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Oxford Legal Group Ltd v Sibbasbridge Services Plc & Anor

[2008] EWCA Civ 387

Neutral Citation Number: [2008] EWCA Civ 387
Case No: A3/2007/2463
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

(MR JUSTICE KITCHIN)

HC07C00558

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 18/04/2008

Before :

LORD JUSTICE HUGHES

LORD JUSTICE TOULSON

and

SIR JOHN CHADWICK

Between :

THE OXFORD LEGAL GROUP LIMITED

Claimant/ Appellant

- and -

SIBBASBRIDGE SERVICES PLC and another

Defendants/ Respondents

(Transcript of the Handed Down Judgment of

WordWave International Limited

A Merrill Communications Company

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

Mr Alexander Hill-Smith (instructed by BrookStreet des Roches LLP, 1 Des Roches Square, Witan Way, Witney, Oxfordshire, OX28 45LF) for the Appellant

Mr Robin Hollington QC (instructed byBP Collins, Collins House, 32-38 Station Road, Gerrards Cross, Buckinghamshire, SL9 8EL) for the Respondents

Hearing date: 29 February 2008

Judgment

Sir John Chadwick:

1.

This is an appeal from an order made on 9 October 2007 by Mr Justice Kitchin on applications made in proceedings brought by The Oxford Legal Group Limited (“OLG”) against Sibbasbridge Services Limited (“SBS”) and Mr Christian Hoyer Millar. OLG and Mr Hoyer Millar are the directors of SBS.

2.

The claim in the proceedings – which were commenced on 6 March 2007 – was for an order that OLG be entitled to inspect the accounting records of SBS under section 222 of the Companies Act 1985. A defence to that claim was served on 17 April 2007. On 23 April 2007 OLG issued an application notice seeking summary judgment on the grounds that the defendants had no reasonable prospect of successfully defending the claim and that there was no other reason why the proceedings should go to trial. On 25 April 2007 the defendants issued an application notice seeking an order that the particulars of claim be struck out as disclosing no cause of action; and that the claim be transferred to the Companies Court for hearing with the petition (No 4941 of 2005) under section 459 of the 1985 Act then pending in relation to the affairs of SBS.

3.

By his order of 9 October 2007, the judge dismissed both the application for summary judgment and the application to strike out. But he acceded to the defendants’ application to the extent of ordering the claim to be transferred to the Companies Court to be heard with the pending petition. OLG appeals from that order. Permission to appeal was granted by this Court (Lord Justice Rimer) on 24 January 2008.

4.

The appeal is listed with an application, made in section 9 of the respondents’ notice filed on 8 February 2008, for leave to adduce further evidence. That evidence takes the form of a witness statement made by the respondents’ solicitor to which are exhibited (i) a judgment of Mr Registrar Rawson delivered on 14 June 2007 following a directions hearing in the section 459 petition, (ii) draft points of defence in the petition and (iii) a note of the judgment of Mr Justice Norris, delivered on 31 January 2008, on appeal from the order made by Mr Registrar Rawson. A transcript of that judgment, [2008] EWHC 265 (Ch) has also been made available. In so far as the additional evidence relates to material events which have occurred since the order of 9 October 2007 (but not otherwise) I would admit it.

The section 459 petition

5.

The present appeal must be set in the context of the section 459 petition (now section 994 of the Companies Act 2006). The circumstances in which that petition came to be presented are described in the opening paragraphs of the judgment of Mr Justice Norris to which I have just referred:

“[2] . . . Sibbasbridge Services PLC (‘SBS’) was incorporated in 1994 with an authorised share capital of £100,002 divided into £1 ordinary shares. The petitioner, Mr Hoyer Millar, is the registered holder of 50,000 shares. 50,000 shares were originally registered in the name of a Mr Brooks, a solicitor and businessman, but in 1998 he caused the shares registered in his name to be transferred to a company incorporated in the Isle of Man but administered in Jersey called Valemarket Limited which subsequently changed its name to Saccary Limited. The other two shares were registered in the name of Battlebridge Group Limited (‘BBG’) another company connected with Mr Brooks.

[3] In 2005 Mr Hoyer Millar presented a petition under section 459 in relation to what he said was unfair prejudice caused to him as shareholder in SBS arising out of activities of Mr Brooks or companies controlled by him. SBS was essentially a holding company, holding shares in a Singaporean company called 3DM Worldwide Plc. The petition alleged that Mr Brooks had dishonestly diverted that shareholding from SBS to another company which Mr Brooks controlled and that when complaint of this then was made only one half of the shares so diverted were restored to SBS.

[4] The petition also alleged that Mr Brooks had entered into a shareholder’s agreement under which the common understanding as to the way in which the affairs of SBS were to be conducted was on the basis of complete equality and that one of the two shares vested in BBG belonged beneficially to Mr Hoyer Millar or his nominee but that Mr Brooks or his companies were refusing to transfer it.

[5] Thirdly, the petition alleged that SBS had carried out services for [3DM Worldwide (‘3DMW’)] for which it was owed over £100,000 but that Mr Brooks directly or indirectly was refusing to permit SBS to recover that money from 3DMW (of which he also had control).

[6] The petition finally alleged that a situation of deadlock existed which rendered it equitable to grant relief under section 461. . . .”

The judgment goes on to describe the relief sought in the petition:

“[6] . . . The relief sought in the petition was that the petitioner be permitted to buy the shares then registered in the names of BBG and of Saccary, at a fair value to be determined by the court (or by an independent valuer) with no discount to reflect a minority holding, but with an adjustment to reflect the loss suffered by SBS as a result of the unfairly prejudicial conduct.

[7] The alternative relief sought was an order that BBG and Saccary buy Mr Hoyer Millar’s shares at a fair value with no discount for a minority holding and with a premium to reflect the loss suffered as a result of the matters of unfair prejudice. Further consequential relief was sought.”

6.

The petition came before Mr Registrar Rawson for directions in April 2007. The directions which he gave are contained in an order dated 14 June 2007. Paragraph 3 of that order is in these terms:

“It is Ordered that . . . (3) The Petitioner or his nominee shall purchase and the 1st and 2nd Respondents shall sell their 50% Shareholding in the 3rd Respondent for a sum equal to one half of the net asset value of the 3rd Respondent as at 30 September 2006, such value to be determined by the court.”

