considered later in these reasons, is whether the terms of the offer were appropriate.

33. In my opinion, it was open to the Tribunal to have regard to the Eggleston principles and, in that respect, to require that an offer be made for all the downstream shares as condition of exempting the deemed downstream acquisition from the operation of Chapter 6.
Condition 2(i)

34. As has been noted, under this condition, in substance, the offer is defeasible if a "prescribed occurrence" takes place between certain dates. "Prescribed occurrence" is defined in s. 603 of the Law, in relation to a target company, to mean:

"(a) any one or more of the provisions of the constitution
of the target company or of a subsidiary being altered
in any of the ways mentioned in subsection 193(1);
(b) the target company or a subsidiary resolving to reduce
its share capital in any way;
(c) the target company or a subsidiary making an allotment of, or
granting an option to subscribe for, any of its shares, or
agreeing to make such an allotment or grant such an option;
(d) the target company or a subsidiary issuing, or
agreeing to issue, convertible notes;
(e) the target company or a subsidiary disposing, or agreeing to
dispose, of the whole, or a substantial part, of its business
or property;
(f) the target company or a subsidiary charging, or agreeing to
charge, the whole, or a substantial part, of its business or
property;
(g) the target company or a subsidiary resolving that it be wound up;
(h) the appointment of a provisional liquidator of the target
company or a subsidiary;
(j) the making of an order by a court for the winding up of the
target company or of a subsidiary;
(k) the target company or a subsidiary being placed under official
management; or
(m) the appointment of a receiver, or a receiver and manager, in
relation to the whole, or a substantial part, of the property
of the target company or of a subsidiary."

35. As has been seen, it was a term of the earlier conditions imposed by the Commission that no prescribed occurrence take place in relation to the company "between the first public announcement that the offers will be made and the close of the takeover period..." The Tribunal, however, was of a different view. In its condition 2(i), the Tribunal related the prescribed occurrence to the period between the date of the expert valuer's report and the close of the take-over period. In its reasons, the Tribunal said:

"It will be seen that of the 11 possible prescribed occurrences, the
first 6 are more susceptible to control by the target than the
remaining 5. The occurrence of any of them could have a deleterious
effect on the value of the shares. BTR submitted that if this
condition was to be imposed, it should operate from the date of the
public announcement of the bid for HSG. We have taken the view that
if any such prescribed occurrence has occurred (and there is no
evidence of this) then it would be taken into account by the valuer
to whom reference will later be made. Whilst we consider it
reasonable in the interest of the offeror that a prescribed
occurrences condition be retained, it seems to us in the
circumstances of this case that a more appropriate commencement
period would be the date of the valuer's report. From that time
onwards the integrity of the valuation should be preserved from the
adverse effect of any prescribed occurrence."

36. The applicants now challenge this condition. I think that there is considerable force in their challenge. With respect to the Tribunal, the present matter is not only a question of valuation of the shares. A wider view is appropriate. Prima facie, it would be unreasonable to require, as a condition of exemption, that BTR proceed with a bid for the minority shares in Westinghouse and in Hawker de Havilland if, after the announcement of the bid and before the valuation, a prescribed occurrence happened. In commercial terms, such an occurrence could radically transform the character of what BTR proposed to acquire. In those circumstances, it would be unfair to BTR to oblige it to proceed, even if it paid less for the shares.

37. In my opinion, the Commission's condition was the appropriate one to impose.
Condition 2(ii)

38. It will be recalled that this condition referred to the absence of "materially adverse government intervention" as a condition of the bid proceeding. On behalf of the applicants it is submitted that this condition was uncertain, unduly onerous and procedurally unfair to them. As has been noted, the earlier condition framed by the Commission specified "no intervention as regards any of the proposed offers by any Governmental...body..."

39. In my opinion, it was open to the Tribunal to prescribe the condition in the terms it used. Whether government intervention is "materially adverse" may involve questions of degree, but the phrase is not uncertain. Conceptually, the condition is, I think, both apposite and fair.
Condition 5(b)

40. Under this condition, it is contemplated that the expert valuer of the shares have access to, inter alia, confidential information of the management of the target company for the purposes of the valuation of the shares. The rationale for this provision was explained by the Tribunal as follows:

"The proposal that there should be 2 experts, that they should rely
on publicly available information and that the price should be the
average of the mean of a range of values assessed by them was
considered by the ASC to be an appropriate commercial compromise.
That solution, it seems to us, has a number of difficulties.
Firstly, publicly available information is hardly sufficient to form
the basis of a realistic valuation. There are many circumstances
relating to a company's affairs which (quite properly) are known
only to the directors, but which may have a material bearing on the
value of the company's shares. Any valuer attempting a 'fair and
reasonable' valuation must have access to that information."

