Federal Court of Australia

Macpherson v Warringah Bowling Club Ltd, in the matter of Warringah Bowling Club Ltd (No 2) [2025] FCA 1555

ORDERS

THE COURT ORDERS THAT:

1.    The second defendants, being the administrators, pay the plaintiff’s costs of the proceeding without recourse to the assets of the first defendant, the company.

2.    The second defendants, being the administrators, bear their own costs of the proceeding without recourse to the assets of the first defendant, the company.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

STEWART J:

1    On 5 December 2025, I ordered that the administration of Warringah Bowling Club Ltd end with immediate effect: Macpherson v Warringah Bowling Club Ltd, in the matter of Warringah Bowling Club Ltd (Administrators Appointed) [2025] FCA 1539. For reasons of urgency and available time, I reserved my decision on the costs of the proceeding, more specifically the plaintiff’s prayer that the administrators be personally liable for the costs of the proceeding and that they be disentitled to an indemnity for those costs or their own costs from the assets of the company. These are now my reasons for the decision on costs. These reasons assume familiarity with the previous reasons.

2    On 4 September 2025, Mr Billingsley (one of the administrators) signed an affidavit for the proceeding in the Supreme Court of New South Wales in which an extension to the convening period for the second meeting of creditors under s 439A of the Corporations Act 2001 (Cth) was sought. In that affidavit he swore on oath as follows:

I have seen a historical valuation report in respect of 72 Bradley’s [sic] Head Road, Mosman that indicates that property alone is worth many multiples of the total secured debt and unsecured creditor claims. … I anticipate an up-to-date valuation of both Company Properties will reveal significant value greatly exceeding the total sum of the secured debt and the unsecured creditor claims.

3    Nothing has been identified by the administrators subsequent to that date giving rise to any reason to change that assessment. That is to say, the administrators have never been in any doubt that the club’s assets vastly exceed its liabilities.

4    On 4 November 2025, Mr Macpherson (the plaintiff and chairman of the board) wrote a letter to Mr Billingsley in which he set out the arrangements made with FOWB Pty Ltd (the “White Knight” lender) for the payment of the debts of the club as well as the provision of “working capital moving forward”. On behalf of the directors of the club, Mr Macpherson “formally request[ed]” that Mr Billingsley convene the second meeting of creditors pursuant to s 439A of the Corporations Act “and that the recommendation to creditors be that the voluntary administration be ended”.

5    Mr Macpherson explained in the letter that the board had formed the view that the continuation of the voluntary administration, or the entry into any DOCA, or liquidation, would not achieve any better outcome for creditors nor for the club’s members. He stated that “with financial backing assured, the Club will be solvent, and in a position to pay all its known liabilities as and when they fall due”. He explained that the directors had resolved to resume control of the club’s affairs and “continue trading on a solvent basis”. He said that in view of the clarity of their position, the directors did not see any utility in having the meeting with the administrators that the latter had requested as part of their usual investigations into a company in administration.

6    The administrators replied to Mr Macpherson’s letter a few hours later. They said that they required a meeting with the directors to assist with their “ongoing investigations”. They said that the investigations were relevant to “the quantum of creditors” and “ongoing trading”. They said that they would consider the letter “after due consideration of the information from the meeting of directors”. Notably, they did not seek any further details of the terms on which FOWB would make a loan to the club to enable it to pay its debts in full.

7    On 5 November 2025, there were a number of email exchanges between Mr Billingsley and Mr Macpherson about the proposed meeting with the directors in which Mr Macpheson asked what information the administrators wanted and Mr Billingsley said that the meeting was part of their “normal … investigations [to] seek clarification on matters”. Again, no details of the FOWB loan were said to be required.

8    On 5 November 2025, Mr Macpherson’s solicitor, Mr Ryckmans, wrote to Mr Billingsley. He stated that he also acted for FOWB and that on its behalf he confirmed that it was in a position to immediately loan additional funds to the club to pay all debts which may be due and owing as well as to pay the approved remuneration, liabilities and expenses of the administrators properly incurred during the period of the voluntary administration. He asked Mr Billingsley to confirm that the administrators would convene a meeting of creditors and put to the meeting a resolution that the administration should end.

9    On 6 November 2025, Mr Macpherson again wrote to Mr Billingsley requesting that the administrators convene the meeting of creditors under s 439A. He expressed concern about the delay and escalating costs being incurred in the administration, including by the administrators proceeding with their standard practice of investigations such as requiring a meeting with the directors. He reiterated that the club was clearly solvent and that there was no solvency risk going forward.

