Pesec v Consolidated Builders Ltd

In the matter of Pesec v Consolidated Builders Ltd, the plaintiff, Pesec, sought leave to bring one or more derivative actions on behalf of Consolidated Builders Ltd against its managing director and board of directors. Pesec considered that he needed to obtain further information and documents from Consolidated Builders Ltd to determine whether such proceedings were appropriate. The application was made for preliminary discovery of documents under rule 651 of the Court Procedures Rules 2006 (ACT). The central legal issue before the court was whether the plaintiff had established the existence of an arguable cause of action, which was necessary to satisfy the prerequisites for the exercise of the court's discretion to grant preliminary discovery.

The court considered that the plaintiff had demonstrated an arguable cause of action by showing that he had made reasonable enquiries and had not been provided with sufficient information by the company. The court also accepted that the documents sought were necessary to complete those enquiries. The court noted that Consolidated Builders Ltd had established a subcommittee to investigate the plaintiff's allegations and that the plaintiff's concerns were known to the company. However, the company had declined to provide the documents sought by the plaintiff. The court held that the plaintiff had satisfied the criteria for exercising the court's discretion under rule 651(5) of the Rules, which required the plaintiff to show that the documents were necessary to determine whether to bring proceedings, that the plaintiff had made reasonable enquiries without success, and that the documents were held by the company, which was the potential defendant in the proposed proceedings.

The court made an order granting the plaintiff's application for preliminary discovery of certain documents from Consolidated Builders Ltd. The orders required the company to provide the documents within 14 days of the order and to provide an undertaking as to costs. The court also noted that the company was not entitled to seek costs of the application from the plaintiff.