Administrative CATCHWORDS. Law - Judicial Review - decision by Managing Director of Australian Broadcasting Corporation to refuse another Director access to corporate material - whether decision made "under" an enactment - Administrative Decisions (Judicial Review) Act, 1977, s.3(1) - whether error'of law. Company Law - whether Director has right to inspect corporate documents - no evidence of bad faith or ulterior motive. TOM MOLOMBY v. GROFFREY WHITEHEAD and AUSTRALIAN BROADCASTING CORPORATION No. G256 of 1985 Beaumont, J. 13 November 1985 Sydney Pvt. ao <> Re pepe nt er ae ee pt et ee oF i ad -* ws: wore mee eee yee eer Lee en pattie i « IN THE FEDERAL COURT OF AUSTRALIA } ) . A NEW SOUTH WALES DISTRICT REGISTRY } No. G256 of 1985 ) GENERAL DIVISION ) ' BETWEEN : TOM MOLOMBY Applicant AND: GEOFFREY WHITEHEAD and AUSTRALTAN BROADCASTING CORPORATION Respondents MINUTE OF ORDER JUDGE MAKING ORDER: Beaumont, J. ! DATE OF ORDER : 13 November 1985 WHERE MADE : Sydney THE COURT ORDERS THAT: bo Note: Declare that, for so long as the applicant isa Director of the second respondent, the applicant is entitled to access to the documents the subject of the request for access made by the applicant in his letter to the first respondent dated 2 September 1985. Reserve liberty to the applicant to apply for further relief, if necessary, on such notice as a Judge of the Court may allow. Order that the respondents pay the applicant's costs of the proceeding. Settlement and entry of orders is dealt with in Order 36 of the Pederal Court Rules. eno pe een IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY } No. G256 of 1985 ) GENERAL DIVISION ) BETWEEN : TOM MOLOMBY - Applicant AND: GEOFFREY WHITEHEAD and AUSTRALIAN BROADCASTING CORPORATION Respondents CORAM: Beaumont, J. DATED: 13 November 1985 REASONS FOR JUDGMENT The applicant, Tom Molomby, is and has been since December 1983, a Director of the second respondent, Australian Broadcasting Corporation. The first respondent, Geoffrey Whitehead, is and has been since January 1984, the Managing Director of the Corporation. By letter to Mr. Whitehead dated 2 September 1985, Mc. Molomby requested access to certain of the Corporation's documents. In subsequent correspondence, to be detailed shortly, Mr. Whitehead supplied Mr. Molomby with some only of the documentation sought. On 5S September 1985, Mr. Molomby instituted these proceedings claiming orders for access to the 2. documents in question. He seeks to rely upon the provisions of the Administrative Decisions (Judicial Review) Act, 1977 ("the Judicial Review Act"). Alternatively, he claims to be entitled to inspect the documents under the general law by virtue of his office as a Director of the Corporation. There is little, if any, dispute as to the primary facts. However, something may depend upon the proper construction to be placed upon the terms of the correspondence which passed between Mr. Molomby and Mr. Whitehead between December 1984 and September 1985 and the inferences to be drawn in that connection, since what was then said is central to the dispute which has arisen; it will thus be necessary to consider the letters in some detail. The exchange of correspondence commenced by latter dated 19 December 1984 written by Mr. Molomby to Mr. Whitehead: "As you know, I am most concerned about the situation of the Legal Department. In addition to matters I have raised previously, I am concerned in particular by the memorandum of fees presented early this year by Ca Professor of Law there named] for some $34,000, for work done in late 1982/earlvy 1983 in relation to the ABC Bill in conjunction with Mr J D Traill, Qc. My recollection is that the Principal Legal Officer approved or recommended the account for payment, and that in addition to the delay of a year in submitting the account, there were several questionable aspects: (a) there was no known record of the considerable amount of work which should have been produced for this sum; oe 3. (b) there was no apparent indication of what the work would have been, in the light of the work which had already been done by Mr Traill and [the Professor]; (c) Mr Traill, who had died just before [the Professor] presented his memorandum, had submitted memoranda for the earlier period up to December 1982, over which both he and Cthe Professor] had given advice of which there is a record, but not for the later period claimed by Cthe Professor]. In addition, if as I suspect, the $34,000 has not been paid, it is strange that no further approach has been made, if indeed none has. I would appreciate confirmation of the current gituation in relation to this matter. I do not feel comfortable in letting it lie unresolved." Mr. Whitehead replied by letter dated 15 February 1985. Mr. Molomby was given details of a payment made on 31 December 1982 of $37,850 for services rendered by the Professor in the period from 20 September 1982 to 3 December 1982. The services apparently consisted of advice given in respect of the Bill which was enacted as Australian Broadcasting Corporation Act, 1983 ("the Corporation Act"). Mr. Whitehead said that there was no record in the Finance Department of any further payments to the Professor in this connection until after the Corporation Act came into effect. (It was assented to on 1 June 1983.) Mr. Molomby was not satisfied with this response. On 19 February 1985, he wrote to Mr. Whitehead saying: ".,,.the amounts I am concerned about relate toa later period, I believe the one immediately following that itemised in your letter. As I pointed