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Boulos v Carter

Boulos v Carter

Case [2005] NSWSC 891 2 September 2005

Corporate Law & Governance

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Reported Decision:
54 ACSR 827
(2006) 24 ACLC 46

New South Wales

Supreme Court

CITATION:
Boulos v Carter; Re TARBS World TV Australia Pty Ltd [2005] NSWSC 891
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 26/08/05

JUDGMENT DATE :

2 September 2005

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF:
Barrett J

DECISION:
Originating process dismissed with costs

CATCHWORDS:
CORPORATIONS - controllers - directors' rights of access to company documents and financial records - company in receivership - sales of property by receivers - directors seek order compelling grant of access to documents which "record and explain" all "transactions that the defendants have entered into as receivers and managers"

LEGISLATION CITED:
Corporations Act 2001 (Cth), ss.9, 198F, 290, 421, 1303

CASES CITED:
Edman v Ross (1922) 22 SR (NSW) 351
Fox v Gadsden Pty Ltd (2003) 46 ACSR 713
Gomba Holdings Ltd v Minories Finance Ltd [1988] 1 WLR 1231
Keyrate Pty Ltd v Hamarc Pty Ltd (2001) 38 ACSR 396
Metyor Inc v Queensland Electronic Switching Pty Ltd [2003] 1 QdR 186
Re Geneva Finance Ltd; Quigley v Cook (1992) 7 WAR 496
Stewart v Normandy NFM Limited [2000] SASC 344

PARTIES:
Magdi Boulos - First Plaintiff
Maria Regina Boulos - Second Plaintiff
Phillip Patrick Carter and Martin Russell Brown in their capacity as receivers and managers of TARBS World TV Australia Pty Limited - First Defendants
TARBS World TV Australia Pty Limited - Second Defendant

FILE NUMBER(S):
SC 3277/05

COUNSEL:
Mr J.T. Johnson - Plaintiffs
Mr J. Stoljar - Defendants

SOLICITORS:
Watson Mangioni - Plaintiffs
Gilbert+Tobin - Defendants

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY, 2 SEPTEMBER 2005

3277/05 MAGDI BOULOS and MARIA REGINA BOULOS v
PHILLIP PATRICK CARTER and MARTIN RUSSELL BROWN in their capacity as receivers and managers of TARBS WORLD TV AUSTRALIA PTY LIMITED & ANOR

JUDGMENT

The application

1 The plaintiffs (Mr Boulos and Mrs Boulos) are the directors of TARBS World TV Australia Pty Limited (which I shall call “TARBS”). By their originating process filed on 2 June 2005 they seek as against Mr Carter and Mr Brown (receivers and managers of the assets and undertaking of TARBS appointed out of court) and TARBS itself an order that they be allowed to inspect “such books and financial records kept by the defendants as correctly record and explain all transactions that the defendants have entered into as receivers and managers of TARBS World TV Australia Pty Limited”. It is clear enough that the second reference to “the defendants” is a reference to Mr Carter and Mr Brown (first defendants) to the exclusion of TARBS itself (second defendant).

The course of correspondence

2 The application is the culmination of a course of correspondence which followed the appointment of Mr Carter and Mr Brown as receivers and managers on 2 July 2004. They were appointed PanAmSat Corporation, a Delaware corporation, in exercise…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Boulos v Carter

Details

AGLC: Boulos v Carter [2005] NSWSC 891
Case: [2005] NSWSC 891
Decision Date: 2 September 2005

CaseChat Overview and Summary

The matter of Boulos v Carter involved a dispute between two former directors of a company and the receivers and managers of that company. The directors sought an order compelling the receivers to grant access to certain documents and financial records. The dispute was heard in the Federal Court of Australia.

The primary legal issue before the Court was whether the directors of a company had a right to access documents and financial records when the company was in receivership. Specifically, the directors sought an order that required the receivers to provide access to documents that "record and explain" all transactions entered into by the receivers and managers in their capacity as such. The Court had to consider the extent of the rights of directors to access company documents and financial records in the context of a company in receivership, and whether those rights were limited by the role and duties of receivers and managers.

The Court held that the directors did not have an unqualified right to access all documents and financial records of the company while it was in receivership. The Court emphasised that receivers and managers, as appointed by the company's secured creditors, have a distinct role and set of duties that differ from those of the directors. The Court found that the directors' rights to access documents and financial records were limited to those necessary for the proper performance of their duties as directors. The Court also noted that receivers and managers have a duty to act in the best interests of the company's creditors, which may require them to maintain certain confidentiality in relation to transactions and communications with creditors. The Court concluded that the directors' application for an order compelling access to all documents and financial records was not warranted.

The Court made an order dismissing the directors' application for an order compelling the receivers to grant access to documents and financial records. The Court found that the directors had not demonstrated a sufficient basis for the relief sought and that the receivers were not required to provide access to all documents and financial records in their possession. The Court also noted that the directors could seek access to specific documents or information if they could demonstrate a proper basis for doing so, but that this would be subject to the receivers' obligations and duties as well as any relevant confidentiality considerations.

Orders