Dolores Correa and The Spanish Club Limited (subject to Deed of Company Arrangement) v Kenneth Michael Whittingham - [2012] NSWSC 526 - NSWSC 2012 case summary — Zoe

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Dolores Correa and The Spanish Club Limited (subject to Deed of Company Arrangement) v Kenneth Michael Whittingham

[2012] NSWSC 526

Supreme Court of NSW|2012-03-28|Before: Black J, John J

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Court

Supreme Court of NSW

Decision date

2012-03-28

Before

Black J, John J

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Judgment (3 paragraphs)

[1]

Deputy Commissioner of Taxation v Portinex Pty Ltd (No 2) [2000] NSWSC 557; (2000) 34 ACSR 422 - Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99; (2000) 156 FLR 453; 34 ACSR 391 - Galea v Bagtrans Pty Ltd [2010] NSWCA 350 - Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 - Gould v Companies Auditors and Liquidators Disciplinary Board [2009] FCA 475; (2009) 71 ACSR 648 - Honest Remark Pty Ltd v Allstate Explorations NL [2006] NSWSC 735; (2006) 234 ALR 765 - RCHPI Australia Pty Ltd [2008] NSWSC 1106 - John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'Asia) Pty Ltd (1991) 6 ACSR 63 - Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 - Kazaar v Duss [1998] FCA 1378; (1998) 88 FCR 218; 29 ACSR 321 - Kirwan v Cresvale Far East Ltd (in liq) [2002] NSWCA 395; (2002) 44 ACSR 21 - Khoury v Zambena Pty Limited (1997) 23 ACSR 344 - Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 - Mentha v Colorbus Pty Ltd (in liq) [2004] VSC 486; (2004) 51 ACSR 677 - Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (1996) 63 FCR 391; 19 ACSR 160 - Monks v Poynice Pty Ltd (1987) 8 NSWLR 662; 11 ACLR 637 - Morris v Kanssen [1946] AC 459 - Natarajan v ACIB Accumulus Pty Ltd [2006] VSC 22; (2006) 56 ACSR 356 - National Australia Bank Ltd v Horne [2011] VSCA 280; 253 FLR 205; 85 ACSR 639 - National Mutual Fire Insurance Co Ltd v Commonwealth of Australia [1981] 1 NSWLR 400 - Naumoski v Parbery [2002] NSWSC 1097; (2002) 171 FLR 332 - Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146; 2 ACSR 161 - NZI Securities Australia Ltd v Poignand (1994) 51 FCR 584 - Panasystems Pty Ltd v Voodoo Tech Pty Ltd [2003] FCA 428; (2003) 21 ACLC 842 - Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1; 27 ACSR 535 - Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 - Re Australian Art Investment Pty Ltd [2012] VSC 18 - Re Australian Property Custodian Holdings Limited (admin apptd) (recs and mgrs apptd) [2010] VSC 492 - Re Bank of Syria [1900] 2 Ch 272 - Re Bank of Syria [1901] 1 Ch 115 - Re Chilia Properties Pty Ltd (1997) 73 FCR 171 - Re Clynton Court Pty Ltd [2005] FCA 543; (2005) 53 ACSR 432 - Re Colorbus Pty Ltd (In liq); Mentha v Colorbus Pty Ltd (in liq) [2004] VSC 486; (2004) 51 ACSR 677 - Re Darin (as administrators of Palamedia Ltd) [2010] NSWSC 451 - Re Ethan Minerals Ltd (admins apptd) [2011] NSWSC 899 - Re GIGA Investments Pty Ltd (in admin) (1995) 17 ACSR 472 - Re Pan Pharmaceuticals Ltd (admins apptd); Selim v McGrath [2003] FCA 855 - Re Pasdonnay Pty Ltd (admins apptd) (2005) 53 ACSR 717 - Re Scottish Petroleum Co (1883) 23 Ch D 413 - Re Sly, Spink & Co [1911] 2 Ch 430 - Re The Spanish Club Limited [2009] NSWSC 1426 - Re Vouris; Epromotions Australia Pty Ltd & Relectronic-Remech Pty Ltd (in liq) [2003] NSWSC 702; (2003) 47 ACSR 155 - Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; (2002) 43 ACSR 257 - Sherred v McDonald [2004] QSC 332 - Sherred v McDonald [2005] QSC 153 - Shirlaw v Graham [2001] NSWSC 612 - Singh v Singh [2008] NSWSC 386 - Skafcorp Limited v Jarol Pty Limited [2002] NSWSC 1183; (2002) 44 ACSR 138 - Smolarek v McMaster [2006] WASCA 216 - Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722; 10 ACSR 699; 11 ACLC 629 - Sutherland (as liquidator of Sydney Appliances Pty Ltd (in liq)) v Robert Bosch (Australia) Pty Ltd [2002] NSWSC 32; (2000) 33 ACSR 680 - Sutherland v Take Seven Group Pty Ltd (1998) 29 ACSR 201 - Wagner v International Health Promotions (admin apptd) (1994) 15 ACSR 419 - Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 1663; (2004) 51 ACSR 404 - Young v ACN 081 162 512 Pty Ltd [2005] NSWSC 139; (2005) 218 ALR 449 - Xie v Crisp [2011] VSC 154] Texts Cited: - Halsbury's Laws of Australia - Ford's Principles of Corporations Law Category: Principal judgment Parties: Dolores Correa (First Plaintiff) The Spanish Club Limited (subject to Deed of Company Arrangement) (Second Plaintiff) Kenneth Michael Whittingham (Defendant) Representation: Defendant: V.R.W. Gray/M. Stevens (Plaintiffs) S.D. Robb QC/N. Bearup (Defendants) Solicitors: Somerset Ryckmans (Plaintiffs) Norton Rose Group (Defendants) File Number(s): 09/290732

