Lee v Amp Ltd & Anor [2006] ACTSC 38 (13 April 2006)

Last Updated: 22 May 2006

FAN LEE v AMP LIMITED & ANOR [2006] ACTSC 38 (13 APRIL 2006)

EX TEMPORE JUDGMENT

PRACTICE AND PROCEDURE - application for summary judgment for defendants - no arguable cause of action - no standing to claim relief sought - summary judgment entered.

Corporations Act 2001, ss232-4, 206C-E, 247A, 411

Supreme Court Rules 1937, O17

United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178

No. SC 148 of 2006

Judge: Master Harper

Supreme Court of the ACT

Date: 13 April 2006

IN THE SUPREME COURT OF THE )

) No. SC 148 of 2006

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: FAN LEE

Plaintiff

AND: AMP LIMITED

First Defendant

AND: ANDREW MOHL

Second Defendant

ORDER

Judge: Master Harper

Date: 13 April 2006

Place: Canberra

THE COURT ORDERS THAT:

1. Judgment be entered for the defendants.

2. The plaintiff pay the defendants' costs of the action and of the application.

1. The plaintiff, until October 2003, was a shareholder, a relatively small shareholder, in AMP Ltd, the first defendant company, of which the second defendant, Mr Mohl, was and still is the Chief Executive Officer.

2. On 1 May 2003 the first defendant, which I will call AMP, made a public announcement of a proposal to separate its Australian and New Zealand business from its United Kingdom business, using a procedure which was described as a demerger. Immediately upon that announcement being made the share price of AMP on the stock exchange fell sharply. Many shareholders expressed concern at the manner in which the company was being managed and directed, and at the sharp fall in the value of their investment.

3. The Board nevertheless proceeded towards implementing the demerger proposal. To that end, AMP applied to the Federal Court of Australia for orders under section 411 of the Corporations Act 2001 convening a meeting of shareholders to consider the scheme. The application came before Emmett J who, on 16 October, made the orders applied for and gave reasons for doing so in proceedings in which it appears there was no formal opposition. His Honour ordered, among other things, that a meeting of shareholders be called to consider and, if thought fit, to agree to a scheme of arrangement.

4. In accordance with his Honour's orders the meeting of shareholders was held on 9 December 2005, with votes representing more than 700 million shares being recorded. As his Honour noted in giving reasons for approving the scheme, there were almost 140,000 members voting in favour of the motion and some 3,500 members voting against it, comfortably giving the resolution the 75% majority required by the Corporations Act. On 12 December 2003 his Honour approved the scheme of arrangement.

5. The plaintiff commenced the present action on 24 February 2006. She substituted the originating application with an amended originating application which was filed on 14 March 2006 and which I take to be the document initiating the present action. The defendants appeared through their solicitors on 30 March 2006. The plaintiff has expressed some concern that her efforts to effect service of the amended originating application were impeded either by the company or by Australia Post, or a combination of the two, but to my mind nothing turns on that. Counsel for the defendants has a copy of the amended originating application and takes no point in relation to service.

6. In the amended originating application the plaintiff seeks an order that she be permitted to inspect the books of AMP, an order that the second defendant, Mr Mohl, be disqualified as Chief Executive Officer of AMP, and relief of $10,000, being a general figure intended to cover what the plaintiff says she has lost by reason of the conduct of the defendants. The plaintiff was a shareholder in AMP until 17 October 2003 but has not been a shareholder since then.

7. The defendants apply by notice of motion for summary judgment, or alternatively for orders that the plaintiff's prayer for relief and pleading be struck out. The effect of the latter orders would be to afford the plaintiff an opportunity to apply to the court for leave to substitute a fresh document, if so advised.

8. The provisions for inspection by a member of the books of a company are contained in section 247A of the Corporations Act, which limits the right to apply for an order authorising inspection to a member of the company.

9. Counsel for the defendants relies on a decision of Campbell J sitting in the Equity Division of the Supreme Court of New South Wales, United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178 in which his Honour refused an application for an order for inspection under section 247A because the applicant was not, at the time of his Honour's order, a shareholder. As his Honour said at 142:

Entitlement to relief under this section is dependant upon Lopmand being a member of the company. As it is not presently a member, it has no present entitlement to such an order.

His Honour was asked to consider making the order pursuant to section 233 of the Corporations Act but held that no occasion for making an order under that section arose.

