BETWEEN : AREVA NC (AUSTRALIA) PTY LTD (ACN 003 337 782)

SUMMIT RESOURCES (AUSTRALIA) PTY LTD (ACN 009 188 078)

Corporations - Application by the plaintiff for orders pursuant to s 247A of the Corporations Act 2001 (Cth) to inspect and make copies of certain books of the defendants - Whether the plaintiff makes this application in good faith and for a proper purpose

Corporations Act 2001 (Cth), s 247A

Application allowed in respect of four categories of documents

Application in respect of remaining category adjourned to enable the plaintiff to apply to amend the application or renew it

1 MARTIN CJ: Areva NC (Australia) Pty Ltd (Areva) applies for orders pursuant to s 247A of the Corporations Act 2001 (Cth) (the Act) authorising its representatives and legal advisors to inspect and make copies of certain books of Summit Resources (Australia) Pty Ltd (SRA) and Summit Resources Ltd (Summit). The relationships between the parties and the circumstances in which the application is brought are best explained by setting out the findings of fact which I make for the purposes of this application.

2 At all material times, SRA has been a wholly owned subsidiary of Summit. On 16 January 2001, Summit entered into a joint venture agreement with Resolute Limited (Resolute) for the conduct of a uranium mining project near Mount Isa in Queensland. Under the terms of the joint venture agreement, each participant held a 50% interest in the joint venture. Under cl 13 of the joint venture agreement, if a participant commits a material breach of any of the covenants or agreements contained within the joint venture agreement, and that default continues unremedied for a period of not less than 30 days after service of notice of default, the non-defaulting participant is given the option to acquire the whole of the defaulting participant's interest in the joint venture for a price equal to 85% of the value of the defaulting participant's interest. Other provisions of the joint venture agreement provide for the mechanism by which that price will be determined.

3 In December 2005, Resolute assigned its interest in the Mount Isa uranium joint venture agreement to Mount Isa Uranium Pty Ltd (MIU), which was then a wholly owned subsidiary of Valhalla Uranium Ltd (Valhalla). Valhalla was, at that time, a subsidiary of Resolute and Resolute held the majority of the issued capital in Valhalla.

4 Also in December 2005, SRA issued a notice of default under the terms of the joint venture agreement, alleging breach of a material covenant within that agreement by each of Resolute and/or MIU.

5 Also in December 2005, Valhalla listed on the Australian Stock Exchange.

6 In August 2006, Paladin Resources Ltd (Paladin) launched a takeover bid for Valhalla. Valhalla's directors recommended acceptance of Paladin's offer and the takeover was successful. In October 2006, Paladin completed its takeover of Valhalla, having acquired 100% of the issued capital in that company.

7 Meanwhile, on 25 September 2006, SRA commenced proceedings in this court (CIV 2021 of 2006) against Resolute and MIU (the SRA proceedings). In those proceedings, SRA claimed that each of Resolute and MIU had committed material breaches of the joint venture agreement, which had been unremedied for more than the 30 day period specified in cl 13 of the joint venture agreement, with the consequence that SRA was entitled to acquire MIU's interest in the joint venture at a price equal to 85% of the value of that interest.

8 In the latter part of 2006 and early 2007, each of the parties to those proceedings made what I might describe as the usual bullish statements as to their prospects of success. For its part, SRA publicly announced that it had received legal advice to the effect that its claim was a strong one, whereas Paladin, which had by then become the ultimate holding company of MIU, announced its confidence that SRA's proceedings would fail.

9 On 27 February 2007, Paladin announced a takeover bid for Summit. As part of that announcement, Paladin declared that it would establish an independent committee of directors to manage the SRA proceedings if the takeover was successful.

10 The SRA proceedings were being case-managed by me in the Commercial and Managed Cases List. Following Paladin's takeover bid for Summit, I was advised by the parties to those proceedings that it would be prudent to suspend the performance of further interlocutory steps, and trial dates which had been tentatively allocated in the latter part of this year were vacated.

11 On 11 April 2007, Areva entered into a subscription deed, strategic alliance agreement and deed of undertaking with Summit. The subscription deed was subject to the approval of the shareholders of Summit. On the same day, the directors of Summit issued a statement recommending that shareholders approve the transaction with Areva, but reject the takeover offer from Paladin.

