Mesa Minerals Ltd v Mighty River International Ltd

Link copied
Case Copied 38 min read

FEDERAL COURT OF AUSTRALIA

Mesa Minerals Limited v Mighty River International Limited [2016] FCAFC 16

Appeal from: Mighty River International Limited v Mesa Minerals Limited [2015] FCA 462
File number: WAD 260 of 2015
Judges: SIOPIS, GILMOUR & KATZMANN JJ
Date of judgment: 26 February 2016
Catchwords: CORPORATIONS — order authorising inspection of company’s books by shareholder under s 247A of the Corporations Act 2001 (Cth) — whether primary judge erred in holding that application made in good faith and for a proper purpose — whether discretion miscarried — whether orders too wide
Legislation: Corporations Act 2001 (Cth) ss 232, 247A, 461
Cases cited:

Abalos v Australian Postal Commission (1990) 171 CLR 167

Barrack Mines Ltd v Grants Patch Mining Ltd (1987) 6 ACLC 97

Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 Qd R 606

Bernard Elsey Pty Ltd v Federal Commissioner of Taxation (1969) 121 CLR 119

Branir v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424

Cescastle Pty Ltd v Renak Holdings Ltd (1991) 9 ACLC 1333

Engel v National Biodiesel Ltd [2015] FCA 1114

Fox v Percy (2013) 214 CLR 118

H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159

Hanks v Admiralty Resources NL [2011] FCA 891; (2011) 85 ACSR 101

House v The King (1936) 55 CLR 499 Lovell v Lovell (1950) 81 CLR 513

Intercapital HoldingsLtd v MEH Ltd (1988) 6 ACLC 1068

Knightswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (1989) 7 ACLC 536

London City Equities Ltd v Penrice Soda Holdings Ltd [2011] FCA 674; 84 ACSR 573

McNeill v Hearing & Balance [2007] NSWSC 942

Praetorin Pty Ltd v TZ Ltd [2009] NSWSC 1237; 76 ACSR 236

Quinlan v Vital Technology Australia Ltd (1987) 5 ACLC 389

Re Claremont Petroleum NL [1990] 2 Qd R 31

Re Style Ltd; Merim Pty Ltd v Style Ltd [2009] FCA 314; 255 ALR 63

Rowland v Meudon Pty Ltd [2008] NSWSC 381; 220 FLR 362

Unity APA Ltd v Humes Ltd(No 2) [1987] VR 474

Yara Australia Pty Ltd v Burrup Holdings Ltd [2010] FCA 1273; 80 ACSR 641

C Mantziaris, “The member’s right to inspect the company books: Corporations Act, s 247A” (2009) 83 ALJ 621
Date of hearing: 13 November 2015
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 88
Counsel for the Appellant: Mr M L Bennett with Mr M J M Nas
Solicitor for the Appellant: Bennett & Co
Counsel for the Respondent: Mr T P O’Leary with Mr G S Greer
Solicitor for the Respondent: Gilbert + Tobin

ORDERS

WAD 260 of 2015
BETWEEN:

MESA MINERALS LIMITED (ACN 009 113 160)

Appellant
AND:

MIGHTY RIVER INTERNATIONAL LIMITED

Respondent

JUDGES:

SIOPIS, GILMOUR & KATZMANN JJ

DATE OF ORDER:

26 FEBRUARY 2016

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.Order 3 of the…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Mesa Minerals Ltd v Mighty River International Ltd and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2016] FCAFC 16
Decision Date

CaseChat Overview and Summary

The appeal in Mesa Minerals Ltd v Mighty River International Ltd was heard by the Supreme Court of Western Australia. Mesa Minerals Ltd, a company, appealed against the decision of the primary judge to grant Mighty River International Ltd, a shareholder, an order authorising an inspection of Mesa’s books under s 247A of the Corporations Act 2001 (Cth). The primary judge had determined that Mighty River’s application was made in good faith and for a proper purpose, and thus, granted the order on certain terms. Mesa challenged the primary judge’s findings, arguing that the discretion was misapplied and the orders were too wide.

The central legal issues before the court were whether the primary judge erred in determining that Mighty River’s application was made in good faith and for a proper purpose, and if the discretion to refuse the order should have been exercised. Additionally, the court needed to determine whether the scope of the inspection orders was too broad. Under s 247A of the Corporations Act, the court may only grant an order for inspection if satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose. The court must also consider whether the order is too wide, and if so, amend it accordingly.

