Chapmans Ltd v Australian Stock Exchange Ltd [1996] FCA 474

CATCHWORDS

CORPORATIONS - Companies - Stock Exchange Resolution to remove company from Official List subject to determination of appeal not yet heard - whether decision capable of review - whether decision if made was void for lack of compliance with Listing Rule 3J(15) - whether Exchange bound to comply with Rule 3J(15).

ADMINISTRATIVE LAW - whether resolution to remove company from Official List a decision made under an enactment - whether Stock Exchange Listing Rules relevantly an enactment.

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Security Industry Act 1980 (Cth)

Companies Act 1981

Corporations Law 1991 (Cth)

Australian National University v Burns (1982) 64 FLR 166; applied.

Chittick v Ackland (1984) 1 FCR 254; discussed.

CHAPMANS LIMITED v AUSTRALIAN STOCK EXCHANGE LIMITED

No NG 549 of 1995

LOCKHART, SHEPPARD & HILL JJ

SYDNEY

21 JUNE 1996

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) No NG549 of 1995

)

GENERAL DIVISION )

ON APPEAL FROM A JUDGE

OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: CHAPMANS LIMITED

Appellant

AND: AUSTRALIAN STOCK EXCHANGE LIMITED

Respondent

CORAM: LOCKHART, SHEPPARD AND HILL JJ

PLACE: SYDNEY

DATED: 21 JUNE 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The parties file submissions concerning the appropriate costs order within seven (7) days of the delivery of these reasons for judgment.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) No NG549 of 1995

)

GENERAL DIVISION )

ON APPEAL FROM A JUDGE

OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: CHAPMANS LIMITED

Appellant

AND: AUSTRALIAN STOCK EXCHANGE LIMITED

Respondent

CORAM: LOCKHART, SHEPPARD AND HILL JJ

PLACE: SYDNEY

DATED: 21 JUNE 1996

REASONS FOR JUDGMENT

LOCKHART & HILL JJ:

The appellant, Chapmans Limited ("Chapmans"), appeals against orders made by a judge of this Court refusing to grant to it relief in connection with action to remove its name from the official list of the stock exchange taken by the respondent, the Australian Stock Exchange Limited ("the Exchange).

The orders appealed against arise out of four separate judgments (in addition to a separate judgment as to costs) delivered between July 1994 and July 1995. Each judgment dealt with a separate but related issue. For convenience of reference the judgments will be referred to by consecutive number, judgment 1 being that of 8 July 1994,
judgment 2 that of 26 June 1995, judgment 3 that of 27 June 1995 and judgment 4 that of 10 July 1995. The respondent cross-appeals against the order for costs made by his Honour in which it was ordered that Chapmans pay seventy percent only of the costs of the Exchange.

THE BACKGROUND FACTS

The background facts are not in dispute. By application dated 15 April 1950, Chapmans applied to the Australian Associated Stock Exchanges (the predecessor to the Exchange) for admission to the official list of the Sydney Stock Exchange. The form of application contained the following words:

"We agree that the company shall remain on the Official List subject to the pleasure of the Committee of the Stock Exchange."

On 18 April of the same year it signed a formal agreement expressed to be in consideration of the Official Listing of the securities covered by its application. Inter alia, it agreed with the committee of the Australian Associated Stock Exchanges that it should remain on the official list subject to the pleasure of that committee. From time to time thereafter Chapmans sought quotation of additional securities. When it did so it signed a form of application. Each application contained the following provision:

"In making this application, the Company ... acknowledges and agrees that, subject to those securities being granted Official Quotation, retention of the Company on the Official Lists of the aforesaid Exchanges and retention of Official Quotation for those securities and all other presently quoted securities will be at the absolute discretion (without qualification whatsoever) of the aforesaid Exchanges and that in particular (but without restricting the generality of the foregoing) removal from those Official Lists or withdrawal of Official Quotation may, at the absolute discretion of the Exchanges, take place if the Company becomes unable or unwilling or in any respect fails to comply with the Listing Requirements of the Australian Associated Stock Exchanges for the time being in force, or if the Exchanges, in their absolute discretion, think fit."

On 8 July 1992 the Exchange wrote to Chapmans making inquiries in respect of Chapmans Annual Report for the year ended 31 December 1991. It raised also the question whether Chapmans complied with Listing Requirements 3J(13), 3J(14) and 3J(9) respectively. These requirements are in the following terms:

"(13) To carry out, directly or indirectly, a sufficient level of operations or to have tangible assets of sufficient value and/or intangible assets for which a sufficient potential value can be demonstrated to the Exchange to warrant the continued Official Quotation of the company's securities.