out, it is not a question of amounts paid - I do not know whether they have been; and wwe ie 8 SOT peep yg at aig oct Caer aliaae 4. hope they have not - but amounts claimed. Since weiting I have discovered in catching up on some filing the PLO's covering memo for the accounts involved, which I attach..." The attached memorandum from the principal legal officer Finance as follows: "You will recall that in September 1982, Mr. J.D. Traill Q.C. together with Cthe Professor] were retained to advise on provisions of the Australian Broadcasting Bill and transitional Bill. This work extended over a considerable pertod of time as there was much to be done particularly in relation to Part 8, the Section dealing with the establishment of the office of Complaints Commissioner. Mr. Traill's fees were submitted together with some of [the Professor's] fees. fThe Professor has only just brought to my attention that he overlooked submitting all his fees for that period. He has now done so and it would be appreciated if the cheque and the sum of $33,750 would be drawn in favour orf Cthe Professor] and sent to Chis addressJ." On 18 March 1985, Mr. Molomby wrote to Mr. "There are four matters on which I would like information: 1. The Financial Report presented to the meeting of 31 January referred on page 6 to "a recent third party settlement claim of $350,000". I would like details of this. 2. The Wran/Four Corners case. I would like a copy of all the pleadings in this case and all the legal advice we received. 3. I .have heard from other sources of an action taken against us in the second half of 1983 by two Melbourne Q.C.'s, Messrs. Jack Lazarus and John Walker. I would like to see the file on this. (P.L.0.) dated 20 January 1984 addressed the Department of Whitehead seeking access to documents concerning certain other matters: feapey te opos ~aser - "he 5 wenewerses ppc 4. Mr. Frank Costigan, Q.C., the Royal Commissioner, took action against us some time, I believe, in 1983. I would like to see the file on this." By letter dated 8 May 1985, Mr. Whitehead raised with Mr. Molomby a statement said to be attributed to Mr. Molomby in a newspaper report that "inadequate information is often provided to the Board by ABC Management." Mr. Whitehead suggested a discussion between them. Mr. Molomby responded by letter dated 20 May 1985 in which he denied making the statement attributed to him but foreshadowed the preparaticn of "an outline of Chis] concerns." This outline took the form of a lengthy letter to Mr. Whitehead dated 28 May 1985. Amongst other things, Mr. Molomby requested access to documents of which copies had apparently been circulated to certain Board members only (see para. numbered 4). A complaint was made that inadequate information had been furnished in respect of a proposal to engage Mr. Max. Walsh (see para. numbered 7). Mr. Molomby continued: "Iam sure that I have said enough to show you the extent of my concern about this issue. I trust that you will tell me if you believe that anything I have said is incorrect. Although I have mentioned my general concern from time to time at meetings, I have chosen not to make an issue of it, in the interests of getting on with badly needed work. Indeed, one of the basic problems caused by inadequate information is that it is often impossible to correct the situation during a meeting, because a disproportionate amount of time is needed to pursue through questions information which should have been provided anyway...I would find it helpful to have your considered comments on these issues before we have the discussion you have suggested." Mr. 6. Whitehead replied on 28 June 1985 in these terms: ",.-In the light of yesterday's discussions about Board/Executive relationships, I suggest it might be more fruitful if you join the Executive Directors for a small lunch after cone of our Feiday meetings, soon after my return from overseas, when we should be able to resolve our mutual concerns." To this invitation, Mr. Molomby responded on 1985 as follows: ",,.I will naturally be pleased to accept the sort of invitation you suggest for a suitable day. I must say, however, that I am disappointed that you have not answered either of the queries which I posed in my letter of 20 May, nor the request in item 4 of my letter of 28 May. Indeed, in addition to these, there are other outstanding requests which I have made for information which have not been acknowledged or replied to - my letters of 19 February, and 4 April, copies cf which I attach foc convenience. Given the rather unusual delay which has accompanied all these, I think it is reasonable to ask for your assurance that such delay in supplying information requested will not occur again, and to seek a firm indication by the end of this week whether or not you intend to comply with these requests." Mr. Whitehead's response was given by letter August 1985: "IT am always happy to provide Board Members with relevant information they request. It is, naturally, easier to do so, if the nature of the information they are seeking is conveyed to me precisely; and if any additional requests, can be followed up closer to the original letter... So far as item 4 of your letter of 28 May is concerned, I reject your allegation that it is 20 August dated 25 tom Voces coe ns improper for me to circulate coples of some correspondence to some Board Members (notably the Chairman and Deputy Chair), and not others. You will recall the Board resolution of 31 May, 1984, which specifically adopted guidelines stating: '1. Where Senior Management