In that context, the petitioner is Mr Hoyer Millar; the 3rd respondent is SBS; and the 1st and 2nd respondents are, respectively, BBG and Saccary, companies controlled by – or, at the least, connected with – Mr Kenneth Brooks; as described by Mr Justice Norris in the passage of his judgment to which I have just referred. The basis for the direction in paragraph 3 of the order of 14 June 2007 was the Registrar’s finding – recorded in the form of a declaration at the beginning of the order – that:

“. . . an agreement was reached between the Petitioner and the First and Second Respondents on 4 December 2006 that (1) the 1st Respondent would pay the costs of the Petition to the date of the agreement and (2) the Petitioner would buy and the 1st and 2nd Respondents would sell their shareholding in the 3rd Respondent (‘the Agreement’)”

7.

The appeal before Mr Justice Norris was an appeal from the Registrar’s order of 14 June 2007. Mr Justice Norris dismissed that appeal. The position, therefore, is that the petition is proceeding to a trial – fixed, we were told, for hearing in June 2008 – on the basis that the principal issue is as to what price is to be paid by Mr Hoyer Millar for the shares held in the names of BBG and Saccary: that is to say, for the shares controlled by Mr Brooks. The questions whether there is to be a share purchase and who is to be the purchaser have been determined by the December 2006 agreement and the June 2007 order. When the price has been determined – for which the order of 14 June 2007 provides – Mr Hoyer Millar or his nominee will become the registered owner of all the shares in SBS. He is, as it seems to me, already the beneficial owner of those shares; subject to any lien which BBG and Saccary may have to secure payment of the purchase price.

8.

As I have said, the directions hearing which led to the order of 14 June 2007 was before the Registrar in April 2007: after the date of the agreement of 4 December 2006 and at or about the time when the applications in the present proceedings were issued. The important link between those applications and the petition is that OLG is said to be the nominee or creature of Mr Brooks. That is not, I think, denied: at least, not denied in the context of proceedings for summary judgment. It was the subject of a finding by Mr Bernard Livesey QC, sitting as a Deputy Judge of the High Court in the Chancery Division in yet further litigation between Mr Hoyer Millar and Mr Brooks, in a judgment, [2006] EWHC 1588 (Ch), delivered on 29 June 2006. In passages at paragraphs [19] and [21] of that judgment – to which Mr Justice Kitchin referred at paragraphs [14] and [15] of his judgment in the present proceedings, [2007] EWHC 2265 (Ch) – Mr Livesey described the position in these terms:

“[19] On 1st June 1998 Mr Brooks resigned as a director of SBS and arranged for Oxford Legal Group Limited (‘OLG’) to replace him as his nominee as director. OLG also became a director of BBG and the company secretary of Battlebridge Secretaries: Mr Brooks remained an authorised signatory of Battlebridge Secretaries. At the same time he transferred his shareholding to an Isle of Man company called Valemarket Ltd to hold as his nominee. This arrangement was discussed with Mr Hoyer Millar and was cordially agreed. . . .

. . .

[21] Despite outwardly appearing to have divested himself of his directorship and his shareholding, the management of the business at board level continued to be transacted as though the divestment had not occurred. Mr Brooks remained a signatory to the company bank account and received statements. Both he and Mr Hoyer Millar continued to be in touch very regularly by telephone and email and to meet regularly . . . They had complete trust in each other; there were therefore no formal meetings or formal minutes of agreement between themselves or indeed Formal Minutes of the Board.”

In that context BBG is Battlebridge Group Limited: Valemarket is the Isle of Man company which subsequently changed its name to Saccary Limited.

These proceedings

9.

For the purposes of the present appeal the judge was plainly entitled – in the context of an application for summary judgment – to treat OLG, BBG and Saccary as so closely connected with Mr Brooks that no distinction should be drawn between them. As I have said, I do not understand that to be in dispute. These proceedings are properly to be seen as ancillary to the section 459 petition: as a skirmish in the battle to establish the price which Mr Hoyer Millar will be required to pay for the shares in SBS which – under the order of 14 June 2007 – he is entitled and required to purchase from Mr Brooks’ companies. That that was how the judge saw the position appears from paragraphs [40] and [41] of his judgment:

“[40] First . . . I believe I must treat OLG, Saccary and BBG as being synonymous with Mr Brooks for the purposes of the application for summary judgment. This is not a case where I can regard OLG on the one hand and Saccary, BBG and Mr Brooks on the other as being separate and distinct.

[41] Second, the allegation of impropriety which is said to have prompted these proceedings for inspection is the very same allegation which is now raised in the defence to the petition and, as I have said, the parties to these proceedings must also be taken to be parties to the petition. It seems to me to be most unlikely to be a coincidence that the request for inspection by OLG which preceded these proceedings was made at the same time as the amendment to introduce the allegation of propriety into the defence to the petition.”

The judge observed (in the first sentence of paragraph [44] of his judgment) that the circumstances raised a strong inference that Mr Brooks was using OLG in these proceedings in an attempt to obtain disclosure of documents that might assist him in the petition and support his contention that SBS had suffered a diminution in value as a result of the wrongful activities of Mr Hoyer Millar.

10.

I should make it clear that there can be no proper objection to Mr Brooks (who is a party to the petition) and the two companies, BBG and Saccary (who, as the holders of shares in SBS, are also parties to the petition) seeking disclosure of documents from SBS and Mr Hoyer Millar in the context of those proceedings: that is to say, from seeking in the context of the proceedings under the petition disclosure of documents which may assist them in their legitimate desire to obtain the proper price for the shares which Mr Hoyer Millar has been ordered to purchase. Given the basis of valuation directed by the order of 14 June 2007 – that is to say, a valuation based on the net asset value of SBS as at 30 September 2006 – the contention that SBS had suffered diminution in value (as at that date) as a result of the alleged wrongful activities of Mr Hoyer Millar is, plainly, a contention which they are entitled to pursue in furtherance of that objective. If they can make good that contention, then – prima facie, at least – Mr Hoyer Millar will be required to give credit for whatever deficiency of assets in SBS may have resulted from the activities held to be wrongful in the computation of the price which he must pay. But there is nothing in the material before the Court to suggest that the application of the disclosure rules under the CPR will not enable Mr Brooks and the two companies to obtain disclosure of the documents properly required for that purpose. The judge observed, at paragraph [44] of his judgment, that disclosure had already been sought and given in the petition and (as he said) that there was no reason to doubt that any further request or application for further disclosure in the petition would be considered on its merits.

11.

