McDougall v On Q Group Ltd

In McDougall v On Q Group Ltd, the plaintiff sought to inspect the defendant's financial records as a director, asserting that he was unable to adequately fulfill his duties without access to these documents. The Federal Court of Australia was tasked with determining whether the director's power to inspect could be exercised by other persons on his behalf, specifically in light of the provisions of the Corporations Act 2001 (Cth). The defendant argued that the director’s power to inspect financial records was personal and could not be delegated to others, citing the explicit language of section 290 of the Act.

The court was required to interpret section 290 and assess whether it allows for the delegation of inspection rights to other individuals. The plaintiff contended that the statutory language does not preclude delegation and that such an interpretation would align with the practical realities of corporate governance, where directors often rely on the expertise of advisors. The defendant maintained that the statutory language is unequivocal, and any deviation from the prescribed process would be contrary to the legislative intent.

The court found that section 290 of the Corporations Act does not expressly prohibit the delegation of inspection rights, and given the practical necessity for directors to rely on advisors, an interpretation that allows for delegation is consistent with the statute's purpose. The court emphasised that the statutory right to inspect is intended to ensure that directors can effectively discharge their duties, and limiting this right to the director personally could impede the efficient operation of corporations. Consequently, the court ruled that directors can authorise other persons to inspect financial records on their behalf, provided it does not contravene other provisions of the Act.

The final orders of the court granted the plaintiff's application, allowing him to authorise other persons to inspect the defendant’s financial records on his behalf, subject to compliance with the relevant statutory requirements. The defendant was directed to provide the necessary access to the plaintiff's authorised representatives within the stipulated timeframe.