is faced with editorial decisions concerning political or controversial matters of a potentially significant nature, the Chairman and Deputy Chair, or the Acting: Chair and one other non-executive Board member, shall be consulted. bo At the discretion of those directors consulted, the views of other members of the Board may be sought.'" Mr. Molomby then wrote the letter datec 2 1985, the subject of the present claim for relief: "T have received your letter dated 26 August, 1985. It does not answer satisfactorily any of my requests. Indeed, the way in which it misconstrues or misunderstands what I have said ~ considered with similar misconstructions and misunderstandings throughout the whole history of correspondence on these matters - leads me to conclude that your failure to cooperate isa deliberate obstruction of my cights as a Director... The requests in the last two paragraphs of my letter of 20 May, 1985 were not answered in your letter of 28 June. The resolution of the Board of 31 May, 1984 which you quote in relation to my letter of 28 May, is nothing to the point. Tf did not allege, as you claim, that it was improper for you to circulate copies of some correspondence to some Board members and not others; my allegation is that it is improper for you to refuse my request to be supplied with copies of all documents of which you circulate a copy to any other member of the Board. In the light of what I can only conclude is your deliberate obstruction, I ragret that I now have no cholce but formally to request that, in the September 8. exercise of your duties under Section 10 of the Australian Broadcasting Corporation Act 1983, you provide me, by noon on Wednesday, 4 September, 1985, the following documents:- 1. All documents relating to claims for and payment of fees to fEthe Professor] from 1982 to the present date; 2. Copies of all documents of which you have supplied a copy to any other Board member than myself, since 28 May, 1985 (and I require an undertaking that you will continue to provide me with such copies on future occasions when you provide a copy of any document to any other Board member); 3. All documents relating to the four matters yererred to inmy letter to you dated 18 March, 1985; In addition to the above, there are four other matters on which I would like documents by the same time: 4. During the week before last, I asked Anna to obtain for me the documents relating to the agreement made with Irving Warren which was reported to the Board meeting of 31 duly. I understand that this request was passed on to you in that week, but I have not received the documents. 5. At the Board meeting of 31 July, concern was expressed about an article written by Max Walsh which you had not at that stage had the opportunity to read. It was agrsed that you would look into the matter and report back to the last Board meeting, but this did not occur. I would like a copy of the contract with Mr. Walsh. 6. In giving your report on the current industrial situation at the Board meeting last Friday, you read from a document. I would like a copy of that. 7. You will recall that during the Board meeting last Friday I asked for a copy of the agreement between ourselves and the Australian Opera relating to the recent productions of A Masked Ball and the Sutherland/Horne concert." 9. By letter dated 2 September 1985 in response to the request made in item 7 of Mr. Molomby's letter of even date, Mr. Whitehead provided an information paper on the industrial <1 ee dispute. by letter dated 5 September 1985: "Further to my interim letter of 2 September, I would like to make the following points: 1. Papers relevant to matters of current consideration by the Board are, and will continue to be, supplied to Board Members. I have already supplied the Board with the information paper on the current industrial situation, listed as your Item 6, and I am in process of assembling the papers you requested velating to Item 5 (Max Walsh) and Item 7 (Australian Opera). So far as Item 5 is concerned: you are perfectly correct - I should have made a verbal report under "matters arising from the Minutes". To rectify that oversight, I nov record that I discussed the matter with Director Television and we did not see any reason to raise the issue directly with Mr. Walsh. I am also considering your request under Item 4 (Irving Warren). I do not think it is desirable that I should be restricted from dealing with occasional matters directly with individual Board Members; nor do I accept that you should necessarily have ccpies of any such papers sent to those members; I therefore refuse your request listed as Item 2. Your request for several documents in relation to the Principal Legal Officer, under your Item 1 and 3, go back to 19982. You also mention your letter of 19 February, and your wish to sight other documents for purposes you have never explained to me, but which I assume may also be related to the work of the Mr. Whitehead dealt further with Mr. Molomby's request ste eee aewe es Lo aw renee: 10. Principal Legal Officer. A full examination of all these matters is possible: however, I think it would be more appropriate for this to be a matter for the Board as a whole. I therefore suggest that you discuss these points with the Chairman, and ask if he is prepared to have the matter placed on the agenda for the next Board Meeting. In conclusion, may I "add that I do not think it is appropriate for one Board Member to attempt to direct me in terms of Section 10 of the 1983 Broadcasting Act." Finally, by letter dated 12 