Case: Hamilton v Oades [1989] HCA 21 ; (1989) 166 CLR 486
Outcome: cited
contended that there was no analogy between the issues in this proceeding and the situation of a liquidator investigating whether to institute proceedings against directors of the company. Style emphasised the unique situation of a liquidator compared to that of an ordinary litigant, Hamilton v Oades [1989] HCA 21 ; (1989) 166 CLR 486 , 497. According to Style, the 'real' purpose of s 247A is to enable a shareholder who has identified a case suspected as requiring investigation to the requisite degree to obtain access to documents of the company to determine whether the case has substance; it is not to enable a shareholder to inspect all the documents of the company that the shareholder may wish to see to determine whether a derivative action would result in the company ultimately recovering substantial funds from directors if a case against them is proved. The situation facing Merim is quite different from the situation facing a liquidator in the cases where a liquidator has sought production of directors and officers insurance policies. In those cases the liquidator did not know whether any such policies were held by the relevant companies or persons against whom proceedings were being contemplated. In this case Merim knows that Style holds, or at least has held, directors and officers insurance. So much is stated on page 22 of Style's Annual Financial Report for the year ended 30 June 2007 in the Directors' Report under the heading "Indemnifying Officers or Auditor" in the following terms: " Indemnifying Officers or Auditor During or since the end of the financial year the company has given an indemnity or entered an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: The company has procured Directors &amp; Officers insurance to insure each of the following directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium is estimated to be $12,636. Gregory Johnson Sean McDaniell Murray Freeman Stephen Roux" It is not unreasonable to assume that Style has continued to procure that insurance during periods subsequent to 30 June 2007. Merim therefore knows of the existence of a policy of insurance and the amount of the premium estimated by Style to be payable under it. That was the position as at 30 June 2007. What Merim does not know, however, is the extent of the cover granted under that policy and whether it is current. I therefore consider that it is appropriate, as a matter of exercise of discretion to order that Style produce for inspection any directors and officers insurance policies currently held by Style. The cover granted under any such policies will be relevant to the decision to be made by Merim, after inspection of the other documents in respect of which I propose to make an order, whether to apply for leave under s 237 of the Act to bring a proceeding on behalf of Style in its name against any directors or officers of Style. Counsel for Style submitted that, if I was minded to make an order under s 247A, that Mr Yunghanns, in addition to Senior Counsel and an instructing solicitor for Merim ("the Nominated Individuals"), be permitted to inspect the relevant documents they should be required to sign undertakings in relation to their inspection of the documents and adhere to a confidentiality regime proposed by Style. Senior Counsel for Merim also requested that an accountant for Merim be added to the list of persons to inspect the relevant documents.