Correa v Whittingham

Background and affidavit evidence

1. I now set out the background to the application, which I have drawn from the affidavit evidence to which I refer below and the helpful submissions of Mr Stack, who appears for the Deed Administrators.
2. Gulf Energy is an unlisted public company, which was incorporated on 28 September 2000. It has issued 186,472,783 shares ("Shares") to in excess of 50 shareholders (Shareholders) (Ex P2, 128-129). Gulf Energy's principal activity has been concerned with the exploration of oil and gas pursuant to Petroleum Exploration Permit Q/23P ("Permit"), which it had held since 21 May 2003 (Ex P2, 60), which authorises exploration in an area located in the Gulf of Carpentaria, approximately 150 kilometres offshore. The Permit was renewed on 18 August 2015 for five years (Ex P2, 30) and the conditions of that renewal were varied on 2 October 2018. Those conditions required Gulf Energy to undertake exploratory works at the exploration site, to the value of almost $63 million, with $16.28 million to be spent by 17 August 2020, $30.25 million to be spent by 17 August 2021 and $16.25 million to be spent by 17 August 2022 (Ex P2, 34). The Permit is Gulf Energy's only material asset.
3. It appears that Gulf Energy has incurred significant liabilities, but it has not commenced commercial drilling, does not receive trading income and has operated at a loss for several years (Ex P2, 60), funding its continued activities by capital raisings. It appears that its ability to raise further capital has been impaired because of declines in the price of crude oil, which fell in 2014/2015 and again in 2020, the price dropped from USD$74 a barrel to USD$18 per barrel although it has since partly recovered to approximately USD$40 a barrel (Fischer [61], Ex P1, 7).
4. On 12 September 2018, Gulf received an estimate of AUD$33.4 million for drilling an exploration well, as required by the Permit, and its directors subsequently formed the view that they would be unable to raise sufficient funds or attract a joint-venture partner, so as to enable it to fund that drilling (Fischer [55], [60]-[61]). On 21 October 2019, Gulf Energy's directors resolved to place Gulf Energy into administration under section 436A of the Corporations Act and appointed the Deed Administrators, then as voluntary administrators. On 25 October 2019, the Deed Administrators placed an advertisement in a national newspaper, inviting offers for Gulf Energy's business or its restructure and no offers were received (Gleeson [69], Ex P2, 632). The Deed Administrators held the first meeting of creditors and circulated a report to creditors and this Court validated their appointment, where Gulf Energy had less than the statutory minimum of three directors required under s 201A(2) of the Corporations Act when they were appointed: Re Gulf Energy Ltd [2019] NSWSC 1637.
5. The second meeting of creditors was then adjourned to 19 December 2019, to allow various parties to submit proposals for a deed of company arrangement. On 11 December 2019, the Deed Administrators circulated a first supplementary report to creditors (Ex P2, 139ff), which recommended against acceptance of the then DOCA proposal put by Petroventures. The second meeting of creditors was further adjourned to 22 January 2020, to allow another party to submit a DOCA proposal (Ex P2, 182ff). The Deed Administrators subsequently recommended a DOCA proposal ("Drake DOCA") received from Drake Management LLC, in preference to an amended DOCA proposal received from Petroventures, and creditors favoured the Drake DOCA at the second meeting of creditors held on 22 January 2020 (Ex P2, 261ff). The Drake DOCA was executed on 13 February 2020 and the Deed Administrators were appointed as deed administrators (Ex P2, 267ff). After difficulties arose in respect of the Drake DOCA, and the Deed Administrators circulated third and fourth supplementary reports to creditors (Ex P2, 322ff, 372ff), which did not recommend an alternative DOCA proposal put by Petroventures over a liquidation, creditors approved the Drake DOCA being wholly amended in the form of the Petroventures DOCA at a further meeting of creditors (Ex P1, 408ff). The Petroventures DOCA was executed on 7 May 2020; the Deed Administrators were appointed as deed administrators (Ex P2, 415ff); and cl 9.2 of the Petroventures DOCA requires that the Deed Administrators to apply to the Court under section 444GA of the Act, for the transfer of the Shares to Petroventures.
