Ito v Shinko (Australia) Pty Ltd

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.