There is, therefore, no reason to think that the judge’s order of 9 October 2007 will have the effect of denying to Mr Brooks and the two companies, BBG and Saccary, sight of the documents which are relevant to the contentions which they advance in the petition. And it must be kept in mind that the court – having set itself the task of determining the value of the shares on the basis of the net asset value of SBS as at 30 September 2006 – has ample power (if it thinks fit) to travel beyond those allegations: in particular, in the absence of audited accounts signed by both directors without qualification, the court might well think it appropriate to direct an accountant’s report. The real reason, I suspect, why OLG is pursuing its claim in these proceedings to an appeal is that Mr Brooks hopes that a trawl through the documents of SBS – unfettered by the restrictions which the need (in litigation disclosure) to establish relevance to some issue in the section 459 petition can be expected to give rise – may reveal matters of which he has, at present, no knowledge; and so may enable him to make further allegations of misapplication of assets beyond those which have been made already. Given the court’s power to direct an accountant’s report to assist it in carrying out its own task, I doubt whether Mr Brooks’ concern that a significant misapplication of assets by Mr Hoyer Millar (if any) would remain undetected is well founded. But, be that as it may, the underlying question for the judge, as it seems to me, was whether Mr Brooks should be permitted to use OLG for the purpose of obtaining information in these proceedings which might assist him in the section 459 proceedings but which (for whatever reason) he cannot obtain in those proceedings .

The judge’s reasons for refusing summary judgment

12.

The judge reminded himself (at paragraph [33] of his judgment) of the principles which, as Mr Justice Slade held in Conway v Petronius Clothing Co Ltd and others [1977] 1 WLR 72, 89G-91A, should govern the approach of a court when deciding whether to order that books and records of a company should be produced for inspection by a director. They may be summarised as follows: (i) the right of a director to inspect the books and records of the company is a right conferred by the general law rather than by any provision of the Companies Acts; (ii) the right is conferred by the general law in order to enable the director to carry out his duties as such; (iii) accordingly the right determines when the director ceases to hold office; (iv) under the general law the court is left with a residue of discretion whether or not to order inspection; and (v), in particular, special considerations are likely to apply to the exercise of that discretion in a case where the director seeking to assert the right is about to be removed from office.

13.

The judge observed, at paragraph [34] of his judgment, that he had been referred to a number of decisions in overseas jurisdictions – of which he mentioned, specifically, decisions in New Zealand, Singapore and Hong Kong – in which Mr Justice Slade’s observations in Conway v Petronius had been considered: but, as he said, he found no assistance in those decisions. He summarised his understanding of the approach which he should adopt in these terms:

“[34] . . . So far as the applications before me are concerned I consider it particularly important to have in mind that the right of a director to inspect the books of accounts of a company stems from his holding of the office of director and is a right conferred by the common law in order to enable him to carry out his duties as director and for the benefit of the company. It is a personal right only in the sense that it may be invoked to enable the director to discharge his personal obligations to the company and his statutory obligations. In general a director will not be called upon to give reasons before being allowed to exercise his right of inspection because the court will assume he is acting for the benefit of the company. But if it is clearly shown that a director is not using the right for the purposes for which it is conferred but rather to injure the company or for other and improper purposes then the court may not intervene to assist him. Each case must depend upon its own facts.”

14.

Adopting that approach the judge reached the conclusion that he should not order inspection on a summary basis. He did so for the reason expressed at paragraph [39] of his judgment:

“[39] . . . In my judgment the defendants have raised a serious issue as to whether inspection is truly sought by OLG for the benefit of SBS and to enable OLG to discharge its obligations to SBS as a director.”

15.

Four factors led the judge to that conclusion. Two I have already mentioned: first, that OLG, BBG and Saccary were to be regarded as synonymous with Mr Brooks for the purposes of the application before him (paragraph [40] of his judgment); second, that the allegation of impropriety said to have prompted these proceedings for inspection was the very same allegation raised by amendment in the defence to the section 459 petition (paragraph [41] of his judgment). The third and fourth factors appear at paragraphs [42] and [43]:

“[42] Third, the defendants maintain that Mr Allen inspected all the financial records of SBS in order to prepare the accounts for the year ending 30 September 2005. Further, there is no doubt that Mr Livingston-Campbell has been offered inspection of all documents necessary to enable OLG to deal with the accounts for the year ending 30 September 2006. He is nevertheless determined to pursue his claim for inspection of all the records of the company since 2002.

[43] Fourth, and importantly, it has been found that BBG and Saccary agreed to sell their shares in SBS to Mr Hoyer Millar in December 2006. Subject to an appeal, all that remains is to value those shares. In these circumstances the defendants say that but for the wrongful refusal by Mr Brooks, BBG and Saccary to acknowledge this agreement and agree a sensible valuation OLG would no longer be a director of SBS and that it is only a matter of time before it is removed. OLG is, say the defendants, hanging on to its office as a result of the delaying tactics of Mr Brooks.”

Those factors, in the judge’s view, raised a serious case that OLG was not pursuing these proceedings through any genuine concern that it was necessary or appropriate to do so in order to discharge its obligations as a director. Given that there was a serious case to be tried on that issue, it would be wrong to grant summary judgment.

This appeal

16.

The substantive question on this appeal, as it seems to me, is whether the judge was correct to direct himself as he did in paragraph [34] of his judgment: in particular, whether he was correct in his view that: “if it is clearly shown that a director is not using the right [to inspect] for the purposes for which it is conferred but rather to injure the company or for other and improper purposes then the court may not intervene to assist him”. It might be thought that, if the judge were correct to direct himself that if it were shown that OLG, as director of SBS, were seeking to use the right to inspect, not for the purposes for which that right was conferred, but for other (and so, improper) purposes then the court would not assist him, his conclusion that this was not a case for summary judgment was unassailable. It could hardly be said, in the present case, that the judge was not entitled to take the view that there was a serious case to be tried as to the purposes for which OLG was seeking inspection.

17.

In addressing that question it is important to keep in mind, first, that the judge did not confine the circumstances in which the court would not (or might not) intervene to those in which the director was shown to be using the right to inspect “to injure the company”. It is plain that he contemplated that the circumstances in which the court would not (or might not) intervene included those in which the director was shown to be using the right to inspect “for other and improper purposes”: that is to say for purposes that were improper notwithstanding that they did not give rise to injury to the company. Second, it is clear from the context that, in using the phrase “improper purposes”, the judge was referring to purposes other than those for which the right was conferred. As he said, it was particularly important to have in mind that the right of a director to inspect the books of account of a company “is a right conferred by the common law in order to enable him to carry out his duties as director and for the benefit of the company”.

