//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2003] FCA 1372
procedural. The applicant's Notice of Motion of 28 July 2003 is dismissed with costs; the respondent's Amended Notice of Motion of 28 July 2003 is dismissed with costs (see Orders, and para [38]).
The Federal Court held that it had jurisdiction to consider an application to relax consent undertakings and permit a director to disclose inspection reports obtained under court orders, because the undertakings were expressly made subject to further order. The Court nonetheless refused the director's application: ACD Tridon Inc had separately undertaken in Supreme Court proceedings not to seek such material, there was close connection between the director and that shareholder, substantial overlapping litigation was pending, and the director failed to file evidence establishing a proper purpose for disclosure. TAPL's cross-application to fix the inspection end date was also dismissed because the inspection was stated to continue until completion of the final report and there was no evidence making time of the essence (see paras [18]–[33], [34]–[37], [38]).
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
2 cited instruments linked from this judgment.
1,696 words · generated 31/08/2026
This case concerned interlocutory applications arising from an earlier Federal Court proceeding in which a director, Mr Harry Lee Arkin, had been authorised to inspect the financial records of Tridon Australia Pty Limited (TAPL) under consent orders. Those consent orders, made on 7 February 2003, permitted inspection by Mr Arkin and his nominee Mr David Watson and contained specific undertakings and a reservation of liberty to apply to the Federal Court about future use or disclosure of material obtained (see the consent orders quoted at para [2]). Parallel Supreme Court proceedings involved ACD Tridon Inc (ACDT) seeking relief against TAPL; in those proceedings ACDT and Mr Arkin had given undertakings in November 2002 which, among other things, restrained disclosure of TAPL's affairs (para [3]–[4]).
Mr Watson inspected TAPL's records for about 111 hours between 20 March and 2 July 2003 and produced a series of reports (paras [11]–[12]). Mr Arkin applied on 28 July 2003 for leave to provide those Watson reports to TAPL's shareholders, including ACDT and Mr Lennox (para [5]). TAPL filed an 'Amended Notice of Motion' seeking, among other things, declarations that the inspection period had expired or that the Court should fix a completion date (para [7]). The Federal Court (Hely J) heard contested submissions and dismissed both Mr Arkin's motion and TAPL's amended notice with costs (para [38]).
Two threshold legal threads ran through the decision: (1) jurisdictional capacity to vary or discharge undertakings and to regulate disclosure after inspection; and (2) the exercise of the Court's discretion when considering leave to disclose material obtained under inspection.
Jurisdiction: The Court concluded it had jurisdiction to consider the application to release the Watson reports. The undertakings to the Supreme Court and to this Court were expressed so as to allow 'further or other order' from the Federal Court; the consent orders expressly contemplated liberty to apply (paras [18]–[21]). Hely J relied on established authorities to the effect that courts can accept and enforce undertakings in lieu of orders and can discharge or vary such undertakings (Thomson Australia Holdings v Trade Practices Commission (1980) and Adam P Brown Male Fashions v Philip Morris (1981)) (para [20]).
Discretion: Having reached jurisdiction, the Court exercised discretion against allowing disclosure. Key discretionary considerations were:
Finally, TAPL's application to declare the inspection time expired was dismissed because the inspection was expressed to continue until completion of Mr Watson's final report, there was insufficient evidence to show unreasonable delay or that time had been made of the essence (paras [34]–[37]).
Before this decision the principles cited by Hely J were well established:
This decision applies those authorities to the particular fact pattern of overlapping litigation and cross-jurisdictional undertakings. The case is not a doctrinal change; rather it illustrates the application of familiar principles: express reservation in consent orders preserves the Court's capacity to regulate disclosure; but where another party has undertaken in separate proceedings not to seek documents, that creates a significant discretionary bar to allowing disclosure to that party absent evidence that disclosure would be for the company's proper interests (paras [18]–[26], [31]–[33]). The decision therefore reinforces the interaction between interlocutory undertakings, statutory inspection powers, and discretionary oversight of disclosure following inspection.
