Michael Hodge QC (with A R Langshaw), instructed by Arnold Bloch Leibler, recently appeared for the Respondents, in Re ICRA Rolleston Pty Ltd [2021] QSC 98.
The Applicant made an application for an order pursuant to section 1303 of the Corporations Act 2001 (Cth), to compel the Respondents to make a contract of sale available for inspection and copying. The Applicant asserted that the Respondents had contravened section 421(2) of the Act, as the Applicant is entitled to inspect a financial record. The question posed to the Court was whether the contract fell within the definition of a “financial record” under section 9 of the Act.
His Honour considered three sub-issues to determine whether the contract was a “financial record” under the Act. Firstly, His Honour determined the contract was not a document of prime entry, as a document that records the financial effect of the transaction subject to the contract is the document of prime entry.
Secondly, his Honour determined that the contract was not a working paper or other document to explain the Respondents’ financial statements, or adjustments in preparing financial statement by accepting the Respondents’ submission that the statement the Applicant relied upon in Boulos v Carter, that a contract to sell falls within reach of section 421(1)(d), should be considered in the context that the orders sought in that case were useless as the documents sought by the Applicant in that case had already been voluntarily provided.
Thirdly, his Honour determined that the contract of sale did not fall within the section 9 definition of “financial records” as Boluos v Carter drew a distinction between source material, such as contracts, and financial records used to compile financial statement, and accepted the Respondents’ submission that the contract of sale did not fall within the section 9 “financial records” definition, just because the contract created legal obligations that could potentially have significant effects to the finances of the company.
On these bases, the appeal was dismissed.
The judgment is published here.