The court found that the primary judge’s decision to grant the inspection order was correct. The court was satisfied that Mighty River’s application was bona fide and for a proper purpose, and thus, there was no error in the primary judge’s determination. The court also held that the discretion was not misapplied, and the scope of the inspection orders was appropriate. The court concluded that none of the grounds of appeal were made out, and therefore, dismissed the appeal with costs.

The court amended the inspection order to specify the times and dates for the inspection, ensuring it took place from 8:30 am to 5:30 pm Perth time on weekdays, excluding weekends and public holidays, and concluded by 5:30 pm on 15 March 2016. Additionally, the court ordered Mesa Minerals Ltd to pay the costs of the respondent, including the costs of the interlocutory application.

Orders

Orders of the court

1. The appeal be dismissed.

2. Order 3 of the orders made by his Honour Justice Barker in proceeding WAD 387 of 2014 on 14 May 2015 be amended so as to read:

Subject to further order, the inspection shall:

(a) take place from 8.30 am Perth time on 4 March 2016;

(b) continue during the hours of 8.30 am to 5.30 pm Perth time on any other day than a Saturday, Sunday or a public holiday in Western Australia; and

(c) be complete by 5.30 pm on 15 March 2016.

3. The appellant pay the respondent’s costs including the costs of the interlocutory application dated 5 June 2015.

Background

Background to the litigation

The primary judge nonetheless accepted Mr Xie’s evidence. He was satisfied that the application was brought bona fide and for a proper purpose and ought to be granted, albeit on terms.The background to Mighty River’s application The application has a long history. The background is set out in some detail in the primary judge’s reasons. What follows is an abbreviated account drawn from those reasons. For some time, it appears, there have been hostile relations between Mighty River on the one hand and Mesa and its parent company, MRL, on the other, personified in antagonism between Mr Xie and Mr Chris Ellison, a director of both Mesa and MRL. Mighty River was founded in about 2000. Mr Xie has been its only director ever since. For about a year, from 22 January 2009 until 20 January 2010 Mr Xie was also a director of Auvex Resources Limited. In 2010 MRL launched takeover bids of both Mesa and Auvex, which led to MRL acquiring about 67% of Mesa and 100% of Auvex. During the takeover, following an application by Mesa to the Takeovers Panel, Mighty River was found to have contravened the Corporations Act in its dealings with Mesa shares. Mesa also brought proceedings against Auvex in the Supreme Court of Western Australia in which Mighty River sought leave to intervene. After the takeover, Mighty River brought proceedings of its own against MRL and its directors, also in the Supreme Court, relating to an alleged unwritten agreement concerning the acquisition by MRL of Mighty River’s shares in Mesa. Then in July 2014 Mighty River’s solicitors wrote to Mesa seeking documents “by way of [informal] pre-action discovery” in order to consider whether to bring proceedings against Mesa under ss 232 and 461 of the Corporations Act for statutory oppression and winding up respectively. On 10 November 2014 Mighty River’s solicitors informed Mesa’s solicitors that it would no longer pursue access to the documents in this way but would instead make an application under s 247A of the Act. The letter advised Mesa that the documents were sought for the purpose of enabling Mighty River to determine the nature and scope of Mesa’s port capacity and access rights with the Port Authority, and the terms upon which third parties are using the port rights and the Boodarie lease, so as to enable Mighty River to make a decision on the exercise of its rights as a shareholder of Mesa. The scope of s 247A Section 247A relevantly provides:247A Order for inspection of books of company or registered managed investment scheme(1)On application by a member of a company or registered managed investment scheme, the Court may make an order:(a)authorising the applicant to inspect books of the company or scheme; or(b)authorising another person (whether a member or not) to inspect books of the company or scheme on the applicant’s behalf.The Court may only make the order if it is satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose.(2)A person authorised to inspect books may make copies of the books unless the Court orders otherwise.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The two remaining questions — whether the discretion to refuse to make an order should be exercised and the scope of the order — were discretionary decisions which could only be set aside if attended by error of the kind described in House v The King. No error of this kind has been shown.Conclusion In my opinion, none of the grounds of appeal is made out. I would therefore dismiss the appeal with costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.