Unrelated parties may collude or otherwise deal with each other in an interested way, so that neither the dealing nor the resultant transaction may properly be considered arm's-length. The concept of an arm's-length relationship is distinct from that of an arm's-length dealing or transaction. The Supreme Court in Victoria has reviewed the authorities about what arm's-length might mean and said. The party alleging the transaction was not on arm's-length terms does not have the burden of proof. Importantly, the onus is on the RE to prove the financial benefit was given on arm's-length terms. A transaction may be so clearly improvident from the public company's point of view that the court can see for itself that the transaction could never have resulted from an arm's-length dealing in which the public company was able to advance and protect its own commercial interests. The court is not, however, bound to rely only upon such expert evidence and to blind itself to common sense and obvious commercial prudence. Common experience or usual terms of trade in a particular market may sometimes also prove a useful guide. The court may receive expert evidence as to what would be within the range of reasonable outcomes of the transaction for the public company. What is a reasonable commercial result for the public company in the transaction is, of course, in itself, a matter of judgment upon which honest and experienced commercial minds may legitimately differ. In determining what a reasonable commercial result might be the courts have said.
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