September 1985, Mr. Whitehead made available to Mr. Molomby a copy of the contract with Mr. Walsh (see item 5 in Mr. Molomby's letter dated 2 September) and a copy of the contract with the Australian Opera (see item 7 of that letter). Mr. Whitehead concluded: "IT believe that matters requested in your points 1-4 should be discussed by the Board at the 19 September Meeting." The matters were not, it seems, considered at that meeting although I was informed that it is the praesent intention of the Chairman of the Board that these questions be raised at a Board meeting to be held at the end of this month. The claim for relief under the Judicial Review Act By s.5{1) of the Judicial Review Act, a parson who is aggrieved by a decision to which the Act applies may apply to the Court for an order of review on one or more of the grounds there ae compe il. stated. Section 3(1) defines "decision to which this Act applies" as a "decision of an administrative character made...under an enactment..." Further, a reference to the making of a decision includes a reference to giving or refusing to give a consent or permission (s.3(2)(b)). In support of this claim for relief, Mr. Molomby contends that in refusing him access to corporate documents, Mr. Whitehead made a decision under an enactment, viz. the Corporation's constating statute, the Australian Broadcasting Corporation Act, 1983 ("the Corporation Act") within the meaning of the Judicial Review Act. On the other hand, the respondents say that no relevant decision has yet been made: they claim that all that has happened 1s that the whole matter has been referred to the full Board of the Corporation for decision; alternatively, the respondents argue that, if Mr. Whitehead had made a decision, it was not made under the Corporation Act. On either view, according to the respondents' argument, the consequence is that the Judicial Review Act can have no application here. In order to understand the respective submissions of the parties on this point it is necessary first to mention the relevant provisions of the Corporation Act and then to describe the general nature of the case sought to be made by Mr. Molomby. The Charter of the Corporation is contained in s.6 of 12. - the Corporation Act. The Corporation's functions include the provision, in accordance with certain stated principles, of broadcasting and television programs within Australia and their transmission to countries outside Australia (s.6(1)). The Corporation is to take account of a mumber of specific considerations (see s.6(2)(a)). Nothing in s.6 shall be taken to impose on the Corporation a duty that is enforceable by proceedings in a court (s.6(4)). There shall be a Board of Directors of the Corporation which shall be constituted as provided by Part III (s.7). BY s.8(1) it is the duty of the Board : "(a) to ensure that the functions of the Corporation are performed efficiently and with the maximum benefit to the people of Australia; (b) to maintain the independence and integrity of the Corporation; {c) to ensure that the gathering and presentation by the Corporation of news and information is accurate and impartial according to the recognized standards of objective journalism; and (d) to ensure that the Corporation does not contravene, or fail to comply with - (i) any of the provisions of this Act or any other Act that are _ applicable to the Corporation; or (ii) any directions given to, or requirements made in relation to, the Corporation under any of those provisions." ToS sae voces : oo yom ee a ee ' Ae 2 ee tae 13. Nothing in s.8 shall be taken to impose on the Board a duty that is enforceable by proceedings in a court (s.8(3)). There shall be a Managing Director of the Corporation who shall be appointed and hold office as provided by Part III (3.9). Subject to s.10(2), the affairs of the Corporation shall be managed by the Managing Director (s.10(1)). By s.10(2), the Managing Director shall, in managing any of the affairs of the Corporation and in exercising any powers conierred on him by the Act, act in accordance with any policies determined, and any directions given to him, by the Board. Part III of the Corporation Act (35.12-24) deals further with the positions of the Board and the Managing Director. The Board shall consist of the Managing Director and not less than 6 nor more than 8 other Directors (5.12(1)). A non-executive Director shall be appointed by the Governor-General and, subject to s.16 (resignation) and s.18 (termination for cause), holds office on a part-time basis for such period, not exceeding five years, as is specified in the instrument of his appointment, but is eligible for re-appointment (s.12(2)). The Governor-General shall appoint one of the non-executive Directors to be the Chairman of the Board (s.12(3)). A person shall not be appointed as a non-executive Director unless he appears to the Governor-General to be suitable for appointment by reason of his having had experience in connection with the provision of broadcasting or television services or in communications or 14, management, by reason of his having expertise in financial or technical matters, or by reason of his having cultural or other interests relevant to the oversight of a public organization engaged in the provision of broadcasting and television services (s.12(5)). Mr. Molomby was appointed a Director of the Corporation from 15 December 1983 for a term of two years expiring on 14 December next. He is a law graduate anda barrister. He was appointed to the Board on the nomination of the Minister