[2]

Judgment 1The Plaintiffs, Ms Dolores Correa ("Ms Correa") and The Spanish Club Limited (subject to Deed of Company Arrangement) ("Club") seek various orders under ss 447E(1), 449E(2) of the Corporations Act 2001 (Cth) and under the general law, by a Second Further Amended Originating Process and Amended Points of Claim filed pursuant to leave which I granted on the first day of the hearing. 2The Defendant, Mr Kenneth Whittingham ("Mr Whittingham"), has brought separate proceedings under s 449E of the Corporations Act and r 9.2 of the Supreme Court (Corporations) Rules 1999 (NSW) seeking approval of his remuneration to 20 August 2010 in a specified amount and approval of further remuneration from 23 August 2010 to the conclusion of those proceedings. In the alternative to the orders sought under s 449E of the Corporations Act, Mr Whittingham seeks an order that he is entitled to be paid, out of the Club's assets, his reasonable remuneration and costs and expenses, including legal expenses, for work performed pursuant to his purported appointment as voluntary administrator and deed administrator of the Club under unjust enrichment principles and an order that the proceedings be referred to a registrar for determination of the amount payable to him on that basis. 3It was common ground that those other proceedings will require an assessment of the specific amount to which Mr Whittingham was entitled by way of remuneration. That question is not raised for determination in these proceedings. However, the findings which I make in these proceedings as to the criticisms made of Mr Whittingham's conduct will have an impact on the categories of remuneration which are recoverable in those other proceedings, since both Mr Whittingham and the Club are party to both proceedings and are likely to be bound by a res judicata or issue estoppel arising from these proceedings. 4It will be convenient to deal sequentially with the particular orders which are sought by the Plaintiffs and the matters which are relied upon in support of those orders, as identified in the Amended Points of Claim. It will also be necessary to address several matters raised by Mr Whittingham by way of Cross-Claim. Witnesses called in the proceedings 5Ms Correa did not give evidence in the proceedings and the Plaintiffs called no other members of the Club or other persons with involvement in the events of which they complain to give evidence of those events. 6The Plaintiffs relied on the expert evidence of an insolvency practitioner, Mr Brian Silvia. The manner in which Mr Silvia's report was prepared was unhelpful in several respects. That report did not clearly set out assumptions of fact on which Mr Silvia relied. Much of Mr Silvia's evidence was directed to his practice and views rather than to the common practice of insolvency administrators, and his evidence as to what Mr Whittingham "should" have done often left it unclear whether he was making a normative judgment by reference to unstated principles. Mr Silvia was also not asked to update his report to have regard to the evidence given in Mr Whittingham's primary affidavit of September 2011 (T295, T305). Mr Silvia was provided with a copy of the report of Mr Grellman (the insolvency expert on whose report Mr Whittingham relied), which had been prepared having regard to assumptions reflecting Mr Whittingham's evidence but he was not asked to and did not prepare a supplementary report to address Mr Grellman's views. Mr Silvia first responded to those views in cross-examination, often in non-responsive answers. Mr Silvia's evidence in cross-examination also substantially extended the criticisms of Mr Whittingham's conduct made in his expert's report, again largely by non-responsive answers. 