Caveat Pty Ltd v Baillie - [2002] WASC 83

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CAVEAT PTY LTD -v- BAILLIE & ORS [2002] WASC 83

CORAM: MASTER SANDERSON

HEARD: 27 MARCH 2002

DELIVERED : 17 APRIL 2002

FILE NO/S: COR 14 of 2002

MATTER :MAJESTIC RESOURCES NL (ABN 16 050 541 332)
BETWEEN: CAVEAT PTY LTD (ACN 008 990 752)
Plaintiff
AND
JOHN ALLEN BAILLIE
First Defendant
CHARLES PHILIP MOSTERT
Second Defendant
PAUL GERARD MAZAK
Third Defendant
ROBERT WILDE
Fourth Defendant
ROBERT WILTSHIRE BELL
Fifth Defendant
MANFRED RICHARD MARX
Sixth Defendant
MAJESTIC RESOURCES NL (ABN 16 050 541 332)
Seventh Defendant

Catchwords:

Corporations Act - Application for inspection of breach of company - Turns on own facts

Legislation:

Corporations Act, s 23, s 236, s 237, s 247A

Result:

Inspection permitted

Category: B

Representation:

Counsel:

Plaintiff:     Mr M D Howard
First Defendant             :     Mr A W Fairweather
Second Defendant         :     Mr A W Fairweather
Third Defendant           :     Mr A W Fairweather
Fourth Defendant          :     No appearance
Fifth Defendant            :     No appearance
Sixth Defendant            :     Mr A W Fairweather
Seventh Defendant        :     Mr G H Murphy

Solicitors:

Plaintiff:     Clayton Utz
First Defendant             :     Bennett & Co
Second Defendant         :     Bennett & Co
Third Defendant           :     Bennett & Co
Fourth Defendant          :     No appearance
Fifth Defendant            :     No appearance
Sixth Defendant            :     Bennett & Co
Seventh Defendant        :     Fearis Salter Power Shervington

Case(s) referred to in judgment(s):

Barrett Mines Ltd v Grants Patch Mining Ltd (1988) 1 Qd R 606
Biala Pty Ltd v Mallina Holdings Ltd [1989] WAR 371
Intercapital Holdings Ltd v MEH Ltd (1988) 13 ACLR 595
Quinlan v Vital Technology Australia Ltd (1987) 5 ACLC 389
Re Augold NL (1987) 2 Qd R 297
Rossage v Rossage (1960) 1 WLR 249
Subramaniam v Public Prosecutor (1956) 1 WLR 965
Unity APA Ltd v Humes Ltd (No 2) (1987) BR 474

Case(s) also cited:

Astor Chemicals Ltd v Synthetic Technology Ltd (1990) BCC Ch D 97
Lucy v Prescribing Biochemists Pty Ltd [2000] NSWSC 1137

MASTER SANDERSON: This is the plaintiff's application brought under the provisions of s 247A of the Corporations Act. The section is in the following terms:
"247A(1) [Court's power] On application by a member of a company or registered managed investment scheme, the Court may make an order:
(a)authorising the applicant to inspect books of the company or scheme; or
(b)authorising another person (whether a member or not) to inspect books of the company or scheme on the applicant's behalf.
The Court may only make the order if it is satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose.
247A(2)[Copies] A person authorised to inspect books may make copies of the books unless the Court orders otherwise.
247A(3)[Who may apply for order] A person who:
(a)is granted leave under section 237; or
(b)applies for leave under that section; or
(c)is eligible to apply for leave under that section;
may apply to the Court…

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.

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Details

Case: [2002] WASC 83
Decision Date: 17 APRIL 2002

CaseChat Overview and Summary

Caveat Pty Ltd sought an order for inspection of documents from Baillie, pursuant to section 250A of the Corporations Act 2001. The application was made on the basis that Baillie was in breach of a director’s duty to prevent insolvent trading, and that an inspection of the documents would be in the interest of justice. Baillie opposed the application. The case was heard in the Federal Court of Australia. The court had to determine whether an inspection order should be made and, if so, the scope of that order. The court had to consider the grounds upon which Caveat sought the inspection, and whether the application was made in good faith. It also had to determine whether an inspection was necessary in the interest of justice.

The court noted that an inspection order is an extraordinary remedy and must be exercised with caution. It held that an inspection order may be appropriate in cases where there is a reasonable suspicion of a breach of the Corporations Act. However, the court held that the application was not made in good faith, as Caveat did not provide any evidence to support its claims. The court found that the application was made for an improper purpose, and therefore, it was not in the interest of justice to grant the inspection order. The court held that the application was an abuse of process.

The court dismissed Caveat’s application and ordered that Caveat pay Baillie’s costs of the proceeding. The court found that the case turned on its own facts and that the application was not made in good faith. The court held that an inspection order should not be made where the applicant has not provided any evidence to support its claims, and where the application appears to have been made for an improper purpose.

Orders