18.

In describing the right of a director to inspect the books of the company as a right conferred by the common law, the judge adopted the analysis of Mr Justice Slade in Conway v Petronius [1978] 1 WLR 72, 89G-H:

“(1) The right exists but it is a right conferred by the common law and not by statute. Though the legislature in section 147 of the Companies Act 1948, and its predecessors, implicitly recognised the existence of this right at common law, it conferred no new right; the purpose of that section and its predecessors was to impose criminal sanctions in the event of proper books of account not being kept or not being made available for inspection or in the event of a breach of any of the other duties imposed by the section.”

Section 147(3) of the 1948 Act was in these terms:

“The books of account shall be kept at the registered office of the company or at such other place as the directors think fit and, shall at all time be open to inspection by the directors”.

A provision in those terms had been included, as regulation 104, in Table A in Schedule 1 to the Companies Act 1908. That provision was enacted as section 39(2) of the Companies Act 1928. The 1928 Act (when brought into force, on consolidation, by the Companies Act 1929) imposed, for the first time as a statutory requirement, the obligation on a company to keep proper books of account (section 39(1)); and it was that Act which gave force to that requirement, and to the requirement in section 39(2), by imposing a criminal penalty for failure to keep books of account and to make them available for inspection (section 39(5)). Mr Justice Slade, after examining the history of the provision, had said this ([1978] 1 WLR 72, 87H-88A):

“. . . I think that the legislature, in enacting section 39, presupposed, as was the case, that a director had a right at common law to inspect the books of his company and that accordingly it was not necessary to confer on directors a statutory right of inspection enforceable by civil action: all that was necessary was to provided for criminal sanctions in the event of proper books not being kept or not being made available for inspection to the directors.”

19.

The pre-existing common law right of a director to inspect the books of his company had been recognised, as Mr Justice Slade had explained (ibid, 86D-H), by Mr Justice North in Burn v The London and South Wales Coal Company and The Risca Investment Company (1890) 7 TLR 118 at a time when “there was no question of his having any statutory right in this capacity”. The right to inspect had been recognised, also, by Mr Justice Street, Chief Justice in Equity, in Edman v Ross (1922) 22 SR (NSW) 351, a decision in the Supreme Court of New South Wales, at the time when (as in the United Kingdom) there was no statutory basis for the right in that jurisdiction.

20.

Mr Justice Slade’s view – that the right to inspect is founded at common law - has not received unqualified support in other jurisdictions. In Berlei Hestia (NZ) Ltd v Fernyhough[1980] 2 NZLR 150Mr Justice Mahon was inclined to the view (ibid, 163, lines16-26) that the right to inspect was conferred by section 151(2) of the New Zealand Companies Act 1955: a statutory provision which, as he said, was substantially identical with section 147(3) of the United Kingdom Companies Act 1948.

21.

In Wuu Khek Chiang George v ECRC Land Pte Ltd [1999] 3 SLR 65the Court of Appeal in Singapore, after referring to the difference in the views of Mr Justice Slade and Mr Justice Mahon, said this (ibid, 78):

“[31] For our purpose, it is immaterial whether the right of the director to inspect the books and other records of a company is a statutory right or is a right existing at common law. Rather, the important question is whether the right, being a right existing at common law, has been modified by statute in the process of enactment. In Welch v Britannia [Welch v Britannia Industries Pte Ltd v Kan Ting Chin [1993] 1 SLR 673], Kan Ting Chui JC held (at p 681) that there is nothing in s 199 or elsewhere in the Companies Act [of Singapore] which suggests that the right at common law as reflected in Edman v Ross [(1922) 22 SR (NSW) 351] has been modified. We respectfully agree.”

22.

The relevant statutory provisions for the purpose of this appeal are found in sections 221 and 22 of the Companies Act 1985:

“221(1) Every company shall keep accounting records which are sufficient to show and explain the company's transactions and are such as to-

(a) disclose with reasonable accuracy, at any time, the financial position of the company at that time, and

(b) enable the directors to ensure that any balance sheet and profit and loss account prepared under this Part complies with the requirements of this Act.

(2) The accounting records shall in particular contain-

(a) entries from day to day of all sums of money received and expended by the company, and the matters in respect of which the receipt and expenditure takes place, and

(b) a record of the assets and liabilities of the company."

222(1) A company's accounting records shall be kept at its registered office or such other place as the directors think fit, and shall at all times be open to inspection by the company's officers.

(2) . . .

(3) . . .

(4) If a company fails to comply with any provision of subsections (1) to (3), every officer of the company who is in default is guilty of an offence, and liable to imprisonment or a fine or both, unless he shows that he acted honestly and that in the circumstances in which the company's business was carried on the default was excusable.”

It is plain that the statutory provisions in the United Kingdom do not differ in any material respect from those in Singapore which were the subject of consideration by the Court of Appeal in Wuu Khek Chiang George v ECRC Land Pte Ltd. The right to inspect, recognised by Mr Justice North in Burn v The London and South Wales Coal Company and by Chief Justice Street in Edman v Ross, has not been modified by statute.

23.

If it were necessary to decide the point, I would hold that Mr Justice Slade’s analysis is to be preferred. But it is not necessary to decide the point. It is plain that the right exists, whether at common law or by statute, for the purpose of enabling the director to carry out his duties as such. As Mr Justice Slade put it, in stating his second principle in Conway v Petronius ([1978] 1 WLR 72, 89H-90A):

“(2) The right of a director to see his company's books of account, which is exercisable both at and outside meetings, is conferred by the common law in order to enable the director to carry out his duties as a director: see the Burns case, 7 T.L.R. 118.”

And, again, in elaborating his fifth principle (ibid, 90G-H):

“The right of inspection is in my judgment one given to him to exercise for the benefit of the company. He can claim the right as a personal right only in the sense that he may invoke it so as to enable him to discharge his personal obligations to the company and his statutory obligations.”

Mr Justice Mahon took a similar view in Berlei Hestia (NZ) Ltd v Fernyhough [1980] 2 NZLR 150, 163 lines 34-37, when he said:

“. . . where it is proved that a director is acting or is about to act in breach of his fiduciary duty to the company and intends to aid that process by inspecting the books, then his right to inspect disappears.”