10    On 7 November 2025, the administrators persisted with their intention of meeting with the directors. They said that their investigations “may impact the solvency of the Company”. They still failed to identify any particular information that they required or concern that they had.

11    Later that day, the administrators’ solicitor, Mr Mattiussi, wrote to Mr Ryckmans saying that “the Administrators are seeking to liaise with the directors regarding past conduct and trading that have created potential legacy issues likely to impact the company's balance sheet as well as the personal liability of the directors and officers (including, possibly, the Administrators themselves)”. Like his clients, Mr Mattiussi did not mention any need for more information about the FOWB loan facility.

12    On 10 November 2025, the administrators held meetings with the committee of inspection that had been appointed at the first creditors’ meeting and with the directors.

13    One of the matters that the administrators raised with the directors was whether the club had been in contravention of s 45 of the Registered Clubs Act 1976 (NSW) by permitting “unauthorised” persons to use the club’s “premises” in allowing parents and children to use the childcare centre which is located on one of the club’s two properties. Mr Hart, one of the directors, wrote to the administrators on 11 November 2025 explaining that the childcare centre was not part of the licensed “premises” of the club so there had been no contravention. The administrators’ solicitor, Mr Mattiussi, replied saying that the matter would be considered further and that the administrators would “come back” to the directors as soon as possible.

14    Another matter raised by the administrators was whether the club had met the requirements of a 2010 private tax ruling and, if not, whether it was still exempt from having to lodge income tax returns. On 11 November 2025, Mr Hart wrote to the administrators explaining that the ending of the administration would not affect that issue and that the continuing directors would have responsibility in relation to it. He explained that the administrators added no value to the club by continuing with their investigations.

15    On 12 November 2025, Mr Ryckmans wrote to Mr Mattiussi complaining that the administrators had “not acted with any degree of promptitude” on the request that they convene the second meeting of creditors. He reiterated that the facility from FOWB meant that the club was able to pay its debts when they became due and said that “there is a strong argument that the administration may be being prolonged unnecessarily, which is inconsistent with the objects of Part 5.3A and may in fact constitute conduct prejudicial to the interests of creditors and members of the Club”. He requested a meeting with Mr Mattiussi.

16    Mr Mattiussi replied later that day saying that he was in the process of taking instructions and preparing a substantive response. He requested a meeting on 14 November 2025.

17    Also on 12 November 2025, Mr Hart again wrote to Mr Billingsley complaining that the continued administration was consuming the limited resources of the club and causing harm to its operations and long-term viability and requesting that the administrators convene a s 439A meeting without further delay.

18    On 18 November 2025, Mr Ryckmans wrote to Mr Mattiussi asking to be told “what is happening” and recording that Mr Billingsley seemed to be simply unwilling to take any step to bring the administration to an end.

19    Very late on 19 November 2025, Mr Mattiussi replied asking for the directors’ patience and saying:

In the meantime, please note that: (i) we are liaising with ILGA [the Independent Liquor and Gaming Authority] (regarding the core/non-core property status of the third bowling green, now subject to the childcare tenancy); and (ii) our client is liaising with the ATO (regarding the outstanding returns and the tax ruling).

Separately, our client is also working on a cashflow to share with you so that FOWB Pty Ltd can be clear about its financial commitment in the context of concluding the administration and post-VA trading. To that end, we would be grateful to receive your client’s draft term sheet.

20    That is the first recorded instance of the administrators asking for the terms of the facility offered by FOWB.

21    On 21 November 2025, Mr Ryckmans replied. He stated that unless the administrators confirmed that they would convene a meeting of creditors by 5.00pm the following day, an application would be brought by the chairman of the club against the administrators to seek an order under s 447A of the Corporations Act that the administration end immediately.

22    Later that day, Mr Mattiussi replied. He did not say anything of present significance.

23    The originating process for urgent relief to end the administration under s 447A was filed on 26 November 2025. I made orders for short service that day with the application being returnable on 28 November 2025. Mr Mattiussi entered an appearance for the company and the administrators late on that day.

24    When the matter was called on 28 November 2025, senior counsel appeared for the administrators. He read an affidavit by Mr Mattiussi that had been affirmed the previous day. Mr Mattiussi set out the position of the administrators in relation to the directors’ application, namely that the hearing be adjourned for two weeks to enable them to resolve, if possible, three matters raised in the affidavit or to put on evidence on the status of those matters.

