FEDERAL COURT OF AUSTRALIA

Kasaragh Investments Pty Ltd as trustee for the Kasaragh Investment Trust v Enablo Pty Limited [2026] FCA 1009

ORDERS

THE COURT ORDERS THAT:

1.    Within 21 days of the date of these orders, the parties provide to the Associate to Goodman J agreed orders (or failing agreement, competing orders).

2.    If the parties are unable to agree on the proposed orders referred to in order 1, then:

(a)    within 28 days of the date of these orders each party file and serve written submissions of no more than five (5) pages in support of the orders sought by that party; and

(b)    the proceeding be listed for further case management on a date and time to be agreed between the parties and the Associate to Goodman J.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GOODMAN J:

A.    INTRODUCTION

1    The plaintiff (Kasaragh) was a founding member of the first defendant (Enablo) in 2017, but ceased to be a member of Enablo in controversial circumstances in early 2025.

2    Kasaragh commenced this proceeding by filing an originating process seeking various forms of relief, including: (1) a grant of leave to institute a proceeding in the name of Enablo pursuant to s 237 of the Corporations Act 2001 (Cth); and (2) authorisation to inspect the books of Enablo pursuant to s 247A of that Act.

3    These reasons for judgment deal primarily with Kasaragh’s application under s 247A of the Act. For the reasons set out below, that application must be dismissed.

B.    BACKGROUND

4    On this application, Kasaragh relied upon several affidavits of Mr Daragh McGrath (one of its directors) and an affidavit of its solicitor, Ms Catherine Mills. Within that affidavit evidence is a draft statement of claim which Mr McGrath deposed reflects his concerns. Enablo relied upon affidavit evidence from Mr David Nixon (one of its directors); its solicitor, Mr Dale Cliff; and Ms Teora Bombeck, a solicitor in the employ of Mr Cliff. Enablo also relied upon an affidavit that Mr McGrath had made but which Kasaragh did not read on the application.

5    Kasaragh’s underlying complaint – as set out in the various affidavits and in its draft statement of claim – may be summarised, in broad terms, as follows at [6] to [41].

6    In March 2017, Enablo was incorporated with three founding members:

(1)    Kasaragh, a company of which Mr McGrath and his wife, Ms Kassie McGrath, are the directors and members;

(2)    the fourth defendant (Sonix Investments), a company associated with Mr Nixon; and

(3)    the fifth defendant (Jaxma), a company associated with Mr Mark Wyman.

7    At that time, each of the three founding members held 15,000 ordinary shares in Enablo.

8    The founding directors of Enablo were Mr McGrath, Mr Nixon and Mr Wyman.

9    Enablo was involved in the resale of software, including Workplace and the provision of ancillary services.

10    On 1 April 2017, Mr McGrath entered into an employment contract with Enablo. From that date, Mr McGrath held the titles “Co-Founder” and “Head of Growth and Operations” and was responsible for sales, revenue, business operations and partnerships for Enablo.

11    On 2 April 2017, Enablo, the founding members, the sixth defendant (Mr Gil) and the seventh defendant (Mr Cohn) entered into a shareholders agreement. The terms of the shareholders agreement include, relevantly for present purposes:

1.    DEFINITIONS AND INTERPRETATION

1.1    Definitions

    In this Agreement:

…

Confidential Information includes, but is not limited to:

(a)    the method of operation of the Company;

(b)    design, formulae, patents, plans, processes, policies, procedures, contracts, documents, financial details, information about software, source code and other documentation and information developed and/or used by the Company and its employees for use in the Company;

(c)    the names of the agents, distributors, customers, suppliers and clients of the Company and the Business and/or details of those parties' arrangements with the Company or any Related Body Corporate and the Business; and

(d)    commercial and legal negotiations and legal documents of the Company, including the Transaction Documents.

…

Discount Price means the Market Price less a 20% discount.

…

Founding Shareholders means collectively [Kasaragh, Sonix Investments and Jaxma] (each a Founding Shareholder).

…

Investor Shareholders means collectively [Mr Cohn], [Mr Gil] and (if and when it becomes a Shareholder) [Mr Hackett and Ms Hackett] (each an Investor Shareholder).

…

Market Price means such amount in respect of the sale of Shares as agreed by the Parties from time to time or, in the absence of agreement of the Parties, such amount as reasonably determined by an Independent Valuer appointed by the Company following the procedure set out in Schedule 4.

…

Party means the Company and each Shareholder.

…

Share means a fully paid share issued in the capital of the Company.

Shareholder means a shareholder of the Company and Shareholders means all of them. For the avoidance of doubt, the term Shareholder includes a Vesting Shareholder.

…

5.    DUTIES OF DIRECTORS

5.1    A Director nominated by a Shareholder may represent the interests of that particular Shareholder and will not by representing those interests, of itself, be in breach of his/her duties as a Director under this Agreement.

5.2    A Director must exercise his/her powers and discharge his/her duties as required under the Corporations Act; including to:

(a)    exercise his/her powers and discharge his/her duties with the degree of care and diligence that a reasonable person would exercise if they were a Director, occupied the office held by, and had the same responsibilities within the Company as the Director;

(b)    exercise his/her powers and discharge his/her duties in good faith in the best interests of the Company and for a proper purpose;

(c)    not improperly use his/her position to gain an advantage for himself/herself or someone else or cause detriment to the Company; and

(d)    not improperly use information obtained by him/her as a Director to gain an advantage for himself/herself or someone else or cause detriment to the Company.

5.3    A Director who has a personal interest in a matter that relates to the affairs of the Company must give the Board notice of the interest if required by law, and must follow the Corporations Act requirements regarding a Director’s potential conflict of interest.

…

11.    SALE NOTICE AND FIRST RIGHT OF REFUSAL

11.1    A Shareholder who wishes to sell any of its Shares (Selling Shareholder) must give notice in writing (Sale Notice) to the other Shareholders (Other Shareholders) giving the Other Shareholders the option to purchase those Shares specified in the Sale Notice, including the proposed price, on such terms as agreed, being the same terms for all of the Other Shareholders.

11.2    Each Other Shareholder to whom a notice is given or deemed to have been given, who wishes to purchase Shares, must make an offer to purchase within 30 days of receipt of the Sale Notice.

11.3    In the first instance all the Other Shareholders are entitled to purchase the Selling Shareholder’s Shares pro rata in proportion to their existing shareholding. However:

(a)    if any one or more of the Other Shareholders does not wish to exercise the option then those Other Shareholders who wish to exercise the option are entitled to purchase the Selling Shareholder’s Shares pro rata in proportion to their existing shareholding as between them only, unless otherwise agreed by them;

(b)    if any one or more of the Other Shareholders wishes to exercise the option in part only then those Other Shareholders who wish to exercise the option in full are entitled to purchase those Selling Shareholder’s Shares which have not been taken-up pro rata in proportion to their existing shareholding as between them only, unless otherwise agreed by them; and

(c)    in the event that the Other Shareholders do not purchase all the Selling Shareholder’s Shares that were the subject of the Sale Notice, the Selling Shareholder may sell any excess Shares to a Third Party on terms no more favourable than the terms specified in the Sale Notice.

11.4    The Selling Shareholder must transfer the Shares that are the subject of the Sale Notice to the relevant purchaser who must pay the stated price for the Shares.

11.5    Each Shareholder agrees to do all things necessary to give effect to a disposal the subject of this clause. If the Selling Shareholder does not transfer the Shares then the Company is authorised to act as the attorney of the Selling Shareholder to effect the transfer of the Shares based on the terms agreed. Each Shareholder acknowledges and agrees that the power of attorney granted by the Selling Shareholder extends to the attorney:

(a)    doing any act; and

(b)    executing any deed, agreement, transfer or any other document in accordance with this Agreement and subject to any payment required under this Agreement,

necessary to effect the transfer. Each Shareholder party to this Agreement ratifies and confirms any such actions carried out on its behalf by the attorney.

