This week's TGIF considers Navarac Pty Ltd v
Carrello  WASC 327, in which the court held that a
director was entitled to inspect certain records created by a
receiver during the course of the receivership.
A court-appointed receiver and manager of Esperance Cattle
Company Pty Ltd, a livestock company, applied for various orders to
finalise the receivership.
A director of the company sought to inspect certain documents,
which she asserted were or might be held by the receiver, to
prepare evidence and submissions in opposition to the
receiver's above application.
Given that the director was self-represented and did not
identify the basis upon which she asserted an entitlement to
inspection, Martin CJ identified the possible sources of such
A key issue was the effect which the appointment of a receiver
has upon a director's exercise of his/her rights to inspect the
books, financial records and documents of a company under the
Corporations Act 2001 (Cth) (Act) and at
common law and in particular, with regard to documents prepared by
and in the possession of the receiver.
Martin CJ ordered the receiver to produce a number of documents
sought, including the following documents prepared by the receiver:
(i) an internal memorandum relating to his conversation with police
concerning missing/stolen assets; (ii) file notes relating to
independent management advice the receiver received; and (iii) file
notes recording conversations or meetings with a third party.
Sources of a right to inspection
The court held that the director had rights to inspect the books
and financial records of the company under sections 198F, 290 and
421 of the Act and at common law.
Section 198F - a director may inspect the books of the company
(other than its financial records) at all reasonable times for the
purposes of a legal proceeding to which the director is a
Section 290 - a director has a right of access to the financial
records of the company at all reasonable times.
Section 421 - any director may, unless the Court otherwise
orders, inspect financial records kept by a managing controller of
property of the company (which included the receiver) of all
transactions that the managing controller enters into as a managing
Scope of common law right of inspection
The court noted that the common law right of inspection applies
to documents in the possession of the company (which includes
documents created or received by the receivers in the course of
acting for the company), as opposed to documents prepared by the
receiver for his own benefit or protection and which are held by
him in that capacity.
The court found that the relevant documents (a memorandum and
file notes) recorded advice related to the management of the
company's assets or were prepared as records of the
receiver's actions as agent for the company. For these reasons,
Martin CJ considered that these documents belonged to the company
(and not the receiver) and were part of the company's books and
records, so ordered the receiver to produce them for
The effect of the appointment of the
The court held that the fact that a receiver had been appointed
to the property of the company did not, of itself, impinge upon the
director's rights of inspection under the Act and at common
law. There must be evidence that granting the right of inspection
would impede the proper exercise of a receiver's functions or
prejudice the position of any secured creditor. There was no such
evidence in this case.
This case illustrates the scope of a director's right to
inspection of documents prepared by and in the possession of a
The appointment of a receiver does not, of itself, impinge a
director's rights under the Act and at common law to inspect
the books, financial records and documents of a company.
However, a receiver would be justified in refusing to grant
access to documents where to do so would impede the proper exercise
of his functions or prejudice the position of any secured
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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