(14) When the liquid assets of a company other than a finance company represent more than 50 per cent of the assets of the
company, the company's securities may be suspended from Official Quotation until the company invests or employs those assets and details of the investment or employment have been advised to shareholders and the Home Exchange.

...

(9) A company shall at all times maintain a spread of shareholdings and optionholdings which in the opinion of the Exchange is sufficient. A company which fails to do so may be given up to 3 months by the Exchange to rectify the situation. In such event the company shall notify the shareholders and/or optionholders accordingly within 15 business days of receipt of such notice and if the position is not rectified within the said period Official Quotation of those securities may be discontinued. The foregoing provision shall also apply where the spread of optionholdings is reduced because of the exercise of options."

The Exchange sought a response by Friday 17 July 1992. The letter also concluded in the following terms:

"ASX hereby formally gives the Company notice that, in the opinion of the Exchange, the Company does not have sufficient spread of shareholdings. We advise that the Company has three months in which to rectify this situation failing which the securities of the Company may be suspended from Official Quotation if not suspended pursuant to Listing Rules 3J(13) or 3J(14) prior to the expiration of the three month period."

Chapmans, in letters dated 10 July 1992 and 29 July 1992 sought extensions of time for submissions to be made. Ultimately an extension of time was permitted until 5 August 1992. By 25 August 1992 there had still been no reply to the inquiries, although correspondence had continued. On that date the Exchange suspended the securities of Chapmans from Official Quotation pending clarification of matters arising from the Annual Report.

Chapmans ultimately responded on 18 September 1992. The Exchange was not satisfied with the response and raised additional questions. In the last paragraph of a letter dated 8 October 1992, raising the further inquiries, the Exchange said:

"As any meaningful interpretation of the company's current situation cannot be made until the above matters are resolved, we place the company on notice that it may be required to show cause as to why it should not be removed from the Official List."

The correspondence between the parties continued into 1993. In the meantime, the Exchange referred the accounts of Chapmans to the Accounting Practices Group of the Australian Securities Commission for investigation and meetings were held between representatives of the Commission and representatives of Chapmans concerning accounting matters said to be raised by the accounts. By letter dated 15 July 1993 the Exchange notified Chapmans of certain issues which needed to be resolved before the then suspension could be lifted. A detailed response was provided by Chapmans with its letter of 17 September 1993.

The Exchange, by letter dated 26 October 1993, reviewed some of the correspondence between the parties. Inter alia, the Exchange said:

"ASX requires that the company provide a written submission by 23 November 1993 addressing all outstanding matters from our letter of 15 July 1993 ... and showing cause why the company should remain on the Official list [sic] of ASX. ASX will then give full consideration to the company's submission prior to making any decision as to the appropriate course of action to be taken. Should a submission not be received ASX reserves the right to take whatever action it deems appropriate."

Chapmans responded by letter dated 23 November 1993. The response was apparently not satisfactory to the Exchange. Accordingly on 26 November 1993 the Exchange wrote to Chapmans as follows:

"Thank you for your letter 23 November 1993.

Having given consideration to your submission Australian Stock Exchange Limited (`ASX') has resolved that Chapmans Limited be removed from the Official List of ASX at close of trading on Friday, 3 December 1993 unless an appeal against this decision is received on or before Wednesday, 1 December 1993.

Chapmans Limited has the right to request that this decision be reviewed by the National Listing Committee. Upon receipt of your written request to this effect on or before Wednesday, 1 December 1993 the matter will be referred to the Committee together with the relevant documentation to date and any further submission you wish to make in writing."

It is common ground that a notice of appeal was in fact lodged with the Exchange on 1 December 1993. That appeal has not been heard and indeed Chapmans sought and obtained an interlocutory injunction restraining the hearing of that appeal pending the outcome of the case.

THE FOUR SEPARATE JUDGMENTS AT FIRST INSTANCE

The present proceedings commenced as an application for judicial review, relying upon the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). The decision to be reviewed was said to be the decision that Chapmans be removed from the Official List. Chapmans also sought an order that the suspension of its securities be lifted and that the Exchange provide reasons for its decision to delist Chapmans.

