The Full Federal Court has explained why it refused to accept proposed consent orders in the Bradken bid-rigging case, saying it was not satisfied the primary judge was mistaken in all her reasons for finding against the company and its chairman Nick Greiner.
“If the court had been prepared to make the orders, the parties would have been able to tell the world that on a short application and without any adjudication on the merits, the Full Court was satisfied of error in the primary judge’s reasons,” the three judges said in a ruling, released today.
“We were not so satisfied.”
As a result of a settlement on Monday, damning orders and declarations made by judge Michelle Gordon involving Bradken and the conduct of Mr Greiner and Bradken chief executive Brian Hodges were set aside.
With the Full Court due to start hearing an appeal on Justice Gordon's judgment, Bradken and its adversary Norcast asked the court last week to dispose of the matter by approving consent orders. Consent orders are a final decree that formalises an agreement between parties.
The Full Court refused, preferring a different process that achieved the parties’ desired outcome without a finding there was judicial error in Justice Gordon’s “long and careful” judgment. Such a finding would have implied the Full Court’s support for all the grounds of appeal.
In March, Norcast's Swiss-based private equity owner Pala Investments argued successfully that Mr Greiner and Mr Hodges had engaged in bid-rigging by reaching a secret agreement that private equity group Castle Harlan would bid for Norcast's mining services business, Norcast Wear Solutions, and then sell the asset to Bradken.
Castle Harlan was successful at $US190m, but within seven hours it had sold the company to Bradken for $US209m. It was alleged that Bradken was the real bidder and Castle Harlan merely an intermediary, and the $US19m differential was a de facto fee for its services.
Bradken said it was excluded from the sale process, which was disputed by the vendor.
The Full Court said the effect of the orders proposed by the parties would have led to the outcome that all of the legal and factual conclusions of the primary judge would have had “no status”.
“That concern was behind the limited intervention of the ACCC,” the judges said. “Its focus was on preserving the public interest, but of course to the extent it was appropriate, the determinations of the primary judge on particular legal issues.”