6. The Deed Administrators rely on an affidavit dated 25 June 2020 of Mr Fischer, who is a director of Gulf Energy and is associated with Petroventures. Mr Fischer sets out the history of Gulf Energy and the difficulties which it had in raising sufficient funds to drill an exploration well in accordance with the requirements of the Permit, and points to the negative impact of falls in the oil price and the COVID-19 pandemic on the global economy and the demand for energy.
7. The Deed Administrators also rely on the affidavit dated 1 July 2020 of Mr Gleeson, which also refers to the background of Gulf Energy, his and Mr Soire's appointment as joint and voluntary administrators of Gulf Energy in October 2019, to earlier proposals made by Petroventures for a DOCA which were not recommended by the Deed Administrators, the entry into and subsequent termination of the Drake DOCA, and the subsequent entry of the revised Petroventures DOCA. Mr Gleeson also refers to the substantial level of Gulf Energy's creditors, with proofs of debt totalling approximately $9.48 million, and several large debts owed to particular creditors.
8. Mr Gleeson also refers to a potential overstatement of the value of the Permit in Gulf Energy's audited financial statements accounts for the year ended 30 June 2018, which were qualified by its auditors by reference to that matter, and to the subsequent but unsuccessful attempt made by the Deed Administrators to sell the Permit. Mr Gleeson notes that ordinary unsecured creditors will likely receive close to nil return under the Petroventures DOCA and would receive approximately one cent in the dollar if Gulf Energy was placed into liquidation, notwithstanding that they have voted in favour of the Petroventures DOCA. Mr Gleeson expresses the view, which follows from that observation, that there is no realistic prospect that any shareholder in Gulf Energy would receive any distribution in respect of his or her shares if Gulf Energy was wound up.
9. The Deed Administrators rely on an affidavit dated 10 July 2020 of their solicitor, Mr Russell, which referred to a circular sent to shareholders giving notice of this application and summarised attempts to contact several shareholders who were uncontactable. By a further affidavit dated 31 August 2020, Mr Russell referred to notification of shareholders pursuant to orders made by the Court on 13 July 2020, although there was a delay in compliance with an aspect of those orders. He also referred to notification of this application to the Australian Securities and Investments Commission.
10. By a further affidavit dated 16 September 2020, which was read subject to an order under the Court Suppression and Non-Publication Act, Mr Russell referred to a technical specialist's report obtained by the Deed Administrators in accordance with ASIC's requirement in respect of an application for relief from the application of s 606 of the Act in respect of a transfer of the shares. Mr Russell noted that the Deed Administrators disclosed the existence of that report as a matter of candour, but did not rely on that report in support of the relief sought in this application. Mr Russell also pointed to a difficulty in providing that report to shareholders, where the technical specialist did not hold an Australian Financial Services Licence and ASIC took the view that the provision of that report to shareholders would likely constitute financial product advice for which an Australian Financial Services Licence would be required. I have not had regard to that report, where it is not relied on in support of the application.
11. By letter dated 21 September 2020, ASIC advised of an "in principle" decision to provide relief under s 655A of the Corporations Act, which would allow a transfer of shares in Gulf Energy to take place without a contravention of s 606 of the Act. ASIC noted that it would execute a formal instrument of relief only if the Court granted leave under s 444GA to the Deed Administrators to transfer all of the existing shares in Gulf Energy to Petroventures in accordance with the Petroventures DOCA. ASIC also identified the documents to which it had regard in granting that relief, including the technical specialist's report to which I referred above and the submissions made by the Shareholders in opposition to the application. ASIC also fairly noted that the Court's decision in respect of the application would have regard to different, and potentially wider, criteria for the purposes of s 444GA of the Act.
12. The Shareholders in turn relied on the affidavit dated 20 August 2020 of their solicitor, Mr Mitry, which annexed a proposal to "vary" the Petroventures DOCA sent by the Shareholders to the Deed Administrators on 20 August 2020. That proposal was a document of a little more than two pages which indicated that the proponents of the revised DOCA would pay some $25,000 into the Deed Administrators' trust account as security for the proposal, 7 days prior to a meeting of creditors to consider the proposal, and set out the steps which would be taken, including a further Court application, in respect of a transfer of the shares to the proponents of that proposal. Mr Mitry also referred to the Shareholders' request that the Deed Administrators convene a meeting of creditors of Gulf Energy to vote on a resolution to vary the Petroventures DOCA in accordance with the terms of the proposal.