The Exchange objected to the Court's jurisdiction, claiming that the decision that the name of Chapmans be removed from the Official List was not a reviewable decision under the ADJR Act because it was not a decision to which the ADJR Act applied. Specifically, it was said that the decision was not made "under an enactment". Accordingly there was heard, as a separate issue, the objection to competency. It was decided adversely to Chapmans in judgment 1.

However, Chapmans had indicated that irrespective of the outcome of the application for judicial review under the ADJR Act, it wished to challenge the decision to delist on other than administrative law grounds and to amend its statement of claim accordingly. In the result his Honour permitted an amendment to the statement of claim to allow Chapmans to challenge the decision that it be removed from the Official List (and the earlier decision to suspend Chapmans' securities) at common law. The remaining three judgments arise out of the amended statement of claim.

In judgment 2 two separate questions were set aside for determination. The first was whether there existed a contract between the parties and the second, to be answered if the first question was answered in the affirmative, was what the terms of that contract were. His Honour was of the view that there was a contract in writing between the parties. In the judgment his Honour identified various documents as being the contractual arrangements between Chapmans and the Exchange and there is no longer any dispute between the parties as to this matter. Included among the contractual documents are the original application for listing (and supporting documents), the applications for listing of additional securities and the
listing requirements. His Honour also held that the Articles of Association of the Exchange were incorporated by reference to the contractual arrangements. Relevantly, Article 74 provided as follows:

"OFFICIAL LIST

74. (1) The official list of the Exchange shall consist of the corporations or other entities which have been admitted to the official list of the Exchange and have not been removed from the official list.

(2) The official list of second board companies of the Exchange shall consist of the corporations or other entities which have been admitted to the official list of second board companies of the Exchange and have not been removed from the official list of second board companies.

(3) The list of corporations or other entities comprising the official list of second board companies of a State Subsidiary shall not form part of the official list of the Exchange.

(4)(a) The admission of corporations or other entities to the official list or the official list of second board companies shall, except as determined by the Board, be upon application in such form and on such terms and conditions (whether before or after admission) as the Board shall from time to time determine.

(b) The Board shall have power to remove any corporations or other entities from the official list or the official list of second board companies.

(5)(a) The Board may grant official quotation of the Securities of corporations or other entities which have been admitted to the official list or the official list of second board companies and may suspend official quotation of such Securities for any period.

(b) The suspension of any Securities from official quotation shall not constitute the removal from the official list or the official list of second board companies of the corporations or other entities which issued the suspended Securities.

(6) Any decision by the Board to admit a corporation or other entity to the official list or the official list of second board companies, to remove a corporation or other entity from the official list or the official list of second board companies, to admit any Securities to official quotation or to suspend any Securities from official quotation may be made by the Board at any time in its discretion without assigning any grounds or reasons therefor and its decision shall be final and conclusive.

(7) In this Article, the expression `corporations or other entities' includes any unincorporated body or association or any institution or trust or government or governmental or semi-governmental authority, instrumentality or agency."

Judgment 3 concerned three separate matters. First, his Honour considered and rejected a submission that there should be implied into the contract between the parties certain implied terms. This matter is no longer at issue between the parties. A second matter decided in this judgment was whether the Exchange had failed to accord to Chapmans procedural fairness in certain respects or had acted unreasonably or unfairly. This claim too his Honour rejected and there is no appeal before us in relation to it. Finally, his Honour considered whether the Exchange was under a duty to provide reasons to Chapmans in respect of its removal from the Exchange. Applying Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 662 his Honour held there was no general or abstract duty to give reasons and that in the circumstances of the case no obligation arose. Chapmans appeals this aspect of the third judgment, but concedes that this Court is bound by the decision of the High Court in Osmond, contenting itself with a formal submission that Osmond was wrongly decided. Accordingly, we accept the correctness of the third judgment.

Judgment 4 concerns whether a declaratory order should be made to the effect that the decision evidenced by the Exchange's letter of 26 November 1993 was void ab initio, voidable or invalid in some other sense. In this judgment his Honour did not deal in any way with the merits of the matter but considered whether (as a matter of discretion), having regard to the fact that the delisting of Chapmans was subject to an appeal, a declaration should not be made. Relevantly to the present appeal his Honour did not determine whether, as was submitted on behalf of Chapmans, the decision to delist Chapmans was made in breach of Listing Rule 3J(15) which is in the following terms:

"(15) When a company's securities have been suspended from trading and the Exchange has made requisitions upon the company and the requisitions have not been answered satisfactorily, the Exchange may advise the company that if the requisitions
are not met to the satisfaction of the Exchange within a further period of 3 months, the company may be removed from the Official List."