25    The three matters identified by Mr Mattiussi as needing to be addressed were the following.

26    The first was the issue of the private tax ruling referred to above, and in particular whether certain factual matters underpinning the applicability of the ruling no longer applied to the operation of the club. That raised the possibility of a further claim from the ATO.

27    The second matter was whether the directors of the club had obtained the majority approval of members to convert the lot on which the childcare centre operates from core to non-core property pursuant to s 41E of the Registered Clubs Act. That gave rise to a concern of the administrators that the directors may be liable to penalties for allowing the use of club premises by non-members.

28    The third matter was the creditors’ proofs of debt. Mr Mattiussi stated that before the administration of the club ends, the administrators would need to make a final call for proofs of debt, adjudicate the debts and make a distribution to creditors.

29    Although senior counsel stated that the administrators neither consented to nor opposed the relief sought by the directors, he made submissions in support of the two-week adjournment sought in Mr Mattiussi’s affidavit.

30    Notably, neither Mr Mattiussi nor senior counsel in submissions said anything about the administrators needing further information about the terms of the FOWB facility or any assurance that any loan from FOWB would not be immediately repayable thus negativing any positive contribution that that loan might otherwise have on the solvency of the club.

31    In the result, the matter was listed for final hearing a week later, on 5 December 2025, and the administrators were given until 3 December 2025 to file and serve any evidence which they might wish to rely on.

32    On 3 December 2025, the administrators filed and served an affidavit sworn by Mr Billingsley on that day. In that affidavit he stated that despite inquiry, the administrators had not received a copy of the term sheet for the FOWB facility. He did not identify what inquiries he was referring to, other than the single inquiry in writing by Mr Mattiussi on 19 November 2025 (referred to at [19] above]).

33    On the hearing of the application, Mr Rose of counsel appeared for the administrators. He explained that the administrators took a neutral position on the application. I accept, as he submitted with reference to In the matter of Condor Blanco Mines Ltd (No 2) [2016] NSWSC 1304 at [11] per Barrett AJA, that the proper role for the administrators in a matter such as this is to maintain a position of “essential neutrality”, particularly by volunteering relevant facts and assisting the Court with respect to the applicable principles. As explained in that case (at [15]), if the administrators do not abandon a position of essential neutrality in favour of some partisan role, there is a case for making a costs order in their favour; but if they are seen to have overstepped that mark, it may be that they should be ordered to pay personally some part or all of the plaintiff’s costs.

34    On the hearing of the application, Mr Rose made submissions with reference to the authorities and the evidence that were helpful and which were, I accept, in keeping with the administrators’ responsibility to maintain essential neutrality. In particular, Mr Rose submitted that although it was ultimately a matter for the Court, the Court might more readily be satisfied with regard to the solvency of the club after the advance of the loan from FOWB if the terms of that loan, or an undertaking made on behalf of FOWB, were such that FOWB would not call in the loan immediately or in the near future. That was with reference to Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2024] FCA 112; 172 ACSR 73 at [140]-[146] per Derrington J. This issue is dealt with at [16] of my previous reasons.

35    Mr Macpherson’s response to that was to immediately procure an undertaking from FOWB, which was proffered by his counsel, Mr Gray, that FOWB would not call in the loan for a period of at least 12 months from the date of the termination of the administration unless the club sold the property over which it held security for the loan. To the extent that there was any doubt about the club’s solvency before that point in the case, it was certainly dispelled by that undertaking.

36    In the ordinary course, then, Mr Macpherson should have his costs of the proceeding from the club and the administrators should be indemnified by the club for their costs of the proceeding. That is in accordance with the ordinary indemnity that the administrators enjoy in respect of their fees and expenses reasonably incurred in the conduct of the administration.

37    However, Mr Macpherson submits that the administrators acted unreasonably in not promptly convening a meeting of creditors where, he submits, a resolution to end the administration would almost certainly have been adopted and the application to the Court would have been averted. He submits that the only reason an application to Court was necessary was because of the administrators’ unreasonable conduct in the face of repeated requests from the board that they convene the s 439A meeting and propose a resolution to end the administration. He submits that for that reason the administrators should pay the costs of the proceeding and that they should be denied any right of indemnity in relation to those costs from the assets of the club.

