17. January 2011 09:44
This decision concerns an application by the respondents to an appeal to vary consent orders in order to enable them to be placed in funds to defend the appeal. The substantive proceedings involved a dispute as to ownership of shares in a family company. The respondents had been successful at first instance.
The effect of the variation to the consent orders was to enable the family company to declare and pay a dividend up to a set limit to the respondents, with undertakings that they would repay the dividends if they lost the appeal.
The company had sufficient retained profits from which to pay the dividends therefore complying with s 254T of the Corporations Act 2001 (Cth): .
Prima facie, the successful party is entitled to the benefit of the judgment they have obtained: .
It was held that the circumstances did not fall within the usual principles preventing majority shareholders from using company funds to defend proceedings , as the respondents were to use their entitlements as shareholders to receive a dividend, not to directly use company funds: .
Relevant paragraphs of Ford
[4.245], [18.090], [18.100], [18.130] [18.140], [18.210], [18.211], [20.280], [24.640], [24.650]