COMPANY – Director – Application to inspect accounts – Purpose of application improper but not injurious – Whether court entitled to refuse application – Companies Act 1985, s 222

The Oxford Legal Group Ltd v Sibbasbridge Services Plc and Another [2008] EWCA Civ 387; [2008] WLR (D) 121

CA: Hughes and Toulson LJJ and Sir John Chadwick; 18 April 2008

The court would refuse to enforce the right of a director to inspect a company’s accounts pursuant to s 222 of the Companies Act 1985 where the purpose of the proposed inspection was to injure the company or was improper.

The Court of Appeal so held in a reserved judgment, dismissing an appeal by the claimant, Oxford Legal Group Ltd, against the decision of Kitchin J who on 9 October 2007 in the Chancery Division had (i) refused the claimant summary judgment on its claim for an order that the claimant be entitled to inspect the accounting records of the first defendant, Sibbasbridge Services Ltd, of which he and the second defendant, Christian Hoyer Miller, were directors; (ii) refused the defendants’ application to strike out the particulars of claim as disclosing no cause of action; and (iii) acceded to the defendants’ application that the claim be transferred to the Companies Court for hearing with the petition under s 459 of the 1985 Act then pending in relation to the affairs of the first defendant.

SIR JOHN CHADWICK said that he rejected the submission that the circumstances in which the court would refuse to enforce the right to inspect company’s accounts were confined to those in which the purpose for which the director sought inspection was to injure the company. The judge had plainly been entitled to take the view that there was a serious issue as to whether inspection was sought by the claimant for the benefit of the second defendant and to enable the claimant to discharge its obligations as a director or for some other, and improper, purpose. For completeness his Lordship added that somewhat different considerations might apply where the director sought an order for inspection by way of interim relief. In such a case it was for those opposing inspection to satisfy the court that there was a serious question as to improper purpose which could not be resolved without a trial.

TOULSON LJ agreed.

HUGHES LJ delivered a concurring judgment.

Appearances: Alexander Hill-Smith (Brook Street des Roches LLP, Witney) for the claimant; Robin Hollington QC (BP Collins, Gerrards Cross) for the defendants.

Reported by: Geraldine Fainer, barrister