12 The following day, on 12 April 2007, Paladin increased the terms of its bid for the shares in Summit, after which the directors of Summit unanimously recommended that shareholders accept Paladin's offer. On 23 April 2007, Summit announced that the transaction with Areva would not proceed.

13 However, on 26 April 2007, Areva acquired 20,659,641 shares in the issued capital of Summit, which then represented 10.46% of the issued capital in Summit. The consideration paid for those shares was approximately $126 million.

14 In May 2007, Summit issued a further 4.75 million shares as a result of the exercise of unlisted options. The effect of the issue of those shares was to dilute Areva's shareholding in Summit to 10.01% (which is of course sufficient to prevent Paladin obtaining sufficient shares in Summit to compulsorily acquire the remaining shares).

15 On 1 June 2007, Paladin announced that it had completed its takeover bid for Summit and had been successful in acquiring 81.82% of the issued shares in Summit.

16 During June and July 2007, there were communications between Areva and Summit relating to the SRA proceedings. In the course of those communications, Areva requested advice as to the steps that would be taken in relation to those proceedings and, in particular, in relation to the creation of an independent committee of directors responsible for the management of those proceedings. No substantive response was provided.

17 On 1 August 2007, this application was brought by Areva. On the same day, Areva sought an undertaking from Summit and SRA to the effect that SRA and Summit would provide Areva with a written copy of any proposed terms of settlement or compromise of the SRA proceedings, and that neither SRA nor Summit would enter into any final and binding compromise of those proceedings until Areva had had the opportunity to inspect the books and records sought in these proceedings or, in any event, without first giving Areva 14 days notice of their intention to do so. Areva requested that undertaking be provided not later than 2.00 pm eastern standard time on Friday 3 August 2007.

18 At about 1.00 pm eastern standard time on Friday 3 August 2007, Summit announced that SRA had agreed with Resolute and MIU to settle the SRA proceedings. At about the same time, a memorandum of consent orders signed by the solicitors for each of the parties to the SRA proceedings was lodged at the Central Office of this court (the Central Office) pursuant to O 43 r 16. By that memorandum the parties proposed that orders be made in terms that the action be dismissed with no order as to costs.

19 That memorandum was brought to my attention a little before 2.15 pm (western standard time) on 3 August 2007. I endorsed the memorandum 'orders in these terms', signed and dated it and directed that it be returned to the Central Office in order that orders might be extracted in due course.

20 About an hour later, a facsimile from the solicitors acting for Areva was brought to my attention, in which those solicitors foreshadowed proceedings on behalf of Areva seeking injunctive relief restraining, inter alia, the extraction of any orders dismissing or discontinuing the SRA proceedings. After considering that facsimile, I directed that no orders giving effect to the memorandum pursuant to O 43 r 16 be settled or extracted until Areva had had the opportunity to bring the foreshadowed proceedings before the court.

21 On 6 August 2007, Areva commenced proceedings against SRA, Resolute, MIU and Summit (COR 114 of 2007). Those proceedings are said to be brought pursuant to s 208, s 233, s 237, s 241 and s 1324 of the Act. Pursuant to s 237 of the Act, Areva seeks leave to intervene in the SRA proceedings for the purpose of taking responsibility for the proceedings on behalf of SRA. Areva also seeks relief under various sections of the Act restraining SRA and MIU from entering into or giving effect to any compromise or settlement of the SRA proceedings without Areva's consent, and further orders requiring Summit, MIU and SRA to do all things necessary to terminate the agreement to settle the proceedings entered into by those parties.

22 When those proceedings were mentioned before me at 10.30 am on 6 August 2007, I made orders to the effect that no order dismissing the SRA proceedings be settled, signed or sealed until either judgment in matter COR 114 of 2007 or further order. At the same time, directions were made for the exchange of affidavits and submissions to enable the early return of this application under s 247A of the Act for inspection of books.

23 On 10 August 2007, a solicitor acting on behalf of Summit and SRA, Mr Michael Lishman, sent a letter to the solicitors acting for Areva providing certain information relating to the settlement of the SRA proceedings. That solicitor is not from the firm on the record for SRA in the SRA proceedings.