Para [6]: "The Court is empowered under s 290(4) ... including an order limiting the use that a person who inspects the records may make." Plain English: The Corporations Act expressly allows the court to place conditions on how anyone who inspects a company's records may use what they learn. This is the statutory basis for restricting onward disclosure.
Para [20]: "The Court has power to discharge or vary such undertakings: Adam P Brown ..." Plain English: If someone gives an undertaking to a court instead of a formal order, that same court can later change or cancel that undertaking.
Para [25]: "That provides a powerful discretionary reason why the relief sought ... should not be granted ... circumventing the undertaking given to the Supreme Court by ACDT." Plain English: Because ACDT promised the Supreme Court it would not obtain these documents, letting Arkin hand them to ACDT would effectively bypass ACDT's promise, and that is a strong reason for the Court to refuse permission.
Para [31]: "Mr Arkin bears the onus ... to prove that his purpose ... is a proper one." Plain English: The applicant must show, with evidence, that he wants to disclose the reports for a legitimate corporate purpose; the Court will not assume this without sworn evidence.
Para [13]: the reports were admitted under s 136 Evidence Act only to prove existence and nature, not their truth. Plain English: The Court treated the Watson reports as documents that show what they say they are, but not as proof that the assertions or opinions in them are correct.
This judgment is particularly relevant where:
Where those features exist, the reasoning in Arkin v Tridon indicates a court will closely scrutinise the applicant's purpose and likely refuse disclosure if there is a strong risk of circumvention of an undertaking or absence of evidence of a proper purpose (paras [24]–[33]).
This judgment itself does not record or analyse subsequent treatment by later courts. The decision applies established High Court authorities (Thomson; Adam P Brown) and illustrates their application in the interlocutory, multi‑jurisdictional context. Any analysis of subsequent appellate or persuasive treatment would require examination of later decisions, which are not contained in this judgment. Users should check subsequent case law and citators to see how courts after 2003 have cited or relied on Hely J's reasoning in Arkin v Tridon.
From the judgment arise several issues that remained open or only partially addressed:
When an inspecting expert's work is in the nature of an on-going investigation with multiple interim reports, what standard should a court apply to decide whether inspection has been conducted 'as expeditiously as possible' or within a 'reasonable time'? Hely J noted the paucity of evidence on timing (paras [34]–[36]), and the judgment leaves the fact‑sensitive balancing of progress and reasonableness unresolved in other contexts.
How should courts balance the company's interest in confidentiality and the statutory rights of directors to inspect records, against competing interests of minority shareholders or third parties engaged in litigation with the company? The judgment points to relevant discretionary considerations but does not produce a closed list of criteria (paras [28]–[33]).
What constitutes sufficient evidence to discharge the onus upon an applicant director to show a proper purpose for disclosure to a third party? Hely J emphasised the need for affidavit material but did not prescribe precise content or thresholds (paras [31]–[33]).
To what extent can a court fashion interim 'marking' or conditional disclosure procedures (for example, redaction, 'eyes-only' regimes, or staged disclosure) where there are competing undertakings or overlapping litigation? TAPL suggested criteria in para [28], but the Court did not adopt a specific procedure; practical modalities for limited disclosure remain open.
The interaction between undertakings given in different courts: while this judgment accepts that a court may vary undertakings expressly made subject to its orders, questions remain about comity and respect between courts where undertakings are given in separate proceedings and may conflict. The judgment treats such cross-court undertakings as powerful discretionary indicators but not absolute bars (paras [18]–[25]).
Practitioners facing similar fact patterns will need to file clear affidavit evidence showing the corporate purpose for disclosure, address potential conflicts with undertakings in other proceedings, and identify protective measures that might ameliorate confidentiality and litigation risks.
Note: This is a source-based explanation of the Federal Court's reasons in Arkin v Tridon Australia Pty Limited [2003] FCA 1372. It is legal information only, not legal advice. I can make mistakes; before you act on or rely upon this, or use any draft documents based on it, get a qualified Australian lawyer to check and advise.