13. The Shareholders also relied on a further affidavit dated 18 September 2020 of Ms Thakur, also a solicitor acting for them, which referred to correspondence between the solicitors acting for the Deed Administrators and the solicitors acting for the Shareholders. In particular, by letter dated 25 August 2020, the solicitors acting for the Deed Administrators had indicated that they did not propose to convene the requested meeting, for reasons including that they were unfunded; the Shareholders' proposal did not provide for the costs of preparing a further report to creditors or holding a further meeting; it would be disadvantageous to creditors for the Deed Administrators to incur those expenses, where they would have a right to indemnity which would rank in priority to creditors' claims; there was no existing breach of the Petroventures DOCA; and two of the Shareholders who propounded the proposal had participated in earlier discussions with the Deed Administrators as to whether to put a proposal for a deed of company arrangement, but had not done so in the course of the administration. The Deed Administrators also indicated their view that they did not see utility in calling or holding a creditors' meeting, because a significant number of creditors who voted in favour of the Petroventures DOCA, including companies controlled by Mr Fischer, would not vote in favour of the Shareholders' proposal.
14. I am satisfied that shareholders in Gulf Energy have been sufficiently notified of the application. Mr Stack points out that, about 8 July 2020, the Deed Administrators, through their solicitors, gave notice to the almost all of the Shareholders (there were difficulties contacting several shareholders) by sending them an email which attached a circular explaining the application made and providing access to the Originating Process and the supporting evidence. The Deed Administrators, subsequently gave notice to all but one of the Shareholders (with the exception of a remaining shareholder for whom a current email address was not then known) of the orders made by the Court on 13 July 2020. On about 13 August 2020, the Deed Administrators' solicitors sent a letter to the last known address for the shareholder for whom a current email address has not been identified. The Deed Administrators have maintained a website which can be accessed by the Shareholders and Gulf Energy's creditors which allowed access to the Originating Process and the supporting affidavits and exhibits.

The Deed Administrators' submissions

1. Mr Stack draws attention to s 444GA, on which this application is founded, which relevantly provides that: "(1) The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained: (a) the written consent of the owner of the shares; or (b) the leave of the Court. (3) The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company."
2. Mr Stack summarises the principles relevant to an application under s444GA, submitting that the test under that section is concerned with "unfair prejudice" rather than any prejudice to the interests of the relevant shareholder: Cussen, Re Big Un Ltd [2019] FCA 1162 at [5]; Re Global Stress Index Pty Ltd (subject to deed of company arrangement) [2020] NSWSC 183 at [15]. Mr Stack also submits that the statutory test requires consideration of all of the circumstances of the case and the policy of the legislation, as summarised in s 435A of the Act: Lewis, Re Diverse Barrel Solutions Pty Ltd (subject to deed of company arrangement) [2014] FCA 53 at [19]; Re Kupang Resources Ltd (subject to deed of company arrangement) (recs and mgrs apptd) [2016] NSWSC 1895 at [14]; Cussen, Re Big Un Ltd above at [6]. Mr Stack also points to authority that the mere transfer of shares without compensation does not, of itself, establish unfair prejudice: Weaver v Noble Resources Ltd [2010] WASC 182 at [80]; Re Kupang Resources Ltd (subject to Deed of Company Arrangement) (recs and mgrs apptd) above at [13]; Cussen, Re Big Un Ltd above at [6]; Re Global Stress Index Pty Ltd (subject to deed of company arrangement) above at [18].
3. Mr Stack points out that the statutory test generally focuses on whether there would be any residual value in the shares if the relevant company was to proceed in liquidation: Weaver v Noble Resources Ltd above at [69]-[71]; Re Kupang Resources Ltd (subject to deed of company arrangement) (recs and mgrs apptd) above at [13], Cussen, Re Big Un Ltd above at [5]. Mr Stack also submits that, ordinarily, there will be no "unfair prejudice" if the shares have no value, and there would be no distribution in the event of a liquidation which is the only realistic alternative to the proposed transfer: Re Kupang Resources Ltd (subject to Deed of Company Arrangement) (recs and mgrs apptd) above at [16]; Cussen, Re Big Un Ltd above at [6]; Re Global Stress Index Pty Ltd (subject to deed of company arrangement) above at [18].
