Ito v Shinko (Australia) Pty Ltd - [2004] QSC 268

SUPREME COURT OF QUEENSLAND

CITATION:

Ito & Anor v Shinko (Australia) Pty Ltd & Anor [2004] QSC 268

PARTIES:

TAKAJI ITO and MIDORI ITO
(applicants)
v
SHINKO (AUSTRALIA) PTY LTD ACN 010 664 196
(first respondent)
HOPE ISLAND RESORT DEVELOPMENT CORPORATION LIMITED ACN 086 782 818
(second respondent)

FILE NO/S:

BS3786 of 2004

DIVISION:

Trial Division

PROCEEDING:

Originating application

DELIVERED ON:

30 August 2004

DELIVERED AT:

Brisbane

HEARING DATE:

28 May 2004

JUDGE:

Mullins J

ORDER:

1.   The application against the first respondent is dismissed.

2.   Subject to any proper claim by the second respondent to legal professional privilege in respect of its books and records, the applicants and their solicitor Mr Fusao Nakano and their accountant Mr Richard Kok Chong Wan are authorised to inspect the books and records of the second respondent relating to:
(a) the allotment of 250 shares to the applicants in or about June 1999 and the financial worth of the second respondent at the time of that allotment; and
(b) the transfer of the assets of the second respondent, including its business, to Hope Island Resort Holdings Pty Ltd;
on such terms and conditions as to the time, place and procedure for such inspection as may be agreed between the applicants and the second respondent or, failing agreement, as determined by the Court.

3.   Liberty to each of the applicants and the second respondent to apply on one day’s notice in writing to the other.

CATCHWORDS:

CORPORATIONS - MANAGEMENT AND ADMINISTRATION - INSPECTION OF RECORDS - applicants sought order for inspection of records of the respondent pursuant to s 247A Corporations Act 2001 (Cth) - where applicants had invested money in respondent in return for security over resort development land - where applicants’ concern was in respect of the dissipation by the respondent of the loans - whether applicants were acting in good faith and whether inspection was for a proper purpose - where applicants’ purpose in seeking inspection of records did not relate to their position as shareholders of the respondent - application dismissed

CORPORATIONS - MANAGEMENT AND ADMINISTRATION - INSPECTION OF RECORDS - applicants sought order for inspection of records of the respondent pursuant to s 247A Corporations Act 2001 (Cth) - where applicants were allotted shares in the respondent in reduction of debt owed to the applicants the liability for which had been assumed by the respondent - where one year later assets of respondent transferred and shares were valueless - where applicants were concerned with the value of the shares at the time they were allotted and when the assets of the respondent were transferred - whether applicants were acting in good faith and whether inspection was for a proper purpose - application granted

Corporations Act 2001 (Cth), s 247A

Re Augold NL [1987] 2 QdR 297
Barrack Mines Ltd v Grants Patch Mining Ltd (1988) 6 ACLC 97
Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 QdR 606
Biala Pty Ltd v Mallina Holdings Pty Ltd [1990]…

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: [2004] QSC 268
Decision Date: 30 August 2004

CaseChat Overview and Summary

The case of Ito v Shinko (Australia) Pty Ltd involved two separate applications for an inspection order under section 247A of the Corporations Act 2001 (Cth). The applicants, Ito, sought the inspection of the respondent's records in both instances. In the first application, Ito had invested money in the respondent in exchange for a security over resort development land and sought to inspect the records to ascertain whether the loans had been dissipated. In the second application, Ito had been allotted shares in the respondent in reduction of debt, which later became valueless after the transfer of the respondent's assets. The court had to decide whether the applicants were acting in good faith and if the inspection was for a proper purpose.

The court examined the applicants' motives and the purpose behind the inspection of records. In the first application, the applicants' concern was not related to their position as shareholders of the respondent. The court found that the applicants were not acting in good faith and dismissed the application. In the second application, the applicants' concern related to the value of the shares at the time they were allotted and when the assets of the respondent were transferred. The court found that the applicants were acting in good faith and that the inspection was for a proper purpose. The court granted the application, subject to any claim of legal professional privilege by the second respondent.