It was common ground that no advice had been given to Chapmans of the kind set out in of Listing Rule 3J(15).

Chapmans had also sought to impugn the decision that it be delisted on the basis that it had been denied procedural fairness.

As a matter of discretion, his Honour declined to make a declaration. In this regard his Honour was of the view that it was premature to do so as there was no present threat on the part of the Exchange to remove Chapmans from the List until after there had been a determination of the appeal. Chapmans seeks to contest his Honour's decision and to persuade us that the decision to delist it was void and that a declaration should be made accordingly.

We turn now to consider the objection to competency.

OBJECTION TO COMPETENCY

Jurisdiction is conferred upon the Court under the ADJR Act to review a decision to which that Act applies (s5) or to review conduct engaged in or proposed to be engaged in
for the purpose of making a decision to which the Act applies (s6).

Although there was some argument between the parties as to whether the letter of 26 November 1993 reflected a decision, having regard to the conditional nature of the advice which it contained, the real matter in issue between the parties is whether a decision made by the Exchange that a company be removed from the Official List would be a decision under an enactment, as those words are used in the ADJR Act. It will be recalled that the word "enactment" is defined in s3(1) of that Act relevantly as meaning not merely an Act of the Commonwealth Parliament but also "... an instrument (including rules, regulations or by-laws) made under such an Act...".

To understand the argument it is necessary to outline the statutory provisions relevant to the Exchange and its Listing Requirements.

The Exchange owes its corporate status to s36B of the Securities Industry Act 1980 (Cth). By force of that section the Exchange was incorporated in the Australian Capital Territory and deemed to be incorporated under the Companies Act 1981 and to be a company limited by guarantee. Sub-section (3) of the same section then provided:

"Notwithstanding anything in this Act, the Exchange shall not be taken for the purposes of a law of the Commonwealth, of a State or of a Territory to have been incorporated or established for a public purpose or for a purpose of the Commonwealth."

Section 36E identifies the memorandum and Articles of the Exchange, being documents lodged with the Commission before the commencement of the Securities Industry Act 1980, as being the memorandum and Articles of the Exchange deemed to have been registered under the Companies Act 1981. Sub-section (4) of that section then provides:

"As from the relevant commencement, the proposed listing rules and the proposed business rules, of the Exchange that AASE lodged with the Commission before that commencement shall be deemed for the purposes of a relevant Act to be rules made by the Exchange at that commencement under its articles."

Section 36L of the Securities Industry Act 1980 then operates to novate contracts in existence between companies the securities of which were listed on a member body of the Australian Associated Stock Exchanges at the time of the commencement of the Securities Industry Act 1980 to the Exchange, as if the Exchange were thereafter a party to the agreements. The operative provision is s36L(2).

Chapter 7 of the Corporations Law is concerned with securities; Part 7.2 with securities exchanges and stock markets. By force of s774, where an Exchange amends or alters its Listing Rules it is required to give written notice of the amendment to the Commission which in turn notifies the relevant Minister. Within twenty-eight days after receipt the Minister is empowered to disallow the whole or a specified part of the amendment. Compliance with Listing Rules may be enforced by s777 of the Corporations Law which is in the following terms:

"Where a person who is under an obligation to comply with or enforce the business rules or listing rules of a securities exchange fails to comply with or enforce any of those business rules or listing rules, as the case may be, the Court may, on the application of the Commission, the securities exchange or a person aggrieved by the failure and after giving to the person aggrieved by the failure and the person against whom the order is sought an opportunity of being heard, make an order giving directions concerning compliance with, or enforcement of, those business rules or listing rules...".

Sub-section (2) of the same section provides:

"For the purposes of subsection (1), a body corporate that is, with its agreement, consent or acquiescence, included in the official list of a securities exchange, or an associate of such a body corporate, shall be deemed to be under an obligation to comply with the listing rules of that securities exchange to the extent to which those rules purport to apply in relation to the body corporate or associate, as the case may be."

Section 1114 similarly empowers the Court to make certain orders in the event that there has been a contravention of the Listing Rules.

Thus it can be seen that the Exchange and its Listing Rules play an important part in the corporate scheme regulating securities. The Exchange owes its existence to statute; the contracts between companies whose securities are listed and the predecessor to the Exchange was novated by force of statute; and the courts are directed to enforce compliance by listed companies with the Listing Rules and indeed to compel the Exchange itself to enforce compliance by such companies with those Rules.

