Case: Chuen v Laredo Pty Ltd [2005] WASC 58
Outcome: discussed
Section 247A(1) expresses a composite notion of good faith and a proper purpose: Barrack Mines Ltd v Grants Patch Mining Ltd (No 2) [1988] 1 Qd R 606 and Knightswood Nominees Pty Ltd v Sherwin Pastoral Co Ltd (1989) 15 ACLR 151. By extension, in my opinion, this is also the position in respect of the requirement of good faith and proper purpose contained within s 247A(5). See Chuen v Laredo Pty Ltd [2005] WASC 58 at [59] . 65 Where orders for inspection are sought under the regime found within s 247A(3) -(6), this will require, in my opinion, a consideration of the bases relied upon or to be relied upon in any foreshadowed application pursuant to s 237 of the Act . Accordingly, I respectfully agree, with the view expressed by Master Sanderson in Caveat Pty Ltd v Baillie &amp; Ors [2002] WASC 83 at [24] - [25] . This approach was adopted by Commissioner Siopis SC, as he then was, in Chuen v Laredo Pty Ltd &amp; Ors [2005] WASC 58 at [59] . 74 The respondent's counsel placed considerable emphasis upon the decision of Chuen v Laredo Pty Ltd [2005] WASC 58. His submission was that there was a striking resemblance between the facts of that case and the present in that it involved a disgruntled shareholder seeking to induce a better offer for his shares [41] by a threat that should such an offer not be received then an application for inspection of the company's books would be made under s 247A of the Act ; it involved management fees being paid by the respondent company to a related company; the level of directors' fees were in question; a loan had been written off; there was a level of hostility between the applicant and one of the directors of the respondent company; questions were raised concerning the financial statements of the respondent. 75 In that case the applicant in 2005 brought an application relevantly under s 247A of the Act in which he raised various questions concerning the accounts of the three respondent companies for the years 1993 to 1999. The facts in that case were complex and the result turned upon particular findings made by Commissioner Siopis SC as his Honour then was. Included in those findings were that the applicant failed to depose specifically as to the nature of the potential action against the respondents under s 236 of the Act ; that the applicant failed to advise the accountant who swore an affidavit on his behalf in support of his application as to the full extent of his knowledge of matters which he was seeking to investigate and indeed was content for an affidavit to be sworn by the accountant deposing to the need to investigate a matter as to which the applicant was already familiar; that the applicant failed to complain about the particular transactions which he was by his application seeking to investigate at the time of the transactions in question or within a reasonable time thereafter; several of the matters which the applicant sought to investigate occurred as much as seven years prior to the application; that at the time those transactions occurred the applicant was a director of the respondent; that many of the transactions were so old as likely to be statute barred in respect of any proposed proceedings in relation to them; that a considerable delay was involved in that a majority of matters in respect of which the applicant by its application sought inspection had been the subject of enquiries made by the applicant almost five years prior to the application with no explanation as to the reasons for delay; that the intention of the applicant in threatening to bring his application was to induce an acceptance of his offer to sell his shares by linking the threat of continuing his agitation to obtain inspection of the respondents' documents to his offer to sell his shares. 76 For these reasons amongst others Commissioner Siopis SC held that the applicant was not acting in good faith and that the inspection of the respondents' books was not for a purpose connected with applying for leave under s 237 of the Act , that is to say it was not for a proper purpose. 77 Whilst there are superficial similarities between that case and the present, they are, in my opinion, no more than that. That case turned largely on its own facts and for that reason is not of assistance to the resolution of the application before me. 78 Viewing the evidence as a whole I am not persuaded by the submissions of the respondent upon these issues and I am satisfied for the purposes of s 247A(1) of the Act that the applicant has demonstrated that he is acting in good faith and that inspection is to be made for a proper purpose and that in respect to the application governed by s 247A(3) -(6) of the Act that the applicant is also acting in good faith and that inspection is to be made for a purpose connected with applying for leave under s 237 of the Act ; or bringing proceedings with leave under that section. 79 The applicant has adduced evidence which condescends in considerable detail to his concerns which if made good upon an inspection of the respondent's books would inform either proceedings contemplated at the instance of the applicant in his own right under ss 232 and 234 of the Act and/or representative proceedings under ss 236 and 237 of the Act . 80 It follows that, in my opinion, orders for inspection of the respondent's books should be made. I will hear counsel as to the precise terms of those orders and the question of costs. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 5 April 2007 Counsel for the Applicant: Mr D H Solomon Solicitors for the Applicant: Solomon Brothers Counsel for the Respondent: Mr A C H Quahe Solicitors for the Respondent: Wojtowicz Kelly Legal Date of Hearing: 15 February 2007 Date of Judgment: 5 April 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/503.html