11.6    The price for the Shares must be paid at the time that an executed transfer is received by the purchaser in respect of the Shares or as otherwise agreed.

12.    EVENT OF DEFAULT

12.1    An Event of Default occurs in relation to a Shareholder or Key Person (as applicable) if:

…

(c)    material breach: the Shareholder commits a material breach of a term of this Agreement and that breach is incapable of remedy or, if capable of remedy, is not remedied within 30 days of being notified in writing by the Company of the breach;

…

12.2    A Shareholder suffering an Event of Default is taken to be the Selling Shareholder for the purposes of this clause.

12.3    An Event of Default will be deemed to have occurred on the date the Directors resolve, by Unanimous Resolution, that the Event of Default has occurred. Where an Event of Default affects a party which is also a Director, then that Director must abstain from voting on the resolution.

…

12.6    The Selling Shareholder is deemed to have immediately provided a Sale Notice under clause 11 (Sale Notice and First Right of Refusal) to the Company and to all the other Shareholders on the following terms immediately upon a Shareholder giving notice to the Selling Shareholder and the Company that it requires the Selling Shareholder to dispose of all of its Shares:

(a)    the number of shares to be offered for sale is all of the Selling Shareholder’s Shares;

(b)    the price per Share is:

(i)    the Market Price in respect of an Event of Default under subclauses 1(a) (change in law) and 1(b) (death or TPD); and

(ii)    the Discount Price in all other circumstances; and

(c)    the period during which the offer to sell the Shares is open is 90 days from the date of becoming a Defaulting Shareholder.

12.7    Each Shareholder to whom a Sale Notice is given or deemed to have been given must, within 30 days of receipt of the Sale Notice, make an offer to purchase the whole or part of the Shares it wishes to purchase.

12.8    If an offer is made by one or more Shareholders pursuant to subclause 7 of this clause, then an agreement must be entered into, which agreement must, amongst other things:

(a)    provide that the Shares are to be transferred to the Shareholder or Shareholders who made the offer pursuant to subclause 7 of this clause; and

(b)    specify the number of Shares to be purchased by each Shareholder (where more than one Shareholder makes an offer pursuant to subclause 7 of this clause, the Shareholders who made offers will purchase the Shares pro rata in proportion to their shareholding, unless those Shareholders otherwise agree).

12.9    Each Shareholder agrees to do all things necessary to give effect to a disposal the subject of this clause. If the Selling Shareholder does not transfer the Shares then the Company is authorised to act as the attorney of the Selling Shareholder to effect the transfer of the Shares based on the terms agreed. Each Shareholder acknowledges and agrees that the power of attorney granted by the Selling Shareholder extends to the attorney:

(a)    doing any act; and

(b)    executing any deed, agreement, transfer or any other document in accordance with this Agreement and subject to any payment required under this Agreement,

necessary to effect the transfer. Each Shareholder party to this Agreement ratifies and confirms any such actions carried out on its behalf by the attorney.

…

21.    COMMENCEMENT, TERMINATION AND RESTRAINT

…

21.5    During the term of this Agreement and for a period following termination of this Agreement, each Shareholder agrees that it will not, and will procure that every associated director, employee, trustee of a trust or other entity within its control will not, without the prior written approval of the other Shareholders:

(a)    directly or indirectly, conduct, carry on, promote, engage or invest in, become involved, concerned, interested or participate in any capacity whether solely or jointly with any other entity, and whether as principal, agent, trustee, shareholder, unitholder, beneficiary, partner, joint venturer, officer, employee, adviser, consultant, contractor or otherwise, in any business, activities, decisions, operations, undertakings or concerns which, in the reasonable opinion of the Company, are in competition with, or are of a similar nature to, the Business or the activities of the Company;

(b)    canvass away, solicit away or entice away from the Business or the Company any person or organisation that was an existing or proposed client, customer, supplier, representative, agent, partner or joint venturer of the Business or the Company at the date of the termination and, in relation to whom, the Shareholder or an associate of the Shareholder regularly dealt with during the term of this Agreement;

(c)    interfere or seek to interfere, directly or indirectly, with the relationship between the Business and/or the Company and its existing or proposed clients, customers, suppliers, representatives, agents, partners or joint venturers in the conduct of the Business and the activities of the Company;

(d)    counsel, procure, induce or otherwise assist any other person, agent or entity to perform any of the acts specified in sub-clauses (a) and/or (b) and/or (c);

(e)    employ, engage, induce or attempt to induce, solicit or entice away from the Business or the Company any person who was at any time during the period of 12 months prior to that Shareholder ceasing to be a Shareholder, an employee, manager, officer, contractor or consultant of the Company for the benefit of the Shareholder or an associate of the Shareholder or any other person.

…

Schedule 4: Independent Valuation

Independent Valuer

(a)    The Board must appoint an independent chartered accountant or an investment or merchant banker as an independent valuer to determine the value of the Shares in accordance with this schedule (Independent Valuer). The Board’s decision to appoint the Independent Valuer must be unanimous.

(b)    If the Board cannot reach agreement within 7 Business Days, the Independent Valuer will be appointed by the president for the time being of the Institute of Chartered Accountants in Australia.

Valuation

(a)    The Independent Valuer will determine the fair value of the Shares by valuing the Company (including any subsidiary) as a whole on a going concern basis as at the end of the month immediately prior to the appointment of the Independent Valuer. The determination will be made assuming:

(i)    a willing, but not anxious, buyer and seller;

(ii)    a reasonable period within which to negotiate the sale;

(iii)    that the Company was offered for sale to the general market for a reasonable period; and

(iv)    that no account is taken of the value or other advantage or benefit, additional to market value, to the buyer incidental to ownership of the Company.

(b)    The fair value of each Share will be the proportionate amount of the value of the Company without any regard to any premium for control.

Access to information

The Board must ensure that the Independent Valuer has a right of access at all reasonable times to the accounting records and other records of the Company (including any subsidiary of the Company) and is entitled to require from any officer of the Company such information and explanation as the Independent Valuer requires to value the Company.

(bold emphasis in original)

12    On 12 May 2017, Mr Gil was appointed as a director of Enablo.

13    On or about 11 May 2018, Mr McGrath was formally appointed as chief executive officer of Enablo.

14    On 23 November 2020, the second defendant, Mr Hackett was appointed as a director of Enablo.

15    On 20 July 2021, Worklabs Alpha Pty Ltd was incorporated as a wholly owned subsidiary of Enablo. Worklabs carried on a business of developing new software products for licence to customers for a fee.

16    On 22 October 2021, an application was made to the Australian Taxation Office (ATO) for the purpose of obtaining a private ruling to demerge Enablo and Worklabs.

17    On 4 May 2022, the ATO provided a private ruling to Kasaragh. Kasaragh contends that, by dint of this ruling, Worklabs was demerged from Enablo.

18    In December 2022, Mr McGrath resigned as the chief executive officer of Enablo; and on 2 March 2023 he ceased to be a director of Enablo.

19    In 2023, Mr McGrath became interested in selling Kasaragh’s shares in Enablo, as he was living overseas at the time, and was looking for a new role, having just relocated from Singapore to France; he was not receiving any updates or information in relation to the affairs of Enablo; and he felt that having been out of Enablo for over 12 months that it was time to cut all ties and to move on.