A director seeks access to documents 1 The background to this matter is explained in a judgment which I delivered on 24 December 2002: Arkin v Tridon Australia Pty Limited (2002) 43 ACSR 610. As I there explained at [57], the issue in the proceedings in this Court was whether the Court should enforce inspection of Tridon Australia Pty Ltd's ('TAPL') financial records by Mr Arkin, as a person falling within the description of a director for the purposes of s 290 of the Corporations Act 2001 (Cth) ('the Corporations Act') having regard to the complaints which TAPL made as to his conduct and connections, and whether this Court should authorise Mr Watson or Mr Donnelly to inspect those records on Mr Arkin's behalf. One of the grounds on which inspection was originally opposed was that ACDT Tridon Inc ('ACDT') was seeking to wind up TAPL in the Supreme Court and, in TAPL's contention, the inspection sought by Mr Arkin was to aid ACDT in the prosecution of those proceedings. Mr Arkin was appointed to the board of TAPL on the nomination of ACDT pursuant to the provisions of the shareholders agreement referred to in the earlier judgment.
The terms of settlement 2 The proceedings in this Court were settled, or at least so I was informed. On 7 February 2003, by consent and without admission, I made the following orders: '1. That the applicant while he remains a director of the respondent and his nominee, Mr David Watson be at liberty to inspect such of the financial records of the respondent as they or either of them may require including all controlled entities of the respondent whether controlled directly or indirectly. 2. Such inspection to commence upon such date as is agreed between the parties but no later than 7 days after written notice to the respondent's solicitors by the applicant's solicitors and to continue thereafter as expeditiously as possible and within a reasonable time until Mr Watson completes his final report upon such matters as is required of him by the applicant. 3. In respect of any document that Mr Watson proposes to give to the applicant or his solicitor, Mr Watson is to furnish such document and, in respect of any report, his instructions to the solicitors for the applicant and the respondent simultaneously. 4. Costs to date reserved with the exception of any costs orders already made in favour of Mr and Mrs Lennox. 5. Liberty to the parties to apply. 6. The applicant shall not make any application for leave to release or provide Mr Watson's reports to any other person before 14 days after the date upon which such report is furnished to the Respondent's solicitors. The Court notes: 7. The applicant gives to this Court an undertaking in terms of paragraphs 4 and 6 of the undertakings described in the document attached marked "A" being the undertaking that he gave to the Supreme Court of New South Wales in the proceedings numbered 5738 of 2001 on 7 November 2002. 8. ACD Tridon Inc (incorporated in Ontario) gives to this Court an undertaking in terms of paragraphs 3 and 5 as described in the document attached marked "A" being the undertaking that it gave to the Supreme Court in proceedings numbered 5738 of 2001 on 7 November 2002. The Court notes the agreement of the parties: 9. That if Mr Watson wants or seeks any explanation as to what is contained in the financial records of the respondent then he shall provide to Mr Lennox, a director of the respondent, a written request for such explanation and Mr Lennox must, in writing, reply within 7 days to such request. 10. That Mr Watson will give to the Respondent reasonable written notice of the financial records to be inspected by him. The Court further orders that Order 1 and 2 above is conditional and dependant upon Mr Watson and any employee to be used by him giving to this Court: (a) an undertaking in terms of the undertaking given by the applicant to this Court; (b) an undertaking of their positive assurance that he or they do not contemplate any instruction from or on behalf of ACD Tridon Inc (or any of the other companies in the Tomkins Group).' 3 Attached to the short minutes of order filed in this Court, and marked "A", was a copy of short minutes of order filed in the Supreme Court proceedings between ACDT as applicant, and TAPL and Mr Lennox as first and second respondent respectively. Paragraphs 3, 4, 5 and 6 of those short minutes provide as follows: '3. The Court notes that: ACDT undertakes to the Court: (a) That it will not seek to obtain, directly or indirectly, any information, report or other document concerning the affairs of TAPL or its subsidiaries from Arkin or the solicitors, counsel and accountant retained by him in the Federal Court Proceedings. (b) It will not cause or permit Arkin to give instructions to the solicitors or counsel retained by ACDT in these proceedings. The Court notes that: 4. Subject to para 6 below, that Arkin undertakes to the Court: (a) not to communicate, reveal, disclose, provide, or in any other way whatsoever transmit any information concerning the affairs of TAPL or its subsidiaries (including oral information or information contained in any document (whether electronic or otherwise)) to any person other than: (i) himself; and subject to the persons referred to below giving similar undertakings: (ii) any nominated accountant and the staff of such accountant (other than an accountant retained or contemplated to be retained) by or on behalf of ACDT in the course of the disputes the subject of these proceedings or the arbitration before the Hon Mr John Clarke QC, and specifically including Donnelly); (iii) his personal legal representatives, where such persons are not engaged and are not to be engaged by or on behalf of ACDT in these proceedings; (iv) a member of the staff of Arkin & Associates. (v) a duly authorised officer of a statutory authority with jurisdiction over or in respect of TAPL or its subsidiaries (in the course of fulfilment of any duty incumbent upon Arkin as director of TAPL. (b) not to be party, whether directly or indirectly, to any breach of the undertaking given in 3 above; (c) that in the course of his undertaking of his role as director of TAPL (with the exception only in the course of his role as applicant in the Federal Court proceedings), not to engage, retain, or otherwise communicate or co-operate with any expert or other person retained (or proposed to be retained) by ACDT or any person associated with it, whether in the course of these proceedings or otherwise. (d) that he shall not be involved, directly or indirectly, with instructing ACDT's lawyers (whether in Australia or elsewhere) in these proceedings and shall not provide counsel and/or advice to ACDT or any person associated with it in respect of these proceedings. 5. The above undertakings in paras 2 and 3 apply subject to further or other order of this Court, where the same shall be reserved to his Honour, Mr Justice Austin (or such other Justice of this Court as having carriage of this matter from time to time), and in the course of the same, any documents subject to an application for such order shall be treated as confidential and the papers treated as sealed until or at the further direction of this Court. 6. The undertakings in para 4 apply subject to further or other orders of the Federal Court, where the same shall be reserved to a Justice of that Court, and in the course of the same, any documents subject to an application for such order shall be treated as confidential and the papers treated as sealed until or at the further direction of that Court.' 4 The undertakings noted above appear to have been given to Austin J in the Supreme Court of New South Wales on 7 November 2002. The proceedings in this Court had been instituted on 22 April 2002, and were pending when the undertakings noted above were given to Austin J. 5 On 28 July 2003 Mr Arkin applied by motion in these proceedings for an order that he be at liberty to provide to the shareholders in TAPL, namely Mr Lennox and ACDT, all the reports by David Watson, and all correspondence between David Watson, Brock Partners (Mr Arkin's solicitors) and Cutler Hughes & Harris (TAPL's solicitors) relating to the inspection of the financial reports of TAPL. Alternatively, liberty to provide the reports of David Watson to those shareholders was sought. 6 The Court is empowered under s 290(4) of the Corporations Act, when authorising inspection of a company's records, to make any other orders it considers appropriate, including an order limiting the use that a person who inspects the records may make of the information obtained during the inspection. In Mr Arkin's submission, orders 5 and 6 of the orders which I made on 7 February 2003 were made pursuant to s 290(4) of the Act, and the power in the Court to make the orders now sought in Mr Arkin's motion flows from the terms of those orders, considered in the light of the undertaking given to this Court as noted in par 7. It is acknowledged that liberty to apply in relation to a final order is limited to matters concerning the implementation of the earlier order: Cristel v Cristel [1951] 2 KB 725 at 728; Kraft v Kupferwasser (1991) 23 NSWLR 236 at 243, but in Mr Arkin's submission, the orders which he seeks in the Notice of Motion are of that nature. 7 On 28 July 2003 TAPL filed a document in these proceedings styled 'Amended Notice of Motion' which showed TAPL as the applicant, Mr Arkin as first respondent and Mr Watson as second respondent. The Amended Notice of Motion sought relief against Mr Watson including orders that he withdraw his reports, and restraining him from publishing other reports. Mr Watson is not a party to these proceedings and it was not open to TAPL to name him as a respondent to its motion. The relief sought in pars [2, 3 and 4] of that motion is, in any event, well outside the scope of 'Liberty to apply'. Ultimately counsel for TAPL, Mr Jacobs QC, did not persist with any of the claims for relief made in TAPL's Amended Notice of Motion, except for that sought in par [1]. Paragraph 1 seeks declarations that the time for inspection limited by order 2 of the orders made on 7 February 2003 has expired, or alternatively asks the Court to fix a date by which inspection of TAPL's financial records is to be concluded. 