The court's reasoning was based on the principle that an inspection order under section 247A of the Corporations Act 2001 (Cth) could only be granted if the applicants were acting in good faith and if the inspection was for a proper purpose. The court found that the applicants were acting in good faith in the second application but not in the first. The court granted the inspection order in the second application, subject to any claim of legal professional privilege by the second respondent. The applicants were authorised to inspect the books and records of the second respondent relating to the allotment of shares and the transfer of assets.

The final orders were that the application against the first respondent was dismissed, and the applicants were authorised to inspect the books and records of the second respondent relating to the allotment of shares and the transfer of assets. Liberty was given to each of the applicants and the second respondent to apply on one day’s notice in writing to the other.

Orders

Orders of the court

1. The application against the first respondent is dismissed.

2. Subject to any proper claim by the second respondent to legal professional privilege in respect of its books and records, the applicants and their solicitor Mr Fusao Nakano and their accountant Mr Richard Kok Chong Wan are authorised to inspect the books and records of the second respondent relating to:

(a) the allotment of 250 shares to the applicants in or about June 1999 and the financial worth of the second respondent at the time of that allotment; and

(b) the transfer of the assets of the second respondent, including its business, to Hope Island Resort Holdings Pty Ltd;

on such terms and conditions as to the time, place and procedure for such inspection as may be agreed between the applicants and the second respondent or, failing agreement, as determined by the Court.

3. Liberty to each of the applicants and the second respondent to apply on one day’s notice in writing to the other.

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:	Ito & Anor v Shinko (Australia) Pty Ltd & Anor [2004] QSC 268
PARTIES:	TAKAJI ITO and MIDORI ITO (applicants) v SHINKO (AUSTRALIA) PTY LTD ACN 010 664 196 (first respondent) HOPE ISLAND RESORT DEVELOPMENT CORPORATION LIMITED ACN 086 782 818 (second respondent)
FILE NO/S:	BS3786 of 2004
DIVISION:	Trial Division
PROCEEDING:	Originating application
DELIVERED ON:	30 August 2004
DELIVERED AT:	Brisbane
HEARING DATE:	28 May 2004
JUDGE:	Mullins J
ORDER:	1. The application against the first respondent is dismissed. 2. Subject to any proper claim by the second respondent to legal professional privilege in respect of its books and records, the applicants and their solicitor Mr Fusao Nakano and their accountant Mr Richard Kok Chong Wan are authorised to inspect the books and records of the second respondent relating to: (a) the allotment of 250 shares to the applicants in or about June 1999 and the financial worth of the second respondent at the time of that allotment; and (b) the transfer of the assets of the second respondent, including its business, to Hope Island Resort Holdings Pty Ltd; on such terms and conditions as to the time, place and procedure for such inspection as may be agreed between the applicants and the second respondent or, failing agreement, as determined by the Court. 3. Liberty to each of the applicants and the second respondent to apply on one day’s notice in writing to the other.
CATCHWORDS:	CORPORATIONS - MANAGEMENT AND ADMINISTRATION - INSPECTION OF RECORDS - applicants sought order for inspection of records of the respondent pursuant to s 247A Corporations Act 2001 (Cth) - where applicants had invested money in respondent in return for security over resort development land - where applicants’ concern was in respect of the dissipation by the respondent of the loans - whether applicants were acting in good faith and whether inspection was for a proper purpose - where applicants’ purpose in seeking inspection of records did not relate to their position as shareholders of the respondent - application dismissed CORPORATIONS - MANAGEMENT AND ADMINISTRATION - INSPECTION OF RECORDS - applicants sought order for inspection of records of the respondent pursuant to s 247A Corporations Act 2001 (Cth) - where applicants were allotted shares in the respondent in reduction of debt owed to the applicants the liability for which had been assumed by the respondent - where one year later assets of respondent transferred and shares were valueless - where applicants were concerned with the value of the shares at the time they were allotted and when the assets of the respondent were transferred - whether applicants were acting in good faith and whether inspection was for a proper purpose - application granted Corporations Act 2001 (Cth), s 247A Re Augold NL [1987] 2 QdR 297 Barrack Mines Ltd v Grants Patch Mining Ltd (1988) 6 ACLC 97 Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 QdR 606 Biala Pty Ltd v Mallina Holdings Pty Ltd [1990]…