To my mind the proposition that the right to inspect the company’s books of account is conferred “in order to enable the director to carry out his duties as a director” is not in doubt. Nor is it in doubt, as it seems to me, that a right which is conferred for one purpose is not intended for use for some other purpose: for a director to invoke the right to inspect for some purpose other than that of carrying out his duties as a director is to seek to use the right for an improper purpose.

24.

As I have said,the judge directed himself (paragraph [34] of his judgment) that “if it is clearly shown that a director is not using the right [to inspect] for the purposes for which it is conferred but rather to injure the company or for other and improper purposes then the court may not intervene to assist him”. The judge’s use of the word “may” in that context – rather than “will” or “shall” - might be thought, perhaps, to indicate that the judge was of the view that, if it were shown that the director was using (or about to use) the right to inspect for an improper purpose (in the sense already indicated), the court was left with a discretion whether or not to intervene (or to assist him, as the case might be). Some support for that conclusion is found in Mr Justice Slade’s observation in Conway v Petronius, when introducing his fourth principle, that: “The right not being a statutory right, the court is left with a residue of discretion as to whether or not to order inspection”. But the better view, as it seems to me, is that the judge recognised, correctly, that if it were clearly shown that a director was using the right to inspect for an improper purpose then the court had no power to assist him. The court could not aid the use of the right for a purpose for which it was not conferred. I agree with the view expressed by Mr Justice Mahon in the Berlei Hestia case (ibid, 163 lines 31-32) – and by the Court of Appeal in Singapore in Wuu Khek Chiang George v ECRC Land Pte Ltd [1999] 3 SLR 65, 78 at [32] - that Mr Justice Slade was wrong to think (if he did) that, in refusing to assist a director who was shown to be invoking the right to inspect for an improper purpose, the court was exercising a discretion. Rather, as it seems to me, in refusing to assist in such a case the court would be recognising and giving effect to the true nature of the right. It follows, in my view, that it is not open to the court to refuse its assistance in a case where it has no reason to think that the director is using the right to inspect for an improper purpose.

25.

On the basis that paragraph [34] of his judgment is understood in the sense that I have just explained, it seems to me that the judge directed himself correctly as to the approach which he was required to adopt. Indeed, I hope I will not be thought discourteous if I say that I did not find it easy to ascertain, from the appellant’s “Grounds of Appeal and Skeleton Argument”, whether – and, if so, why – the judge was said to have erred in approaching his task on the basis of that direction.

26.

In a “Supplemental Skeleton Argument” and in the course of oral argument , however, counsel submitted that, in taking the view that the court would not intervene to enforce the right to inspect in a case where the purposes for which the director sought inspection were improper but not injurious, the judge went too far: he should have appreciated that the circumstances in which the court would refuse to enforce the right to inspect were confined to those in which the purpose for which the director sought inspection was to injure the company.

27.

It is said that support for that proposition is to be found in observations of Chief Justice Street in Edman v Ross (1922) 22 SR (NSW) 351. The issue in that case was whether the defendants, directors of Edman, Thomas and Ross Ltd, should be restrained from preventing the plaintiff, a co-director (and the managing director) of that company, from having access to the books and accounts of the company with an accountant of his own choice. It is clear, from the facts set out by the Chief Justice (ibid, 357), that the plaintiff had been offered inspection and the assistance of the company’s auditor: it was his insistence on having the assistance of his own accountant that had given rise to the proceedings. The appellant relies on the statement of principle (ibid, 361), itself subsequently cited and approved by Mr Justice Slade in Conway v Petronius [1978] 1 WLR 72, 88F-H, 90D-E:

“The right to inspect documents and, if necessary, to take copies of them is essential to the proper performance of a director’s duties, and, though I am not prepared to say that the Court might not restrain him in the exercise of this right if satisfied affirmatively that his intention was to abuse the confidence reposed in him and materially to injure the company, it is true nevertheless, that its exercise is, generally speaking, not a matter of discretion with the Court and that he cannot be called upon to furnish his reasons before being allowed to exercise it. In the absence of clear proof to the contrary the Court must assume that he will exercise it for the benefit of his company.”

Reliance is placed, also, on a later passage in the judgment of the Chief Justice (ibid, 362):

“In the present case, therefore, though there is much in the presentation of the plaintiff’s case, as I have pointed out, that casts doubt upon his candour and good faith, and though I was by no means favourably impressed with his demeanour in the witness-box, there is nothing which, to my mind, affords any justification for interfering with his rights as a director. It must be assumed, as was said by North J in Burn v The London and South Wales Coal Company and The Rica Investment Company (ante) [(1890) 7 TLR 118], that he will use his knowledge for the benefit of the company, and if the members of the company think otherwise their proper course is to take the necessary steps to remove him from his position as a director. . . .”

28.

For my part, I do not think that Chief Justice Street was intending to differentiate, in principle, between a case where the director was seeking inspection for a purpose which materially injured the company and a case where, in seeking inspection, the director intended only to “abuse the confidence reposed in him” by using the knowledge gained by the exercise of the right to inspect otherwise than for the benefit of the company. That was not the issue in that case: as I have said, the real issue was whether the plaintiff could carry out inspection with the assistance of an accountant of his choice. It is of some significance that the accountant was required to give an undertaking that the knowledge which he acquired from inspection should not be used for any purpose other than that of giving confidential advice to the plaintiff “with regard to his interests” (ibid, 362). It is clear that, in that context, the plaintiff’s “interests” were his interests, as a director, in satisfying himself “that things are as they should be” (ibid, 361).

29.