For Chapmans it was submitted that the statutory scheme involves a mixture of both contract and administrative law. So it is said that the Listing Requirements have a dual source, that source being both in contract and by statute. The fact that part of the source of the power to delist arises in contract does not require, so it is said, the conclusion to be drawn that the decision to delist is purely a matter of contract law. Rather it is said it is a matter arising under statute even if also arising by virtue of contract.

A decision will be a decision made under an enactment where that decision is one made "in pursuance of" or "under the authority of" a relevant enactment: Evans v
Friemann (1981) 53 FLR 229 at 238. As the judgment of Bowen CJ and Lockhart J in Australian National University v Burns (1982) 64 FLR 166 at 173 points out the difficulty lies not in understanding the meaning of the words "under an enactment" but rather in applying the word "under" to particular circumstances.

For the decision to be properly characterised as one made "under" a relevant enactment, the decision will need to be one which the statute requires or authorises: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 336 per Mason CJ. The question of characterisation must be determined as one of substance and it would seem not to be determinative that the statute did not spell out precisely the power to make the decision: Burns at 176. Be that as it may, it is clear that there needs to be sufficient proximity between the decision and the enactment to permit the decision to be characterised as one made under the enactment: CEA Technologies Pty Limited v Civil Aviation Authority (1994) 51 FCR 329 at 333 per Neaves J; Lewins v Australian National University (1995) 133 ALR 452 at 460 per Lee J.

Where a decision is made under a contract, that factor will not preclude a conclusion that the decision will also be one made under an enactment for a decision may have more than one source: Burns at 176. Thus in Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342 the decision challenged was made under an agreement authorised by a schedule to the Airlines Agreement Act 1981 (Cth). On the particular circumstances of the case it was held that the decision challenged was one made under an enactment because the necessary close connection existed between the agreement and the Act which authorised it.

In the circumstances of the present case it can not be said that the decision to delist Chapmans was a decision made under an Act of Parliament. There is no Act of Parliament at all which either requires or authorises delisting. Rather, the delisting decision is one clearly made under the Listing Rules. The small point therefore is whether in the present case those Rules fall within the definition of "enactment", namely, by virtue of the fact that they are contained in an instrument made under an Act.

In Chittick v Ackland (1984) 1 FCR 254 at 264, Lockhart and Morling JJ warned against the attempt to expound definitively the meaning and ambit of the expression "instrument ... made under such an Act ...". However, they accepted (at 264):

"... that to qualify as an instrument for the purposes of the Judicial Review Act the document must be of such a kind that it has the capacity to affect legal rights and obligations."

In that case the relevant instrument was a document embodying conditions of employment. Section 28(2) of the Health Insurance Commission Act 1973 made the provisions of that document the terms and conditions governing employment of persons who agreed to be employed by the Commission. But the section gave to the document a greater significance than that. It enabled the terms and conditions of a person's employment to be altered by the Commission even after the employment relationship had commenced and thus affected the rights and obligations of the Commission's staff. So seen the document was an instrument made under the Act and thus within the definition of "enactment" for the purposes of the ADJR Act.

However, the Listing Requirements of the Exchange are not made under any of the Acts to which reference has been made. Those Requirements as in force, at least in 1980, were a merely private act of the predecessor to the Exchange, operative as a matter of contract and enforceable against companies whose securities were listed on the Exchange. It is true that the Listing Requirements were identified in the Securities Industry Act which saw the incorporation of the Exchange and the novation of contractual obligations to it. It is true also that a court may enforce not only compliance with the Listing Requirements but may also order enforcement by the Exchange of that compliance. But the fact that the Listing Requirements are referred to in legislation does not mean that they are made under it. More than identification in
a statute is required before an instrument can be said to be one made under a Statute.

In consequence the Rules themselves do not fall within the definition of enactment, with the result that the decision to delist is not a decision under an enactment.

In our opinion, his Honour was therefore correct in upholding the objection to competency and the appeal to this extent must fail.

WHETHER THE DECISION TO DELIST CHAPMANS WAS VOID - LISTING REQUIREMENT 3J(15)

For the purpose of this question it can be assumed that the letter of 26 November 1993 constituted an effective decision to remove the name Chapmans from the Official List. That is a matter to which we will later return.

