TGIF 22 August 2025 – Court of Appeal clarifies test to be applied for a s 444GA share transfer

This week’s TGIF considers Fitzroy River Limited Liability Company v Richard Scott Tucker as Joint and Several Administrator of Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) [2025] WASCA 11K8. 

In this case, the WA Court of Appeal dismissed a shareholder’s challenge to a s 444GA share transfer under a Deed of Company Arrangement. It clarified the high threshold for proving unfair prejudice to shareholders and the evidentiary requirements in administrator-led valuations.

Key takeaways

• Under s 444GA of the Corporations Act 2001 (Cth) (Act), the test to be applied for a transfer of shares application is whether the proposed transfer of shares would ‘unfairly prejudice’ the interests of members of the company. This is a high bar when creditors have approved the deed of company arrangement (DOCA) and the alternative is liquidation.
  
  
• When expert valuations rely on ‘comparable sales’ data, administrators must prove those transactions with admissible evidence (direct knowledge or admissible documents).
  
  
• Failure to object to evidence can shift the debate from admissibility to weight, limiting the scope for challenge on appeal.

Background

Yeeda Pastoral Company Pty Ltd (Yeeda) and its subsidiaries entered administration in early 2024. The administrators negotiated five inter-dependent DOCAs, under which the DOCA proponent would:

1. fund the ongoing business; and
   
   
2. acquire 100% of Yeeda’s shares for no consideration to existing members, if the Court granted leave under s 444GA of the Act.

Fitzroy River Ltd (Fitzroy) (20% shareholder of Yeeda), opposed the transfer, contending that the administrators had not proved the value of Yeeda’s principal assets, in particular an abattoir owned by subsidiary Kimberley Meat Co Pty Ltd. The primary judge granted the transfer, finding the shares worthless.

The key issue on appeal was whether the administrators had adduced admissible valuation evidence to justify the conclusion that Yeeda’s shares had no residual value so that their transfer would not ‘unfairly prejudice’ the members for the purposes of s 444GA.

There were two key comparable sales relied upon in the abattoir valuation.

These two transactions were central to the ‘Productive Unit’ valuation method used by the expert valuer. However, the Court of Appeal found that the sale prices for comparable sales were not proved by admissible evidence. This rendered the valuation method inadmissible and of no probative value.

Despite the conclusion of the abattoir valuation, the Court of Appeal found that the administrators had otherwise demonstrated that Yeeda’s liabilities far exceeded its assets. There was no reasonable prospect of the shares having value.

The Court upheld the administrators’ and the DOCA proponent’s notices of contention, and the appeal was dismissed.

Comment

This decision is a reminder that:

• Once creditors have approved a DOCA, the courts will focus tightly on the statutory tests, especially the ‘unfair prejudice’ threshold in s 444GA of the Act.
  
  
• Parties challenging administrator valuations must press admissibility objections at first instance. Waiting until appeal may be fatal.
  
  
• For administrators, valuation evidence must be diligently prepared and supported by admissible proof of comparable transactions, otherwise the opinion risks exclusion or being given no weight.
  
  
• A well-publicised, competitive sale process which fails to generate any offers sufficient to provide a return to shareholders, can of itself be compelling evidence that the shares have no value.
  
  
• Even if a DOCA challenger is correct in contending that there was no admissible evidence sufficient to support a conclusion, it may be sufficient to have other evidence to prove that the transfer of shares would not unfairly prejudice the interests of the company’s shareholders.