4. In Cussen, Re Big Un Ltd above, to which Mr Stack referred, Jagot J referred to my observations in Kupang Resources above at [13]-[14] and [16] as follows: "In Weaver v Noble Resources Ltd [[2010] WASC 182] above, Martin CJ also noted (at [69]-[71]) that the limitation in s 444GA(3) of the Corporations Act that the Court may only grant leave for a transfer of shares under s 444GA(1) if it is satisfied that the transfer would not unfairly prejudice the interests of members reflects the view expressed in the CAMAC report that the possibility of prejudice to a shareholder would arise if there were some residual equity in the company. His Honour also considered (at [78]-[79]) the content of the expression "unfairly prejudicial" and his Honour noted (at [80]) that something more than a mere transfer of shares without compensation would be necessary to establish unfair prejudice. In Lewis, Re; Diverse Barrel Solutions Pty Ltd (subject to deed of company arrangement) [2014] FCA 53 , White J noted (at [19]) that the terms of s 444GA(3), in focusing on the concept of "unfair prejudice" to shareholders, contemplated that a transfer of shares may result in some prejudice to the interests of shareholders and that: Whether or not 'unfair prejudice' will result from a transfer of the shares is to be determined having regard to all the circumstances of the case and to the policy of the legislation. Relevant matters would seem to include whether the shares have any residual value which may be lost to the existing shareholders if the leave is granted; whether there is a prospect of the shares obtaining some value within a reasonable time; the steps or measures necessary before the prospect of the shares attaining some value may be realised; and the attitude of the existing shareholders to providing the means by which the shares may obtain some value or by which the company may continue in existence. A relevant comparison will be between the position of the shareholders if the proposal does not proceed and their position if leave to transfer shares is granted. … In Re Nexus Energy Ltd (subject to deed of company arrangement) [[2014] NSWSC 1910] above at [22], I followed the observation of Martin CJ in Weaver v Noble Resources Ltd above that the possibility of prejudice to a shareholder "would arise if there was some residual equity in the company." Mr Withers submits, and I accept, that it is difficult to see how shareholders could be prejudiced by the transfer of their shares in the absence of any residual value or equity in the company: Weaver v Noble Resources Ltd above at [70]; Re BCD (Operations) NL (subject to deed of company arrangement) above at [11]. Mr Withers also points out that the authorities establish that the fact that shares are to be transferred without compensation is not sufficient, in itself, to establish unfair prejudice: Weaver v Noble Resources Ltd above at [80]; Re Mirabela Nickel Ltd above at [39]. Mr Withers submits, and the case law seems to me to establish that there would not ordinarily be any prejudice, or no prejudice that has the requisite quality of "unfairness", if the shares to be transferred have no value, and there would be no distribution in the event of a liquidation which is the only realistic alternative to the proposed transfer."
5. Her Honour also observed (at [5]), in summarising the position that emerges from the case law that "the test involves unfair prejudice to the interests of the shareholders. Further, in order to determine this, the Court must consider whether there is any residual value in the company as the issue involves comparing the circumstances in the event of a transfer of shares with the circumstances which would prevail in a liquidation."
6. As Mr Stack points out, the Permit is Gulf Energy's only material asset. Mr Stack recognises that, as I noted above, the Permit was included as a non-current asset with a value of $20 million in Gulf Energy's most recent audited financial statements, for the 2018 financial year (Ex P2, 492). That value comprised actual exploration costs spent, being $5.464 million, and a directors' revaluation of the asset of $14.535 million (Ex P2, 502, 627ff). Mr Stack points out that, as I noted above, Gulf Energy's auditors issued a qualified report indicating that that the directors' revaluation of the Permit "constitutes a departure from the Australian Accounting Standards" and observed that, if the Permit were carried at cost, the effect would be that Gulf Energy would have negative equity position of $4.37 million (Ex P2, 506).
