24 It is also not the law, in my view, that because an applicant may have the means of obtaining information elsewhere, it is not acting in good faith, or seeking inspection otherwise than for a proper purpose.
25 The fact that an applicant may or may not have the means via a relationship with a previous accountant to obtain information is not a good reason why inspection should not be afforded it.
26 In any event, and even were that to be the law, the evidentiary material discloses, in my view, that the information so far provided is inadequate.
27 The valuation material provided goes back to 2004. The business was sold in 2006. Financial statements dated 30 June 2006 have been provided. The relevant material is on a single page. It contains a statement of current assets consisting of cash of $3 and receivables at $190,888, with total current liabilities totalling $190,888, so that the net equity reflected in those accounts is $3.
28 The notes to those financial statements inform the reader that the company acts solely as trustee of the Trust and that any liabilities have been incurred on behalf of the Trust in the company's capacity as corporate trustee. They go on to say that the assets of the Trust which lie behind the right of indemnity are not directly available to meet any liability of the company acting in its own right. The assets of the Trust are sufficient to discharge all the liabilities of the Trust in 2006 and 2005.
29 The information provided says nothing of the trading, results or anything else concerned with the operation and performance of the business which has been sold.
30 Accordingly it follows, in my view, that even if the precepts put by Mr O'Neill were to be accepted I do not consider that the Trustee has in either capacity provided the plaintiff with information which could reasonable be said to satisfy a shareholder in the position of the second plaintiff.
31 Reliance was placed by the Trustee on the decision of Street CJ in Eq, as he then was, in Edman v Ross (1922) 22 SR (NSW) 351 dealing with the rights of a shareholder in a company under the Companies Act 1899 to investigate the company's affairs. His Honour at 358 held that a shareholder of a company registered under that Act, apart from any right conferred upon the shareholders under its Articles of Association, is not entitled as of right to investigate the company's affairs. His right is merely the common law right of a member of a corporation to inspect its documents and that the authorities establish that it must be shown that inspection is necessary with respect to some specific dispute or question in which the party applying is interested, and that it is only then granted to such extent as may be necessary for the particular occasion.
32 His Honour was not dealing with a statutory provision in the nature of s 247A of the Act but with the common law. The decision does not assist the Trustee.
33 It follows, in my view, that there should be an order that the first plaintiff be entitled to inspect the books and records of the Trustee and to take copies thereof.
34 The second leg of the application is by the second plaintiff, as a beneficiary of the Trust to have access and copies of the books and records of the Trust.
35 A person who is one of the potential objects of the exercise of a discretionary power of appointment in respect of a trust fund, has the right to seek, and obtain, from the trustee of that trust fund, information concerning the trustee's management of that trust fund. The exercise of such right does not depend upon it being alleged that the trustee of that trust fund has, in the course of his or her management of that trust fund, been guilty of fraud or other breach of trust: Spellson v George (1987) 11 NSWLR 300 at 315 per Powell J. The second plaintiff is such a person.
36 The trustee is obliged not only to keep proper accounts and allow a cestui que trust to inspect them, but he or she must also, on demand, give a cestui que trust information and explanations as to the investment of, and dealings with, the trust property: Spellson v George at 316.
37 The Trustee had the discretion and power under the Trust Deed to distribute any part of the capital of the trust fund and it did so by distributing the proceeds of sale of the business to the unit holders.
38 No basis has been put as to why the second plaintiff should not be entitled to access to the records of the Trust, and, accordingly, I propose to order that it have such access.
39 The third application was for preliminary discovery. Having regard to the orders I propose to make, the third leg of the application becomes otiose and it is refused.
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