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Makutu v Na Hina Pte Ltd [2022] FJHC 140; HBC321.2019 (18 March 2022)

IN THE HIGH COURT OF FIJI
AT LAUTOKA

CIVIL JURISDICTION


Civil Action No. HBC 321 of 2019


BETWEEN:


RATU TEVITA MAKUTU of Cuvu, Nadroga, Businessman.


PLAINTIFF


AND:


NA HINA PTE LIMITED a limited liability company having its Registered office at
Office of G H Whiteside & Co, 211 Ratu Sukuna Road, Suva.


DEFENDANT


BEFORE:
Hon. Mr. Justice Vishwa Datt Sharma


COUNSELS:
Ms Swamy A. with Ms Ritova for the Applicant
Mr Singh V. with Mr Kumar P. for the Respondent


DATE OF DECISION:
Friday, 18th March 2022 @ 9.00 am.




DECISION

[Originating Summons seeking Orders pursuant to Section 125 of the Companies Act 2015]


The Plaintiff’s Originating Summons in Support of an Affidavit deposed by Ratu Tevita Makutu seeks for the following orders:-

  1. That the Defendant shall disclose within fourteen (14) days after the service of the order on it and provide the Plaintiff or Plaintiff’s Solicitors with copies of the accounts as listed below;
    1. Financial statements (including profit and loss statement and balance sheet) from the years 2009 to 2018;
    2. Final signed financial statement (including profit and loss statement and balance sheet) from the years 2009 to 2018;
    3. Books of account from which balance sheets were made up from years 2009 to 2018;
    4. Company income tax returns for years 2009 to 2018;
  2. That the Defendant shall disclose within fourteen (14) days after the service of the order on it and provide the Plaintiff with full particulars of all dividends declared by the company in the last 10 years and advise on how these monies were dispersed and to whom.
  1. That the Defendant shall disclose within fourteen (14) days after the service of the order on it and provide the Plaintiff with full particulars of;
    1. All properties/assets (including but not limited to all fixed assets, shares owned by the company and the trust in other entities) of any kind owned by the company and the trust.
    2. Copies of all papers in relation to any debts and loans taken by the company and the Trust.
    3. Copy of any current valuation and the company may hold of the land comprised in Certificate of Title Vol. 33 Folio 3336.
  1. That the Defendant shall disclose within fourteen (14) days after the service of the order on it and provide the Plaintiff with copies of all correspondence that may have with Yanuca Island Limited in relation to any increase in premium being paid by Yanuca Island Limited for the lease of the land comprised in Certificate of Title Register Vol. 33 Folio 3336.
  2. Costs on client solicitor indemnity basis.
  3. Any further or other order as this Honourable Court may deem fit in the circumstances.

On the following Grounds:

  1. That the Defendant is a limited liability company having its registered office at office of GH Whiteside & Co, Ratu Sukuna Road, Suva.
  2. That the Defendant consists of 8 Directors namely Aporosa Tuivuya Lalabalavu, Peceli Nakavulevu, Tomasi Tawake, Ratu Luke Nalasi Vosailagi, Sekove Naqiolevu, Ratu Aisea Wakanimolikula Volavola, Ratu Aisea Waka Vosailagi and me and consists of 4 Shareholders namely Estate of Setareki Roiroi holding one share, Ratu Kinijoji Nanovo holding 2 shares, Sekove Naqiolevu holding 1 share and Apakuki Rakuro holding 1 share.
  3. That the Defendant is also the Trustee of the Na Hina Trust (herein after referred to as Trust).
  4. That as the Trustee of the Trust, the Defendant also looks after the land managements and deals for the lands and the welfare of the beneficiaries of the said Trust which consist of the lawful heirs and successors of the families of the “Kalevu” of Cuvu Nadroga namely Dorokavu, Lalabalavu, Makutu, Nadroga, Volavola and Vosailagi.
  5. That the Defendant as the Trustee of the said Trust has powers to leases, collect rentals and deals with property sales for the lands which is under the name of the families of the “Kalevu” of Cuvu Nadroga namely Dorokavu, Lalabalavu, Makutu, Nadroga, Volavola and Vosailagi.
  6. That the Plaintiff is one of the Director of the Defendant and Head of the family of Makutu.
  7. That the Plaintiff as the Director of the Defendant and as the Head of the family of Makutu have not been provided with any information in regards to the accounts and assets of the Defendant by the other managing directors of the Defendant and neither have been given access to the said information from year 2009 till 2018.
  8. That on the several occasion the Plaintiff has requested the other directors of the Defendant to provide with the information dealing with the assets of the Defendant and also the Na Hina Trust, however till to-date the other directors of the Defendant have refused to give the access to the said information.
  9. That the Plaintiff has also requested for the details of the income distribution in terms of the income received under the Trust, specifically for the dealing regarding the Yanuca Islands Limited and other lands which the Defendant has refused or neglected to provide the same to the Plaintiff.
  10. That the Defendant has failed to pay the dividend to the shareholders and also has failed to declare the proper accounts of the company from year 2009 till 2018.
  11. That on 12th April 2019 a notice was issued to the Defendant pursuant to Section 125 of the Companies Act 2015, seeking information’s in regards to the Company’s financials and the assets, which the Defendant till to date has failed or refused to disclose to the Plaintiff.
  12. That the Plaintiff as the Director of the Defendant, pursuant to Section 125 of the Companies Act 2015 has a right of access of the company books at all reasonable time for the purposes of a legal proceeding in good faith to bring.
  13. The Defendant filed its Affidavit in Response stating:-