20    On 12 September 2023, Mr McGrath sent an email to Mr Steve Zan (Enablo’s then chief executive officer) indicating that he was seeking to sell all of Kasaragh’s shares in Enablo.

21    Mr McGrath agreed with Mr Zan that Mr McGrath would be provided with appropriate financial information relating to Enablo, however such information was not made immediately available to him and he was required to follow up on at least two occasions.

22    On 9 October 2023, Mr Hackett sent an email to Mr McGrath providing profit and loss statements and balance sheets for Enablo and Worklabs.

23    Kasaragh avers that the financial information provided by Mr Hackett:

(1)    was consolidated financial information of both Enablo and Worklabs such that it was not possible to isolate financial information in respect of Enablo only, so as to ascertain the fair market value of Kasaragh shares in Enablo;

(2)    was inconsistent with the obligation in cl 2.6 of the shareholders agreement to provide information to members;

(3)    contained:

(a)    blended financial information of both Enablo and Worklabs;

(b)    a mix of AUD and USD figures for Enablo and Worklabs;

(c)    errors and omissions in relation to the treatment of salaries and discretionary related expenses for employees;

(d)    an unexplained reduction in the customer success and growth expenses relative to other months in April 2023;

(e)    a significant and unexplained spike in professional services expenses in May 2023 which did not on its face appear to be for the benefit of, or in the interests of, Enablo; and

(f)    discrepancies between the inter-entity income and expenses for March 2023 that were unexplained.

24    On 23 October 2023:

(1)    Mr McGrath sent an email to Mr Hackett and Mr Zan:

(a)    stating that the profit and loss statement of Enablo incorporated financial information of Worklabs mid-way through the financial year and that this made it difficult to determine the valuation for Enablo and the shares held in Enablo by Kasaragh;

(b)    requesting that an independent valuer be appointed to value Enablo, pursuant to Schedule 4 of the shareholders agreement; and

(2)    Mr Hackett responded confirming that Worklabs was a separate entity but stating that “ ... It is separate but in reality, it’s very close to one business”.

25    On 4 November 2023, Mr McGrath sent a request to Mr Hackett and Mr Zan, that an “independent valuation of the business” be obtained.

26    On 8 November 2023, Mr Zan responded stating:

Since your last email, I have reacquainted myself with the shareholder’s agreement to ensure we’re following the proper process. Clause 11.1 states that a shareholder wishing to sell their shares must include the proposed price in their ‘Sale Notice’. There is no reference to obtaining an independent valuation.

I’ve quickly discussed this with the Board, and they have suggested that you seek your own independent valuation to assist you in determining the price at which you wish to sell your shares. The financial information provided to date should be sufficient for a valuer - any further information requests will need to be approved by the Board before I can release them.

27    On 15 May 2024, Meta Platforms Inc publicly announced that it was shutting down the Workplace platform (Workplace Announcement).

28    In late May 2024, Mr McGrath met with Mr Nixon and Mr Hackett and as a result of matters discussed at that meeting, he believed that he would be provided with documents that he had requested at that meeting. Despite a follow-up request on 4 June 2024, these documents were not provided.

29    On 12 July 2024, McGrath entered into a consultancy agreement with Yoobic Limited and on 15 July 2024, he commenced at Yoobic as an independent consultant. Yoobic was in the business of selling proprietary software as a service solution to retail customers.

30    On 24 July 2024, Enablo sent two letters to Mr McGrath alleging that by reason of his role at Yoobic: (1) he had breached his employment contract with Enablo; and (2) Kasaragh had breached cl 21.5 of the shareholders agreement.

31    On 28 August 2024, Kasaragh’s solicitors wrote to Enablo’s solicitors denying that Kasaragh had breached the employment contract and the shareholders agreement, denying that Mr McGrath held confidential information, confirming that Mr McGrath had not provided confidential information of Enablo to Yoobic, explaining that Yoobic is not a competitor of Enablo and requesting that Enablo comply with the dispute resolution procedure at cl 2 of the shareholders agreement.

32    On 26 September 2024, Kasaragh made a share offer (of $1.00 per share), to Enablo. Enablo rejected this offer on 1 October 2024.

33    On 20 December 2024, Mr McGrath ceased providing consultancy services to Yoobic.

34    As at 29 January 2025:

(1)    the members of Enablo were:

(a)    Kasaragh (15,000 shares);

(b)    Sonix Investments (15,000 shares);

(c)    Jaxma (15,000 shares);

(d)    Mr Hackett and Ms Hackett (3,207 shares);

(e)    Mr Gil (2,328 shares);

(f)    Mr Cohn (2,328 shares); and

(2)    the directors of Enablo were Mr Nixon, Mr Wyman, Mr Hackett and Mr Gil.

35    On that day, the directors of Enablo met and passed resolutions to the following effect:

(1)    an Event of Default had occurred (by reason of a material breach of the shareholders agreement by Kasaragh);

(2)    by reason of cl 12.6 of the shareholders agreement, Kasaragh was deemed to have immediately provided a Sale Notice under cl 11 of the shareholders agreement for its shares in Enablo;

(3)    for the purpose of issuing a Sale Notice pursuant to cl 12.6 of the Shareholders Agreement, the price for Kasaragh’s shares was $1.00 per share; and

(4)    pursuant to cl 12.9 of the shareholders agreement, Enablo would issue a Sale Notice pursuant to cl 11 of the shareholders agreement to all shareholders in respect of the sale of the Sale Shares.

36    The Sale Notice was in the following form:

This notice is provided under clauses 11.1 and 12.6 of the Shareholders Agreement of [Enablo].

[Kasaragh] intends to sell all of its 15,000 ORD class shares (the Sale Shares) that it owns in [Enablo] at a price of $1.00 per share.

Pursuant to clause 11.3 of the Shareholders Agreement, each other shareholder is entitled to purchase the Sale Shares pro rata in proportion to their existing shareholding.

Acceptance of this offer to purchase your pro rata share or any other number of the Sale Shares, must be made within 30 days from the date of this notice.

(bold emphasis in original)

37    On 30 January 2025, the directors of Enablo met again. The minutes of that meeting include:

(bold emphasis in original)

38    On the same day, Mr Hackett, qua director of Enablo, wrote to Kasaragh:

As a result of the Share Sale Notice dated 29th January 2025, [Enablo] has received offers from the existing shareholders to purchase the Selling Shareholder’s shares in [Enablo].

Therefore, please find enclosed the following Share Transfer Forms, for execution by the Selling Shareholder:

The Selling Shareholder has 14 days from the date of this letter to sign and return each of the Share Transfer Forms before [Enablo] will take steps to rely on clause 12.9 of the Shareholders Agreement for [Enablo] to act as attorney for the Selling Shareholder to effect the transfer of the Shares contained in the Share Transfer Forms.

Can you please provide banking details so that the sale proceeds can be deposited following the signing of all transfer documents.

(bold emphasis in original)

39    On 4 February 2025, Kasaragh’s solicitors wrote to Enablo’s solicitors taking issue with the steps that had purportedly been taken to acquire Kasaragh’s shares in Enablo.

40    On 10 February 2025, Enablo’s solicitors rejected the demands in the letter from Kasaragh’s solicitors and stated that Enablo would proceed to effect the proposed transfer of Kasaragh’s shares.

41    Steps were then taken to effect the transfers of Kasaragh’s shares to the other members of Enablo.

42    Kasaragh then commenced this proceeding by filing an originating process. The principal orders sought therein are:

1.    Pursuant to section 237 of the Corporations Act, an order that [Kasaragh] be authorised, or alternatively granted leave, to institute proceedings in the name and on behalf of [Enablo].