Senior counsel for Chapmans submits that, as a matter of construction of the Listing Requirements and the contractual arrangements between Chapmans and the Exchange, the Exchange was bound, should it determine to remove the name of a company from the Official List in circumstances where the listing of the shares of that company had been suspended and inquiries had been made to comply with the provisions of Rule 3J(15). That Rule requires that there be given to the company three months notice and the opportunity in that three month period to satisfy the Exchange that its requisitions have been met. For the Exchange, senior counsel submits that the Exchange has an absolute discretion at any time to remove the name of a company from the List without complying with Listing Rule 3J(15). Reference is made in support of this proposition to statements included in the initial application for listing, in the agreement for listing, in the application for listing additional securities and in Article 74 of the Articles of Association of the Exchange which have already been set out.

The argument put on behalf of the Exchange renders Rule 3J(15) nugatory. Indeed senior counsel for the Exchange was forced to concede that 3J(15) in no way affected the generality of the language in the other provisions which left the matter of delisting wholly to the discretion of the Exchange. The procedure in Rule 3J(15) was thus to be seen to be merely one path which the Exchange could take, but not a path which it was bound to take in circumstances which came within it. So, it was said, the Exchange could, if it so desired at its pleasure, remove the name of a company from the Official List without giving the company a right to satisfy requirements or indeed without the giving of any notice.

It is an elementary proposition that a contract will be read as a whole giving weight to all clauses of it, where possible, in an endeavour to give effect to the intention of the parties as reflected in the language which they have used. A court will strain against interpreting a contract so that a particular clause in it is nugatory or ineffective, particularly if a meaning can be given to it consonant with other provisions in a contract. Likewise where there are general provisions in a contract and specific provisions, both will be given effect, the specific provisions being applicable to the circumstances which fall within them.

Clause 3J(15) of the Listing Requirements deals with a specific case. It comes into operation only where two prerequisites have been satisfied. First, it will apply only where the company's securities have been suspended. No doubt, unless some other Rule were applicable, the Exchange could remove a company from the List in circumstances where its shares had not been suspended without complying with Rule 3J(15). The second prerequisite is that the Exchange must have made requisitions upon the company which requisitions have not been answered satisfactorily.

The word "requisitions" in the context of Rule 3J(15) means no more than the act of requiring or demanding. Generally, the requirement or demand will be to furnish information, although this need not always be the case. A requisition could relevantly involve the demand that a particular document be furnished. Where, however, in the case of a company the securities of which have been suspended, the Exchange requires information from that company and that information is not answered in a manner which is satisfactory
to the Exchange, then the provisions of Rule 3J(15) come into operation. But Rule 3J(15) makes it clear to companies in this position that the name of the company will not be removed from the Official List for a period of three months during which time the company may supply the information or otherwise answer the requisitions in a way that will be satisfactory to the Exchange.

Other general provisions of the contractual arrangements between the company and the Exchange, that is to say in the application for listing, the listing agreement, the Articles of Association and in any application for listing of supplementary securities, which provisions give the Exchange an absolute discretion without the need for notice, may apply in other situations (subject to questions of procedural fairness) but will have no application to a case where the prerequisites of Rule 3J(15) have been satisfied.

It follows, therefore, that if the letter of 26 November 1993 is properly to be seen as a decision removing Chapmans from the Official List, that decision, not being in compliance with Rule 3J(15), would be void.

The wording of the 26 November 1993 letter is not completely clear. Probably the better interpretation is that the Exchange has made a decision to remove the name of Chapmans from the Official List but has stayed or suspended
that decision pending the determination of an appeal, assuming as was the case, an application to appeal was lodged by 1 December 1993. The alternative interpretation is that no decision had yet been made and no decision would be made unless and until the appeal process was determined. This alternative interpretation while giving effect to the word "unless" is inconsistent with the remaining language of the letter which refers to a decision having been made to delist.

The evidence before the learned trial judge does not permit the Court to form a view as to what the nature of the so-called appeal process is. Power to make a decision to delist is conferred upon the Board of the Exchange. The Board has delegated certain decisions, including the decision to delist to a Committee called the National Listing Committee with power to sub-delegate. That Committee in turn has sub-delegated to what is referred to as "management", the power, inter alia, to delist.