Determination

  1. The application before the Court is seeking certain orders against the Defendant to allow the Plaintiff to have the right to access to the Company books and financials.
  2. Section 125 of the Companies Act 2015 provides as follows:-

“125-(1) A Director of a Company may inspect the books of the company, including its financial records at all reasonable times for the purposes of a legal proceeding-

(a) to which the person is a party;

(b) that the person proposes in good faith to bring; or

(c) that the person has reason to believe will be brought against them.

(2) A person who has ceased to be a Director of a Company may inspect the books of the company, including its financial records at all reasonable times for the purposes of a legal proceeding-

(a) to which the person is a party;

(b) that the person proposes in good faith to bring; or

(c) that the person has reason to believe will be brought against them.

(3) The right stated under subsection (2) shall continue for 7 years after the person has ceased to be a Director of the Company.

(4) A person authorized to inspect company books under this section for the purposes of a legal proceeding may make copies of the company books for the purposes of those proceedings.

(5) A Company shall allow a person to exercise their rights to inspect or take copies of the company books under this section.

(6) Subject to subsections (1), (2) and (3), this section does not limit any right of access to company books that a person has.”

  1. The Plaintiff’s contention is that he is one of the Directors of the Defendant Company and since he has become the Director of the Company, he has not been provided with the information in regards to the accounts and assets of the Defendant Company.
  2. That on several occasions, the Plaintiff had requested the Defendant to provide the said information, however, the Defendant has failed to do the same.
  3. The Plaintiff submitted that the Plaintiff is the Director has full right to have access to the company books without any conditions attached pursuant to Section 125 of the Companies Act 2015.
  4. According to the Plaintiff, the Defendant has not provided any valid reasons why the Plaintiff should not be given the access to the company books and the financials. In the Response Affidavit of Ratu Aisea Waka Vosailagi, the Defendant has failed to provide a genuine reason why the Plaintiff should not be given full and unfettered access to the Company Books and financials of the Defendant Company at all reasonable times.
  5. The Plaintiff in its Originating Summons stated that the Plaintiff is the Director of the Defendant Company, has a right to access of the company books at all reasonable times for the purpose of a legal proceedings in good faith to bring up.
  6. The Plaintiff relied on case authority of Fox v Gadsden [2003] NSWSC 748 (4 August 2003) where the court at paragraph 23 stated as follows:-

“It would be difficult for the Court to over-emphasise the importance of the director’s statutory law rights of access to corporate information. They are the foundation of the system of corporate governments as it exists in Australia today. Directors cannot be expected to carry out any of their substantial responsibilities, including their fiduciary duties and their duties to attend to the solvency of the company and its general management, unless they can be sure of having full and unfettered access to the documents of the company. It is not appropriate for their fellow directors to offer to provide the requesting director with particular documents if that director requests those documents by name. What should happen, when documents are demanded by a director, is that the gate is opened wide and the director has full and unfettered access at all reasonable times.” (our emphasis)

  1. In the present application, the Plaintiff has director’s statutory law rights of access to company information which is well covered under Section 125 of the Companies Act 2015. Thus, the Plaintiff should have full and unfettered access to company books and financials of the Defendant company at all reasonable times.
  2. However, the Defendants contention in terms of the provisions of Section 125 of the Companies Act 2015 submitted that:-
  3. It cannot be disputed that the Plaintiff is a Director of the Defendant company.
  4. Section 125(1) of the Companies Act 2015 provides a Director of a Company to inspect the books of the Company other than its financial records at all reasonable time for the purpose of a legal proceedings.
  5. The Plaintiff relied on the case authority of Stewart v Normandy NFM Limited No. SCGRG-00-954 [2000] SASC 344 (date of Judgment – 19 October 2000) [Tab 1] the Supreme Court of South Australia considered the identical provision to Section 125(2) of the Fijian Companies Act of 2015 and said as follows:-

“...10 As I understand it, the essence of the plaintiff’s argument is that, on an application such as this, it is not necessary to prove the facts upon which the applicant relies in proposing in good faith to bring the relevant legal proceeding. It was argued that the plaintiff needs only to prove that he is a former director of the defendant, that the relevant seven year period has not expired, that in good faith he proposes to bring a legal proceeding and that inspection of the books was for the purposes of that legal proceeding. I do not consider that the wording of the section should be so construed. It is for the plaintiff to establish the factual background to the application. This may not be done by unsubstantiated assertions.

