Selim v McGrath [2003] NSWSC 806

Selim v McGrath [2003] NSWSC 806

The plaintiffs discharged the implied onus under s 437F because the transfers to the charitable foundation trustee were shown not to be contrary to the interests of creditors or the objects of Part 5.3A: Mr Selim was only one of three directors and shareholders of the trustee, the other two were independent and could outvote him, and the shares would be held for charitable purposes. The defendants' broader concerns about the proposed DOCA, creditor claims, future capital and releases were matters for creditors and did not justify refusing approval of the narrower share transfers before the Court.

Jurisdiction
Australia
Judgment Date
26 August 2003
Procedural Posture
Corporations; Voluntary Administration Application Under Corporations Act 2001 (cth) S 437 F for Approval of Share Transfers / Originating Process; Ex Tempore Judgment
Outcome
Orders made under s 437F approving the proposed share transfers; plaintiffs ordered to pay the defendants' costs of the hearing.
Legal Topics
['voluntary Administration' 'transfer of Shares During Administration' 'court Approval Under S 437 F' 'deed of Company Arrangement' "creditors' Interests"]
['corporations Law' 'equity'] ['voluntary Administration' 'transfer of Shares During Administration' 'court Approval Under S 437 F' 'deed of Company Arrangement' "creditors' Interests"]

Case Brief

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Procedural Posture

Corporations; Voluntary Administration Application Under Corporations Act 2001 (cth) S 437 F for Approval of Share Transfers / Originating Process; Ex Tempore Judgment

Legal Issues

  1. 1 ['Whether the Court should approve proposed transfers of shares during the voluntary administration of Pan Pharmaceuticals Limited under Corporations Act 2001 (Cth) s 437F.' 'Whether the proposed transfers were in the interests of creditors and consistent with the objects of Part 5.3A of the Corporations Act 2001 (Cth).' 'Whether concerns raised by the voluntary administrators about the proposed DOCA and related share sales justified refusing approval of the transfers.']

Ratio Decidendi

The plaintiffs discharged the implied onus under s 437F because the transfers to the charitable foundation trustee were shown not to be contrary to the interests of creditors or the objects of Part 5.3A: Mr Selim was only one of three directors and shareholders of the trustee, the other two were independent and could outvote him, and the shares would be held for charitable purposes. The defendants' broader concerns about the proposed DOCA, creditor claims, future capital and releases were matters for creditors and did not justify refusing approval of the narrower share transfers before the Court.

Court Disposition

Orders made under s 437F approving the proposed share transfers; plaintiffs ordered to pay the defendants' costs of the hearing.

Orders

  • ['The transfers of shares by Mr Selim to Selim Foundation Pty Limited as trustee and by Buzrio Pty Ltd to Selim Foundation Pty Limited were approved under Corporations Act 2001 (Cth) s 437F.' "The plaintiffs are to pay the defendants' costs of the hearing."]