Day 083 - 06 Feb 95 - Page 11
1
2 MR. RAMPTON: May I ask your Lordship to take that blue file of
3 authorities? It has now an index. I am sorry it is in
4 handwriting. (Handed)
5
6 MR. JUSTICE BELL: Yes.
7
8 MR. RAMPTON: My Lord, may I start with tab 2 which is Lonrho v.
9 Shell Petroleum in the Court of Appeal, 1980 QB at 358?
10 Your Lordship will remember the facts of this case where
11 the Plaintiffs, Lonrho, applied for discovery against
12 Shell, the Defendants, that is, of documents in the
13 possession of various of Shell's subsidiaries in different
14 parts of the world.
15
16 The question was whether the parent had power under Order
17 24 to, as it were, compel the subsidiaries to disgorge the
18 documents and, therefore, whether Lonrho had a right of
19 discovery as against the parent Shell. The Court of Appeal
20 held that neither of those propositions was right, and that
21 the parent did not have a power to compel its subsidiaries
22 to disgorge the documents, the position being that the
23 subsidiaries were separate legal entities, though their
24 shareholding was entirely in the hands of the parent with
25 independent boards of directors who had to make their own
26 minds up about what it was right in the interests of their
27 subsidiary company to do when asked for the documents.
28
29 There were other aspects to the case with which I do not
30 believe your Lordship need be concerned in the context of
31 this particular case. My Lord, can I start at page 371
32 between A and B in the Judgment of Master of the Rolls,
33 Lord Denning, where he says: "It is not suggested that
34 Shell or BP have the 'possession' or 'custody' of the
35 documents of their subsidiaries. They are in South Africa
36 and Rhodesia. But it is said that they have the 'power' to
37 disclose them. Paragraph 39 of Halsbury's Laws goes on to
38 say:
39 '... "power" means an enforceable right to inspect it or
40 to obtain possession or control of the document from the
41 person who ordinarily has it in fact.'
42
43 That is the important point in this case - a case which has
44 been well argued before us. What is the position with
45 regard to a holding company or the head of a group like
46 Shell or BP, which has subsidiaries - some 100 per cent
47 owned, (or as in many of these cases) when they own 50 per
48 cent each, so that between them they control the
49 subsidiaries? When there is a parent company with
50 subsidiaries, is it or is it not the law that the parent
51 company has the 'power' over the documents of the
52 subsidiaries when they are in another country?
53
54 I would like to say at once that, to my mind, a great deal
55 depends on the facts of each individual case. For
56 instance, take the case of a one-man company where one man
57 is the shareholder - perhaps holding 99 per cent of the
58 shares, and his wife holding one per cent - where perhaps
59 he is the sole director. In those circumstances, his
60 control over that company may be so complete - his 'power'
