The Federal Court of Australia confirmed in the recent decision Oswal v Burrup Fertilisers Pty Limited (Receivers and Managers Appointed)  FCAFC 9 that receivers are justified in refusing to grant directors access to company documents when access would interfere with realisation of the secured assets.
Mr Oswal, a director of Burrup Fertilisers Pty Limited, sought access to documents created after the appointment of receivers and concerning the potential sale of secured assets. Mr Oswal said he wanted to ensure any sale was conducted in a proper manner and for market value.
The Federal Court affirmed the trial judge's decision to refuse access to the documents. Receivers are entitled to possession of company documents to perform their duty and realise the secured assets. While directors have common law rights to inspect documents in person or through an agent, directors have no power over assets in possession and control of the receiver. Receivers are therefore justified in refusing to grant access to documents where to do so would impede them in the proper performance of their duties or threaten the secured assets.
In this case, the Court found Mr Oswal intended to "second-guess or keep an eye on the receivers" during the process of selling the secured assets. It was likely that the inspection would interfere with the receivers' performance of their duties in circumstances when there was no basis to suggest that the receivers had acted improperly.
See court decision here.