24 The letter advised that the decision 'to discontinue the litigation' against Resolute and MIU was made by Mr David Berrie and Mr Mal Randall acting as a committee of the Summit board. Enclosed with the letter was a document, said to be minutes of a meeting of that committee held at 7.30 am on 26 June 2007, at which Mr Lishman was present, in which it was resolved that the directors present, being Mr Berrie and Mr Randall, were of the opinion that not continuing the litigation would be in the best interests of Summit.

25 Mr Lishman's letter also encloses a letter of advice from Mr Lishman dated 5 July 2007 to Mr Randall and Mr Berrie. Plainly they could not have had that letter at the time of their meeting on 26 June 2007, although Mr Lishman's letter of 10 August 2007 asserts that they had before them an earlier draft of that letter of advice dated 8 June 2007, which was in substantially the same terms.

26 The letter of advice dated 5 July 2007 expresses the opinion that the following considerations supported a decision to discontinue the litigation:

(a) Summit's prospects have not improved following discovery;

(b) Paladin now own 82% of Summit - there is little benefit to other shareholders in the litigation and Paladin's control removes the opportunity of raising third party equity to fund any purchase of the Joint Venture Interest;

(c) Summit's prospects are highly dependent upon the availability and enthusiasm of Alan Eggers, who no longer has any financial interest in the case;

(d) There is little commercial rationale for Paladin settling, given that its downside is limited - no offer can be negotiated;

(e) Summit will incur significant further legal costs in getting the declarations it seeks;

(f) Having got the declarations, Summit may have no effective means of exercising its option given the inability to raise finance without the support of its major shareholder; and

(g) There is significant uncertainty about the price that Summit would have to pay for the Joint Venture Interest.

27 The letter of advice of 5 July 2007 goes on to refer to a possible complication because Summit, as a public company, is not able to give Paladin (a related party) a financial benefit other than as permitted by ch 2E of the Act. The letter expresses the view that the discontinuance of the litigation would be the provision of a financial benefit to Paladin, and refers to the various exceptions that might be available under the Act. The letter recommended against seeking shareholder approval. It also expressed the view that settlement of the litigation would fall within one of the exceptions to s 208, being the exception specified in s 210 of the Act, on the basis that the terms upon which the financial benefit is being provided would be reasonable in the circumstances if the public company and the related party were dealing at arms length, or are less favourable than arms length terms.

28 The letter of advice of 5 July 2007 concluded '[h]owever, in order to put this matter beyond doubt, the litigation can be discontinued pursuant to a consent order of the Court, thus falling within s 216'.

29 No advice was given to the court at the time that consent orders were sought to the effect that those orders were sought for the purposes of relying upon an exception to a prohibition created by s 208 of the Act. On the materials in evidence before me, there is a clear inference to the effect that that was at least one of the purposes of moving the court for orders of dismissal (as opposed to discontinuance). If that was one of the purposes for which the order was sought, or its perceived effect, the failure to disclose that fact to the court at the time that consent orders were sought falls short of the candour that the court is entitled to expect from legal practitioners who are, first and foremost, officers of the court. If the court is to repose confidence in its practitioners, it is essential that they inform the court of all matters relevant to the exercise of the court's powers, especially when parties are not dealing at arms length. In this case, had I been informed that the purpose for which the orders dismissing the SRA proceedings were sought was in part to overcome the prohibition imposed by s 208 of the Act or that that was thought to be the effect of the orders sought, I would have directed that those orders not be made unless and until the Australian Securities and Investments Commission had been served with notice of the proposal and given the opportunity to intervene in the proceedings if it wished to do so.

30 Mr Lishman's letter of 10 August 2007 also attaches another document purporting to be minutes of a meeting of the 'Litigation Committee' of Summit held at 9.30 am on 30 July 2007. The persons present at that meeting were Mr Berrie, Mr Randall and Mr Lishman. The minutes record that a draft Consent Order and Deed of Settlement and Release were tabled, after which it was resolved to execute the Deed of Settlement and Release, and to instruct the company's solicitors to enter into the Consent Order. The minutes record that the directors present confirmed their belief that entry into the deed was in the best interests of the company.

