Case: Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344
Outcome: followed
Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344 , Debelle J stated a number of propositions which he extracted from the authorities. His Honour stated at par [29]: "1. The requirement that the applicant is acting in good faith and that the inspection is to be made for a proper purpose expresses a composite notion and the court will determine whether each has been demonstrated by applying an objective test. The onus is on the applicant to demonstrate that he is acting in good faith and that the inspection is for a proper purpose. The section operates where the applicant seeks to protect some specific or personal right by the making of the order. Examples are where a shareholder contemplates proceedings under s 233 of the Corporations Act (the statutory successor of s 320 of the Companies Code)... or where a shareholder reasonably takes the view that a transaction could adversely affect his investment and he seeks to investigate the transaction for the purpose of determining what action he should take ... or where a shareholder seeks to ascertain facts for the purpose of considering a takeover offer... If the applicant's primary or dominant purpose is a proper purpose, it is not to the point that an inspection may be of benefit to the applicant for some other purpose... The rights provided by s 247A should not be regarded as affecting the basic rule of company law that a shareholder should not ordinarily have recourse to the courts to challenge a managerial decision made by or with the approval of the directors. Since every shareholder has a right to apply under the section for an inspection order, it is no answer to an application that, if an order is made, the applicant may acquire information not available to other shareholders and thereby be in a more advantageous position than those shareholders. Applicants do not necessarily lack a proper purpose merely because (a) they are hostile to other directors; or (b) they will, after inspection, have more information than other members. The procedure under s 247A is not intended to be a process as wide-ranging as the process of discovery of documents so that, as a general rule, inspection will be confined to, say, the results of decisions of directors rather than all the documents such as board papers leading to decisions ... I emphasise that this is a general rule. There may be occasions where it is proper to admit inspection of board papers ... Even where an applicant is acting bona fide and has shown a proper purpose, the court has a discretion whether to order inspection. " [citations omitted] For present purposes I am prepared to accept that the lobbying of proxy holders is a significant purpose of Mr Campbell in seeking access to the Company's books. In other words, I am prepared to accept that there is a doubt as to whether Mr Campbell's primary or dominant purpose is related to the issues arising out of the allotment of shares. I do not forget that the power given under s 247A must depend upon the application by "a member" of the Company. Can it be a proper purpose for a member of the Company to seek access for the purpose of lobbying proxy holders to vote in a particular way to ensure that that member is elected, to or retained on, the board of directors of the Company? I consider that is a proper purpose and I compare, for example, proposition 3 extracted by Debelle J in Acehill Investments Pty Ltd v Incitec Ltd (supra), which I repeat in this context: "The section operates where the applicant seeks to protect some specific or personal right by the making of the order. ... "or where a shareholder reasonably takes the view that a transaction could adversely affect his investment and he seeks to investigate the transaction for the purpose of determining what action he should take." It seems to me that it can be a proper purpose for a member of the Company to seek access to proxies, even though he also has another role as a director of the Company, to determine whether he should take any, and if so what, action in support of his aim to remain on the board of directors. Again, borrowing from the doctrine in relation to the common law principles, that purpose is not to abuse the confidence reposed in him as a director or materially to injure the Company. Although Mr Campbell posted messages on the Hot Copper website, to which Mr Pursell has referred and which I have summarised in these reasons, those matters again related to the issues of the composition of the board of directors.