FEDERAL COURT OF AUSTRALIA
Mighty River International Limited v Mesa Minerals Limited [2015] FCA 462
Citation: Mighty River International Limited v Mesa Minerals Limited [2015] FCA 462 Parties: MIGHTY RIVER INTERNATIONAL LIMITED v MESA MINERALS LIMITED ACN 009 113 160 File number: WAD 387 of 2014 Judge: BARKER J Date of judgment: 14 May 2015 Catchwords: CORPORATIONS – application to inspect company books and records under s 247A of the Corporations Act 2001 (Cth) – whether acting in good faith and inspection to be made for a proper purpose – whether plaintiff company attempting to influence decisions of directors of defendant company or force purchase of minority shareholding in defendant company – information sought relevant to plaintiff company’s investment and not adequately revealed in recent financial reports of defendant company – application granted – proposed scope of order not excessive Legislation: Civil Dispute Resolution Act 2011 (Cth) s 6
Corporations Act 2001 (Cth) s 232, s 237, s 247A, s 247A(1), s 247A(2), s 461Cases cited: Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344; (2002) 223 LSJS 97
Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [2007] WASC 207
Hanks v Admiralty Resources NL [2011] FCA 891; (2011) 85 ACSR 101
Intercapital Holdings Ltd v MEH Ltd (1988) 13 ACLR 595
Kingswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (1989) 15 ACLR 151
Re Claremont Petroleum NL (No 2) [1990] 2 Qd R 310
Rowland v Meudon Pty Ltd [2008] NSWSC 381; (2008) 220 FLR 362
Style Limited, in the matter of Merim Pty Ltd v Style Ltd [2009] FCA 314; (2009) 255 ALR 63
Yara Australia Pty Ltd v Burrup Holdings Limited [2010] FCA 1273; (2010) 80 ACSR 641Date of hearing: 1 April 2015 and 7 April 2015 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 118 Counsel for the Plaintiff: Mr TP O’Leary Solicitor for the Plaintiff: Gilbert + Tobin Counsel for the Defendant: Mr ML Bennett Solicitor for the Defendant: Bennett + Co
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 387 of 2014
BETWEEN: MIGHTY RIVER INTERNATIONAL LIMITED
PlaintiffAND: MESA MINERALS LIMITED ACN 009 113 160
Defendant
JUDGE:
BARKER J
DATE OF ORDER:
14 MAY 2015
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to s 247A of the Corporations Act 2001 (Cth) the plaintiff is authorised to inspect and take copies of any and all books specified in para 5 of these orders of the defendant by its director, Mr Yuzheng Xie.
2.Mr Xie shall sign a register prior to each attendance to conduct the inspection, identifying (a) his name (b) his affiliation to the plaintiff, and (c) the date and time of his attendance.
3.Subject to further order, the inspection shall:
(a)take place from 8.30am Perth time on 8 June 2015;
(b)continue during the hours of 8.30am to 5.30pm Perth time on any other day than a Saturday, Sunday or a public holiday…
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- Case
- [2015] FCA 462
- Decision Date
CaseChat Overview and Summary
The court held that Mighty River had satisfied the requirements for good faith and proper purpose. The inspection was deemed necessary to remove ambiguity and incompleteness in the information provided by Mesa Minerals concerning the exploitation of port rights and the Boodarie lease. This would allow Mighty River to adequately protect its investment in the company. The court was satisfied that the scope of the inspection order proposed by Mighty River was not excessive and granted the order with some modifications regarding the period and timing of the inspection.
The court found that the proposed inspection period of four years was necessary to cover all documents related to the exploitation of Mesa’s port rights and the Boodarie lease. This would ensure that Mighty River had adequate information to safeguard its investment. Consequently, the court ordered that Mighty River be granted access to specified documents, subject to certain conditions regarding the inspection period, the identification of the inspecting party, and the disclosure of obtained information. Additionally, the plaintiff was released from an earlier undertaking to the court, and Mesa Minerals was ordered to pay Mighty River’s costs related to the application.
Orders
Orders of the court
1. Pursuant to s 247A of the Corporations Act 2001 (Cth) the plaintiff is authorised to inspect and take copies of any and all books specified in para 5 of these orders of the defendant by its director, Mr Yuzheng Xie.
2. Mr Xie shall sign a register prior to each attendance to conduct the inspection, identifying (a) his name (b) his affiliation to the plaintiff, and (c) the date and time of his attendance.
3. Subject to further order, the inspection shall:
(a) take place from 8.30am Perth time on 8 June 2015;
(b) continue during the hours of 8.30am to 5.30pm Perth time on any other day than a Saturday, Sunday or a public holiday in Western Australia; and
(c) be complete by 5.30pm on 15 June 2015.
4. Subject to further order, pursuant to s 247B of the Corporations Act, the person identified in para 1 of these orders may only disclose any information obtained during the inspection to:
(a) the plaintiff;
(b) any Australian Court;
(c) any and all of the solicitors and counsel retained by the plaintiff; and
(d) ASIC (as that term is defined in s 9 of the Corporations Act).