2.    Pursuant to section 247A(1) and (3) of the Corporations Act, an order authorising [Kasaragh] to inspect the books of [Enablo] and/or its agents to inspect the books of [Enablo] on [Kasaragh’s] behalf.

3.    Pursuant to section 1322(4)(b) of the Corporations Act, an order that ASIC be directed to rectify its registers to record that [Kasaragh] holds 15,000 fully paid ordinary shares in [Enablo].

4.    A declaration that the affairs of [Enablo] are being conducted, further or alternatively that the acts or omissions on behalf of [Enablo], are oppressive to, or unfairly prejudicial to, or unfairly discriminatory against [Kasaragh] pursuant to section 232 of the Corporations Act.

5.    Such further orders as the Court considers appropriate in order to address such oppression as is found in respect of [Enablo] under prayer 4 above.

6.    Further or in the alternative, a declaration that on or around 15 February 2025, [Mr Hackett, Ms Hackett, Sonix Investments, Jaxma, Mr Gil and Mr Cohn] breached the Shareholders Agreement dated 14 October 2022.

…

43    Kasaragh’s claims for relief in terms of prayers 1 and 2 of the originating process were scheduled for hearing together and orders were made in anticipation of the hearing for the filing of submissions concerning both those prayers.

44    Kasaragh’s written submissions filed in advance of that hearing addressed only prayer 2 of the originating process. Enablo, in its written submissions, took issue with the failure of Kasaragh to pursue the relief sought in prayer 1. Kasaragh in its written submissions in reply reiterated the position taken in its submissions in chief, namely that it was moving only on prayer 2, but with a fallback position that s 237 of the Act was satisfied in the event that the Court were to decide to determine prayer 1. During the hearing, the Court indicated that the decision whether to move on prayer 1 was a matter for Kasaragh, not the Court. Counsel for Kasaragh affirmed that Kasaragh did not move on prayer 1.

C.    SECTION 247A APPLICATION

45    Against that background, I turn now to the relief sought under s 247A of the Act.

C.1    Section 247A of the Act and relevant principles

46    Section 247A of the Act provides:

247A     Order for inspection of books of company or registered managed investment scheme

(1)     On application by a member of a company or registered managed investment scheme, the Court may make an order:

(a)     authorising the applicant to inspect books of the company or scheme; or

(b)     authorising another person (whether a member or not) to inspect books of the company or scheme on the applicant’s behalf.

The Court may only make the order if it is satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose.

(2)     A person authorised to inspect books may make copies of the books unless the Court orders otherwise.

(3)     A person who:

(a)     is granted leave under section 237; or

(b)     applies for leave under that section; or

(c)     is eligible to apply for leave under that section;

may apply to the Court for an order under this section.

(4)     On application, the Court may make an order authorising:

(a)     the applicant to inspect books of Enablo; or

(b)     another person to inspect books of Enablo on the applicant’s behalf.

(5)     The Court may make the order only if it is satisfied that:

(a)     the applicant is acting in good faith; and

(b)     the inspection is to be made for a purpose connected with:

(i)     applying for leave under section 237; or

(ii)     bringing or intervening in proceedings with leave under that section.

(6)     A person authorised to inspect books may make copies of the books unless the Court orders otherwise.

(bold emphasis in original)

47    It is common ground for the purposes of this application that Kasaragh is not a member of Enablo and thus cannot apply for relief under s 247A(1) of the Act. It is also common ground that as a former member of Enablo, Kasaragh is eligible to apply for leave under s 237 of the Act and thus has standing pursuant to s 247A(3)(c) of the Act to seek relief under s 247A of the Act.

48    Section 247A confers a discretion upon the Court to make an order authorising Kasaragh to inspect the books of Enablo: s 247A(4) of the Act. The Court may exercise the discretion to make an order under s 247A(4) of the Act only where it is satisfied that:

(1)    Kasaragh is acting in good faith; and

(2)    the proposed inspection of books is to be made for a purpose connected with: (a) applying for leave under s 237 of the Act; (b) bringing proceedings with leave under s 237 of the Act; or (c) intervening in proceedings with leave under s 237 of the Act.

49    Kasaragh contends that: (1) it is acting in good faith; and (2) the proposed inspection of the books in respect of which it seeks authorisation is for a purpose connected with applying for leave under s 237 of the Act.

50    The “good faith” and “purpose” criteria are usually considered together and must be proved objectively, with the onus of proof on the applicant: Mesa Minerals Ltd v Mighty River International Ltd [2016] FCAFC 16; (2016) 241 FCR 241 at 245 to 246 [22] (Katzmann J; Siopis and Gilmour JJ agreeing).

51    In Vinciguerra v MG Corrosion Consultants Pty Ltd [2007] FCA 503; (2007) 61 ACSR 583 at 597 ([62] and [65]), Gilmour J explained that:

62    Section 247A(1) expresses a composite notion of good faith and a proper purpose: Barrack Mines Ltd v Grants Patch Mining Ltd (No 2) [1988] 1 Qd R 606; (1987) 12 ACLR 630 and Knightswood Nominees Pty Ltd v Sherwin Pastoral Co Ltd (1989) 15 ACLR 151. By extension, in my opinion, this is also the position in respect of the requirement of good faith and proper purpose contained within s 247A(5). See Chuen v Laredo Pty Ltd [2005] WASC 58 at [59].

…

65    Where orders for inspection are sought under the regime found within s 247A(3)–(6), this will require, in my opinion, a consideration of the bases relied upon or to be relied upon in any foreshadowed application pursuant to s 237 of the Act. Accordingly, I respectfully agree, with the view expressed by Master Sanderson in Caveat Pty Ltd v Baillie [2002] WASC 83 at [24]–[25]. This approach was adopted by Commissioner Siopis SC, as he then was, in Chuen v Laredo Pty Ltd [2005] WASC 58 at [59].

(italic emphasis in original)

52    The view expressed by Gilmour J in Vinciguerra was subsequently endorsed by Martin CJ in Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [2007] WASC 207 at [39], where his Honour explained:

It is now established that the reference in s 247A(1) to good faith and a proper purpose is the expression of a composite notion, rather than separate and divisible concepts (see Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 Qd R 606; Knightswood Nominees Pty Ltd v Sherwin Pastoral Co Ltd (1989) 15 ACLR 151; Vinciguerra v MG Corrosion Consultants Pty Ltd [2007] FCA 503; (2007) 61 ACSR 583). I agree with the view expressed by Gilmour J in Vinciguerra to the effect that the same composite approach should be taken to the requirement under s 247A(5) of the Act that the applicant be acting in good faith and for a purpose connected with an application for leave under s 237 or bringing or intervening in proceedings pursuant to that leave. When an application for inspection is brought in reliance upon a pending or foreshadowed application under s 237 of the Act, it is appropriate to consider the basis for the substantive application for leave to intervene in the context of the necessary assessment of whether the applicant is acting in good faith and for a purpose connected with that substantive application - see Vinciguerra; Caveat Pty Ltd v Baillie [2002] WASC 83, [24] - [25]; and Chuen v Laredo Pty Ltd [2005] WASC 58, [59].

(bold and italic emphasis in original)

53    Thus, it is necessary to consider whether Kasaragh is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act in the context of the foreshadowed application under that section.

54    Relatedly, proof that an applicant is acting in good faith and for a proper purpose usually requires satisfaction that the proposed claim is sufficient to suggest a “case for investigation”. In the absence of a reasonable basis or foundation for the asserted purpose for which inspection is sought, it cannot be said that an application is made in good faith: Enares Pty Limited v Nimble Money Limited [2022] FCAFC 126; (2022) 294 FCR 31 at 41 to 42 ([44] to [45]) (Farrell, Markovic and Derrington JJ).