31 The Deed of Settlement and Release apparently executed pursuant to that resolution was also enclosed with the solicitor's letter. It does not bear a date. It is purportedly executed on behalf of SRA by Mr Berrie and Mr Randall. I have been advised that Mr Randall was not a director of SRA at the time he purported to execute the agreement, although it seems common ground that nothing substantive turns on this, as Mr Randall and Mr Berrie were apparently authorised to enter into the agreement on behalf of SRA. The settlement agreement contains what I would describe as the usual releases and discharges in respect of all claims arising in or associated with the SRA proceedings.

32 Areva seeks authority to inspect and make copies of the following books and records of Summit and SRA:

1. All documents containing or recording legal advice given to Summit and/or SRA as to the merits of the SRA Proceedings.
2. All documents containing or recording any consideration by Summit or SRA, including the boards of those companies or any committee of those boards, of:

1. legal advice as to the merits of the SRA Proceedings; 2. the options commercially available to Summit or SRA if the option in clause 13.4 of the Isa Uranium Joint Venture Agreement were to be exercised, in the event that SRA obtained a declaration substantially in the terms sought in the SRA Proceedings;

1. any other matter taken into account in arriving at the decision to enter into the agreement for settlement of the SRA Proceedings; and

1. the proposal to create, or the creation of, the Independent Committee.
2. All documents containing or recording instructions given to or matters considered by Michael Lishman or any partner in or employee of Cochrane Lishman in relation to preparation of Mr Lishman's advice to the Independent Committee dated 5 July 2007 and the earlier draft of that advice which was provided to the Independent Committee.
3. All documents discovered in the SRA Proceedings (including by non-parties) which are or copies of which are in SRA's solicitors possession.
4. All correspondence passing between any combination of Summit, SRA, MIU and Paladin Resources Limited in relation to the SRA Proceedings and the dispute underlying the SRA Proceedings in the possession, custody or power of Summit and/or SRA.

33 Insofar as the application is brought in respect of books and records held by Summit, Areva relies upon s 247A(1) of the Act, on the basis that Areva is a member of Summit. Under that section, the court may grant Areva's application if satisfied that Areva is acting in good faith and that the inspection is to be made for a proper purpose.

34 Insofar as Areva applies for access to books and records held by SRA, Areva relies upon s 247A(3) of the Act, on the basis that Areva is a person who has applied for leave under s 237 of the Act, or who was, at the time this application was brought, eligible to apply for leave under that section. In respect of that application, the court is authorised to grant Areva access if satisfied that Areva is acting in good faith and that the inspection is to be made for a purpose connected with applying for leave under s 237 or bringing or intervening in proceedings with leave under that section.

35 Section 236 of the Act defines the persons who can apply for leave to intervene in proceedings pursuant to s 237. Members of related bodies corporate of the litigant party are within the scope of that section. Accordingly, Areva falls within the scope of persons entitled to apply for leave to intervene in the SRA proceedings because Areva is a member of Summit, which is the holding company of SRA, and therefore a related body corporate pursuant to s 50 of the Act.

36 Section 237 of the Act provides that the court must grant an application for leave under that section if satisfied of certain matters, including that the company will not itself properly take responsibility for the proceedings or the steps in those proceedings, that the applicant is acting in good faith, and that it is in the best interests of the company that the applicant be granted leave.

37 Section 237(3) creates a rebuttable presumption to the effect that the grant of leave is not in the best interests of the company if it is established that: the proceedings are by the company against a third party and the company has decided to discontinue, settle or compromise the proceedings; and all of the directors who participated in that decision, acting in good faith for a proper purpose, did not have a material and personal interest in the decision and informed themselves about the subject matter of the decision to the extent that they reasonably believed to be appropriate, and rationally believed that the decision was in the best interests of the company. That subsection goes on to provide that the directors' belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold.

38 The principles governing the consideration of applications brought pursuant to s 247A and its legislative predecessors are relatively well established. They were not in controversy in the course of argument in this application.

