Pelling v Families Need Fathers Ltd

Section 356(6) of the Companies Act 1985 confers a discretion to order inspection of, or delivery of copies from, a company’s register of members. The discretion is narrow but real. The court will ordinarily enforce the statutory right, but may refuse an order where special circumstances make it unjust, unnecessary or inappropriate. The criminal penalties in section 356(5) do not remove that discretion. A court may balance the applicant’s legitimate purpose against confidentiality and other legitimate concerns by imposing conditions or accepting an undertaking to facilitate communication without disclosing the register. An appellate court may interfere with the exercise of discretion only for recognised errors of principle, failure to consider relevant matters, consideration of irrelevant matters, or a plainly wrong decision.

Dr Michael Pelling appealed from the decision of Mr Registrar Buckley refusing his application under section 356(6) of the Companies Act 1985. He sought an order requiring Families Need Fathers Ltd, a company limited by guarantee and registered as a charity, to provide part of its register of members.

The Registrar considered that he had a discretion and refused the order. Dr Pelling argued that section 356(3) gave him an unqualified right to a copy of the register and that section 356(6) imposed a duty to enforce that right following refusal or default. The company relied on confidentiality, the charitable nature of its work, data protection and Article 8 concerns. The central issues were whether the statutory power was discretionary and whether the refusal should be disturbed.

1. Appeal dismissed. The Court of Appeal, in a judgment to which all members contributed, upheld the Registrar’s refusal to make an order under section 356(6) of the Companies Act 1985.
2. On its true construction, section 356(6) gives the court a discretion. The ordinary meaning of “may”, contrasted with the mandatory use of “shall” in section 356(3), supports that conclusion. The court accepted the reasoning in O’Brien v Sporting Shooters Association of Australia [1999] 3 VR 251 concerning the similarly worded Australian provision.
3. The discretion must be exercised judicially, in accordance with established legal principles and only on relevant considerations. The normal response will be a mandatory order enforcing the statutory right, but the right is not unqualified. The residual discretion may apply where an order is unnecessary, physically impossible, or where an undertaking provides a satisfactory solution. The court endorsed the qualification identified in Armstrong v Sheppard & Short Ltd [1959] 2 QB.
4. The criminal penalties in section 356(5) reinforce the importance of the right and the company’s obligation, but do not remove the discretion under section 356(6). The court also concluded that section 34 of the Data Protection Act 1984 provided relevant exemptions and that the discretionary construction was not incompatible with Article 8 of the European Convention on Human Rights.
5. The court could reconcile the competing interests by imposing confidentiality and use conditions, or by declining inspection while accepting a suitably worded undertaking from the company to act as a post box for communications. In light of the undertakings offered by the company and Dr Pelling, such a solution was available and an unqualified order was inappropriate.

• Court of Appeal (Civil Division) [2001] EWCA Civ 1280: dismissed the appeal and upheld the refusal of an order under section 356(6) of the Companies Act 1985.
• Mr Registrar Buckley: refused Dr Pelling’s application on 5 April 2001, considering that the statutory power was discretionary.