Industry Education Networking Pty Ltd & Ors - [2008] QSC 67

SUPREME COURT OF QUEENSLAND

CITATION:

Re Industry Education Networking Pty Ltd & Ors
[2008] QSC 67

PARTIES:

ANNA MARIA SENTINELLA
(first applicant)
KAREN MAREE HOLD
(second applicant)
v
INDUSTRY EDUCATION NETWORKING PTY LTD
ACN 061 370 769
(first respondent)
COMMUNITY ENTERPRISES AUSTRALIA LIMITED ACN 096 045 000
(second respondent)
ENTERPRISE MANAGEMENT GROUP PTY LTD ACN 123 371 022
(third respondent)
KEN O’BRIEN PTY LTD ACN 105 050 342
(fourth respondent)
STUDIO UNLIMITED PTY LTD ACN 112 273 748
(fifth respondent)
KENNETH GEOFFREY O’BRIEN
(sixth respondent)
KENNETH GEOFFREY O’BRIEN ATF THE KEN O’BRIEN TRUST
(seventh respondent)

FILE NO/S:

SC No 7872 of 2007

DIVISION:

Supreme Court of Queensland

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

11 April 2008

DELIVERED AT:

Brisbane

HEARING DATE:

14 November 2007

JUDGES:

Mackenzie AJA

ORDERS:

1.   That the application for an order for inspection of the books of the first respondent and ancillary orders under s 247A Corporations Act 2001 (Cth) be dismissed;

2.   That the application for leave for the applicants to bring proceedings on behalf of Industry Education Networking Pty Ltd against the sixth and seventh respondents Kenneth O’Brien and Kenneth O’Brien as Trustee for the Ken O’Brien Trust be dismissed; and

3.   That the applicants pay the costs of the respondents of this application on the standard basis.

CATCHWORDS:

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – INSPECTION OF OR ACCESS TO FINANCIAL RECORDS, REGISTERS, DOCUMENTS AND OTHER INFORMATION OF COMPANY – BY SHAREHOLDERS OR OTHER PERSONS – where applicants alleged numerous contraventions of the Corporations Act 2001 (Cth) – where applicants sought to inspect the books and records of the first respondent – where one or both applicants were Directors of the first respondent at the time of the conduct complained of – where the first applicant’s solicitor had previously inspected the first respondent’s books – where voluminous information of a detailed nature within the personal knowledge of the applicants – whether the discretion to order inspection should be exercised in the applicants’ favour

CORPORATIONS – MEMBERSHIP, RIGHTS AND REMEDIES – MEMBERS’ REMEDIES AND INTERNAL DISPUTES – PROCEEDINGS ON BEHALF OF COMPANY BY MEMBER – STATUTORY DERIVATIVE ACTION – where applicants were members and former Directors of the first respondent – where applicants sought leave to bring proceedings on behalf of the first respondent, alleging numerous contraventions of the Corporations Act 2001 (Cth) – where relief sought included an order winding up the first respondent – whether the proposed action is in the best interests of the first respondent company

Corporations Act 2001 (Cth), s 140, s 175, s 180, s 181,
s 182, s 232, s 236, s 237, s 247A, s 254T, s 260A-D

Acehill Investments Pty Ltd v Incitec Ltd (2002) 223 LSJS 97; [2002] SASC 344, applied
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, cited
Fiduciary Ltd v Morningstar Research Pty Ltd (2005) 53 ACSR 732; [2005] NSWSC 442, cited
Maher v Honeysett & Maher Electrical Contractors [2005] NSWSC 859, applied

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: [2008] QSC 67
Decision Date: 11 April 2008

CaseChat Overview and Summary

In the Federal Court of Australia, Industry Education Networking Pty Ltd & Ors brought an application against several respondents alleging numerous contraventions of the Corporations Act 2001 (Cth). The applicants, who were members and former directors of Industry Education Networking, sought to inspect the company's books and records and to bring proceedings on behalf of the company against other respondents, including the company's directors. The applicants sought relief including an order to wind up the company. The primary legal issues before the court were whether the applicants were entitled to inspect the company's books and records and whether they should be granted leave to bring proceedings on behalf of the company.

The court found that the applicants were not entitled to inspect the company's books and records because they had previously been directors of the company and therefore had personal knowledge of the matters they sought to inspect. The court also found that the proposed action was not in the best interests of the company because the applicants had not demonstrated that the action would benefit the company or its members. The court concluded that the applicants had not made out a case for the exercise of the court's discretion to order inspection or to grant leave to bring proceedings on behalf of the company.