8 Although Mr Arkin's motion seeks liberty to provide Mr Watson's reports to Mr Lennox and to ACDT as the shareholders in TAPL, there is a controversy as to whether ACDT remains a shareholder in TAPL, or whether its shares in TAPL were lawfully acquired by Mr Lennox. That is one of the issues for determination in the Supreme Court proceedings which are fixed for determination by the Hon A J Rogers QC, sitting as an arbitrator, and as a Part 72 Referee, at a hearing currently scheduled for the period 3 May 2004 - 21 May 2004. 9 Other issues which arise in the Supreme Court proceedings include: - whether ACDT should have access to the financial records of TAPL; - whether TAPL should be wound up on the application of ACDT; - whether ACDT is entitled to determine the distributorship agreement with TAPL in the event that a liquidator is appointed to TAPL; and - whether Mr Arkin should be removed as a director of TAPL.
The inspection of TAPL's records 10 On 19 February 2003 Mr Arkin's solicitors gave written instructions to Mr Watson as to the purpose and scope of his inspection of TAPL's records pursuant to the orders which I made on 7 February 2003. The purpose of the inspection on behalf of Mr Arkin was described as obtaining a reasonable level of satisfaction: (a) that the financial statements of TAPL and related entities and businesses from time to time are in fact true and fair; (b) that the books and records of TAPL and related entities and businesses accurately record the transactions which have taken place; (c) that the transactions that have taken place are reasonable, proper and appropriate and no transfer or other pricing or other transactions have taken place to the detriment of either TAPL or its minority shareholder ACDT; (d) that there are no breaches of the law including the Corporations Act, the taxation legislation and other relevant legislation; and (e) that Mr and Mrs Lennox have not abused their positions and fiduciary duties as directors and officers of TAPL to the benefit of themselves and/or others, to the detriment of the minority shareholders of TAPL, ie, ACDT to which the directors of TAPL also owed certain fiduciary duties. Initially, the review on these issues was limited to the period post 1 July 1999. In addition, the solicitors requested that 15 transactions and issues which they itemised, and commented upon, should be specifically looked at as part of Mr Watson's inspection. 11 Mr Watson and members of his staff inspected the financial records of TAPL for some 111 hours over the period 20 March 2003 to 2 July 2003. That inspection generated the following reports, which Mr Arkin seeks liberty to distribute to the shareholders: Exhibit Date G1 6 June 2003 G3 14 July 2003 G4 28 July 2003 G5 12 September 2003 G6 25 September 2003 G7 3 October 2003 (2 reports) 12 Mr Arkin contends that the Watson reports raise serious issues as to breaches of the Corporations Law on the part of Mr and Mrs Lennox as well as issues as to breaches of fiduciary duties as directors. Other serious issues are said to be raised concerning possible breaches by TAPL of s 286 of the Corporations Act relating to the failure to keep adequate written financial records that correctly record and explain TAPL's transactions and financial position and performance so as to enable true and fair financial statements to be prepared and audited. Possible issues concerning a breach by TAPL of Division 7A of the Income Tax Assessment Act (Cth) are also identified. 13 The reports were not tendered in these proceedings as proof of any of the assertions made in them, nor as proof of the correctness of any of the opinions expressed in them. At the invitation of counsel for Mr Arkin, Mr Walker SC, when the reports were received into evidence I made an order pursuant to s 136 of the Evidence Act 1995 (Cth) limiting the use which could be made of the reports to proof of the fact of their existence and the nature of their contents. In large measure the reports are more in the nature of a running commentary on the progress of the investigation being undertaken by Mr Watson in which potential irregularities are raised and discussed, and alleged inadequacies in the information and records available are referred to, rather than in the nature of a final report in which an opinion is definitively expressed in relation to particular issues. If and insofar as the reports contain assertions of fact or matters of opinion, the consequence of the s 136 limitation is that the reports do not rise above views which Mr Watson has expressed in relation to those matters, views which may be right or wrong. 