It seems that the initial decision to delist, unless an appeal was lodged, was a decision made by management. There is nothing in the Articles of Association or any document in evidence which permits an appeal from a decision to delist and, a fortiori, no provision which indicates the procedure to be adopted. On the evidence, therefore, there is much to be said for the view that the so-called right of appeal is an internal process of the Exchange and in reality
part of its decision-making process. But whether this is a correct analysis or whether the correct analysis is that management has made a decision which it has stayed in the event of the lodgement of the so-called appeal, it would seem clear that the National Listing Committee would have no power to remove Chapmans from the Official List in circumstances where Rule 3J(15) is applicable unless there had first been given three months' notice to Chapmans during which time Chapmans could endeavour to satisfy the Exchange. Notice not having yet been given to Chapmans, it is clear no valid decision to delist could have been made. A fortiori there could be no competent appeal from such a decision. Assuming the National Listing Committee is part of the original decision making process so that its deliberations do not constitute an appeal, it could still not proceed to delist Chapmans unless it had first given the notice under Rule 3J(15) and the opportunity thereafter for Chapmans to comply with outstanding requisitions.

CONSEQUENCES OF THE DECISION ON APPEAL

The Exchange takes the view that pending the so-called appeal, the name of Chapmans still remains on the Official List. That would be a consequence of the original decision of management being conditional upon the outcome of the appeal. It would in any event follow from the conclusion that the decision of management was void. The question, which then arises, is what, if any relief the Court should give.
Until the provisions of Rule 3J(15) are complied with by the Exchange there can be no valid decision to delist, nor could there be any valid appeal. In the absence of evidence of the basis of any appeal right it would seem inappropriate for the Court to restrain the holding of an appeal. The present proceedings are premature in that unless and until the Exchange notifies Chapmans under Rule 3J(15), it could not proceed to remove Chapmans' name from the List for failure to comply with the requisitions made by it.

In the circumstances the appropriate order would seem to be merely to dismiss the application. No doubt the parties will have regard to our reasons when determining what further action should be taken. No question at this stage will arise as to the giving of reasons by the Exchange for the simple reason that it has not yet made any valid operative decision to remove the name of Chapmans from the Official List for which reasons could be demanded.

This does not mean that Chapmans has been completely unsuccessful in the appeal or that its application was entirely misconceived. It is for this reason that a question arises as to costs, not merely as to the costs below but also the costs of the appeal, as on any view of the matter both sides have had some success.

In the circumstances we would direct each of the parties within seven days of the giving of these reasons to file submissions as to the appropriate cost order, having regard to the reasons which we have given.

I certify that this and the

preceding twenty-six (26) pages

are a true copy of the Reasons

for Judgment herein of their Honours

Justices Lockhart and Hill.

Associate:

Date: 21 June 1996

IN THE FEDERAL COURT OF AUSTRALIA)

)

NEW SOUTH WALES DISTRICT REGISTRY) No. NG549 of 1995

)

GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

BETWEEN: CHAPMANS LIMITED

Appellant

AND: AUSTRALIAN STOCK EXCHANGE LIMITED

Respondent

CORAM: LOCKHART, SHEPPARD AND HILL JJ

PLACE: SYDNEY

DATE: 21 JUNE 1996

REASONS FOR JUDGMENT

SHEPPARD J: In this matter I have had the advantage of reading the judgment to be delivered by Hill J. I am in agreement with his conclusion that the relief sought under the Administrative Decisions (Judicial Review) Act 1977 was rightly refused. The distinction is a fine one, but I am satisfied that the relationship of the parties is essentially contractual. Although the Stock Exchange owes its existence to statute and there are the other statutory provisions to which Hill J has referred, it is not correct to say that the decision was made under an enactment. The rules of the Stock Exchange under which the decision was made are not statutory instruments within the meaning of para. (c) of the definition of "enactment" in s.3 of the Judicial Review Act.

Subject to one matter, nothing of significance turns on this conclusion for the appellant is able to raise the concerns which it has under the general law. The one matter which the Court's conclusion will deny to it is the entitlement to obtain reasons from the Stock Exchange for the decision pursuant to s.13 of the Judicial Review Act. It will have no application to the circumstances of the case. Nor will it be possible for the appellant to obtain reasons under the general law. The decision of the High Court in Public Service Board of New South Wales v Osmond (1986) 159 CLR 656, the correctness of which is challenged by counsel for the appellant, prevents this. We, of course, are bound by it. Nevertheless, it does not seem to me that the appellant's inability to obtain reasons is of great disadvantage to it. As is so often the case, the reasons for the course of action taken against the appellant emerge clearly enough from the correspondence.