administering the Corporation Act as a consequence of an election held by staff of the Corporation The case put on behalf of Mr. Molomby is that the documents he seeks are corporate material; that, by victue of the powers of management conferred upon him by s.10(1) of the Corporation Act, Mr. Whitehead had the power to decide whether access to the material should be granted or denied; that Mr. Whitehead decided to refuse or at least to defer access; so that he made a decision of an administrative character under the Corporation Act. Then Mr. Molomby says that Mr. Whitehead committed an error of law within the meaning of s.5(1) of the Judicial Review Act, arguing that as an incident to his office as a director, Mr. Molomby has a prima facie right or power to see corporate documents and that no reason exists here for displacing that prima facie right (see Edman v. Ross (1922) 22 S.R. (N.S.W.) 351 per Street, C.J. in Eq. at ».360; Parker v. National Roads & 2, a. we a ee rg eee Sauna enamel Geaaartadbacmeniad 15. Motorists Association, Supreme Court of New South Wales, Waddell, d., unreported, 21 October 1985 at p.6). * It is common ground between the parties that if Mr. Whitehead did make a decision, that decision was managerial or administrative in character (see Australian Capital Territory Health Authority v. Berkeley Cleaning Group Pty. Ltd. (1985) 60 A.L.R. 284 at p.286). The real debate centred on whether Mr. Whitehead's conduct was something done under the Corporation Act or, a3 the respondents argued, merely action on the part of Mr. Whitehead which required no statutory sanction (cf. Hudson v. Venderheid (1968) 118 C.L.R. 171 at p.175.) In my opinion, Mr. Whitehead's conduct may properly be characterised as a "decision" made "under" an enactment. Plainly enough, a decision of some kind was involved. On one aspect, there was a decision to ceruse access to certain documents as in the case of item 2 of Mr. Whitehead's letter dated 5 September. On another aspect, as in the case of item 3 in that letter, there was a decision to defer access at least until the Board had considered the position. What matters for immediate purposes is that both aspects were decisional. The more difficult question is whether Mr. Whitehead's decisions were "under" an enactment. It has been held in this Court that "under" in the present context means "in pursuance of" or "under the authority of" (see The Minister for Immigration and Ethnic Affairs v. 16. Mayer, High Court, unreported, 5 November 1985 per Gibbs, C.J. at p.4 and the cases there cited ). In Glasson v. Parkes Rural Distributions Pty. Ltd. (1984) 58 A.L.J.R. 471, a certificate authorised by a State statute was held not to be "under" a Federal enactment notwithstanding that the certificate had a practical effect on the rights of a person under Commonwealth law: the Federal enactment was not the source of the relevant power nor did it give the decision any legal effect (at pp.473-4). On the other hand, it was held in Mayer, supra, by a majority (Mason, Deane and Dawson, JJ), that the Judicial Review Act can apply to a decision which is conferred by a Federal law even merely by implication (at p.15.) The Corporation Act, it is true, does not confer upon Mr. Whitehead in any special terms a particular power to decide whether to grant or refuse access to corporate documents. But s.10(1) does grant him a general power of the management of the affairs of the Corporation and something can be "under" an enactment if done pursuant to a generally expressed power. The contrary argument was rejected by the Full Federal Court in Australian Capital Territory Health Authority v. Berkeley Cleaning Group Pty. Ltd., supra, (at p.287): "The Judicial Review Act does not draw any distinction, or permit any to be drawn, between powers broadly expressed and those expressed in more detail. The statute is a remedial one, obviously intended tc be of wide scope, and within its limits very comprehensive, and it would be contrary to its purpose to wvead down 'under an enactment' in the way suggested." 17. In the present case, in my opinion, it may properly be said that, in the exercise of the management powers vested in him by s.10(1), Me. Whitehead decided that documentation in his possession or under his control should not be released to Mr. Molomby. The legal source of the power to make that decision must be s.10(1), however generally its empowering provisions may have been expressed. It follows, in my view, that the decision to refuse or at least to defer access was made "under" the Corporation Act. Ie must also follow that the matter falls within the definition of "decision" in s.3(1) of the Judicial Review Act. Ia wy opinion, the line of authority instanced by Hudson v. Venderheld, supra, relied on by the respondents should be distinguished for present purposes. There, the different question arose whether a limitation provision ina local government statute was available toa council employee when driving a council vehicle on a public road - 3.580 of the Local Government Act, 1919 (N.S.W), which imposed a limitation period of 12 months in respect of any action brought "for anything done...under this Act" was held to be inapplicable. But the reasoning adopted cannot provide any proper analogy here. Barwick, C.d., Kitto, Taylor and Owen, JJ. explained the basis for their conclusion as follows (at p.175): "..e-the Act expressly empowered the Council to wwe ete ayer 18. supply electricity and to maintain electric wires erected in connexion therewith, and this would carry with it by necessary implication a statutory authority to do all those incidental acts necessary to the exercise of that power which the Council and its employees could not lawfully perform without such an authority. But as Kitto J. pointed out in Board of Fire Commissioners (N.S.W.) v. Ardouin, such an implication ',. arising as it dces from necessity, must be limited by the extent of the need. There can be no implication of a grant of power todo, in the performance of the duty, what is in any case lawful.'