Court of Appeal

Published May 15, 2008

Oxford Legal Group Ltd v Sibbasbridge Services plc and Another

Before Lord Justice Hughes, Lord Justice Toulson and Sir John Chadwick

Judgment April 18, 2008

The court could refuse to enforce the right to inspect a company’s accounts, not only where the purpose for which the inspection was sought was to injure the company, but also where the purpose was improper.

The Court of Appeal so held in a reserved judgment in dismissing an appeal brought by the claimant, Oxford Legal Group Ltd, against the decision of Mr Justice Kitchin, on October 9, 2007, in the Chancery Division in proceedings brought by Oxford Legal against the defendants, Sibbasbridge Services plc and Christian Hoyer Miller, under section 222 of the Companies Act 1985. Oxford Legal and and Mr Hoyer Millar were directors of Sibbasbridge.

Mr Alexander Hill-Smith for Oxford Legal; Mr Robin Hollington, QC, for the defendants.

SIR JOHN CHADWICK said that the claim was for an order that Oxford Legal be entitled to inspect the accounting records of Sibbasbridge. A defence was served.

The claimant then issued a notice seeking summary judgment on the grounds that the defendants had no reasonable prospect of successfully defending the claim and that there was no other reason why the proceedings should go to trial.

On the same day, the defendants issued a notice seeking an order that the particulars of claim be struck out as disclosing no cause of action and that the claim be transferred to the Companies Court for hearing with the petition under section 459 of the 1985 Act then pending in relation to the affairs of the first defendant.

Mr Justice Kitchin dismissed both applications but he acceded to the application transferring the case to the Companies Court to be heard with the pending petition.

His Lordship rejected the submission that the circumstances in which the court would refuse to enforce the right to inspect a company’s accounts were confined to those in which the purpose for which the director sought inspection was to injure the company.

The judge was plainly 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 wished to add 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.

Lord Justice Toulson agreed and Lord Justice Hughes delivered a concurring judgment.

Solicitors: Brookstreet des Roches LLP, Witney; B. P. Collins, Gerrards Cross.

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