In my opinion the heart of the case is Rule 3J(15) of the Rules of the Stock Exchange. The rule follows immediately after Rules 3J(13) and (14) which are the rules referred to by the Stock Exchange in the critical letter of 17 July 1992. It was the letter that preceded the letter, albeit by some 18 months, of 26 November 1993 in which the appellant was informed that its name would be removed from the Official List at close of trading on 3 December 1993 unless an appeal against the decision was received on or before 1 December 1993. The letter of 17 July 1992 informed the appellant that, in the opinion of the Stock Exchange, the appellant did not have a sufficient spread of shareholdings. The letter advised the appellant that it had three months in which to rectify the situation failing which the securities of the appellant might be suspended if not suspended pursuant to listing Rules 3J(13) or 3J(14) prior to the expiration of the three month period. Rule 3J(9) needs to be read in conjunction with these rules.

Rule 3J(14) speaks of suspension and not of removal. That is dealt with in Rule 3J(15) which is consequential on the operation of Rule 3J(14). In its letter of 26 November 1993, the Stock Exchange did not purport to act pursuant to Rule 3J(15). This emerges clearly because the period of three months provided for in the Rule was not allowed. The period was in fact seven days being the period between 26 November 1993, the date of the letter, and 3 December 1993 which was the date the Stock Exchange limited for the appellant's removal. I agree with Hill J that, in the circumstances of the case, the only course available to the Stock Exchange, trading in the shares having been suspended by invoking the provisions of Rule 3J(13) and Rule 3J(14), was to act pursuant to Rule 3J(15). The proper construction of the Rules required the Exchange, if it wished to remove the appellant from the list, to act in accordance with that Rule. Plainly, the Exchange did not do so.

If there were no more, the appellant would be entitled to a declaration and any necessary consequential relief to restrain conduct inconsistent with the Rule. The complicating factor is the qualification in the letter to the effect that the suspension would not operate if an appeal against the decision were received on or before 1 December 1993. The letter explained that the appellant had the right to request that the decision be reviewed by the National Listing Committee. It said that, upon receipt of the appellant's written request to this effect on or before 1 December 1993, the matter would be referred to the Committee together with the relevant documentation and any further submission the appellant might make.

The letter is ambiguous but, in my opinion, a fair reading of it establishes that the appellant was removed from the list but had a right to a review of the decision if it acted in accordance with the letter which it did. In that case the decision would not take effect until the appeal or review was completed.

Because the Stock Exchange acted contrary to Rule 3J(15), its action was unlawful. Accordingly, no appeal or review other than one which resulted in the setting aside of the letter of 26 November 1993 could itself be lawful. It follows that there was no purpose in any appeal or review. The only outcome must be that the purported action by the Stock Exchange had no legal effect. I therefore regard this as a proper case for a declaration that the purported removal of the appellant's name from the list was of no effect. I do not regard the declaration as hypothetical because, although the decision did not take effect because of the appeal, it still has a potential to do so and it is useful, in my opinion, for the Court to make a declaration about the effect of the letter so that the parties know where they stand. This is particularly so because of the apparent uncertainty of the status of the National Listing Committee and the question, discussed in argument, whether the reality of the situation would be that a delegate would in fact perform the Committee's function. The discussion which occurred during the argument suggested that there was a degree of vagueness in the decision and appeal procedures of the Exchange which is undesirable in a body entrusted with such an important public function.

It would not seem necessary to accompany the declaration with any consequential relief, although liberty to apply could be reserved. But, as I see the matter at present, it is a case where it is sufficient to declare the right which I consider the appellant to have.

It follows that I would allow the appeal in part and vary the decision appealed from by making the declaration which I have proposed. The orders I would make are as follows:

(1) The appeal be allowed in part.

(2) The orders made by this Court on 10 July 1995 be set aside and, in lieu thereof, the following orders be made:

(a) it be declared that the purported removal by the respondent of the appellant's name from the Official List of the Australian Stock Exchange Limited was void and of no effect;

(b) there be liberty to the appellant to apply to a Judge of this Court for such other relief as it may be advised;

(3) The appeal be otherwise dismissed.

(4) The respondent pay the appellant's costs of the appeal.

I certify that this and the five (5) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.

Associate

Dated

Counsel and Solicitors D Bennett QC with E Strasser

for Appellant: instructed by Glynn Chaffey

Counsel and Solicitors J Hilton SC with T Castle

for Respondent: instructed by Allen Allen & Hemsley

Date of Hearing: 19 February 1996

Date Judgment Delivered: 21 June 1996

Top