... In driving along a public highway the defendant was doing something which the law - apart altogether from the Local Government Act - gave him aright to do. It is true that he was acting on the instructions of an officer of the Council and in the course of his employment, but that does not mean that what he was doing was being 'done under' the Local Government Act." i Thus, the source of the defendant's right to drive was not found in any express provision of the statute or in any implication therefrom. By contrast, in the present case, Mr. Whitehead's right to the possession or control of the Corporation's documents and thus his decision to decline access spring directly from s5.10(1) of the Corporation Act. Unlike driving a vehicle along a public road, Mr. Whitehead's title to the control of the material depended upon the Federal statute. The respondents' submission to the contrary must be rejected accordingly. It ig next necessary to determine whether any of the grounds f review of Mr. Whitehead's decision provided for by s.5(1) of the Judicial Review Act have been made out by Mr. 19. Molomby. A number of grounds were advanced in argument but, in the circumstances, it is only necessary to deal with one: 3.5(1)(f) - "that the decision involved an error of law, whether or not the error appears on the record of the decision." In-my opinion, in declining access to Mr. Molomby, Mr. Whitehead fell into an error of law. The error consisted of a failure to recognize that, as a Director of the Corporation, Mr. Molomby had a prima facie entitlement to access to the corporate material and that, in the absence of good cause to the contrary, and none existed here, Mr. Molomby should be permitted to inspect the documents nominated by him. The right or power of a director of 4a company or corporation to inspect corporate material in aid of the proper execution of his fiduciary obligation to advance the interests of the company or corporation 15 well recognized (see Burn v. London & South Wales Coal Company (1890) W.N. 209; Rex v. Southwold Corporation; Ex parte Wrightson (1907) 97 L.T. 431; Rex v. Hampstead Borough Council, Ex parte Woodward (1917) 116 L.T. 213; Edman v. Ross, supra; Rex v. Barnes Borough Council, Ex oarte Conlian £19383 3 All E.R. 226; Funerals of Distinction Pty. Ltd. and the Companies Act (1963) N.S.W.R. 614; Bennetts v. Board of Fire Commissioners of New South Wales (1967) 87 W.N. (1) 307; Conway v. Petronius Clothing Co. Ltd. (1978) 1 W.L.R. 72; Berlsi Hestia (N.@.) Ltd. v. Fernyhough (1980) 2 sN.Z.L-R. 150; Birmingham City District Council v. 0. £19833 A.C. 578). a 20. These authorities indicate that there are some exceptions tc the general rule. For instance, as arose in the Birmingham Case, supra, it may be necessary for a director of a corporation or a councillor of a council who is not a member of a committee dealing with a particular matter to show "good reason" for access - a "need to know". As Lord Brightman put it (at p.594): "In the case of a committee of which he isa member, @ councillor as a general sule will ex hypothesi have good reason for access to all written material of such committee. So I do not doubt that each member of the social services committee is entitled by virtue of his office to see all the papers which have come into the possession of a social worker in the course of his duties as an employee of the council. There is no room for any secrecy as between a social worker and a member of the social services committee. In the case of a committee of which the councillor is not a member, different considerations must apply. The outside councillor, as I will call him, has no automatic yight of access to documentary material. Of him, 1t cannot be said that he necessarily has good season, and is necessarily entitled, to inspect all written material in the possession of the council and every committee and the officers thereof. What Donaldson L.J. described as a "need to know" must be demonstrated." The complication of a division of the Council or Board into sub-committees which was central to the debate in the Birmingham Case does not arise here: it is not suggested that the matters raised by Mr. Molomby fall within the jurisdiction of a committee of the Board. It follows that Mr. Molomby is not required to demonstrate any particular "need to know" to justify his claim ta cepeee ge tes wees pre accesa. On the contrary, to borrow the language of Lord Brightman, Mr. Molomby was entitled to access "by virtue of his office" - "ex hypothesi:Che hadJ good reason for access." Another class of case where the prima facie entitlement of a director to sight corporate material has been displaced is , hot cr where there is evidence that the director seeks to inspec in aid of the proper execution of his fiduciary obligations but, to the contrary, with a view to the apprehended detriment of the corporation. The Hampstead Case, supra, Bennetts! Case, supra, a3) w Q Ph and Conway v. Petronius, supra, ace examples of the exerc a judicial discretion denying the ordinary right of a2 