39 It is now established that the reference in s 247A(1) to good faith and a proper purpose is the expression of a composite notion, rather than separate and divisible concepts (see Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 Qd R 606; Knightswood Nominees Pty Ltd v Sherwin Pastoral Co Ltd (1989) 15 ACLR 151; Vinciguerra v MG Corrosion Consultants Pty Ltd [2007] FCA 503; (2007) 61 ACSR 583). I agree with the view expressed by Gilmour J in Vinciguerra to the effect that the same composite approach should be taken to the requirement under s 247A(5) of the Act that the applicant be acting in good faith and for a purpose connected with an application for leave under s 237 or bringing or intervening in proceedings pursuant to that leave. When an application for inspection is brought in reliance upon a pending or foreshadowed application under s 237 of the Act, it is appropriate to consider the basis for the substantive application for leave to intervene in the context of the necessary assessment of whether the applicant is acting in good faith and for a purpose connected with that substantive application - see Vinciguerra; Caveat Pty Ltd v Baillie [2002] WASC 83, [24] - [25]; and Chuen v Laredo Pty Ltd [2005] WASC 58, [59].

40 The onus of establishing that the applicant is acting in good faith and for the requisite purpose under s 247A(1) or s 247A(5) rests on the applicant at all times (Intercapital Holdings Ltd v MEH Ltd (1988) 6 ACLC 1068, 1074; Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344.

41 The purposes that can be regarded as proper purposes within the scope of s 247A(1) are not constrained or confined, provided that they are referrable to the applicant's status as a shareholder in the relevant entity (see Acehill Investments Pty Ltd).

42 Even where the applicant is acting in good faith and has shown a proper purpose, the court has a discretion whether or not to order inspection - see Acehill Investments Pty Ltd [29]; Humes Ltd v Unity APA Ltd [1987] VicRp 42; (1987) 11 ACLR 641.

43 It is also established that there is no reason for exercising the discretion against the making of an order merely because the relevant purpose (or in this case involvement in the legal proceedings) arises in respect of a subsidiary - see Intercapital Holdings Ltd. The application of the composite notion of good faith and proper purpose is not determined by mere assertion but is also assessed from a perspective of objective reasonableness. Therefore, if an application brought pursuant to s 237 had no reasonable prospect of success, it would be reasonable to infer that the application was not brought for that purpose, but for some collateral or other purpose with the result that the requirements of the section would not be met - see Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313.

44 The managing director of Areva, Mr Portella, has sworn an affidavit in support of Areva's application for inspection of documents in which, after referring to the factual context which I have set out above, he asserts that Areva wishes to obtain access to the documents in question in order to assess for itself the merits of SRA's claim, the steps that Summit has taken to protect SRA's interests (and therefore Summit's interests) in the SRA proceedings and the joint venture. He further deposes that depending on the results of Areva's assessment of the position in relation to the SRA proceedings, Areva may wish to make an application seeking leave to intervene. Of course that affidavit has been overtaken by the events to which I have referred, in that Areva has now brought that application. In the circumstances which I have set out above, it seems to me that those assertions are objectively reasonable, and that there is no reason to doubt that they accurately depict Areva's purpose in seeking inspection of the relevant books and records.

45 When regard is had to the categories of documents sought, the relevance of the first four categories to the enunciated purpose is obvious. The documents containing or recording legal advice given to Summit and/or SRA as to the merits of the proceedings are obviously relevant to Areva's application under s 237 of the Act, and would be relevant to its prosecution of the SRA proceedings in the event that application is successful. The documents relating to the considerations taken into account at the time of the decision to compromise the SRA proceedings and as to the options commercially available to Summit to finance the acquisition of the joint venture interest in the event of success in those proceedings are obviously relevant to the issues likely to arise under s 237(3) in respect of Areva's application under that section. The documents discovered in the SRA proceedings are obviously relevant to Areva's assessment of the merits of those proceedings, which is in turn relevant to the question of whether it wishes to continue with its application under s 237 and would, in the event of success in such an application, be relevant to its future conduct of those proceedings.

46 The connection between the fifth category of documents sought and the enunciated purpose is less obvious. That category would catch all correspondence passing between any of the relevant entities relating to the SRA proceedings and the dispute underlying the SRA proceedings. It is, I think, a reasonable inference that the category has been included as a kind of 'sweeper' or 'catch all', designed to pick up any documents not otherwise included in any of the specific categories enunciated in the first four items.

47 For these reasons, on the evidence before me there appears to be no reason to doubt that Areva seeks access to the relevant books and records in good faith and for a proper purpose, being also a purpose connected with its application for leave under s 237 or bringing or intervening in proceedings with leave under that section.