7. Mr Stack also points out that the Deed Administrators' report to creditors dated 15 November 2019 also expressed a "preliminary view" adverse to the inclusion of the directors' revaluation in the 2018 Financial Statements (Ex P2, 258-259, [6.5]-[6.6]). The Deed Administrators also there noted that, if "the Company was unable [to] generate any income from [the Permit], such expenditure would be unlikely to be recoverable" (Ex P2, 255, [6.2.2]). Mr Stack also points out that, under the variation to the Permit issued on 2 October 2018, Gulf Energy was required to spend in excess of $61.5 million (which, I interpolate, it does not have) on exploration before it could exploit the area for commercial gain. Mr Stack submits, and I accept, that the value allowed to the Permit would also need to take into account the fact that the Deed Administrators did not receive any offer to purchase it. I can see no basis on which the Permit could be treated as having a value in excess of the amount of $4.37 million spent by Gulf Energy in respect of it for the purposes of this application, and the probability is its value is less than that. I did not understand the Shareholders to contend to the contrary.
8. As Mr Stack points out, the shares in Gulf Energy cannot have any value unless the liquidation of Gulf Energy would result in a recovery of monies for shareholders, after the costs of the liquidation, and the claims of Gulf Energy's priority creditor and its ordinary creditors. Mr Stack points out that the Deed Administrators have received proofs of debt totalling approximately $9.48 million (Gleeson [56]) and, for the purpose of voting, the Deed Administrators admitted a proof for $2,000 for Mr Fischer as a priority creditor and proofs for $8.09 million for unsecured creditors (Ex P2, 412). It is readily apparent that the value of the Permit and Gulf Energy's assets, as noted above, is significantly less than its creditors' claims. That conclusion is consistent with the "liquidation scenario" in several of the Deed Administrators reports to creditors, which have shown varying, but minimal, recoveries to unsecured creditors in a liquidation, with the lower end of the range being nil and the higher end declining over time from $0.026 in the dollar (Ex P2, 88-89, 158-159, 228-229, 341-342, 390-391). Mr Stack submits, and I accept, that the Court can be comfortably satisfied there would be no return to the Shareholders if Gulf Energy were placed into liquidation and, consequently, the shares have no value. In those circumstances, subject to the Shareholders' Grounds of Opposition and submissions which I address below, there is no unfair prejudice to shareholders in the transfer of the shares in Gulf Energy to Petroventures and the Court would grant leave for that transfer pursuant to s 444GA of the Act. Again, I did not understand the Shareholders to contend to the contrary, putting aside their proposal which they contend is more advantageous to Gulf Energy's creditors, as distinct from its shareholders.

The Shareholders' grounds of opposition and submissions

1. The Shareholders did not oppose the application on the basis that there was likely to be any return to shareholders of Gulf Energy in a liquidation or that Gulf Energy's shares had any continuing value. That is not surprising given the evidence on which the Deed Administrators rely, and the fact that the Shareholders themselves seek to implement a similar transaction which would promise (if performed) a somewhat higher return to creditors but no return to shareholders in Gulf Energy. Any suggestion that it was not just and equitable for Petroventures to acquire the shares in Gulf Energy without payment to shareholders would also have undermined that proposed transaction.
2. The Shareholders instead oppose the grant of relief by reference to their alternative proposal which, it was suggested, would deliver a greater return to creditors of Gulf Energy although not (as I noted above) to its shareholders. Mr Notley fairly accepted in oral submissions that, although the Shareholders' proposal would result in a greater return to creditors, that return would still be "miniscule" and, I should add, the increase in it is of a corresponding character. Mr Notley, in his opening submissions for the Shareholders, largely focussed on criticisms of reasons given by the Deed Administrators for not calling the creditors' meeting requested by the Shareholders to consider their proposal, as distinct from identifying any reasons why that ought to be done, after the Petroventures DOCA had been approved by creditors. I will address aspects of those submissions below.
3. As I noted above, the Grounds of Opposition set out in the Shareholders' Notice of Appearance indicated that they would request the Deed Administrators convene a meeting of the creditors to vote on a resolution to vary the Petroventures DOCA, pursuant to s 445A of the Act, to provide for a transfer of shares in Gulf Energy to a new company controlled by one or more of the Shareholders. That request was made and declined by the Deed Administrators and nothing now turns upon it.