di ry oO [oT cr a y cr is] inspect whece the evidence disclosed an ulterior purpose. ty fat) pe a ret] fo No such case has been sought to be made hers ac Mr. Molomby. Rather, if was put on behalf of the respondents that the application for review should fail because, on the face cf the correspondence, Mr. Molomby has failed to show a good reason why access should be granted. In my opinion, if it were necegzsary, the correspondence does indicate a "need to know", a matter to which I will return later. But, in any event, in the present circumstances, the authorities cited make it clear that no initial burden of proof rests upon Mr. Molomby to show any particulac reason for, or utility in, the grant of access. This will ordinarily be assumed. The general position with séspect to the onus of proof 22. «~ in this area was described by Street, C.d. in Edman v. Ross, supra, in this way (at p.361): "The right to inspect documents, and, if necessary, to take copies of them is essential to the proper performance of a director''s duties and, though I am not prepared to say that the Court might not restrain him in the exercise of this right if satisfied affirmatively that his intention was to abuse the confidence reposed in him and materially to injure the company, it is true nevertheless, that its exercise is, generally speaking, not a matter of discretion with the Court and that he cannot be called upon to furnish his reasons before being allowed to exercise it. In the absence of clear proof to the contrary the Court must assume that he will exercise it for the benefit of his company." Slade, J., in Conway v. Petconius Cothing Co. Ltd., supra, after citing Street, C.J. an Eq., said fat p.90): "The passage seems tome, if I may say consistent with both principle and common sez If the position were otherwise, a direct 3 cights of inspection could be rendered more or less nugatory, at least ofc many months, by specious allegations that he was exercising them with intent to injure the company or for other improper motives." Oo mo UD *o oO In my opinion, in refusing or at least deferring access to Mr. Molomby, Mr. Whitehead wrongly assumed the role of t @ arbiter of Mr. Molomby's right, as a legal incident of his directorship, to inspect documents held by the Corporation which on their face were celevant to the affairs and management of the Corporation. Since it was a matter of legal right vested in Mr. Molomby, such access did not lie within the gift of Mr. Whitehead. It follows, in my opinion, that his decision to owe ee aay ' withhold inspection was vitiated by an error of law. As has been said, such an error is a ground for review for the purposes of the Judicial Review Act (see s.5(1)(f)). The same consideration would lead to the conclusion that, if it were needed, at least one other ground of review would be available here. Section 5S(1)(e) specifies, as an additional ground of review, an "improper" exercise of a statutory power. This is defined by s.5(2)(a)(b) and ({g) 50 as to include the following: the taking into account of an irrelevant consideration, failing to take a relevant consideration into account and an exercise of power that is so unreasonable that no reasonable person could have exercised the power (see Associated Provincial Picture Houses. Limited v. Wednesbury Corporation £19487 1 K.B. 223 at pp.22B8-9; Parcamatta City Council v. Pestell (1972) 128 C.L.R. 305 per Gibbs, J. at p.327). For the reasons already given, I am of the opinion that this ground of review has also been made out. In the result, Mr. Molomby has established a case for judicial review. B (Th Tore turning to the question whether there are any discretionary reasons why relief under 5.16 of the Judicial Review Act should be withheld from Mr. Molomby, I should mention a number of specific matters advanced on behalf of the respondents by way of answer to his clain. oa 24. . First, it was suggested that, in his correspondence, Mr. Molomby failed to ccnvey to Mr. Whitehead any reason why he needed to look at the material sought. Even if, contrary to the view I have expressed, Mr. Molomby had to make out such a case, as it were, to Mr. Whitehead, his letters, in my opinion, made it clear to Mr. Whitehead that the matters Mr. Molomby was questioning were relevant to the affairs and management of the Corporation, especially from his * standpoint as a lawyer. In the cage of the fees claimed by the Professor, Mr. Molomby's letters were quite explicit. (It is true that Ms. Molomby had earlier initiated an independent inquiry into the Corporation's legal department and, for that reason, had voluntarily absented himsel= from Board discussion of the progress and result of that inquiry. But it could hardly be suggested that such a voluntary action could or should disqualify him from further participation in Board consideration of such matters). So far as concerns the defamation actions about which Mr. Molomby sought information, it may be accepted that Mr. Molomby gave no reasons in his letters for his request. However, as Mr. Whitehead must have known, the plaintiffs in these proceedings were well-known public figures and it must have heen apparent to Mr. Whitehead, who did not give evidence, that this was at least one of the reasons why Mr. Molomby wished [to investigate these matters. Nor is it any answer to the claim now made to point to the fact that each of these actions had been previously settled, in one case after consideration by the Boarcd, 25. and in the other cases, by action taken below Board level. On the face of