55    It follows that Kasaragh must identify that there is a reasonable foundation for its asserted purposes for inspection. Put another way, a “case for investigation” must be identified. The concept of establishing a “case for investigation” as an element of good faith operates – as the Full Court of this Court explained in Enares at 42 to 43 ([46] to [47]) – to exclude applications lacking a sufficient basis. For example, those in which the member: has nothing more than a wish to ascertain if something untoward may have happened; is unsure as to whether the directors have complied with their duties and merely wishes to examine the books in order to be satisfied that there has been no breach; or lacks some tangible support for the member’s concerns and has only belief or assertion.

56    Further, the procedure under s 247A of the Act is not intended to be as wide-ranging as discovery: Mesa at 246 [22(12)]. Nor is it to be used to launch fishing expeditions.

C.2    The asserted foundation for the purpose for which inspection is sought

57    Before addressing the categories of documents the subject of the application, it is helpful first to identify the foundation for Kasaragh’s asserted purpose for which authorisation to inspect is sought.

58    As noted above, Kasaragh has provided a draft statement of claim. The draft statement of claim sets out claims based upon: (1) alleged breaches of the shareholders agreement; (2) oppressive conduct in contravention of s 232 of the Act; and (3) a potential derivative claim.

59    The first two of these claims cannot be regarded as providing a foundation for a purpose connected with applying for leave under s 237 of the Act. Neither purports to be a claim to be brought on behalf of Enablo and each is plainly a claim propounded on behalf of Kasaragh alone.

60    The potential derivative claim differs in that it is framed as a claim able to be brought on behalf of Enablo and one that may properly be the subject of an application under s 237 of the Act.

61    The potential derivative claim describes Mr Nixon, Mr Gil, Mr Hackett and Mr Wyman as the Director Defendants, and asserts claims against the Director Defendants expressed as follows:

19.    At all material times, the Director Defendants owed a fiduciary duty to Enablo to act in the best interests of Enablo (relevantly all of its shareholders) and not to:

a.    prefer their interests over Enablo’s interests;

b.    use their position, or any opportunity or knowledge obtained by reason of their position, improperly to gain a benefit for themselves or for any other person;

c.    be in a position of conflict between their duty to Enablo and their interests; and

d.    be in a position of conflict between their duty to Enablo and their duty owed to any other person or company.

…

K.     BREACH OF DIRECTORS’ DUTIES

67.    By reason of:

a.    failing to maintain annual unaudited financial statements for each financial year, including an unaudited balance sheet as of the end of the financial year, statement of operations and statement of cash flows of Enablo for such year, in accordance with clause 2.6 of the Shareholders Agreement, further or alternatively;

b.    refusing and failing to appoint an Independent Valuer to value [Kasaragh’s] shares in Enablo pursuant to schedule 4 of the Shareholders Agreement;

c.    resolving at the Board meeting on 29 January 2025 that an Event of Default had occurred in relation to [Kasaragh] under clauses 12.1 and 12.3 of the Shareholders Agreement, in circumstances where no Event of Default had occurred and the Board had failed to undertake proper and thorough enquiries as to whether [Kasaragh’s] conduct constituted an Event of Default;

d.    resolving that representatives of Sonix Investments, Jaxma, and Thomas Hackett, Nerida Hackett, Gil and Cohn execute the share transfer forms for [Kasaragh] pursuant to clause 12.9 of the Shareholders Agreement in circumstances where no Event of Default had occurred in relation to [Kasaragh];

e.    resolving to sell [Kasaragh’s] shares in Enablo for $1.00 per share and failing to conduct an independent valuation of Enablo’s shares in accordance with Schedule 4 of the Shareholders Agreement;

f.    failing to refer the dispute between the parties as required by clause 20.1 and 20.3 of the Shareholders Agreement,

the Director Defendants, or any of them, have:

g.    used their position to gain an advantage for themselves, by obtaining the benefit of [Kasaragh’s] shares in Enablo in a manner that was inconsistent with the Shareholders Agreement;

h.    used their position to gain an advantage for themselves, by obtaining the benefit of [Kasaragh’s] shares in Enablo for less than their fair market value; and

i.    caused detriment of Enablo (sic).

68.    In the premises of paragraph 67 above, the Director Defendants, or any of them, have contravened:

a.    section 180 of the Corporations Act:

b.    further or alternatively, section 181 of the Corporations Act;

c.    further or alternatively, section 182 of the Corporations Act.

69.    By reason of the conduct pleaded at paragraph 67 and 68 above, the Director Defendants, or any of them, are liable to pay compensation to Enablo under section 1317H of the Corporations Act.

L.    BREACH OF FIDUCIARY OBLIGATIONS

70.    By reason of the Director Defendants’ conduct pleaded at paragraph 67 above, the Director Defendants, or any of them, breached the duties pleaded at paragraph 19 above in that they engaged in conduct that:

a.    preferred their interests to Enablo’s interests and the interests of [Kasaragh];

b.    used their position, or opportunity and knowledge obtained by reason of their position, improperly to gain a benefit for themselves or for any other person;

c.    was in a position of conflict between their duty to Enablo and their interests, or of Enablo’s interests and their interests;

d.    acted dishonestly.

71.    By reason of the Director Defendants’ conduct pleaded at paragraph 70, the Director Defendants:

a.    caused loss to Enablo; and

b.    are obliged to pay equitable compensation to Enablo or to account for the profits they have received.

(bold emphasis in original)

62    The conduct the subject of the proposed derivative claim is conduct concerning: (1) breaches of the shareholders agreement; and (2) steps taken to effect the transfer of Kasaragh’s shares to the other members of Enablo. Such conduct is alleged to have involved contraventions by the Director Defendants of ss 180 to 182 of the Act and breaches of their fiduciary duties; and to have provided an advantage to the Director Defendants and to have caused detriment or loss to Enablo.

63    I accept for present purposes that such conduct, if proven, may establish contraventions of ss 180 to 182 of the Act and breaches of the fiduciary duties. However, there has been no clear identification in the evidence or submissions of the alleged detriment or loss caused to Enablo. Indeed it is difficult to conceptualise how Enablo has suffered loss by reason of a breach of the shareholders agreement or from the conduct involved in the transfer of Kasaragh’s shares to the other members of Enablo. Even assuming that the Director Defendants profited from the impugned conduct, any such profits appear to have been at the expense of Kasaragh rather than Enablo. Thus, I am not satisfied that there would be any benefit to Enablo in pursuing the proposed derivative claim, in so far as it seeks damages or compensation.

64    The other relief sought (such as declarations) also provides no potential tangible benefit to Enablo.

65    In these circumstances, it does not appear to be in the interests of Enablo to pursue the potential derivative claim. It follows that I am not satisfied that the present application, in so far as it is brought for a purpose connected with applying for leave under s 237 of the Act with respect to the proposed derivative claim, is one in which Kasaragh is acting in good faith.

66    To the extent that the evidence identified in the helpful aide-memoire provided by counsel for Kasaragh during oral submissions (MFI-3) touches upon claims which go beyond the claims pleaded in the potential derivative claim, these are addressed as part of the discussion of the categories of documents sought, to which I now turn.

C.3    The proposed categories

67    Kasaragh notified Enablo of 13 categories of books in respect of which it sought authorisation to inspect. During the hearing of the application, counsel for Kasaragh indicated that categories 1 and 9 were not pressed. The extant categories are discussed below. In considering these categories, I have taken Kasaragh’s position to be as set out in MFI-3.