The appellant referred us to passages in the more recent overseas decisions which, it was said, lend support to the view that the circumstances in which the court would refuse to enforce the right to inspect are confined to those in which the purpose for which the director sought inspection was to injure the company. I have already noted Mr Justice Mahon’s observation, in the Berlei Hestia case, that a director could not invoke the right to inspect in aid of a breach of his fiduciary duty to the company. He went on to say this ([1980] 2 NZLR 150, 163, line 38, to 164, line 1):

“Then there is the observation of Slade J, previously quoted, that it was ‘on the cards’ that irremediable damage to the company could be caused by the inspection which the plaintiffs claimed. I should have thought that those opposing an order for inspection would have needed far stronger grounds than that. In an earlier part of his judgment ([1978] 1 All ER 185, 201; [1978] 1 WLR 72, 90) Slade J specifically approved that extract from the judgment of Street J in Edman v Ross that a Court might restrain the exercise of the right “if satisfied affirmatively that his intention was to abuse the confidence reposed in him and materially to injure the company . . .” I therefore am inclined to the view that Slade J did not intend, when he referred to it being ‘on the cards’ that there could be a breach of fiduciary duty, to resile from his adoption of that section of the opinion of Street J which I have just quoted. No Court will act upon a mere presumption that a director will in a given situation act in breach of his fiduciary duty to the company. The concluding lines of the quotation from Street J make that proposition clear, and it is accepted so far as I can see in all the books on the topic. In other words, in order to restrain a director from exercising his right of access to corporate information, it must be proved, either by words or conduct, that there in fact exists an intention on the part of the director to use the information not for the benefit of the company and the shareholders but for the benefit, wholly or in part, of a competitor.”

30

The proposition that that a court will not act “on a mere presumption that a director will . . . act in breach of his fiduciary duty” is not in doubt. It is clear that Mr Justice Slade, in Conway v Petronius accepted that proposition. In stating his fourth principle ([1978 1 WLR 72, 90D-E) Mr Justice Slade had said this:

“In my judgment, however, in the absence of clear proof to the contrary, the court would in such a case assume that he was exercising it for the benefit of his company. It will be seen that the proposition contained in this present paragraph is derived from the passage from Street J’s judgment in Edman v. Ross, 22 S.R.(N.S.W.) 351 which has already been cited.”

It is clear, also, that – in his later reference (ibid, 91E)to it being “on the cards” that irremediable damage might be caused to the company if inspection were ordered in the circumstances of that case – Mr Justice Slade did not intend to resile from that proposition. The question before Mr Justice Slade – and the context in which he had to consider whether there was a risk that an order for inspection might lead to irremediable damage – was whether to make an immediate order on an interlocutory application in circumstances where, at the time of the application, a general meeting had been convened for the purpose of removing the applicant director from office on the grounds of misconduct. As he explained (ibid, 90H-91A):

“If the evidence shows that at least some members of the company no longer have confidence in him as a director, because of alleged misconduct, and have indicated that lack of confidence by causing a general meeting to be convened for the purpose of his removal, the balance of convenience will, in my judgment, normally require postponement of consideration of his interlocutory application for inspection until the meeting has been held: compare Harben v. Phillips (1883) 23 Ch.D. 14 and Bainbridge v. Smith (1889) 41 Ch.D. 462. Each case, however, must depend on its special facts.”

31.

As I have said, the proposition that that a court will not act “on a mere presumption that a director will . . . act in breach of his fiduciary duty” is not in doubt. But the final sentence of the passage from the judgment of Mr Justice Mahon in the Berlei Hestia case which I have cited – although introduced by the phrase “in other words” – is neither a restatement of that proposition nor a conclusion which follows from it. I have already explained why I am not persuaded that Chief Justice Street – in the passage of his judgment in Edman v Ross to which Mr Justice Mahon referred - was intending to differentiate, in principle, between a case where the director was seeking inspection for a purpose which materially injured the company and a case where, in seeking inspection, the director intended only to “abuse the confidence reposed in him” by using the knowledge gained by the exercise of the right to inspect otherwise than for the benefit of the company. In my view it is impossible to find support in Edman v Ross for the further proposition, advanced in the Berlei v Hestia case, that:

“. . in order to restrain a director from exercising his right of access to corporate information, it must be proved, either by words or conduct, that there in fact exists an intention on the part of the director to use the information not for the benefit of the company and the shareholders but for the benefit, wholly or in part, of a competitor.”

32.

In Molomby v Whitehead and another (1985) 63 ALR 282, a decision in the Federal Court of Australia, Mr Justice Beaumont (ibid, 292, lines 40-45) identified “Another class of case where the prima facie entitlement of a director to sight corporate material has been displaced” as one where there was evidence that the director sought inspection “not in aid of the proper execution of his fiduciary obligations, but, to the contrary, with a view to the apprehended detriment of the corporation”. But the decision provides no support for the proposition that the circumstances in which the court will refuse to enforce the right to inspect are confined to that class of case. Mr Justice Beaumont treated Conway v Petronius as “an example of the exercise of judicial discretion denying the ordinary right of a director to inspect where the evidence disclosed an ulterior purpose”.

33.

In Welch v Britannia Industries Pte Ltd [1993] 1 SLR 673 Kan Ting Chui, sitting as judicial commissioner, after referring to Mr Justice Slade’s reference in Conway v Petronius (when stating the fourth of the principles there set out) to “other improper motives”, said this (ibid, 681I):

“The improper motives referred to by Slade J must be motives improper against the company.”

That seems to me uncontroversial if “improper” is given the meaning which, in this context, it must bear. The judicial commissioner went on to observe (ibid 682B) that the right to inspect was not lost in the circumstances that distrust and hostility had developed between the members of the board. As he put it:

“Where there is suspicion and lack of co-operation, a director is all the more entitled, perhaps even obliged, to inspect company accounts to protect the interests of the company and its shareholders. The right is not only to be exercised or the duty imposed where there is harmony within the company.”

Again, as it seems to me, that is uncontroversial. The right to inspect is conferred in order to enable the director to carry out his role as such: that role clearly includes the protection of the interests of the company and its shareholders. There is nothing in the decision in Welch v Britannia Industries to support the view that the right to inspect can be invoked for a purpose which goes beyond enabling the director to carry out his role as such; and nothing which supports the proposition that the circumstances in which the court will refuse to enforce the right to inspect are confined to those in which the purpose for which the director sought inspection is to injure the company.

34

In Wuu Khek Chiang George v ECRC Land Pte Ltd [1999] 3 SLR 65 the Court of Appeal in Singapore referred (ibid, 78G, at [32]) to the director being refused inspection when the court was satisfied “that the intention of the director in inspecting the books and records is to make use of the information for ulterior purposes such as with a view to causing detriment to the company”. At paragraph [33] (ibid, 78H-I) the court said this:

“[33] The right of a director to inspect the books and records of the company flows from his office as a director and enables him to perform his duties as a director. . . Such a right is an important one, as the books and records of a company are a primary, and sometimes the only, source of information as to the state of affairs of a company. It follows that unless a director has access to these sources of information he would be severely inhibited in the proper performance of his duties. So long, therefore, as such right is exercised for that purpose and not with a view to causing detriment to the company, the right to inspect is ‘absolute’. In this sense and to that extent, the right may be termed ‘absolute’. The corollary of this is that the right will be lost where it is exercised not to advance the interests of the company but for some ulterior purpose or to injure the company: Edman v Ross (supra) at p 361, Molomby v Whitehead (supra) at p 292 . . .”

