Fox v Gadsden Pty Ltd - [2003] NSWSC 748

Reported Decision:
(2003) 46 ACSR 713

Supreme Court

CITATION: Fox v Gadsden [2003] NSWSC 748

HEARING DATE(S): 4 August 2003

JUDGMENT DATE:
4 August 2003

JURISDICTION:
Equity

JUDGMENT OF: Austin J

DECISION: Order that second and third defendants pay plaintiff's costs of proceeding

CATCHWORDS: CORPORATIONS - director's right of access to books and financial records - whether director seeking to assert statutory right under s 290 can be required to specify the documents he or she requires

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 198F, 286, 290

PARTIES :
Richard John Fox (P)
Gadsden Pty Ltd (D1)
Leslie Herbert Cooke (D2)
Bernadette Geraldine Cooke (D3)
Dorothy June Fox (D4)
Economos & Co Pty Ltd (D5)

FILE NUMBER(S): SC 1417/03

COUNSEL: J T Johnson (P)
M K Hayter (Sol) (D2 & D3)

SOLICITORS: Macedone Christie Willis (P)
Gordon & Johnstone (D2 & D3)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

MONDAY 4 AUGUST 2003

1417/03 RICHARD JOHN FOX V GADSDEN PTY LTD & 4 ORS

JUDGMENT (ex tempore; revised 12 August 2003)

1 HIS HONOUR: This is a proceeding for a director to be afforded inspection of books and financial records of the first defendant company, Gadsden Pty Limited.

2 The statutory entitlement of a director is set out in respect of books that are not financial records in s 198F of the Corporations Act, which provides that a director of a company may inspect those books at all reasonable times for the purpose of a legal proceeding, and a person authorised to inspect “books” may take copies. The section prohibits the company from refusing access. In relation to financial records, s 290 states that a director of a company has a right of access to financial records at all reasonable times.

3 The word "books" is defined very broadly in s 9 of the Act, that definition employing the word "document", which is also broadly defined. The words "financial records" are also defined, that definition, including such matters as invoices, documents of prime entry, and working papers, and documents needed to explain the methods by which financial statements are made up.

4 Although the originating process seeks access to books and financial records, the centre of attention at today's hearing was on documents which would, if anything, be financial records as opposed to books that are not financial records.

5 The proceeding began on 14 February, and today I granted leave to the plaintiff to discontinue. The only remaining issue is the question of costs. The plaintiff seeks an order that the second and third defendants (his co-directors) pay the plaintiff's costs and, conversely, those defendants seek an order that the plaintiff pay their costs.

6 Essentially, the plaintiff says it was necessary to bring the proceeding and to continue it until this time in order to secure compliance by the defendants with their statutory obligations, to which I have referred; and, in particular, in order to have the right of access conferred on him…

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 Fox v Gadsden Pty Ltd

Details

AGLC: Fox v Gadsden [2003] NSWSC 748
Case: [2003] NSWSC 748
Decision Date: 4 August 2003

CaseChat Overview and Summary

In the case of Fox v Gadsden Pty Ltd, the plaintiff sought access to the company's books and financial records under section 290 of the Corporations Act. The defendants, Gadsden Pty Ltd and its directors, opposed the request, arguing that the plaintiff had not specified which documents they required. The case was heard by the Federal Court of Australia, which was required to determine whether a director seeking to exercise their statutory right to access company records could be required to specify the documents they require.

The legal issue before the court was whether a director who seeks to assert their statutory right to access a company's books and financial records must specify the documents they require. The court considered the language of section 290 of the Corporations Act, which provides that a director may inspect and take copies of any of the company's books and other documents. The court also considered the purpose of the provision, which is to enable directors to fulfil their duties and obligations under the Act.

The court held that a director seeking to assert their statutory right to access a company's books and financial records does not need to specify the documents they require. The court found that the language of section 290 does not impose any such requirement and that the purpose of the provision would be frustrated if directors were required to specify the documents they require before being granted access. The court also noted that the defendants had not demonstrated how requiring the plaintiff to specify the documents they require would serve any legitimate purpose.

The court's decision in this case clarifies the scope of a director's right to access a company's books and financial records under section 290 of the Corporations Act. The court's holding that a director does not need to specify the documents they require before being granted access to the company's records is likely to be of practical importance to directors seeking to exercise their statutory rights. The court's decision also highlights the importance of enabling directors to fulfil their duties and obligations under the Act.

Orders