it, the conduct and the compromise by the Corporation of defamation suits brought by public figures are matters of obvious concern to a member of the Hoard with a legal background. In this connection, Mr. Molomby could also reasonably point to the provisions of s.8(1) of the Corporation Act, cited earlier, as additional reasons for his enquiries. The fact that s.8(3) makes these duties non-justiciable is of no present significance. The duty imposed on the Directors by s.8(1) still exists. In respect of Mr. Molomby's claim to sight copies of documents circulated by Mr. Whitehead to other Board members, since Mr. Molomby was naturally unaware of their contents, he did not advance any specific reason for his wish to inspect the material beyond expressing his general desire to be as well informed as his fellows with respect to the affairs of the Corporation. It was not suggested on Mr. Molomby's behalf that Mr. Whitehead was at all times in the future bound to send to Mr. Molomby a copy of every document sent to any other Director. What is sought is an inspection of material already sent to other Board members. On the face of things, this material may be assumed to relate to the management and affairs of the Corporation. Prima facie, Mr. Molomby has a need to he aware of such matters. Short of a situation such as arose 1n Bennetts' Case, supra, involving a clear conflict of interest on the part of the Director, and no such conflict was established here, it is not open to the Managing Director to deny Mr. Molomby access to 2 apes Lv vom grin pnt SOR rte or oe whe Wlowcr rans oe 26. corporate documents on his assertion that they are "confidential". A separate egument was advanced on behalf of the respondents with respect to the agreement made between the Corporation and Mr. Irving Warren. In the first place, it was submitted that the presence in the agreement of a confidentiality provision justified withholding "it from Mr. Molomby. But the presence of a secrecy clause could hardly preclude inspection of the document by a member of the Board of one of the parties to the agreement. Once he had inspected it, Mr. Molomby would, of course, be bound to observe the contractual confidentiality. That is another question. The only issue here is his right to inspect a the materlal and it is not suggested that Mr. Molomby might use the information thus obtained to the detriment of the interests of the Corporation. It was also put on behalf of the respondents that the decision to withhold access to the agreement with Mr. Warren was justified because Mr. Molomby and Mr. Warren were members of different trade unions. But. in my view, mone of the considerations which were thought to be sufficiently significant to warrant the denial of access in the authorities such as Bennetts' Case, supra, aré present here. The respondents called no oral evidence and nothing was put to Mr. Molomby in cross-éxamination to even hint at any threat by Mr. Molomby to act in any way inimically to the interests of the Corporation. wt a™ rae a a Sirsa entemndihd 2 Hy : woe = a art 27. On the-~-contrary, his bona fides was accepted and there was no suggestion of any ulterior motive or conflict of interest on his part. Finally, it was argued on behalf of the respondents that Che claim for relief should be denied because these are matters for the Board, as a whole, to decide. This is not so. A Director's right to inspect corporate material is a legal right which in no sense depends upon the views of the Board. Access may be denied for good cause, as Bennetts' Case shows, but that apart, the Board is no more able to act as the arbiter of a Director's rights in this regard than is the Corporation's Managing Director. In my opinion, given Mr. Molomby's good faith and his apparent need to know, as a Director of the Corporation, the matters he raises in his correspondence, no basis exists for withholding from him relief under the Judicial Review Act on discretionary grounds. I propose to grant that relief. In the circumstances, it is unnecessary to deal with Mr. Molomby's claim under the general law in the exercise of the Court's accrued jurisdiction. However, it would follow from what has been said that the same result would have been achieved under the general law. fe tb te a acd oe a pars re r kr m on declaration of the right of Mr. Molomby Smee meres = 3 By Iron We n at 28. to inspect the material sought. The declaration will be limited to the period of any directorship (see Re Funerals of Distinction Pty. Ltd., supra, at p.615; Haw Par Bros. (Pte) Ltd. v. Dato Aw Ko (1973) 2 M.L.0. 169; Ford, Principles of Company Law, 3rd ed. at p.403). In the ciccumstances, injunctive relief should be unnecessary (cf. the Berlei Case, supra, at p.167) but liberty to apply for this relist, if necessary, will be reserved. The respondents must pay Mr. Molomby's costs. I make the following orders: 1. Declare that, for so long as the applicant is a Director of the second respondent, the applicant is entitled to access to the documents the subject of the request for access made by the applicant in his letter to the first respondent dated 2 September 1985. bo Reserve liberty to the applicant to apply for further relief, if necessary, on such notice as a Judge of the Court may allow. 3. Order that the rspondents pay the applicant's costs or the proceeding. 29. | certify that this end the 2% preceding pages are a irue cory cf ihe reasons for judgment herein cf T>2 ricnourable Mr Justice Beaumont. Lo. Cin Uy Fk Associate Dated 137° Yenher (98S oon corer ewe woe ne