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'

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