Jurisdiction - Australia
Australia – Panel Gets Tough With Costs Orders.

31 August, 2012


In brief


  • Panel makes costs orders in two recent matters.
  • This is unlikely to involve a significant change in policy, but we may see more use of costs orders against parties who flout Panel rules.


The Takeovers Panel's policy on costs is very different to the approach taken in the courts. In Panel proceedings, orders requiring one party to pay another's costs are the exception not the rule. The Panel has made very few costs orders in the last 12 years, but has done so twice in recent weeks. This is probably largely a coincidence, but may also indicate greater willingness to make costs orders.


Party failed to conduct itself in a professional and businesslike fashion


In Minemakers Limited 01, the Panel considered that there were material information deficiencies in UCL's bidder's statement in relation to the proposed funding of the bid, related party transactions, the capital structure of the combined group and recent sale prices of Minemakers and UCL shares and the offer premium. The Panel ordered (among other things) that UCL prepare a replacement bidder's statement which addressed the information deficiencies.


After finding that there were material deficiencies in UCL's bidder's statement, the Panel initially decided not to make a costs order. However, because changes proposed by UCL required a number of rounds of amendments, and considerable time, before the Panel was satisfied with the disclosure, the Panel revisited the question of costs.


The Panel concluded that Minemakers was put to additional expense by the multiple versions of the replacement bidder’s statement that needed to be reviewed before the disclosure was satisfactory. The Panel also noted that UCL did not appear to engage properly with concerns raised by Minemakers prior to making the application, even though it later conceded virtually all the disclosure points raised.


The Panel considered that UCL had failed to conduct itself in a professional and businesslike fashion and the circumstances warranted making an order that UCL pay part of Minemaker's costs (representing costs incurred in taking steps that might have been avoided).


Costs awarded against applicant


The second example of a costs order is particularly interesting because the Panel made a declaration and costs order against the applicant. The Panel only has power to award costs if it makes a declaration of unacceptable circumstances. That has made it difficult to order applicants to pay costs, since an unmeritorious application will generally be rejected with no declaration having been made. However, in Austock Group Limited, it seems that the costs order was made not because the application was unmeritorious, but because the Panel decided to look at the applicant's conduct as well as the conduct complained of in the application.


Mariner Corporation, which had announced an intention to make a bid for Austock, applied to the Panel to complain of a transaction it alleged was intended to frustrate its bid as well as an associated break fee. The Panel accepted an undertaking that effectively reduced the break fee, but also had concerns about the bid, including that Mariner did not have a reasonable basis to expect that it could fund its bid.


Mariner announced that the action taken by Austock triggered a bid condition and decided to withdraw its proposed bid. Mariner also sought to withdraw its Panel application.

The Panel declined to consent to Mariner withdrawing its application and instead made a declaration (relating to concerns it had with Mariner's bid) and orders against Mariner. The orders included an order that Mariner pay part of the costs of the other parties (including ASIC). Mariner was only required to pay part of the other parties' costs because it had succeeded in obtaining a modification of the break fee.


The Panel had previously made an interim order, in response to a newspaper article commenting on the issues before the Panel, which effectively held Mariner to the confidentiality undertakings it had given to the Panel. The Panel has not yet given reasons in Austock Group Limited so it is not yet clear whether this is part of the reason why costs were ordered.




It would seem unlikely that these two cases involve any significant change in policy by the Panel to costs orders – and such orders will probably still be relatively rare. However, it would not be surprising if we saw more use of costs orders than in the past where parties fail to comply with policies and rules regarding the conduct of Panel proceedings.



For further information, please contact:


Bruce Dyer, Partner, Ashurst

[email protected]


Stuart Dullard, Ashurst 

[email protected]


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