48 However, Summit and SRA submit that I should conclude that Areva is not acting in good faith and for the enunciated purposes because its application under s 237 is doomed to fail for the following reasons:

(a) Areva will fail to establish that the grant of leave is in the best interests of SRA, because the compromise effected by the Deed of Settlement and Release has been effective to discharge and release any claim which SRA may have against either Resolute or MIU; and

(b) Areva has no reasonable prospect of overcoming the rebuttable presumption that the grant of leave is not in the best interests of the company created by s 237(3).

49 Before considering those submissions, I should observe that when an application is made under s 247A, on the basis of a pending or foreshadowed application under s 237 of the Act, it is neither necessary nor appropriate for the court hearing the application for access to records to in effect hear and determine the application for leave under s 237. Such an approach would entirely defeat the purpose and effect of s 247A, which is to enable an applicant for access to books and records to obtain the information which might be needed to assess the strength and prospects of an application under s 237 and if it determined to do so, pursue the application under s 237 and then, if successful, the substantive proceedings. Accordingly, an assessment of the merits of the application made or foreshadowed under s 237 of the Act should only be undertaken for the purpose of ascertaining whether there is a plausible connection between that application and the documents to which access is sought, and for the purpose of assessing whether a legitimate forensic purpose would be served by the provision of access to those documents.

50 Put another way, as one of the purposes for which access to books and records may be granted under s 247A is the purpose of assessing and advancing an application under s 237, it would be quite wrong to deny an applicant access because of a conclusion that the application under s 237 had no reasonable prospect of success unless it was clear beyond argument that access to the books and records concerned could not affect the assessment of prospects of success of the application under s 237.

51 Accordingly, I approach the evaluation of the submissions on behalf of Summit and SRA on the basis that I would only conclude that Areva's application for access is not brought in good faith and for a proper purpose if I was satisfied, not only that Areva's application under s 237 had no prospect of success, but also that it is inconceivable that any of the books and records to which Areva seeks access could affect the assessment of those prospects of success.

52 Taking that approach, the submissions made by Summit and SRA with respect to the rebuttable presumption arising under s 237(3) can be readily dismissed. The documents to which Areva seeks access bear directly upon the considerations taken into account by the directors who participated in the decision to compromise the SRA proceedings, the information they had before them at the time of that decision, and the basis and rationality for their beliefs. Because neither I nor Areva know what the documents to which they seek access would reveal in relation to those matters, it is quite impossible to say that those documents could not affect the assessment of the strength of Areva's application under s 237. Accordingly, it would be quite wrong to attempt to pre-judge those issues or the outcome of that application in the course of Areva's application for access to the documents which it needs in order to assess the strength of its application and pursue it if so advised.

53 The arguments raised by Summit and SRA in relation to the effect of the Deed of Settlement and Release are potentially more compelling because, if that document is effective, any rights or claims SRA may have in the SRA proceedings have been discharged and released. It could not therefore be in the best interests of SRA for Areva to be granted leave to intervene and takeover the conduct of those proceedings because they are doomed to fail.

54 However, in response to the submissions of SRA and Summit, Areva points to s 208 of the Act and foreshadows the prospect that, depending upon the information provided by the access to books and records which it seeks, application might be made for injunctive relief under s 1324 of the Act to prevent MIU and Resolute from relying upon a transaction (the Deed of Settlement and Release) entered into in contravention of s 208 of the Act. In this context, although s 209 provides that contravention does not affect the validity of any contract or transaction connected with the giving of the relevant financial benefit, and that the public company or entity is not guilty of an offence by contravening the section, that provision would not preclude effect being given to the section by the grant of injunctive relief under s 1324 of the Act. Therefore, Areva foreshadows that if, in the course of its application under s 237, it is argued that the application is futile because of the Deed of Settlement and Release, depending upon the information Areva has by then received, it could counter that submission with an application for an injunction, restraining MIU, as a beneficiary of the Deed of Settlement and Release, from relying upon that Deed because of the contravention of s 208 of the Act.

55 In order to evaluate those contentions it is necessary to explain precisely how s 208 could apply to the Deed of Settlement and Release. The section provides:

(1) For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company:

(i) obtain the approval of the public company's members in the way set out in sections 217 to 227; and

(ii) give the benefit within 15 months after the approval; or

(b) the giving of the benefit must fall within an exception set out in sections 210 to 216.

