Fan Lee v AMP Limited and Andrew Mohl

[2006] ACTCA 27

FAN LEE v AMP LIMITED & ANDREW MOHL
[2006] ACTCA 27 (12 December 2006)

APPEAL – Claim brought under Corporations Act 2001 – summary judgment entered in favour of defendants – no error of law – appeal dismissed

Corporations Act 2001 (Cth), ss 206D, 232, 233, 236, 237, 247A

United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178

AMP Ltd [2003] FCA 1465 (16 October 2003)

ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

No. ACTCA 16 - 2006
No. SC 148 of 2006

Judges:  Higgins CJ, Gray and Moore JJ
Court of Appeal of the Australian Capital Territory
Date:  12 December 2006

IN THE SUPREME COURT OF THE  )   No. ACTCA 16 - 2006
  )  No. SC 148 of 2006
AUSTRALIAN CAPITAL TERRITORY  )
  )

COURT OF APPEAL  )

ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:FAN LEE

Appellant

AND:AMP LIMITED

First Respondent

AND:ANDREW MOHL

Second Respondent

ORDER

Judges:  Higgins CJ, Gray and Moore JJ
Date:  12 December 2006
Place:  Canberra

THE COURT ORDERS THAT:

1. The appeal be dismissed.

1. The appellant pay the respondents’ costs.

IN THE SUPREME COURT OF THE  )   No. ACTCA 16 - 2006
  )  No. SC 148 of 2006
AUSTRALIAN CAPITAL TERRITORY  )
  )

COURT OF APPEAL  )

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:FAN LEE

Appellant

AND:AMP LIMITED

First Respondent

AND:ANDREW MOHL

Second Respondent

Judges:  Higgins CJ, Gray and Moore JJ
Date:  12 December 2006
Place:  Canberra

REASONS FOR JUDGMENT

THE COURT:

1. This is an appeal against a decision of the Master entering summary judgment in favour of the respondents in respect of a claim by the appellant that she, as a former shareholder in the first respondent, should be permitted to inspect the books of the first respondent and for the “disqualification” of the Chief Executive Officer, the second respondent.

1. She seeks also damages, claimed, she concedes, arbitrarily, at $10,000 for loss of value of her shares resulting from the decision to demutualise the first respondent.  She ceased to be a shareholder on 17 October 2003.

1. The Master considered that the right to inspect the books of a corporation, contained in s 247A Corporations Act 2001 (Cth) (Corporations Act), did not authorise the order sought in the circumstances. Section 247A Corporations Act provides:

(1) On application by a member of a company … the Court may make an order:

(a) authorising the applicant to inspect books …

1. As was pointed out in United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178 that section only applies to persons currently members of a corporation. Even so, the order is not made as a matter of course. It is a matter for the Court whether or not to make an order. It would be made only if the member demonstrated a legitimate reason for requiring that inspection. Indeed, s 247A(5) provides:

   The Court may make the order only if it is satisfied that:

   (a) the applicant is acting in good faith; and

   (b) the inspection is to be made for a purpose connected with:

   (i)applying for leave under section 237; or

   (ii)bringing or intervening in proceedings with leave under that section.

2. Section 237 Corporations Act refers to proceedings by a person referred to in s 236(1) Corporations Act.  That provides:

(1)A person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if:

(a) the person is:

(i)a member, former member, or person entitled to be registered as a member, of the company or of a related body corporate; or

…

(b) the person is acting with leave granted under section 237.

(2)Proceedings brought on behalf of a company must be brought in the company’s name.

1. The plaintiff is, of course, a “former member” of the company.  However, she has not brought, nor does she seek to bring, proceedings in the name of the company.  It seems that her only legitimate complaint, as a former member of the company, is that her share price on exit was less than it ought to have been.  That is not a complaint the company itself could make.  Nor would it be open to her, on this appeal or in these proceedings so to do.

1. Even so, the entitlement of such a former member is merely to apply for leave to bring such a proceeding. Section 237(2) Corporations Act provides that:

(2)The Court must grant the application if it is satisfied that:

(a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

(b) the applicant is acting in good faith; and

(c) it is in the best interests of the company that the applicant be granted leave; and

(d) if the applicant is applying for leave to bring proceedings— there is a serious question to be tried; and

(e) either:

(i)at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or

(ii)it is appropriate to grant leave even though subparagraph (i) is not satisfied.

1. In so far as the plaintiff’s complaints relate to the demerger of the first respondent it is not open to her to challenge it.  That demerger has been approved by the Federal Court of Australia (see AMP Ltd [2003] FCA 1465 (16 October 2003)).

1. The plaintiff claims that the approval was procured by fraud. There is nothing in the material she relies upon to justify that suggestion. It is manifestly not in the interests of the first respondent to seek to challenge or set aside that approval. There is no arguable case for the grant of leave under s 237(2) Corporations Act.

1. It was, nevertheless, also claimed by the plaintiff that the affairs of the company had been conducted contrary to s 232 Corporations Act so as to entitle her to an order, including inspection of books and records, under s 233 Corporations Act. Section 232 provides:

The Court may make an order under section 233 if:

(a)the conduct of a company’s affairs;

…

is either

(d)contrary to the interests of the members as a whole; or

(e)oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

1. It may well be, as many press commentators referred to by the plaintiff opined, that the affairs of the first defendant were mismanaged by the management team led by the second defendant. Even if that was so it would not warrant a finding that s 232(e) Corporations Act applied.  The Master was right to conclude that no grounds were established to point to any such circumstance as being arguably present.  If there was mismanagement it was not a circumstance that impacted otherwise than on all shareholders equally.

1. The second order sought related to the second defendant. It appears that the appellant/plaintiff was seeking an order that the second defendant be disqualified from acting as chief executive of the company. The only power directly so to do based on mismanagement, seems to be s 206D Corporations Act. That power can only be enlivened on ASIC’s application, if the corporation has failed or is insolvent. There is no evidence that s 206D(2) Corporations Act could apply even on ASIC’s application.  It is not open to this plaintiff so to apply.

1. On no view of it could such an order be made on the plaintiff’s application.  The Master so concluded.  He was right to do so.

1. The third aspect is the claim for damages.  There are, as the Master concluded, no facts asserted which could give rise to such a claim.  The monetary claim seems to have been, in any event, an afterthought to give the plaintiff some colour of standing otherwise lacking.

1. There is no error shown in the Master’s judgment on this aspect of the matter either.

1. It follows that the Master’s conclusion was correct.  It was inevitable that the plaintiff’s claim would be struck out and summary judgment entered for the defendants with costs.

1. It is arguable that the appellant needs leave on the basis that the Master’s judgment may be viewed as interlocutory.  Final orders made in consequence of an interlocutory order are themselves not interlocutory.  Given that the appeal is dismissed the consequence is the same as if leave was refused.

1. We dismiss this appeal with costs.

   I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

   Associate:

   Date: 12 December 2006

Counsel for the Appellant:  Self represented
Solicitor for the Appellant:  Not applicable
Counsel for the Respondents:  Mr R Clynes
Solicitor for the Respondents:  Clayton Utz
Date of hearing:  7 November 2006
Date of judgment:  12 December 2006