68    Each of the proposed categories is preceded by the following chapeau:

For the period 1 January 2024 to date and for each of Enablo and its subsidiaries, which for the purposes of the below includes Worklabs Alpha Pty Ltd (Worklabs) but is not otherwise limited to Worklabs:

…

(bold emphasis in original)

C.3.1    Category 2: Board Meeting Minutes, Board Meeting Agendas, Board packs and any Board resolutions (including resolutions proposed but not passed)

69    Mr McGrath’s evidence is that he seeks authorisation to inspect the documents in category 2 because:

(1)    he is concerned that the directors of Enablo may have breached their duties to Enablo including by the purported transfer and sale of the shares held by Kasaragh in Enablo to the existing members of Enablo;

(2)    since his departure as chief executive officer and director of Enablo he has held concerns that Enablo has not been operating in the best interest of its shareholders, including that since his departure from Enablo in around September 2023:

(a)    he was told by Mr Hackett in around early April 2024 that two separate chief executive officers of Enablo (Mr Andrew Knott and Mr Zan) had resigned in less than two years;

(b)    the board of Enablo had not announced any strategy to grow the business following the Workplace Announcement;

(3)    he has not been made aware of Enablo’s business strategy following the Workplace Announcement. He then cites as “examples” the following:

(a)    a significant number of staff of Enablo have been made redundant or have chosen to leave, including the chief growth officer and head of professional services;

(b)    Enablo’s website contains inaccurate information as it still mentions the partnerships with Meta and the Workplace platform, Microsoft and others and refers to staff members who have since left the business; and

(c)    in connection with the private ruling, Enablo provided a valuation of itself of $5 million which he believed to be true at the time, based upon a conversation with Mr Hackett.

70    Mr McGrath also gave evidence that he is concerned about the directors’ management of the relationship between Enablo and Worklabs, including the movement of monies, resources and personnel between each entity, especially following the private ruling, and following his review of the merged financial records. Mr McGrath provided evidence that, during his time as chief executive officer of Enablo, he:

(1)    presided over:

(a)    seed capital raises for both Enablo and Worklabs;

(b)    the transfer of certain intellectual property from Enablo to Worklabs for a nominal fee;

(2)    was aware that an agreement was being prepared for Enablo to provide working capital to Worklabs due to its insufficient revenue generation. This included a pre-purchasing licence which would later be resold to Enablo customers without additional charges being incurred by Enablo. Mr McGrath is uncertain as to whether this agreement was honoured as he departed before it was formalised;

(3)    received an email from Mr Nixon requesting an urgent loan as between Mr Hackett (as lender) and Worklabs (as borrower) in the amount of AU$161,753, interest free, to assist Worklabs with the payment of outstanding invoices; and

(4)    was aware that Mr Nixon asked for further capital to be provided to allow him to make a new hire at Worklabs.

71    Mr McGrath also gave evidence that he requires the documents in category 2 in order to form a view as to the current operation of Enablo in general, and whether this has changed since his departure, especially in relation to investor funding.

72    Finally, Mr McGrath gave evidence that in around May 2024, he was made aware by Mr Nixon that there were significant reductions in Enablo’s employee headcount due to the Workplace Announcement.

73    Based on that evidence, Kasaragh submitted that:

(1)    the documents in category 2 are required to investigate the breach of duties claims set out in the draft statement of claim, including against the Director Defendants, and to value the shares of Enablo, in circumstances where there has been: (a) unexplained departures of two separate chief executive officers of Enablo; (b) no explanation provided to shareholders as to the business strategy for Enablo following the Workplace Announcement; (c) a significant number of staffing redundancies, including the chief growth officer and the head of professional services; and (d) directors obtained interest free loans from shareholders to assist Worklabs with the payment of outstanding invoices; and

(2)    the incomplete financial information provided to the Kasaragh in October 2023 suggests that the Director Defendants have approved transactions involving Worklabs that do not provide any commercial benefit to Enablo.

74    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act, for the following reasons.

75    First, the basis of the application for the documents in category 2 appears to be a desire to determine whether there has been any breach of duty by the Director Defendants, rather than the identification of any reasonable foundation for a case that there has been such a breach to which the documents sought may be relevant. The evidence provided falls well short of establishing any case for investigation of a breach of duty by the Director Defendants.

76    Secondly, the concerns expressed by Mr McGrath are in substance complaints as to management decisions. As the Full Court explained in Enares at 41 [43], members ordinarily do not have access to the Court to challenge directors’ managerial decisions and as such mere dissatisfaction with such decisions cannot provide a basis for an order under s 247A.

77    Thirdly, in any event leave would not be granted with respect to a category in that form. A category of this kind ought not be drafted in a manner which seeks discovery of all minutes, agendas, packs and resolutions. Rather, such a category should be limited to such of the documents as are relevant to particular events or decisions relevant to the case identified by the applicant: see Mesa at 246 [22(12)].

C.3.2    Category 3: Shareholder Meeting Minutes, Agendas, packs and any resolutions (including resolutions proposed but not passed)

78    Mr McGrath’s evidence in support of the application for authorisation to inspect the documents in category 3 is that:

(1)    the Workplace Announcement was unexpected and saw over 30,000 clients, (representing more than US$150 million of revenue) requiring new software to assist with their internal communications requirements. It also had a material impact on Enablo’s business operations, as at the time of the announcement, Enablo was one of the largest partners and resellers for Workplace and a significant portion of Enablo’s revenue was derived from the partnership with Meta, specifically around Workplace;

(2)    he requires the documents in category 3:

(a)    because he is concerned about the management and governance of Enablo, especially following the late May 2024 meeting referred to at [28] above during which he says he expressed a desire to assist Enablo. Since this time, he has not been made aware of any decisions that have been made or discussed to ensure Enablo’s investors are to be made whole from their investment; and

(b)    to review what communications were shared with the other members of Enablo following the Workplace Announcement which had negatively affected Enablo’s primary source of revenue and in turn the value of its shares.

79    On the basis of that evidence, Kasaragh submitted that the documents in category 3 are required so that Kasaragh can review what communications were shared with other members of Enablo following the Workplace Announcement.

80    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. No reasonable foundation for a case to be pursued by Enablo under that section (or otherwise) has been identified. The purported purpose is no more than a desire to understand or investigate what has happened within Enablo. In any event, the category is too broad for the reasons set out with respect to category 2.

C.3.3    Category 4: All bank account statements for all bank accounts held in the name of Enablo

81    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 4 is that:

(1)    on his review of the documents provided by Enablo, it was apparent to him that there were errors and omissions in what he had been provided; and that this information also blended financial information of Enablo and Worklabs;

(2)    it was unclear to Mr McGrath why the financial statements that he had received from Enablo merged the financial records of Worklabs;

(3)    on 23 October 2023, he had the email exchange with Mr Hackett set out at [24] above;

(4)    he understood from those emails that there had been consolidation into one company;

(5)    the information that had been provided to Mr McGrath showed loans and payments between the two companies (Enablo and Worklabs) that did not make sense to Mr McGrath with the information he then had about the business operations and in the absence of further information that was not forthcoming;

(6)    he is familiar with Enablo’s bank accounts and the movement of monies through and between its accounts. For example, he is aware that Enablo holds a number of foreign reserve accounts in Australia and elsewhere, as well as overseas accounts through a subsidiary company known as “Enablo Inc” in the United States of America;

(7)    he raised with Mr Hackett and Mr Zan concerns as to the financial records that had been provided to him. Those records did not align with what he would have expected;

(8)    he requires the documents in category 4 in order to understand:

(a)    the movement of monies between these accounts, so as to understand Enablo’s financial position; and

(b)    the relationship between Enablo and Worklabs so as to determine how and why the financial statements are being merged in circumstances where he understands that the ATO had ruled that those entities were de-merged and to be treated separately for taxation purposes.