41. Whilst I respectfully agree that it is appropriate that BTR pay a "fair and reasonable" value for the shares, I have difficulty in accepting that, in the circumstances, condition 5(b) is an appropriate provision. Once it is decided the question of the "fair and reasonable" value of the shares should be referred to a neutral expert, it then becomes a matter for the expert to determine that value in the manner in which he or she, as a matter of expert opinion, believes to be appropriate. In this context, there are difficulties in giving an expert specific directions as to how he or she is to go about determining a "fair and reasonable" value. For one thing, a specific direction such as condition 5(b) could contradict the general direction to express an opinion as to the "fair and reasonable" value of the shares. For another, as has been mentioned, it was not open to the Tribunal to bind third parties, such as the management of the target companies for this purpose. In my opinion, condition 5(b) was not appropriate.
Condition 5(c)(i)

42. Under this provision, the price to be assessed by the expert is to include "an appropriate share in any control premium which is assessed by the expert to be appropriate". In this connection, the Tribunal said:

"A good deal of evidence and submission were directed to
whether or not the minority shareholders in Westinghouse and
Hawker should be entitled to participate in any control
premium paid by BTR to the shareholders in HSG. It was not
disputed that an element of control premium must have been a
component in the UK bid price. The question was whether the
Australian shareholders in the subsidiary should be entitled
to participate in that benefit. It may well be that
calculation of any appropriate local control premium is
extremely difficult, if not impossible. Nevertheless, we
consider it a matter for the valuer to take into account as
he considers it appropriate. We consider that if he can
identify any pro rate control premium, then the Eggleston
principles require that the Australian shareholders should
share in it. Release No. 116 by the NCSC recognises in
paragraphs 19 and 20 that a premium for control would be
appropriate to be considered as an element in arriving at a
fair and reasonable valuation. ASC Practice Note 6.0.1
(Release 1) reaffirms the view of the ASC that NCSC policy
releases will be highly persuasive but not binding. If we
were to accede to the BTR submission and to hold that the
valuer should be instructed to ignore any premium for
control, then we will be turning our back not only on these
policy documents, but also upon the terms of s 731 itself.
Such a decision would not only be not preferable, it would
be not correct.:

The Tribunal went on to say:

"...in the light of the clear legislative principles, we consider
that the Australian shareholders should be treated no less
generously than the UK shareholders. The whole of the premium for
the control of the HSG Australian subsidiaries does not 'belong' to
the UK shareholders. BTR, for example, effectively acquired only 85
per cent of Westinghouse by acquiring 100 per cent of HSG. If it
sold what it acquired, it would still be able to deliver only 85 per
cent of Westinghouse. If BTR is to acquire the balance of
Westinghouse, it should do so upon like terms to those offered for,
in effect, the first 85 per cent of Westinghouse.
...Having regard to these views, we came to a decision that an
exemption should be granted, that it should be conditional, that the
ASC should control the mechanism for arriving at the price and that
this price should contain a control premium."

43. Again, I have difficulty in accepting this approach. As has been said, it was appropriate to refer to an expert the question, for his opinion, of the "fair and reasonable" value of the shares. Whether this value was, or was not, to include a "control premium" is a matter for the expert opinion of the valuer. It was not, in my view, appropriate to give a specific direction to the valuer on this point.
Condition 5(c)(iii)

44. This provision contemplated that the valuer might provide a lower and higher value by reference to different approaches to valuation and, if so, the price payable is to be the higher value. The Tribunal referred to five different but possible approaches to valuation -

"...a discounted cash flow, capitalisation of future
maintainable profits, notional realisation of assets, value
of net tangible assets (on a going concern basis), and
capitalisation of future maintainable dividends."

The Tribunal went on to say:

"In instructing the valuer, it is necessary to give some guidance as
to the method to be adopted. Furthermore, if a range is produced,
the only fair result must be the top of that range."

45. With respect, I cannot agree with this reasoning. If, as is appropriate here, the expert is asked to express an opinion as to the "fair and reasonable" value of the shares, it will be a matter for the expert judgment of the valuer to decide what method or methods should be adopted to give a result which is fair and reasonable so far as all interested parties are concerned. In my view, condition 5(c)(iii) is not appropriate.
Should the Tribunal have permitted BTR to withdraw unless it achieves sufficient acceptances to proceed to compulsory acquisition?

46. The applicants urged the Tribunal, without success, to qualify its offers in this way so that, if necessary, BTR could withdraw its bid for the minority shares unless it could compulsorily acquire any outstanding shares under the legislation. It was, in my view, open to the Tribunal to decline to accept that this proposal was necessary to achieve a fair result in terms of the conditions required to be fulfilled before the exemption sought was operative. No error of law was made by the Tribunal in this connection.
Result of the appeal

47. Since, in my opinion, the applicants have shown a case for limited relief on some of the grounds advanced, I would propose that the appeal be allowed, that the Tribunal's decision be set aside and that the matter be remitted to the Tribunal for further consideration in accordance with these reasons.
Costs

48. Since the applicants have been successful to some degree, I propose that the respondents other than the Commission pay two-thirds of the applicants' costs. There should be no order for the costs of the Commission.