38    The administrators oppose that relief on the basis that they acted reasonably. They submit that they had requested the term sheet of the FOWB facility and had never been given it, and until it was provided they were unable to report to creditors in advance of the meeting as required by s 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth). One of the requirements for such a report is, relevantly, that it includes a statement whether, in the administrators’ opinion, it would be in the creditors’ interests for the administration to end (s 75-225(3)(b)(ii)) and the reasons for that opinion (s 75-225(3)(b)(iv)). The administrators submit that they could not form such an opinion until they had formed an opinion on the solvency of the club, and they could not form such an opinion until they knew the relevant terms of the FOWB facility.

39    It has been said that when a liquidator unsuccessfully defends proceedings on behalf of the company in liquidation, a costs order may be made against the liquidator personally in “exceptional circumstances”, being where the liquidator’s opposition to the relief sought was, in the circumstances, unreasonable, unnecessary or dishonest: Adsett v Berlouis [1992] FCA 549; 37 FCR 201 at 211–212 per Northrop, Wilcox and Cooper JJ; Mead v Watson as Liquidator for Hypec Electronics [2005] NSWCA 133; 23 ACLC 718 at [16] per Sheller, Ipp and Tobias JJA.

40    I accept, and the administrators did not contest, that the same considerations apply to whether or not the administrators should be ordered to pay the costs of the proceeding and denied recourse against the assets of the club for those costs and their own costs. As no question of dishonesty arises, the essential inquiry is whether the administrators acted unreasonably in the face of the requests from the directors that they convene a meeting of creditors and whether it is that conduct that made the proceeding necessary.

41    In my view, until such time as Mr Rose appeared on behalf of the administrators at the final hearing, the administrators’ conduct in relation to the potential termination of the administration was unreasonable, and it demonstrated a partisanship contrary to their responsibility to maintain essential neutrality.

42    As explained, the administrators have known from early in the administration that the club’s assets vastly exceed its liabilities. There is nothing about the concerns with regard to the continued application of the private tax ruling or the contravention of the Registered Clubs Act that caused, or could have caused, them to have a different understanding. Also, from 4 November 2025 they knew that the directors contended that there was sufficient funding available from FOWB to immediately pay all known secured and unsecured creditors and to trade into the future in solvent circumstances. The administrators did not challenge that contention. Nor did they seek further information about the funding until 19 November 2025.

43    Although through counsel’s submissions at the hearing the administrators contended that they were not in a position to report to creditors on the solvency of the club and whether the administration should end until the undertaking from FOWB was proffered, in all the lengthy correspondence that they engaged in during the month before the hearing, and even in their affidavits, they never once made that point. They did not once say to the directors that they needed further specific, identified, information in order to be able to report to creditors and to convene the meeting. Instead, they persisted with their so-called “usual” or “normal” investigations, including of what even they described as “legacy” issues.

44    When the matter was first in court (on 28 November 2025) the administrators sought a two-week adjournment to continue their investigations – investigations that were not in any sense material to the question at hand, namely whether the club was solvent. Their continued investigation of legacy issues was an unnecessary distraction that caused prejudicial delay. That is evidenced by the fact that neither the Independent Liquor and Gaming Authority nor the ATO has shown any interest in those issues. When, finally, for the first time the administrators raised a relevant point with regard to whether or not the administration should end, being the point raised by Mr Rose about when the FOWB loan would be repayable, that was easily and immediately met by the directors proffering the undertaking by FOWB that put the question of solvency beyond doubt. I have no reason to doubt that had that point been raised at the outset, it would have been as quickly answered.

45    Whether the administrators were simply misguided as to their responsibilities, blindly resolute in sticking to the usual course of administrators’ investigations and accordingly unresponsive to what the new circumstances demanded of them, or knowingly racking up unnecessary fees and expenses, does not matter. The point is that once the FOWB funding was available it was in the club’s and the creditors’ best interests for the administration to be brought to an end as swiftly as possible. That could and should have been achieved by reporting to creditors on the relevant details of the funding – including immediately seeking such further details as may have been relevant, advising the creditors to vote in favour of ending the administration and convening a meeting under s 439A within five days for that purpose.

46    The consequence of the funding from FOWB would have been that all creditors would have been immediately paid. There would be no downside to creditors in bringing the administration to an end. In those circumstances, it would be fanciful to suggest that the creditors might not have voted in favour of ending the administration. I am satisfied that it is at least more likely than not that the creditors would have voted in favour of ending the administration.

47    I therefore conclude that the proceeding before the Court was made necessary only because of the unreasonable conduct of the administrators. In those circumstances, they should be denied their right of indemnity from the assets of the club for their costs of the proceeding and they should personally pay the plaintiff’s costs.

Associate:

Dated:    9 December 2025