82    On the basis of this evidence, Kasaragh submitted that:

(1)    production of the bank account statements will enable Kasaragh to understand the movement of monies, including in accounts held overseas, to investigate the derivative claims, and in particular whether the Director Defendants have transferred funds from Enablo to Worklabs or any other entities that are in the Director Defendants’ control for no benefit to Enablo; and

(2)    the email from Mr Hackett dated 23 October 2023 and the manner in which the financial records provided to Kasaragh in October 2023 merge Enablo and Worklabs financial information suggests the Director Defendants are treating both entities as “one business”, contrary to the demerger ruling from the ATO.

83    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. Again, no reasonable foundation for a case to be pursued has been identified and the purported purpose is little more than a wish to understand what has happened within Enablo. So much is clear from the references in Kasaragh’s submissions to a desire to understand and to investigate and to determine whether the Director Defendants have breached their duties. In any event, the category is also too broad for the reasons set out with respect to category 2.

C.3.4    Category 5: All statements of comprehensive income, cash flow statements, statements of changes in equity, income statements, whether audited or unaudited, and whether prepared for management only

84    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 5 is that:

(1)    when he was at Enablo, it adopted a diligent approach to its financial reporting including to its directors and shareholders;

(2)    Enablo’s company files are kept on a program called “Xero” and that certain directors, including Mr Hackett, had direct access to Xero;

(3)    Enablo holds documents of the kind requested in category 5;

(4)    he requires the documents in category 5 in order to understand Enablo’s performance since 1 January 2024, including to:

(a)    determine the fair market value of its shares and other assets;

(b)    identify:

(i)    any movement of funds between companies or bank accounts that may not have been in the best interests of Enablo or were not compliant with Enablo’s governing documents;

(ii)    any reporting errors of currency (i.e. USD instead of AUD); and

(iii)    any other anomalies.

85    On the basis of this evidence, Kasaragh submitted it should be authorised to inspect the documents in category 5 because they are required in order to:

(1)    determine the fair market value of the shares in Enablo. In this regard, Kasaragh refers to its contentions that: (a) in seeking the private ruling, a “conservative valuation” of the shares of $5 million was provided to the ATO, but the board of Enablo has now valued Kasaragh’s shares at $1 per share; and (b) the process for an independent valuation under schedule 4 of the shareholders agreement was not followed; and

(2)    investigate the claims pleaded in the draft statement of claim, particularly as to the transfer of Enablo’s assets from Enablo to Worklabs or other third parties that were not in Enablo’s best interests, and to understand how the conduct of the defendants has negatively affected the value of Enablo’s shares.

86    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. Mr McGrath’s evidence as to Kasaragh’s purpose speaks largely to a desire to undertake investigations to determine whether there has been conduct giving rise to a claim to be pursued. He also gives evidence of seeking these documents for the purpose of ascertaining the fair value of the shares in Enablo, however such a purpose, albeit relevant to the proposed breach of contract and oppression cases, is not a purpose connected to applying for leave under s 237 of the Act.

87    The submission that the documents are required in order to investigate the claims pleaded in the draft statement of claim, particularly as to the transfer of Enablo’s assets from Enablo to Worklabs or other third parties that were not in Enablo’s best interests was not developed. The draft statement of claim does not contain such a claim.

88    In any event, the category is too broad for the reasons set out with respect to category 2.

C.3.5    Category 6: A copy of any agreements or documents recording any new business settled by Enablo and Worklabs

89    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 6 is that:

(1)    he was concerned following the Workplace Announcement of the impact that would have on the members of Enablo;

(2)    he is also concerned about the financial growth of Enablo compared to its expenses between the time that he left Enablo (about 2 March 2023) and the Workplace Announcement (on 15 May 2024). This is also relevant to the ascertainment of the fair market value of Kasaragh’s shares given that the shareholders and directors of Enablo have purported to sell Kasaragh’s shares for $1.00 per share in the absence of having conducted a valuation pursuant to schedule 4 of the Shareholders Agreement;

(3)    he requires the documents in category 6:

(a)    because of the concerns he holds as to the long-term viability of Enablo and whether there is a growth strategy implemented by management and the directors of Enablo, especially following the Workplace Announcement. As noted above, in around May 2024, he was made aware that there were significant reductions in Enablo’s employee headcount due to the Workplace Announcement;

(b)    to show him what actions, if any, have been taken by Enablo to generate new revenue and act in the best interests of its shareholders; and

(c)    to understand the value of the shares in Enablo and to demonstrate the long-term viability and growth strategy of Enablo.

90    On the basis of this evidence, Kasaragh submitted that the documents in category 6 should be made available for inspection because:

(1)    those documents are required to investigate how the conduct of the defendants has negatively affected the value of Enablo’s shares or otherwise not been in the best interests of shareholders; and

(2)    Kasaragh is concerned about the long-term viability of Enablo and whether there is a growth strategy implemented by management and the board of Enablo, following the Workplace Announcement.

91    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. Mr McGrath’s evidence as to Kasaragh’s purpose and the submissions described in the previous paragraph rise no higher than a desire for information. The documents are sought in aid of a search for a case, rather than in furtherance of such a case. Critically, no purpose connected to an application for leave under s 237 of the Act has been identified.

C.3.6    Category 7: Insurance documents for Enablo, including any director and officer insurance policy and notification to insurers of any Claims

92    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 7 is that he requires these documents to ascertain the insurance position of Enablo, including as to whether Enablo has acted upon Kasaragh’s request that it notify its insurer as to the claim made the subject of this proceeding.

93    Based on that evidence, Kasaragh submitted that the documents in category 7 should be made available for inspection because:

(1)    those documents are required to confirm whether Enablo has notified its insurer of any claim under any directors and officers insurance policies; and

(2)    the terms and limits of any responsive directors and officers insurance policies are connected to any derivative claims Kasaragh might bring against the Director Defendants. Such policies may establish the likelihood of Enablo achieving a recovery from the derivative claims, which is relevant to the best interests requirement for leave in s 237(2)(c).

94    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. This is because of the absence of evidence that it would be in the interests of Enablo for Kasaragh to seek leave to pursue an application under s 237 of the Act to bring a derivative claim, when there is no apparent benefit to it in doing so.

C.3.7    Category 8: Documents recording the remuneration of directors and executives of Enablo and Worklabs, including any bonuses or pay increases

95    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 8 is that:

(1)    he was aware that certain directors and executives of Enablo were on different remuneration structures. Historically, board members were members of Enablo, either directly or through entities that they controlled, and were not separately remunerated unless they had a role in the business;

(2)    his remuneration structure was a lower base salary with a sales compensation plan (i.e. he would receive commission if he generated certain levels of revenue for Enablo); whereas Mr Wyman and Mr Nixon were on higher base salaries without a compensation plan. Instead of receiving additional remuneration by way of a compensation plan, Mr Wyman and Mr Nixon would, on occasion, request monies or bonuses at certain times as remuneration for their respective roles, which was only as employees of Worklabs;

(3)    he was aware that on previous occasions, certain directors had drawn a bonus from Enablo despite not actively working in or at Enablo in any capacity other than a director. For example, he is aware that Mr Nixon and Mr Wyman had drawn bonuses from Enablo, and he is not aware of Mr Hackett or Mr Gil being financially compensated for their roles as directors of Enablo;

(4)    he is concerned that despite the need to reduce company related costs following the Workplace Announcement, Mr Nixon, Mr Wyman, Mr Hackett and/or Mr Gil may have approved payments of bonuses and other forms of remuneration to themselves, including in relation to the purported transfer of Kasaragh’s shares in Enablo, in circumstances where they provided no additional value to Enablo; and

(5)    for these reasons, and the reasons set out in his evidence with respect to categories 4 and 5, Kasaragh requires the documents in category 8.