5. For the purposes of these orders, the books shall comprise any and all books (as that term is defined in s 9 of the Corporations Act) whether held in paper, electronic or any other form which are specified in Sch 1.
6. The plaintiff is released from its undertaking to the Court of 26 February 2015 regarding the security held by its solicitors.
7. The defendant pay the plaintiff’s costs of and incidental to the application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Schedule 1
(1) All books which relate to the use by any Third Parties, between December 2010 and November 2014, of:
(a) the Port Capacity; and/or
(b) the Access Right; and/or
(c) the Boodarie Lease.
(2) The Multi-User Agreement and any amendments, variations or agreements relating to the Multi User Agreement.
(3) The Utah Point Facility Agreement and any amendments, variations or agreements relating to the Utah Point Facility Agreement.
(4) The Utah Point Agreement and any amendments, variations or agreements relating to the Utah Point Agreement (which is identified at paragraph 28.3 of the affidavit of Bruce Albert Goulds sworn 3 March 2015).
(5) The lease entered into by Mesa relating to an area within the multi-user out loading facility for stockpiling and shipping product (which is identified at paragraph 28.4 of the affidavit of Bruce Albert Goulds sworn 3 March 2015).
(6) The following definitions apply to this schedule:
(a) “Access Right” means the right to stockpile ore at the Utah Point ore stockyard and to export the stockpile ore through the ore loader
(b) “Boodarie Lease” means general purpose lease 45/265, situated at the Boodarie Industrial Estate.
(c) “Mesa” means the Defendant, Mesa Minerals Limited.
(d) “Multi-User Agreement” means the agreement between, among others, Mesa and the Port Hedland Port Authority in relation to the granting to Mesa of the Port Capacity.
(e) “Port Capacity” means Mesa’s port capacity at Utah Point, Port Hedland.
(f) “Third Parties” means any entity other than Mesa, irrespective of whether that entity is also a related entity.
(g) “Utah Point Facility Agreement” means the agreement between, among others, Mesa and the Port Hedland Port Authority in relation to the granting to Mesa of the Access Right.
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
Ratio Decidendi
Legal Principle Established
Any such suggestion by Mesa is, Mighty River submits, misconceived given that the relevant, earlier correspondence between the parties’ respective solicitors was attached to Mr Xie’s affidavit in support of the application, which affidavit was filed on the same date as the genuine steps statement.Consideration The Court, in considering these detailed submissions, is persuaded, primarily for the reasons advanced in the submissions and reply submissions of Mighty River, that access to the required documents should be permitted by the making of an order. As has been noted above and the parties accept, the principles by which the Court should exercise its discretion under s 247A(1) are well understood. In some cases, such as Knightswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (1989) 15 ACLR 151; (1989) 7 ACLC 536, and by Debelle J in Acehill Investments, it has been suggested that the requirement that an applicant for an access order satisfy the Court it is acting in good faith and the inspection is to be made for a proper purpose contains a composite notion. In Knightswood Nominees, Brooking J said, at 156, that he was disposed to think that all that the reference to good faith does is to remind one, first that the proper purpose set up must not be a mere pretence, and, secondly, that in considering purpose it will be necessary to go beyond the mere desire to obtain information by the inspection of the books and to ask what the applicant wishes to achieve as a result. Perhaps, properly understood, his Honour was merely emphasising, as he went on to say, that an access order should not be made merely to satisfy the curiosity of an applicant to look at the books of a company. There must be reasonable grounds for making the order providing for the access. This need has been referred to in some of the authorities, including Intercapital Holdings, by Brooking J, as a “case for investigation”. The authorities recognise, as the parties do in their written opening and closing submissions, that while the principles may be broadly stated their application can involve complexities of judgement. In Hanks v Admiralty Resources NL [2011] FCA 891; (2011) 85 ACSR 101 at [32], Gordon J observed that the following principles emerge from the authorities:(1)an applicant who has a significant shareholding and who has been a shareholder for some considerable time will more easily discharge the burden of showing good faith than one who has recently acquired a token holding;(2)an applicant need not show a difference between its interests and those of other shareholders; (3)the words “proper purpose” mean a purpose connected with the proper exercise of rights of a shareholder as a shareholder, as opposed to a purpose connected with some other interest, such as an interest as a bidder, under a takeover scheme, or as a litigant in proceedings against the company;(4)pursuing a reasonable suspicion of breach of duty is a proper purpose for seeking an inspection of a company’s records;(5)it is not necessary that the applicant have sufficient evidence to bring or make out an action, however, and an applicant does not need to establish that it will succeed in any future claim – it is sufficient if the issue raised is “substantive and not fanciful” and not “artificial, specious or contrived”; and(6)the Court should not determine any substantive questions and should not attempt to do so on the hearing of an application under s 247A.