14 TAPL has filed affidavits from Mr Lennox and from experts criticising the Watson reports. In Mr Watson's report of 12 September 2003 Mr Watson responds to some of those affidavits (others were filed at a later date), and except to the extent indicated in that report, maintains his position. In TAPL's submission the evidence which it has filed completely refutes the 'mistakes and errors, prejudicial inferences and innuendos' in Mr Watson's reports. That, of course, assumes that all of the evidence filed by TAPL is ultimately accepted. However, Mr Walker SC did not submit that even if TAPL's evidence is accepted, the Watson reports nonetheless describes residual breaches of duty or other improper conduct on the part of Mr or Mrs Lennox. 15 Mr Watson's reports raise issues as to compliance with the taxation laws. TAPL contends that as the reports have been provided to TAPL they are part of its documents. If they came to the attention of the Australian Taxation Office, they might spark a taxation audit. Although TAPL contends that the results of that audit would not be adverse to TAPL, hundreds of thousands of dollars in legal and accounting costs would be consumed in securing that result. If the reports were made available to ACDT, it would not be subject to any constraints in relation to the use which it could put the reports. 16 Mr Watson's reports form part of TAPL's documents because TAPL stipulated as part of the 'settlement' of the original proceedings that copies of those reports should be provided to it.
Jurisdictional issues 17 TAPL contends that this Court does not have jurisdiction to grant any of the orders sought by Mr Arkin to release him from undertakings he has given to Austin J in the Supreme Court. Nor, it is submitted, can the Supreme Court confer on the Federal Court an ability/power to relieve a person of an undertaking given to the Supreme Court. 18 The undertaking given by Mr Arkin to the Supreme Court not to disclose information concerning the affairs of TAPL was expressed to be subject to further or other order of the Federal Court. The same undertaking was given to this Court. The only impediment to Mr Arkin releasing the Watson reports to TAPL is the undertakings given to the Supreme Court and to this Court. Order 6 of the orders made by this Court on 7 February 2003 contemplates that an application might be made to this Court for leave to release or provide Mr Watson's reports to another person. ACDT is 'another person'. The grant of leave would necessarily involve a release or relaxation of what would otherwise be the non-disclosure obligation flowing from the undertakings given by Mr Arkin. 19 Provided this Court has jurisdiction to make an order authorising Mr Arkin to provide the Watson reports to TAPL, then the release of those reports by Mr Arkin to TAPL pursuant to such an order will not involve Mr Arkin in a contravention of the undertakings given to the Supreme Court or to this Court. That result follows not because of any purported delegation of power by the Supreme Court to the Federal Court to release Mr Arkin from an undertaking given to the Supreme Court, but because the terms of the undertakings given to both Courts allowed for the release or relaxation of the non-disclosure obligation by virtue of an order of the Federal Court. 20 It would have been open to this Court to make an order pursuant to s 290(4) of the Corporations Act prohibiting Mr Arkin from disclosing information concerning the affairs of TAPL derived during the inspection of TAPL's records without the leave of this Court. Instead a non-disclosure undertaking was given to and accepted by this Court, but on the basis that application might be made for leave to provide Mr Watson's reports to other persons. Those facts provide a sufficient foundation for the jurisdiction of this Court to make the orders sought by Mr Arkin. Whilst parties by consent cannot confer power on the Court to make orders which the Court lacks power to make, the Court may accept and enforce an undertaking given to the Court in lieu of an order which it is within the jurisdiction of the Court to make: Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1980) 148 CLR 150 at 165. The undertakings given to this Court are of that character. The undertaking given to this Court is interlocutory in nature, having regard to its terms, and to the provisions of order 6 of the orders made on 7 February 2003. The Court has power to discharge or vary such undertakings: Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170. In any event, order 6 on its proper construction is a reservation of that power. 21 I therefore reject TAPL's submission that this Court lacks the power to make the orders sought by Mr Arkin.