4. Alternatively, as I noted above, the Shareholders' Grounds of Opposition indicated that they would apply for an order under s 90-21 of the IPSC directing that a meeting of creditors of Gulf Energy be convened to vote on a resolution, under s 445A of the Act, that Gulf Energy entered into and execute a varied deed of company arrangement and report the result of that meeting to the Court. The Shareholders did not bring such an application and the mere possibility that it might (or might not) in future be brought is not reason not to make the orders sought. It is also doubtful that such an order would have been made, had the application for it been made.
5. Section 90-21 of the IPSC authorises the Court, if it thinks fit for the purpose of ascertaining the wishes of shareholders or contributories, to direct that meetings of creditors or contributories be convened. It does not seem to me that the Court would have directed such a meeting in this case. The wishes of creditors sufficiently emerge from the fact that they have approved the Petroventures DOCA and have not appeared in this application to support the Shareholders' position.
6. The manner in which the Petroventures DOCA would be "varied" under s 445A of the Act, to substitute the Shareholders for Petroventures as the transferee of the shares without its or the Deed Administrators' consent, is also a matter of some difficulty. The power to vary the DOCA under s 445A of the Act is at least limited in the sense that creditors do not have an "absolute and unfettered power of variation" and can only vary the DOCA with the deed administrator's consent: Surber v Lean (2000) 36 ACSR 176; [2000] WASCA 380; Whittingham, Re The Spanish Club Ltd (subject to deed of company arrangement) [2009] NSWSC 1426 at [24]. Mr Stack also submits that, so far as the Petroventures DOCA remains in force, it binds Gulf Energy, its creditors, its officers and the Shareholders by statute: Re Antqip Hire Pty Limited (subject to deed of company arrangement) (in liq) [2020] NSWSC 487 at [65]-[70]. There is least a suggestion in Surber v Lean above at [41] and [56] that a deed of company arrangement constitutes a "contract" between a company and a deed administrator although Malcolm CJ there recognised (at [41]) that the reference to "deed" in this context was not to a "deed" as understood at common law and (at [54]) that the requirements for variation of a "deed" at common law do not apply to a deed of company arrangement. However, in Correa v Whittingham (No 2) [2013] NSWCA 471 at [76], Gleeson JA approved the observations of Barrett J in Reed Constructions Australia Ltd v DM Fabrications Pty Ltd (2007) 25 ACLC 1463; [2007] NSWSC 1190 at [20] that: "A deed of company arrangement derives its operative force from statute … Sections 444D and 444G identify persons who are bound by the deed of company arrangement. Those persons are not parties bound together by contract. They are persons whose rights and obligations are created by law by virtue of the execution of the relevant instrument. They are akin, in that respect, to persons bound by a scheme of arrangement under Part 5.1 of the Corporations Act." His Honour also observed (at [79]) that there was no room for an argument that, independently of the Corporations Act, a company may be bound by contract as the binding force of a deed of company arrangement only arises by reason of s 444G of the Act. These observations were in turn applied by Rees J in Re Antqip Hire Pty Limited (subject to deed of company arrangement) (in liq) above.
7. Mr Stack also points out that no default has been committed under the Petroventures DOCA. Mr Notley responds that the Shareholders do not contend to the contrary, but that there is no requirement under s 445A of the Act that there be a default under the DOCA before the creditors of the company are entitled to vote to vary it. Mr Notley submits that: "the authorities suggest that the only fetter on the power of the creditors of the Company to vote to vary the DOCA is that the variation not be materially different from that proposed in the notice of meeting and that the [Deed Administrators] consent to the variation (although if the refusal of the [Deed Administrators] to consent to the variation is prejudicial to the interests of creditors the Court can make such order as it thinks fit under section 90-15 of the Insolvency Practice Schedule)". Mr Notley does not, however, identify any case which has accepted that creditors can vary a deed of company arrangement under s 445A of the Act, particularly after an amount has been contributed by the deed proponent to a deed fund, so as to deprive the deed proponent of the contemplated benefit of the deed and confer it instead on the company's shareholders or some of them, or that such a variation would survive a challenge under s 445B or s 447A of the Act.
