In this case, G+T acted for a minority shareholder who was granted access to the company’s books under section 247A(1) of the Corporations Act 2001 (Cth).  It was alleged that the shareholder brought the application for collateral purposes arising from prior corporate hostilities between the shareholder and the company.  However, the court found that the shareholder’s application was made for a proper purpose in circumstances where the company’s disclosure about certain leasing arrangements was ambiguous and incomplete.

Mighty River International Limited (Mighty River) applied under section 247A(1) of the Corporations Act 2001 (Cth), as a minority shareholder in Mesa Minerals Limited (Mesa), to inspect the books of Mesa.

Mighty River submitted that it had genuine concerns that certain arrangements entered into by Mesa allowing third parties to use Mesa’s assets may not be in the best interest of Mesa shareholders.  Mesa pointed to the history of hostilities between particular directors of Mighty River and Mesa, and claimed that Mighty River had no genuine concerns and was in fact trying to force a purchase of its minority shares and seeking to act as a de facto director involving itself in the management of Mesa.

In finding that Mighty River made the application in good faith and that the inspection was for a proper purpose, Barker J in the Federal Court of Australia held that:

  • while the principles that guide the exercise of the court’s discretion under section 247A(1) may be broadly stated (and an order should not be made just to satisfy the curiosity of an applicant), their application can involve complexities of judgement and there is no particular checklist of criteria that must be satisfied;
  • Mighty River was a substantial shareholder (and had been for some time before the hostilities arose);
  • the existing disclosure in relation to exactly what arrangements were in place was limited and the information was ambiguous and incomplete; 
  • it was reasonable for a minority shareholder in the position of Mighty River, especially in light of the drawn out hostilities, to want to be better informed about the arrangements;
  • the fact that Mighty River would be pleased to receive an offer to buy out its minority shares in Mesa did not disentitle it to make an application under section 247A(1), nor did the history of hostilities with Mesa nor the fact that a particular action or court proceeding had not been finally identified as a possible consequence of Mighty River’s access to the books; and
  • the fact that Mighty River would be pleased to receive an offer to buy out its minority shares in Mesa did not disentitle it to make an application under section 247A(1), nor did the history of hostilities with Mesa nor the fact that a particular action or court proceeding had not been finally identified as a possible consequence of Mighty River’s access to the books; and
  • Mighty River was not impermissibly involving itself in the management of Mesa.

Many thanks to Tim O’Leary and Amanda Macmaster (who acted for Mighty River) for their assistance in preparing this summary.