Whether the consent orders authorise the remedies sought by Mr Arkin? 22 Although this is identified as an issue in TAPL's written submissions, it was not elaborated upon either in the written submissions, or in oral argument. 23 The terms of the undertaking given to this Court, when taken in conjunction with orders 5 and 6 of the orders made on 7 February 2003, empower the Court to make the orders which Mr Arkin seeks. Whether the Court should exercise that power involves discretionary considerations.
Discretion 24 ACDT is not a party to these proceedings. It is a party to the Supreme Court proceedings. ACDT has undertaken to the Supreme Court that it will not seek to obtain, directly or indirectly any information report or other document concerning the affairs of TAPL from Mr Arkin or Mr Watson. That undertaking applies subject to the further or other order of the Supreme Court. There is nothing to suggest that any application has been made by ACDT to the Supreme Court for the release or discharge of that undertaking, or that any order has been sought from or made by that Court affecting the operation of ACDT's undertaking. 25 Mr Walker SC accepted in argument that there is a real, close commercial relationship between Mr Arkin and ACDT, but he does not appear for ACDT. By this application, Mr Arkin seeks the authority of this Court to give to ACDT reports which ACDT has undertaken to the Supreme Court that it will not seek to obtain from Mr Arkin. In my view, that provides a powerful discretionary reason why the relief sought by Mr Arkin should not be granted, as it is not appropriate for this Court to make orders at the suit of Mr Arkin which would have the effect of at least circumventing the undertaking given to the Supreme Court by ACDT, even if it does not involve ACDT in a breach of that undertaking. 26 Before the proceedings in this Court were 'settled', one of the grounds on which TAPL resisted the making of orders under s 290 of the Corporations Act was a contention on its part that access to TAPL's records was being sought by Mr Arkin for the improper purpose of assisting ACDT in its litigation against TAPL, and in particular, in its endeavours to wind up TAPL, and terminate the distribution agreement. In correspondence, Mr Arkin refuted ACDT's contentions in that respect and asserted that inspection was desired for the non-controversial purpose of enabling Mr Arkin properly to discharge his duties as a director of TAPL: see in particular Mr Arkin's solicitors' letters of 19 April 2002 and 12 November 2002. 27 The undertakings given to the Court on 'settlement' of the s 290 application were given for the evident purpose of reinforcing Mr Arkin's assurances as to the purpose for which he desired to inspect TAPL's records: the results of that inspection are not to be made available to any other person unless this Court gives leave for that to occur. 28 TAPL contends that should this Court hold that it has power to grant Mr Arkin's application it would be necessary to read into the orders made by Austin J and this Court certain criteria to determine whether the Watson reports should be released to ACDT. In TAPL's submission these criteria should, at the very least be: '(a) the Reports should not contain obviously flawed statements; (b) the Reports should not exceed reports on the financial records of TAPL that he has inspected, based on such financial records, and without unsupported commentary, inferences and speculation; (c) the Reports should not refer to or deal with any entity other than TAPL; (d) that the release of the Reports would not put Mr Arkin in conflict with any provisions of the Corporations Act, including secs 180(1), 181(1), 182(1), 183(1), as well as those common law duties to the company upon which a director is bound; (e) that the release of the Reports is necessarily for and is to be used for TAPL's purposes; (f) the release of the Reports is in the best interests of TAPL or at least not contrary to the best interests of TAPL; (g) the Reports released to ACDT would not contain any information confidential to TAPL and TNZL.' 29 The Court is not required, as it were, to 'mark' Mr Watson's reports, or to form some assessment as to whether the controversy which apparently exists between Mr Watson's opinions, on the one hand, and the views of Mr Lennox and his experts, on the other, is likely to be resolved in Mr Watson's favour. The resolution of that controversy would require a substantial trial which is quite outside the scope of the orders implementing the 'settlement'. 