Ian Edward Morton & 5 Ors v Nylex Ltd & 1 Or [2007] NSWSC 562
HEARING DATE(S):
22/05/07
JUDGMENT DATE :
4 June 2007
JURISDICTION:
Equity Division Corporations List
JUDGMENT OF:
White J
DECISION:
1. Order that the amended summons be dismissed; 2. order that the plaintiffs pay the first defendant’s costs of the proceedings.
CATCHWORDS:
PRACTICE AND PROCEDURE – Preliminary discovery – Whether requirements of r 5.3(1)(a) of Uniform Civil Procedure Rules 2005 (NSW) are satisfied – Where it appears to the Court that the applicants may be entitled to make a claim for relief – Where it appears to the Court that reasonable inquiries have been made – Where relevant documentation already obtained through those inquiries – Where applicants have not disclosed what information they possess or identified what information is lacking for decision to be made – Whether it appears to the Court that applicants “unable to obtain sufficient information to decide whether or not to commence proceedings” – Objective assessment by the Court of information already possessed by the applicants is required to determine whether that information is sufficient for such a decision to be made – Requirements of r 5.3(1)(a) not satisfied – Order that application be dismissed. - (NSW) Uniform Civil Procedure Rules 2005, rules 5.3 and 5.4 - (CTH) Corporations Act 2001, ss 232 and 233
IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST
WHITE J
Monday, 4 June 2007
1235/07 Ian Edward Morton & 5 Ors v Nylex Limited & 1 Or
JUDGMENT
1 HIS HONOUR: This is an application under rules 5.3 and 5.4 of the Uniform Civil Procedure Rules 2005 (NSW) for preliminary discovery.
2 The plaintiffs are minority shareholders in Hawker Richardson Ltd (“HRL”). In August 1997, the first defendant, Nylex Ltd (“Nylex”) acquired 87.8% of the shares in HRL. The second defendant, National Australia Bank Ltd, did not appear on the present application. The evidence read on the application suggests that it provided finance to Nylex.
Preliminary Discovery Against Nylex
3 The plaintiffs seek orders that Nylex be required to produce certain classes of documents for the purpose of assisting the plaintiffs in determining whether or not they are entitled to make a claim against Nylex for…
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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AGLC
Morton v Nylex Ltd [2007] NSWSC 562
Case
[2007] NSWSC 562
Decision Date
CaseChat Overview and Summary
The parties in this case are Morton, the applicant, and Nylex Ltd, the respondent. The dispute arose in the context of a preliminary discovery application seeking access to certain documents held by Nylex Ltd. The matter was heard in the Supreme Court of New South Wales. The central legal issue before the Court was whether the requirements of rule 5.3(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW) had been satisfied for the application to proceed. Specifically, the Court needed to determine whether it appeared that Morton may be entitled to make a claim for relief, that reasonable inquiries had been made, and that Morton was unable to obtain sufficient information to decide whether or not to commence proceedings.
The Court held that the requirements of rule 5.3(1)(a) had not been satisfied. The key issue was whether the Court could make an objective assessment of the information already possessed by Morton to determine if it was sufficient to decide whether to commence proceedings. The Court found that Morton had not disclosed what information they possessed or identified what information was lacking. Instead, Morton's affidavit did not provide sufficient detail about the information already obtained through the inquiries, and it did not explain why that information was insufficient for Morton to decide whether to proceed with a claim. The Court concluded that an objective assessment of the information already possessed by Morton was necessary, but the information provided in the application was insufficient for such an assessment to be made.
As a result, the Court dismissed the application for preliminary discovery. The Court also noted that, even if the requirements of rule 5.3(1)(a) were satisfied, the application would still fail because it did not meet the requirements of rule 5.4 of the Uniform Civil Procedure Rules 2005 (NSW). Furthermore, the application did not comply with sections 232 and 233 of the Corporations Act 2001 (CTH), which impose additional requirements for access to documents in the context of a company. The final orders of the Court were that the application be dismissed with costs to be paid by Morton.