96    Upon the basis of this evidence, Kasaragh submitted that the documents in category 8 should be made available for inspection because:

(1)    these documents are required to investigate the claims against the Director Defendants in the draft statement of claim with respect to preferring their own interests over the interests of Enablo for their personal benefit, and to determine the value of Enablo;

(2)    the Director Defendants’ authorisation of additional remuneration for themselves following the Workplace Announcement, when Enablo had an acute requirement for cash retention and was making the majority of its staff redundant, is connected to derivative claims Kasaragh may bring against the Director Defendants; and

(3)    the documents are sought based on Mr McGrath’s experience of how the Director Defendants remunerated themselves from time to time when he was also a director of the business and the fact that the Director Defendants have refused to disclose remuneration they have received since Mr McGrath left the business.

97    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. It is plain from the evidence and the submissions that Kasaragh wishes to investigate whether there is a case based upon payments made from Enablo to the Director Defendants after the Workplace Announcement. There has been no identification of evidence, whether direct or indirect, that such payments have been made. Mr McGrath’s suspicion and supposition is insufficient to establish a case for investigation. Further, the allegations in the statement of claim concerning the Director Defendants preferring their own interests over the interests of Enablo, relate to the matters pleaded at paragraph 67 of the statement of claim, which do not include any allegations concerning remuneration of directors.

C.3.8    Category 10: The current business plan and plans to deliver any shareholder returns

98    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 10 is that:

(1)    in around June 2021, he was approached by a Principal of Corporate Development at Deloitte APAC who expressed an interest in Deloitte acquiring Enablo;

(2)    between June 2021 until about September 2021, he worked with Deloitte to set up an internal data room to consider this potential acquisition;

(3)    the potential deal fell through;

(4)    following the Workplace Announcement, Kasaragh had not received any information from Enablo as to its plans to remediate this issue;

(5)    he requires the documents sought in category 10:

(a)    because those documents directly relate to “whether any return financial benefit may be made as a result of the Shareholders’ shares in [Enablo]” and to form a view as to whether the directors are acting in the best interest of Enablo and the shareholders as a whole; and

(b)    to understand the plans, if any, of Enablo to secure a return, or, if there are winding up discussions in place how Enablo proposes to distribute company assets and surplus cash.

99    Upon the basis of this evidence, Kasaragh submitted that the information in category 10 should be made available for inspection because those documents are documents required in order to consider claims against the defendants in the draft statement of claim for failing to act in the best interests of Enablo after the Workplace Announcement, which is also relevant to any share valuation.

100    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. The draft statement of claim does not include any allegation that the Director Defendants failed to act in the best interests of Enablo in the aftermath of the Workplace Announcement. Again, accepting that the documents may have some connection to the fair value of the shares in Enablo, inspection of the documents in this category has no apparent purpose connected with applying for leave under s 237 of the Act.

C.3.9    Category 11: Documents showing the transfer of money as between Enablo and Worklabs

101    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 11 is a subset of his evidence concerning categories 4 and 5.

102    Upon the basis of this evidence, Kasaragh submitted that the documents in category 11 should be made available for inspection because:

(1)    production of those documents will enable Kasaragh to understand the movement of monies, including in accounts held overseas, to investigate the derivative claims, particularly whether the Director Defendants have transferred funds from Enablo to Worklabs or any other entities that are in the Director Defendants’ control for no benefit to Enablo; and

(2)    Mr Hackett’s email dated 23 October 2023 and the manner in which the financial records provided to Kasaragh in October 2023 merge the financial information of Enablo and Worklabs suggest that the Director Defendants are treating both entities as “one business”, contrary to the private ruling.

103    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a proper purpose connected with applying for leave under s 237 of the Act. Once again, no reasonable foundation for a case to be pursued has been identified and the purported purpose is but a wish to identify whether there is a claim to be pursued.

C.3.10    Category 12: A copy of any agreements or documents recording the management of the relationship between Enablo and Worklabs

104    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 12 is that he requires the documents in this category in order to:

(1)    determine:

(a)    how and why the board of Enablo has approved the merging of the two entities’ financial statements, despite the ATO ruling;

(b)    the value of the shares in Enablo; and

(2)    understand whether Enablo is fulfilling its commercial agreements. He provided as an example his authorisation, qua chief executive officer of Enablo, of the “pre-purchase” of a significant number of Worklabs’ licences at a discounted rate on the basis that Enablo would later achieve a commercial benefit from doing so by the release of these licences to its customers. His evidence is that the records requested in category 12 will determine what occurred on that occasion, and any other business arrangements of a similar kind.

105    Mr McGrath also gave evidence that he is interested in understanding what, if any, loans as between Enablo and Worklabs have been made and/or repaid, whether any commercial agreements between the two entities have been entered into and whether any of those terms have been honoured. He says that will have a direct impact on the value of the shares in Enablo.

106    Upon the basis of this evidence, Kasaragh submitted that the documents in category 12 should be made available for inspection because:

(1)    those documents are required in order to determine the value of the shares in Enablo and whether the Director Defendants have approved loans or other transactions between Enablo and Worklabs that detrimentally affect Enablo’s financial position and were not in Enablo’s best interests; and

(2)    the terms of any agreements, or the absence of such agreements, when compared against the transactions between Enablo and Worklabs disclosed in the financial information and bank statements also sought by Kasaragh, are directly connected to whether the Director Defendants have failed to act in the best interests of Enablo.

107    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. Again, Mr McGrath’s evidence concerns his quest for information. No reasonable foundation for a case to be pursued under s 237 of the Act (or otherwise) has been identified.

C.3.11    Category 13: A copy of the former and current customer records of Enablo

108    Mr McGrath’s evidence with respect to the application for authorisation to inspect the documents in category 13 is that: (1) his solicitors provided an updated list of categories of documents sought which included as category 13: “A copy of the former and current customer records of [Enablo]”; and (2) the solicitors for Enablo declined to provide such documents.

109    Mr McGrath provided no evidence as to Kasaragh’s purpose in inspecting the documents in this category.

110    Kasaragh submitted that the documents sought in category 13 ought be made available for inspection because such documents are:

(1)    required to appropriately value the shares in Enablo and to assess the proposed claims against the Director Defendants and the other defendants; and

(2)    connected with the Director Defendants’ conduct in the purported transfer of Kasaragh’s shares to the other members of Enablo.

111    I am not satisfied, with respect to this category, that Kasaragh has established that it is acting in good faith and for a purpose connected with applying for leave under s 237 of the Act. Again, accepting that the documents may have some connection to the fair value of the shares in Enablo, inspection of the documents has no apparent purpose connected with applying for leave under s 237 of the Act. To the extent that the asserted foundation is the proposed derivative claim, I am not satisfied that Kasaragh is acting with good faith and the requisite purpose when, as earlier discussed, I am not satisfied that it could be in the interests of Enablo for Kasaragh to seek leave to pursue an application under s 237 of the Act to bring a claim for which there is no apparent benefit to Enablo.

D.    CONCLUSION

112    For the foregoing reasons, Kasaragh’s application under s 247A of the Act must be dismissed. Counsel for Enablo indicated that Enablo wishes to be heard on the question of costs. There remains the issue of whether prayer 1 should be dismissed; and the costs associated with prayer 1 that have been incurred to date. I will make orders which allow the parties time to confer as to the form of orders that ought be made; and for the determination of any disputed questions.

Associate:

Dated:    30 July 2026

SCHEDULE OF PARTIES