8. In oral submissions, Mr Notley submitted (T36) that a deed proponent enters a deed of company arrangement subject to the risk that that a deed of company arrangement might later be varied under s 445A of the Act, implicitly, extending to a variation that excluded the deed proponent from the benefit which was contemplated by its entry into that deed, after it paid an amount into the deed fund. That proposition raised a range of surprising possibilities, for example, that creditors could unilaterally vary the deed of company arrangement to increase the amount to be contributed by a deed proponent, after that deed proponent had already partly performed its obligations under it; or could vary it to extinguish any benefit to be provided to the deed proponent, after it had partly performed those obligations; or, as here, could vary it to the advantage of a third party or third parties and the detriment of the deed proponent, after the deed proponent had paid monies into the deed fund.
9. It is by no means apparent that the approach for which the Shareholders contend would promote the purposes of Part 5.3A of the Act. If a deed of company arrangement could readily be varied under s 445A of the Act so as to extinguish the benefit for the deed proponent, where a third party made a marginally more attractive offer to creditors after it was executed and took effect, and appropriate contributions made by the deed proponent to the deed fund, then deed proponents would likely either discount the terms they were prepared to offer under such arrangements or decline to enter into them, because of the increased risk that would then attach to them. Assuming, without deciding, that such a variation is arguably within the proper scope of s 445A of the Act, it seems to me that it might well be set aside under s 445B of the Act on the application of a dissenting creditor or under s 447A of the Act on the application of an interested person, including the deed proponent. That risk is a matter that creditors of Gulf Energy might well consider would undermine any attraction in the marginally higher return offered by the Shareholders' proposal.
10. It also seems to me that the possibility that creditors might vote in favour of a different DOCA, if a further meeting were called, is also no more than speculation. If one were to speculate as to that matter, creditors might well prefer the Petroventures DOCA, where there is no evidence to establish the Shareholders' capacity to pay the amount foreshadowed by their proposal, and there is, as I have noted above, real legal risk in any attempt to "vary" the Petroventures DOCA to the obvious detriment of Petroventures without either its consent or the consent of the Deed Administrator.
11. Had it been necessary to decide the question, I might well have held that the Court should not order a meeting with a view to the Petroventures DOCA being varied under s 445A of the Act, where a creditor of the company could apply to the Court for an order cancelling the variation under s 445B of the Act and it would likely be cancelled where it had the adverse effect on Petroventures which is contemplated, or the same result would likely follow on an application brought by an interested person, including Petroventures itself, under s 447A of the Act. It is again not necessary to decide this question where the Shareholders have not brought an application to have that meeting convened.
12. Alternatively, the Shareholders' Grounds of Opposition foreshadow that they will apply for an order under s 445D(1)(f), 445D(1)(g) and 447A of the Act terminating the Petroventures DOCA. Again, that intention was foreshadowed, but not implemented by bringing any such application in the two months since the Notice of Appearance was filed. The possibility that such an application might (or might not) in future be brought is again not a sufficient basis not to make the orders sought by the Deed Administrators. It also seems to me to be doubtful that such an order would have been made, had the application for them been made. Section 445D(1)(f) of the Act provides that the Court may terminate a deed of company arrangement where it is, broadly, oppressive or unfairly prejudicial or unfairly discriminatory against one or more creditors or contrary to the interests of the creditors or the company as a whole. The evidence does not establish that the entry into the Petroventures DOCA had those characteristics, even if it were compared with the uncertain prospects of implementing the Shareholders' proposal. Section 445D(1)(g) allows the Court to terminate a deed of company arrangement where it should be terminated for some other reason, but no such other reason was established on the evidence. Section 447A allows the Court to make such order as it thinks appropriate as to how Part 5.3A is to operate in relation to a particular company, but no basis has been shown to think that the Part should be varied to give effect to the Shareholders' proposal rather than the Petroventures DOCA.