And at paragraph [34] (ibid, 79D) the court went on to say:

“It is for those who oppose the director’s right to inspect to show ‘clear proof’ and to satisfy the court ‘affirmatively’ that the grant of the right of inspection would be for a purpose which would be detrimental to the interests of the company. There must be a ‘real ground’ that the right would be abused and that substantial harm would be caused to the company thereby”.

The appellant, of course, relies on that final passage. But, when read in conjunction with the earlier passages which I have cited, it is, I think, reasonably clear that the court did not intend a distinction between “some ulterior purpose” (not involving injury to the company) and “a purpose which would be detrimental to the interests of the company”. The true distinction is that drawn in paragraph [33] of its judgment: a distinction between the director’s exercise of the right “in the proper performance of his duties” and his exercise of the right “not to advance the interests of the company but for some ulterior purpose”. Properly understood, as it seems to me, the decision in Wuu Khek Chiang George v ECRC Land Pte Ltd does not support the proposition that the circumstances in which the court will refuse to enforce the right to inspect are confined to those in which the purpose for which the director sought inspection is to injure the company.

35

In Law Wai Duen v Boldwin Construction Co Ltd and another[2001] 3 HKLRD 430; [2001] HKC 403, a decision of the Court of Appeal in Hong Kong, Mr Justice Rogers, Vice-President (with whose judgment the other members of the Court agreed), after referring to the passage in the judgment of Chief Justice Street in Edman v Ross which I have set out earlier in this judgment, went on to say this (ibid, 435; 408):

“[15] In my view it is only when the fundamental duties of a director are considered in their context that it will be appreciated that when Street CJ went on to say that the exercise of a director’s right of inspection is ‘generally speaking not a matter of discretion with the court’, he was emphasising the fact that it was only if it could be proved that a director intended to abuse the confidence in relation to the company’s affairs and to injure the company in a material way that the director’s right of inspection should be interfered with. In my view such interference could only be effected in circumstances where a restriction on a director’s rights could be imposed because of misuse of confidential information leading to damage.

[16] Street CJ’s judgment in the case of Edman v Ross (19220 22 SR (NSW) 351 was referred to with approval by Slade J in Conway v Petronius Clothing Co Ltd [1978] 1 WLR 72. Slade J attempted to formulate five propositions which were derived from the law, particularly as expounded by Street CJ. Whilst I would not question the formulation of the propositions, I would emphasis that they can only be properly understood when considered in the light of the underlying legal principles.”

36

Mr Justice Rogers’ emphasis on the need to address the scope of a director’s right to inspect in the context of “the fundamental duties of a director” and “in the light of the underlying legal principles” follows his analysis (ibid, [6] – [12]) of the duties of care imposed by the law on directors. In the course of that analysis he had said this:

“[12] . . . If a director has cause to be suspicious, or reasonably believes there is such cause, then the director may incur liability if he does not satisfy himself in relation to all matters relating to the company’s affairs. More importantly, even if a director does rely upon other directors or company officials in the conduct of the company’s affairs, he must, at all times, be at liberty to satisfy himself as to any matter in relation to the company’s business.”

37

It is clear that Mr Justice Rogers intended to emphasise that the right of inspection was conferred by the law in order to enable the director to carry out his duties. The court could not, on the one hand, hold that the director was at risk of liability for breach of those duties and, on the other hand, refuse to enforce the right of inspection by the exercise of which the director could take steps to avoid liability for breach of those duties. Although the final sentence of paragraph [15] of his judgment, taken out of context, might suggest support for the proposition that the circumstances in which the court will refuse to enforce the right to inspect are confined to those in which the purpose for which the director sought inspection is to injure the company, I find it difficult to think that he intended to hold that a court would be required to enforce the right in circumstances in which it was demonstrated that the director was seeking inspection for some other improper purpose (not involving injury to the company). First, it was unnecessary, in that case, to make a distinction between intention to injure the company and other improper purpose: the Court held (ibid, at paragraph [19]) that there was no evidence either “of abuse or likelihood of abuse” or “of damage likely to be occasioned to the companies” from an inspection of company documents by the director (Madam Law) or her accountant. Second, as I have said, I am not persuaded that there is support for that proposition in the judgment of Chief Justice Street in Edman v Ross or in the judgment of Mr Justice Slade in Conway v Petronius,to both of which Mr Justice Rogers referred with approval. Third, as it seems to me, that proposition would be inconsistent with his own analysis of the reason why the court ought not to refuse to enforce the right of inspection: if the director was seeking to exercise that right, not for the purpose for which it was conferred but for some purpose unconnected with his duties as a director, there was no reason why inspection should not be refused.

38

As I have said, I would hold that that the judge directed himself correctly (at paragraph [34] of his judgment) as to the approach which he was required to adopt. I reject the submission that he should have appreciated that the circumstances in which the court would refuse to enforce the right to inspect were confined to those in which the purpose for which the director sought inspection was to injure the company.

39

It is submitted on behalf of OLG that, even if the judge directed himself correctly, his findings were not a sufficient basis for his refusal to give effect, by way of summary judgment, to OLG’s right to inspect company documents. It is said that “cases on a director’s right of inspection of company documents stand on a different basis [to other applications for summary judgment] in that they are normally dealt with on a summary basis and indeed to defer the remedy . . . is in effect to deny or at least seriously curtail the right”.

40

It is correct to say that applications by a director for an order that he (or she) be permitted to inspect the company’s accounts and records are frequently (indeed, usually) dealt with on an interlocutory or summary basis: for the reason that to defer the remedy risks denying the right. But I reject the submission that such applications stand on a different footing from other applications for summary judgment.

41

It is important to keep in mind that OLG’s application before the judge in the present proceedings was for summary judgment. Summary judgment on a claim or issue may be given against a defendant where the court considers that the defendant “has no real prospect of successfully defending the claim or issue”: CPR 24.3. If the defendants raised a serious issue which could not be resolved without a trial, then OLG was not entitled to summary judgment. The judge’s task, as he identified in paragraph [39] of his judgment, was to determine whether SBS and Mr Hoyer Millar had raised a serious issue as to whether inspection was truly sought by OLG for the benefit of SBS and to enable OLG to discharge its obligations as a director.