30 However, Mr Arkin bears the onus of establishing that he should be at liberty to release the Watson reports to ACDT in a context where Mr Watson has not completed his investigation, and where the litigation between ACDT and TAPL designed to achieve the liquidation of TAPL is still pending. According to Mr Walker SC there is a 'very considerable overlap' between the issues identified in the Watson reports and the issues in the Supreme Court proceedings. According to Mr Jacobs QC, all the issues raised by the Watson reports are issues in the Supreme Court proceedings. 31 In my view, whether Mr Walker's formulation, or Mr Jacob's formulation of the overlap is accepted, the discharge of that onus at least involves demonstration that Mr Arkin reasonably conceives it to be his duty as a director of TAPL to provide the Watson reports to ACDT notwithstanding that ACDT is seeking to wind up TAPL, and to terminate what appears to be a valuable distribution agreement, at least from TAPL's point of view, and even though the issue of ACDT's membership of TAPL is yet to be resolved. Or, putting it shortly, the context is such as to impose an onus on Mr Arkin to prove that his purpose in seeking to provide ACDT with information as to the internal financial affairs of TAPL is a proper one. 32 Mr Arkin has not filed any evidence to that effect. He has not filed an affidavit in support of this application. In some circumstances an inference could be drawn from the nature of the information sought to be conveyed that Mr Arkin's desire to release the reports to ACDT was activated by a proper purpose. But given the nature of the Watson reports, the controversy which attends those reports and the litigation between ACDT and TAPL and the ultimate objective of that litigation, it is not an inference which I am prepared to draw without express evidence. 33 I am not satisfied that Mr Arkin's desire to release the Watson reports to ACDT is the pursuit of the interests of TAPL. This provides a second reason for declining to make the orders sought by Mr Arkin.
TAPL's motion 34 The consent orders made on 7 February 2003 allowed for inspection of TAPL's records to continue until completion of Mr Watson's final report. The terms of settlement were such that the scope of that report was a matter for Mr Arkin to determine. It is apparent from a consideration of Mr Watson's reports that he has not yet completed the assignment which was given to him by the solicitors for Mr Arkin. Whether that is a result of some failure on the part of Mr Lennox to provide explanations which he was obliged to provide, or defaults on the part of TAPL was not the subject of specific submission. 35 I am not able to conclude whether or not Mr Watson's inspection has continues as 'expeditiously as possible', or whether a 'reasonable time' has elapsed because the only evidence on the point is the number of hours which have been spent on the inspection thus far. I do conclude that Mr Watson has not completed his final report, but whether he intends to make such a report may be regarded as an open question. Mr Arkin's position in this respect shifted during the course of the hearing of the motion. 36 My attention has not been drawn to any communication emanating from TAPL purporting to make time of the essence for the completion of Mr Watson's final report. The period of inspection is expressed to continue until completion of the final report. 37 Accordingly, it is not appropriate for any order to be made in relation to par [1] of TAPL's Amended Notice of Motion. The other claims in that Motion were specifically abandoned by Mr Jacobs QC.
Conclusion 38 Mr Arkin's Motion filed on 28 July 2003 is dismissed with costs. TAPL's Amended Notice of Motion filed on 28 July 2003 is dismissed with costs. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.
Counsel for the Applicant: Mr B Walker SC, Mr G Turner
Solicitor for the Applicant: Brock Partners Solicitors
Counsel for the Respondent: Mr M Jacobs QC, Mr P Bambagiotti
Solicitor for the Respondent: Cutler Hughes & Harris Lawyers
Date of Hearing: 30 June 2003 and 31October 2003
Arkin
Tridon Australia Pty Limited
(1981) 148 CLR 170
(1991) 23 NSWLR 236
(1980) 148 CLR 150
The applicant's Notice of Motion of 28 July 2003 is dismissed with costs; the respondent's Amended Notice of Motion of 28 July 2003 is dismissed with costs (see Orders, and para [38]).