13. Alternatively, the Shareholders foreshadowed that they will apply (although they have again not done so) for an order under s 447A of the Act varying the Petroventures DOCA so that it was on the same or similar terms as their proposal. The possibility that such an application might (or might not) in future be brought is again not reason not to make the orders sought by the Deed Administrator. It is also doubtful that such an order would have been made, had the application for them been made. The benefit of such an order to creditors or Gulf Energy is uncertain, where Shareholders' ability to perform their obligations under their proposal is not established; the detriment to Petroventures of frustrating its expectation that the Petroventures DOCA would be performed, apparently without compensation for the monies it has already contributed to the deed fund on that basis, is obvious; and the Shareholders' approach is potentially inconsistent with the object of Pt 5.3A of the Act as noted in paragraph 36 above .
14. As I noted above, the Shareholders also foreshadowed that they will seek further orders if the Petroventures DOCA was terminated, but those further orders do not advance matters where an application to terminate the Petroventures DOCA was not brought and a basis for termination of the Petroventures DOCA was not established.
15. Mr Stack also noted in reply that, so far as the Shareholders also raise the possibility of relief under s 90-15 of the IPSC, standing to bring such an application was limited by s 90-20 of the IPSC to, relevantly, a person with a financial interest in the external administration, as defined in s 5-30 of the IPSC, and Shareholders did not fall within that definition. Mr Stack pointed out for completeness, that Shareholders would also not be interested persons for the purposes of an application under s 447A of the Act, since it is apparent that they have no financial interest in the result of the deed administration because there will be no return to them from it.
16. I note, for completeness, that Mr Notley also conveyed, in oral submissions, an offer of an undertaking by the Shareholders to commence proceedings seeking the relief foreshadowed in the Grounds of Opposition within 14 days, "if required". I do not propose to accept such an undertaking. It seems to me that Shareholders have had sufficient time to commence the foreshadowed application and there is no reason for the Court to require an undertaking that they do in the future what they could have readily have done in the time this application was on foot; and, second, the application should be determined as matters stand, not by reference to a different state of affairs that might or might not arise, if Shareholders ultimately brought that application, pursued it and, in the fullness of time, ultimately succeeded or failed in it.
17. For these reasons, it is not necessary to determine the various applications foreshadowed by Shareholders, since they have not pursued them in the two months in which these proceedings have been on foot and the Court should determine the Deed Administrators' application by reference to the position that now exists. I have also observed above that it seems to me that the prospects of those applications, had they been brought, were doubtful to say the least. These foreshadowed applications do not alter the fact that the proposed transfer of the shares to Petroventures does not involve prejudice, or unfair prejudice, to shareholders in Gulf Energy in the relevant sense.

Conclusion and orders

1. I am satisfied that the shares in Gulf Energy do not have residual value in a liquidation which would likely follow from the failure of this application and the consequential failure of the Petroventures DOCA. I am not persuaded that the Grounds of Opposition raised by the Shareholders, their proposal or the applications which they foreshadowed but did not bring alter that result. I am satisfied that the proposed transfer of the shares to Petroventures does not involve prejudice to shareholders in Gulf Energy in the relevant sense and if, contrary to that view, there is such prejudice, it does not seem to me to be unfair prejudice in all the circumstances.
2. For these reasons, I make the orders sought by the Deed Administrators as follows: 1. Pursuant to section 444GA(1)(b) of the Corporations Act, the Plaintiffs are granted leave to transfer all of the shares ("Shares") of Gulf Energy Ltd (subject to deed of company arrangement) ("Company") to Petroventures Pty Ltd, in its capacity as trustee for the New Horizons Trust ("Petroventures") or its nominee, pursuant to the deed of company arrangement executed by the Company on 7 May 2020 ("DOCA"). 2. Pursuant to s 447A of the Corporations Act and clause 90-15 of Schedule 2 of the Corporations Act, the Plaintiffs are authorised and empowered, jointly or severally, to: (a) execute, on behalf of all members of the Company, who are not Petroventures or its nominees, a share transfer form(s) and any other documents ancillary or incidental to effecting the transfer of the Shares to Petroventures or its nominees; and (b) enter, or procure the entry of, the name of Petroventures or its nominees, into the share register of the Company, in accordance with the order made in paragraph 1 above. 3. The Defendants pay the Plaintiffs' costs of the proceedings referable to the matters raised in their Grounds of Opposition, as agreed or as assessed.

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