In the matter of Gulf Energy Limited (subject to deed of company arrangement)

Gulf Energy Limited, a company subject to a deed of company arrangement, sought leave under section 444GA of the Corporations Act 2001 to transfer its shares. The dispute arose when certain shareholders argued they were unfairly prejudiced by the administrators' refusal to convene a meeting to consider an alternative deed of company arrangement (DOCA) they proposed. The alternative DOCA was presented after the proponent of the current DOCA had already made payments into the deed fund. Although the shareholders foreshadowed their intention to bring applications requiring consideration of the alternative DOCA, they did not actually make the necessary applications. The central legal issue was whether the residual equity in the company and the shareholders' potential unfair prejudice justified allowing the current DOCA to be varied to accommodate the alternative DOCA proposed by the shareholders.

The court examined whether the presence of a third party offering higher consideration through the alternative DOCA constituted sufficient grounds to vary the current DOCA. It assessed whether the shareholders' failure to formally pursue their proposed DOCA precluded them from seeking relief under section 444GA. The court also considered the principles of fairness and whether the administrators' refusal to consider the alternative DOCA resulted in the shareholders being unfairly prejudiced. The court had to balance the interests of the residual equity holders, the proponent of the current DOCA, and the shareholders who proposed the alternative arrangement.

The court held that the residual equity in the company and the potential for unfair prejudice to the shareholders warranted consideration of the alternative DOCA. It determined that the administrators' refusal to convene a meeting to consider the alternative DOCA, despite the presence of a third party offering higher consideration, was a factor that could justify varying the current DOCA. The court emphasised that while the shareholders did not formally pursue their proposed DOCA, the potential for unfair prejudice was significant enough to warrant the court's intervention. Consequently, the court granted leave for the transfer of shares under the alternative DOCA, finding that the interests of justice were served by doing so.

The final orders of the court were that leave be granted to transfer the shares in accordance with the alternative DOCA proposed by the shareholders, recognising the potential for unfair prejudice and the presence of a third party offering higher consideration. The court directed the administrators to convene a meeting to consider the terms of the alternative DOCA, ensuring that the interests of all parties involved were appropriately balanced.