Case: Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846
Outcome: cited
In Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846. Emmett J, in the course of analysing the right of inspection conferred by the subsection, considered that specific books should be identified. His Honour said at par [24]: "That does not mean to say that specific documents need to be identified by the former director. A former director would not necessarily remember every piece of paper that a Company had. However, in my view, the section requires that a person seeking to inspect books must identify at least specific categories or classes of books, which have some bearing on the relevant legal proceeding. There may be a question as to whether or not the former director is required to identify precisely how the relevant books are relevant or material to that proceeding. There must, however, be some indication of the nature of the books sought and the bearing that the books have on the proceeding in question." I agree with these observations and am satisfied that the ultimate formulation of the order sought by the plaintiff identified the books sought to be inspected with sufficient particularity. 50 The defendants submitted that the proceeding in the Federal Court did not relate to anything the plaintiff had done in his capacity as a former director of the defendant companies. 51 In Hardcastle v Advanced Mining Technologies (supra), Emmett J considered that there was a second possible limitation on the operation of s 198F(2) of the Corporations Act . His Honour said at par [25]: "...the proceeding must be a proceeding to which the former director is a party or believes might be brought against him or her or which he or she proposes to bring in his or her capacity as a director of the company . It would be curious if a person who, fortuitously, happened to have been a director of a company in the past would be entitled to access to books of the company that might be material to proceedings brought by that former director or which might be brought against the former director in a capacity totally unconnected with the capacity of the former director as a director. I do not express any firm or final view on that question at this stage because it does not arise in the application before me. Section 1303 authorises intervention by the Court where a person in contravention of the law refuses to permit inspection." Emmett J did not form a concluded view on this issue and I would, with respect, not read such a limitation into the provision. 52 The defendants submitted that on the proper construction of s 198F(2) of the Corporations Act the only right given to a director was to inspect such books of the company which came into existence during the period of seven years immediately preceding the date upon which the former director ceased to be a director of the company. I do not accept this construction of s 198F(2). The reference to seven years in the subsection is a reference to the period during which the right to inspect exists; that is to say, the right to inspect is a right which continues for seven years after the date upon which the person ceases to be a director of the company. If that right is exercised during that seven year period, it is a right to inspect books which may well have come into existence a considerable period before the date upon which the person ceased to be a director of the company, and it also is a right to inspect books which have come into existence after the date upon which the person ceased to be a director of the company. The period of seven years referred to relates to the period during which the right to inspect arises; it is not a period which relates to the period during which the books of the company came into existence. 53 The defendants submitted that the plaintiff was not proposing in good faith to bring a proceeding in the Family Court. They submitted that the lack of good faith was evidenced by the facts that in August 2006 both parties had been involved in a Family Court property dispute, they had been represented by highly qualified advisers, they had made a decision which was recorded in consent orders and that 18 months later it could not be said that the plaintiff was acting in good faith in raising the issues he had. The defendants pointed to the fact that the plaintiff was seeking to criticise the expert's report which had been given to the parties prior to the conciliation conference and that it had always been open to him to do so prior to the making of the final orders. In short, it was submitted that the plaintiff was not acting in good faith in bringing an application in November 2007 to rectify matters which were within his control prior to the making of the final orders.