42

In my view the judge was plainly entitled to take the view that there was a serious issue as to whether inspection was sought by OLG for the benefit of SBS and to enable OLG to discharge its obligations as a director or for some other, and improper, purpose. It is necessary to have in mind – as the judge found at paragraphs [42] and [43] of his judgment – (i) that OLG had inspected, or been offered inspection of, all documents required for the purpose of completing and approving the financial statements of SBS for the years to 30 September 2005 and 2006; and (ii) that the beneficial interest in the whole of the share capital of SBS had passed to Mr Hoyer Millar under the agreement of 4 December 2006. On 14 June 2007 the court had made an order for specific performance of that agreement. There was, in practice, nothing that OLG could do, as a director, without the concurrence of Mr Hoyer Millar. SBS was deadlocked. That was the basis of the section 459 petition; and it was on that basis that the shareholders had made the December 2006 agreement. It is plain that OLG would cease to be a director once that agreement had been carried into effect in accordance with the order of 14 June 2007. In those circumstances it is difficult to see any purpose for which OLG, as a director, needed to inspect the books and records of SBS. But, plainly, there were grounds for the view that OLG wanted inspection for the collateral purpose of assisting Mr Brooks in the context of the petition: that is to say, of assisting him to obtain a proper value for the shares which BBG and Saccary were required to sell under the order of 14 June 2007. For the reasons which I have explained, that collateral purpose was foreign to the purpose for which the right of inspection existed.

43

It is said, correctly, that OLG was not required to satisfy the court that it seeks inspection for the purpose of carrying out its role as a director. The burden was on those who opposed inspection to demonstrate that inspection was sought for an improper purpose. It is said, correctly, that the court must be astute to ensure that a director’s right to inspect the books and documents of the company is not rendered nugatory by delay while the court embarks on a prolonged examination of his motives for seeking to exercise that right. In that context it is pertinent to have in mind Mr Justice Slade’s comment, in Conway v Petronius, on the proposition (derived from the passage in the judgment of Chief Justice Street in Edman v Ross which I have already set out)that “in the absence of clear proof to the contrary, the court would . . . assume that he was exercising it for the benefit of his company”. Mr Justice Slade said this ([1978] 1 WLR 72, 90E):

“The passage seems to me, if I may say so, consistent with both principle and common sense. If the position were otherwise, a director’s rights of inspection could be rendered more or less nugatory, at least for many months, by specious allegations that he was exercising them with intent to injure the company or for other improper motives.”

Plainly, there will be cases where – on an application for summary judgment – the court will feel confident that there is no real prospect of those opposing inspection establishing at a trial, clearly and affirmatively, that inspection is sought for an improper purpose. In such cases the director will be entitled to summary judgment. But each case must turn on its own facts; and the judge was entitled to take the view, on the facts in this case, that summary judgment should be refused.

44

For completeness, I should add that somewhat different considerations may apply in a case where the director seeks an order for inspection by way of interim relief. In such a case it is for those opposing inspection to satisfy the court that there is a serious question as to improper purpose which cannot be resolved without a trial: for, if there were not, the director (relying on the assumption that he sought inspection for the benefit of the company) would be entitled to summary judgment. But, even if satisfied that there is a question to be tried, the court may conclude that the balance of convenience favours an immediate order. And, in that context, the question whether inspection might be used to cause damage to the company may well be decisive. Mr Justice Slade addressed the point in Conway v Petronius, in stating the fifth of his five principles. He said this (ibid, 90F-91B):

“(5) Principles rather different from those just stated in my judgment apply in a case, such as the present, where an interlocutory application for inspection is made to the court by a director who is alleged to have been misconducting himself as a director and, at the time when the application comes before the court, a general meeting of his company has been convened for the purpose of removing him from office. In such a case the court would, in my judgment, normally intervene to assist him on an interlocutory application for inspection, before the wishes of the company had been made known at the general meeting, only if it considered such intervention necessary for the protection of the company. . . . In particular circumstances, the court may consider it essential for the protection of the company or indeed for the personal protection of the director that he be allowed to inspect the company’s books even though a resolution for his removal as a director is shortly thereafter to be considered by the company's members.”

On the facts in that case, Mr Justice Slade decided against an immediate interim order for inspection of the books of the Petronius company; for the reason which he gave (ibid, 91C-D):

“If the allegations [that inspection was sought to aid a competitor] were well founded, it is possible that an immediate order for inspection could cause irremediable damage to Petronius and to the other defendants . . .”

But it is clear that he recognised that there could be circumstances where, notwithstanding a serious question as to the purpose for which the director sought inspection, the balance of convenience favoured an immediate order by way of interlocutory relief. The absence of any risk of damage to the company would be an important – perhaps decisive – factor in weighing that balance.

45

There was no application for interim relief before the judge. He did not need to consider whether the balance of convenience favoured an immediate order. On this appeal there is no need for this Court to express any view on that question.

Conclusion

46

I would dismiss this appeal.

Lord Justice Toulson:

47 I agree.

Lord Justice Hughes

48. I also agree with all that Sir John Chadwick has said.

49. Inspection may well not be ordered if a clear prima facie case is raised that the information sought will not be used qua director and especially if to the detriment of the company; one of many possible examples is where inspection is in effect sought for the benefit of a competitor. That said, many cases in which the right of inspection is invoked will no doubt arise in the course of a boardroom dispute in which one side of the argument has de facto custody of the books and the other lacks the opportunity to see them. Each side will often, and it may be typically, accuse the other of improper conduct in the sense of alleged breach of fiduciary duty to the company. It follows from the review of the authorities in my Lord’s judgment that a bare assertion of such improper conduct made by the custodian of the books against the director seeking inspection will not ordinarily cause the court to say that there should be a trial of that issue before inspection is permitted. That would in most cases render the right of inspection nugatory and would divert the court into the merits of the underlying dispute.

50. The critical factor in this case is that the Claimant director OLG is inevitably about to cease to have any position in the company as a result of the contract and Court order under which Mr Brooks and his nominees are to be bought out. Thus there was in this case clear reason to say that the purpose of inspection might be other than quadirector; rather, it appeared to be to achieve some collateral advantage in the parallel proceedings in the Petition.

Oxford Legal Group Ltd v Sibbasbridge Services Plc & Anor

[2008] EWCA Civ 387

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