11 The Court is required to determine whether or not the plaintiffs proposal to bring proceedings is advanced in good faith.

12 Contrary to the plaintiff’s submission, it is not a matter of the defendant disclosing want of good faith. The onus is upon the plaintiff to establish that he proposes in good faith to bring the relevant proceedings.

13 In addition, the ability to inspect the books of the company is limited to the purposes of the proposed legal proceeding. Unless and until the plaintiff adduces sufficient evidence as to the basis upon which he advances the proposal to bring proceedings and which set out the nature of the proposed proceedings, the Court cannot make a finding as to the existence of good faith nor can a determination be made as to whether or not the inspection of the company’s books is for the purposes of the legal proceeding referred to...”

And later

“...25 In this case, because of the paucity of the facts deposed to by the plaintiff, I have no means of determining the appropriateness of the order sought. There is no evidence as to the materiality of the documentation sought to the proceedings which the plaintiff intends to bring. To some extent, the required evidence would be similar to the evidence given on an application for further and better discovery. The evidence should go to the existence of the documentation sought and why it is material to the matters which are likely to be in issue in the proposed proceedings. The lack of the required evidence means that the plaintiff has failed to establish an essential part of the application. For that additional reason the application must fail...”

  1. The reasoning in Stewart hereinabove is also relevant and applies to an application provided in pursuant to Section 125(1) of the Companies Act 2015 since Section 125(1) and (2) are almost identical albeit for the fact that one provides for a current Director and latter a former Director.
  2. Section 717 of the Companies Act 2015 makes it clear that books must be inspected where they are kept.
  3. In the Affidavit filed on behalf of the Defendant on 26 February 2020 the Director of the Defendant has deposed as follows:-

(a) At paragraph 5 – the Plaintiff has failed to attend 1 out of the last 6 board meetings of the Defendant. It is at the board meetings where the financial and administrative affairs of the Defendant are discussed.

(b) At paragraph 6 – the request of the Plaintiff was discussed at a board meeting where it was resolved that the Plaintiff would contact the CEO of the Defendant to arrange an inspection of the documents requested.

(c) At paragraph 7 Plaintiff has not complied with the board resolution to make arrangements to carry out an inspection.

  1. However, the Court is required to determine whether or not the Plaintiff’s proposal to bring proceedings is advanced in ‘good faith’. The onus is upon the Plaintiff to establish that he proposes in god faith to bring the relevant proceedings. Further, the ability to inspect the ‘books’ of the Company is only limited to the purposes of the proposed legal proceedings.
  2. The Plaintiff submitted that the Affidavit in Support deposed on 8th November 2019 from paragraphs 4 to 8 has factual background of the action and from paragraphs 9 to 14 clearly shows that he has brought this proceedings in good faith seeking for his right to access the Company Books and financials of the Defendant Company.
  3. I note from Annexure ‘C’ within the Plaintiff’s Affidavit in Support that the Solicitors were instructed to write to the Secretary of the Defendant Company, Na Hina Pte Limited on 12th April 2019 seeking for the information and documents as enumerated therein.
  4. In Reply, the Defendant Company, Na Hina Pte Limited wrote back on 5th May 2019 that the letter was tabled and discussed at the NHPL Board meeting in Suva on 24th April 2019 which your client attended. “It was also resolved that your client at his convenience, would contact the Company Secretary/Chief Executive Officer with regards to the documents and information requested”.
  5. The Plaintiff has not adduced the sufficiency of evidence upon the basis on when the Plaintiff advances the proposal to bring the legal proceedings which set out the nature of the proposed proceedings. The evidence should go to the documentation sought and why is it material to the matters which are likely to be in an issue in the proposed proceedings.
  6. Unless and until the Plaintiff is able to establish sufficient evidence, the Court cannot make a finding as to the existence of good faith nor can it make its determination as to whether or not the inspection of the Company’s books is for the purposes of the proposed legal proceedings.
  7. I find that the Plaintiff has failed in its bid to establish an essential part of the application in terms of the sufficiency of the evidence.
  8. I have no alternative but to dismiss the Plaintiff’s originating summons in light of the aforesaid rationale.

Costs

  1. The application proceeded to full hearing with parties filing Affidavits and written submissions.
  2. It is only fair that I grant a summarily assessed cost to the Defendant in the sum of $500.00 to be paid by the Plaintiff.

Orders

(i) The Plaintiff’s Originating Summons is hereby dismissed.
(ii) Summarily assessed costs of $500.00 to be paid by the Plaintiff to the Defendant.

DATED at SUVA this 18th day of March, 2022.


VISHWA DATT SHARMA
JUDGE


cc. Messrs Patel & Sharma, Suva.
Parshotam Lawyers, Suva.


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