The court dismissed the application for inspection and for leave to bring proceedings and ordered the applicants to pay the respondents' costs. The court held that the applicants had not satisfied the necessary threshold for the exercise of the court's discretion in their favour. The court also found that the proposed action was not in the best interests of the company and its members and that there were other means available to the applicants to pursue their claims. The outcome of the case was that the applicants were not granted the relief they sought and were ordered to pay the respondents' costs.

Orders

Orders of the court

1. That the application for an order for inspection of the books of the first respondent and ancillary orders under s 247A Corporations Act 2001 (Cth) be dismissed;

2. That the application for leave for the applicants to bring proceedings on behalf of Industry Education Networking Pty Ltd against the sixth and seventh respondents Kenneth O’Brien and Kenneth O’Brien as Trustee for the Ken O’Brien Trust be dismissed; and

3. That the applicants pay the costs of the respondents of this application on the standard basis.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Re Industry Education Networking Pty Ltd & Ors [2008] QSC 67
PARTIES:	ANNA MARIA SENTINELLA (first applicant) KAREN MAREE HOLD (second applicant) v INDUSTRY EDUCATION NETWORKING PTY LTD ACN 061 370 769 (first respondent) COMMUNITY ENTERPRISES AUSTRALIA LIMITED ACN 096 045 000 (second respondent) ENTERPRISE MANAGEMENT GROUP PTY LTD ACN 123 371 022 (third respondent) KEN O’BRIEN PTY LTD ACN 105 050 342 (fourth respondent) STUDIO UNLIMITED PTY LTD ACN 112 273 748 (fifth respondent) KENNETH GEOFFREY O’BRIEN (sixth respondent) KENNETH GEOFFREY O’BRIEN ATF THE KEN O’BRIEN TRUST (seventh respondent)
FILE NO/S:	SC No 7872 of 2007
DIVISION:	Supreme Court of Queensland
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland
DELIVERED ON:	11 April 2008
DELIVERED AT:	Brisbane
HEARING DATE:	14 November 2007
JUDGES:	Mackenzie AJA
ORDERS:	1. *That the application for an order for inspection of the books of the first respondent and ancillary orders under s 247A Corporations Act* 2001 (Cth) be dismissed; 2. That the application for leave for the applicants to bring proceedings on behalf of Industry Education Networking Pty Ltd against the sixth and seventh respondents Kenneth O’Brien and Kenneth O’Brien as Trustee for the Ken O’Brien Trust be dismissed; and 3. That the applicants pay the costs of the respondents of this application on the standard basis.**
CATCHWORDS:	CORPORATIONS – MANAGEMENT AND ADMINISTRATION – INSPECTION OF OR ACCESS TO FINANCIAL RECORDS, REGISTERS, DOCUMENTS AND OTHER INFORMATION OF COMPANY – BY SHAREHOLDERS OR OTHER PERSONS – where applicants alleged numerous contraventions of the Corporations Act 2001 (Cth) – where applicants sought to inspect the books and records of the first respondent – where one or both applicants were Directors of the first respondent at the time of the conduct complained of – where the first applicant’s solicitor had previously inspected the first respondent’s books – where voluminous information of a detailed nature within the personal knowledge of the applicants – whether the discretion to order inspection should be exercised in the applicants’ favour CORPORATIONS – MEMBERSHIP, RIGHTS AND REMEDIES – MEMBERS’ REMEDIES AND INTERNAL DISPUTES – PROCEEDINGS ON BEHALF OF COMPANY BY MEMBER – STATUTORY DERIVATIVE ACTION – where applicants were members and former Directors of the first respondent – where applicants sought leave to bring proceedings on behalf of the first respondent, alleging numerous contraventions of the Corporations Act 2001 (Cth) – where relief sought included an order winding up the first respondent – whether the proposed action is in the best interests of the first respondent company Corporations Act 2001 (Cth), s 140, s 175, s 180, s 181, s 182, s 232, s 236, s 237, s 247A, s 254T, s 260A-D Acehill Investments Pty Ltd v Incitec Ltd (2002) 223 LSJS 97; [2002] SASC 344, applied Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, cited Fiduciary Ltd v Morningstar Research Pty Ltd (2005) 53 ACSR 732; [2005] NSWSC 442, cited Maher v Honeysett & Maher Electrical Contractors [2005] NSWSC 859, applied