10. The plaintiff in the present proceedings has submitted that section 233 would empower the court to make the order she seeks, and that she is entitled to apply for such an order under section 234 which relevantly provides that an application for an order under section 233 in relation to a company may be made by:

(c) A person who has ceased to be a member of the company, if the application relates to the circumstances in which they ceased to be a member.

11. Section 233 provides that a court may make any order that it considers appropriate in relation to a company. The section provides a list of examples of orders which may be made, in ten categories, though not including an order for inspection of books. The plaintiff relies on the expansive opening wording of the section and argues that the court can make any order it considers appropriate, which must include an order for inspection.

12. It seems to me that section 233 must be read together with section 232, which provides that the court may make an order under section 233 in specified circumstances in five categories. The plaintiff accepts this but relies on category (e), the conduct of the company's affairs having been, she argues, oppressive to, unfairly prejudicial to or unfairly discriminatory against a member or members of the company.

13. A shareholder or former shareholder who can establish oppression, unfair prejudice or unfair discrimination under section 232 undoubtedly has standing to apply for an order under section 233. It seems to me, although it is unnecessary to decide the question for the disposition of this application, that such an order could include an order for inspection of books.

14. However, in the present circumstances, I am not satisfied that there is any evidence of oppression, unfair prejudice or unfair discrimination against the plaintiff. Nor am I satisfied from a reading of the amended originating process that facts are asserted which, if established, could give rise to such a finding. In those circumstances, it seems to me that section 233 is not triggered and that the court is not empowered to make the order the plaintiff seeks under that section.

15. The second category of relief sought by the plaintiff is the disqualification of Mr Mohl as Chief Executive Officer of AMP. Part 2D.6 of the Corporations Act deals with disqualification of persons from managing corporations. Sections 206C, 206D and 206E confer power on a court to make an order disqualifying a person from managing a corporation for a period. It is clear that the only entity which has standing to apply for an order under any of those sections is ASIC, the Australian Securities and Investments Commission. There is no entitlement in any other person, whether a shareholder or in some other category, to apply for a disqualification order.

16. Again, the plaintiff submits that a disqualification order could be made under section 233 as "any order under the section that the court considers appropriate". As I have said in relation to the first ground of relief claimed, the threshold question of oppression, unfair prejudice or unfair discrimination under section 232 is not made out, so that the court does not have power to make an order under section 233 for disqualification. Further, it seems to me that part 2D.6 of the Act purports to deal in an exclusive fashion with the disqualification of persons from managing corporations, and that it is the clear intention of the legislature that only ASIC have standing to apply to a court for a disqualification order.

17. Thirdly, the plaintiff seeks relief in the sum of $10,000 to cover her loss as a shareholder. It seems to me that the amended originating process does not disclose a cause of action under which that amount could be recovered by the plaintiff from either of the defendants, nor does it assert facts capable of giving rise to such a cause of action. In those circumstances, the monetary claim is not capable of succeeding.

18. I have given consideration to whether, having arrived at those conclusions, I should provide the plaintiff with an opportunity to replead her claim against the defendants or whether it is appropriate to enter summary judgment for the defendants. If I was satisfied that the plaintiff had an arguable case for any of the relief which she seeks I would be inclined to permit her, taking account of the fact that she is self-represented, the opportunity to replead. However, in the present case I am satisfied that the claim could not be repleaded in such a way as to support a case for any of the categories of relief which the plaintiff seeks. In those circumstances it seems to me that the entry of summary judgment is the preferable course in the interests of justice.

19. The court's power to enter summary judgment for a defendant is conferred by Order 17 of the Supreme Court Rules 1937. Under subrule (1)(ii) of that order the court may make an order that judgment be entered for a defendant if satisfied that the action is frivolous or vexatious, or that there is a good defence on the merits, or that the action should be disposed of summarily and without pleadings. I am satisfied that the action is incapable of success, in that there is no prospect that the plaintiff could succeed in obtaining judgment in respect of any of the categories of relief she seeks. In those circumstances, the appropriate order is that the defendants have judgment. There will be judgment for the defendants.

20. There is no reason why costs should not follow the event. I order that the plaintiff pay the defendants' costs of the application and of the action.

I certify that the preceding twenty (20) numbered paragraphs are

a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 3 May 2006

Plaintiff: In person

Counsel for the defendant: Mr RP Clynes

Solicitors for the defendant: Clayton Utz

Date of hearing: 13 April 2006

Date of judgment: 13 April 2006