56 SRA is an entity that a public company (Summit) controls. The Deed of Settlement and Release, confers a financial benefit on MIU. Section 228 provides that an entity that controls a public company is a related party of the public company. Paladin now has control of Summit because, by virtue of its ownership of more than 80% of Summit's shares, it has the capacity to determine the outcome of decisions about Summit's financial and operating policies (within the meaning of s 50AA of the Act). Paladin is therefore a related party of Summit. Further, s 228(4) provides that an entity controlled by a related party is a related party of the public company unless the entity is also controlled by the public company. In this case, Paladin controls Valhalla (which is a wholly owned subsidiary of Paladin) which in turn controls MIU (which is a wholly owned subsidiary of Valhalla). Accordingly, MIU is controlled by Paladin, which is a related party to Summit, and Summit does not control MIU. Accordingly, through this somewhat arcane process of reasoning, MIU is a related party of Summit for the purposes of s 208 of the Act.

57 As I have mentioned, one of the exceptions to the operation of s 208 is provided by s 216 which is in the following terms:

Member approval is not needed to give a financial benefit under an order of a court.

58 Summit and SRA do not at this point rely on that section, presumably for the obvious reason that no order of the court giving effect to the Deed of Settlement and Release has been extracted. However, they contend that s 210 applies to preclude Areva relying upon an alleged contravention of s 208. Section 210 provides:

Member approval is not needed to give a financial benefit on terms that:

(a) would be reasonable in the circumstances if the public company or entity and the related party were dealing at arm's length; or

(b) are less favourable to the related party than the terms referred to in paragraph (a).

59 Summit and SRA contend that the considerations set out in the letter of advice from Mr Lishman of 5 July 2007 and to which I have referred, including in particular the difficulty which Summit might face in sourcing finance for the acquisition of the interest in the joint venture even if SRA is successful in the SRA proceedings, compel the conclusion that the terms of settlement would be reasonable if SRA and MIU had been dealing at arms length.

60 There are, I think, two fundamental difficulties with this submission. The first is that no evidence was adduced before me as to the terms that would be reasonable in the circumstances if SRA and MIU had been dealing at arms length. Essentially, the case is put on the basis that I should accept the advice given by the solicitor because it is said to be self-evidently correct. However, I have no evidence, nor means of knowing, whether the assertions made by the solicitor with respect to the availability of finance are correct or not. The second difficulty with the submission corresponds with the difficulty in the submission based on the rebuttable presumption arising under s 237(3), and that is that it seeks to presume the outcome of an issue for the purpose of denying Areva access to documents which would be relevant to the litigation of that issue. While the criterion to be applied under s 210 of the Act is undoubtedly objective, the ascertainment of the terms that would be reasonable between arms length parties will depend upon the factual substratum in which those arms length parties are considered to undertake their hypothetical negotiations. The documents sought by Areva bear directly upon that factual substratum. Accordingly, it is impossible to say that the documents to which Areva seeks access could not bear upon the assessment of the strength of Areva's argument to the effect that s 208 of the Act has been contravened. It follows, therefore, that it would be wrong to apply a premature perception of the likely outcome of that argument to defeat Areva's application.

61 For these reasons, I am satisfied that Areva's application for access to the books and records of SRA and Summit is brought in good faith and for a proper purpose within the meaning of s 247A(1) and for a purpose connected with Areva's application for leave to intervene in the SRA proceedings under s 237 of the Act. In relation to the first four categories of documents sought by Areva, I can see no basis upon which I should exercise any discretion to refuse Areva's application.

62 However, I remain concerned as to the breadth of the fifth category of documents sought. I am not presently persuaded that access to documents falling within such a broad category is necessary or appropriate for the purposes enunciated by Areva. I am not therefore presently disposed to grant access to documents falling within that category. However, rather than dismiss Areva's application in respect of that category at present, I propose to adjourn Areva's application in that regard to enable Areva to either apply to amend the category of documents sought to a narrower field, or to renew its application for access to those documents after inspecting the first four categories of documents, at which time it may be able to satisfy me that access to the fifth category of documents would serve a legitimate forensic purpose.