7I did not permit a second expert report of a real estate agent and auctioneer, Mr Gavin Lloyd, to be read by the Plaintiffs for the reasons set out in my judgment delivered on 20 March 2012 ([2012] NSWSC 266), relating to the lateness of service of that report and the fact that I did not consider that exceptional circumstances existed which would warrant the grant of leave under r 31.28 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). 8Mr Whittingham filed a lengthy affidavit setting out his recollection of events and his reasoning process at the relevant times and exhibiting extensive contemporaneous documents, and was cross-examined vigorously and at length. Although I refer below to his evidence of one conversation which, in my view, involved a degree of reconstruction, I consider that Mr Whittingham was a generally reliable witness who did his best to provide honest evidence. Although Mr Whittingham had an obvious personal and economic interest in justifying his conduct, he directed his answers in cross-examination to the questions he was asked and made appropriate concessions as to matters which he could not now explain. 9Mr Whittingham also relied on the evidence of Mr Kovacs, an estate agent with Colliers who had advised Mr Whittingham in respect of the sale campaign for the Club's properties to which I refer below. Mr Kovacs was plainly experienced and knowledgeable and, in my view, gave honest and persuasive evidence. 10Mr Whittingham also relied on the expert evidence of Mr Richard Grellman. Mr Grellman's evidence focused on the range of actions which might reasonably have been taken by a competent insolvency practitioner, and he gave evidence by reference to detailed assumptions reflecting Mr Whittingham's evidence. Mr Grellman was cross-examined at considerable length and largely without objection. However, the questions which were put to him often invited him to express views as to matters which were outside the scope of his professional expertise and, to the extent that assumptions were identified in those questions, they were frequently not established by the evidence in the proceedings. 11Mr Grellman had retired from his role as partner-in-charge of the Corporate Recovery Division of KPMG in March 2000 and it is likely that professional practice will have developed since that date, including in relation to questions such as the extent of inquiries which an administrator should make to investigate the validity of his appointment. The Plaintiffs submit that Mr Grellman conceded that, after he retired, he did not have occasion to keep up with what constituted evolving good practice in the profession. In my view, that submission overstated the evidence, in which it was put to Mr Grellman, and he properly conceded, that he had not had occasion since his retirement to keep up "as diligently" with such practice after his retirement as before and that he was not, since his retirement, "quite so familiar" with developments in particular areas as a result of court or disciplinary body decisions in connection with the validity of appointments. It was not put to Mr Grellman and he did not accept that the level of diligence which he had applied after his retirement was not sufficient to inform him as to current standards of professional practice. It does not follow, as the Plaintiffs contend, that Mr Grellman's evidence should be accepted only as evidence of good practice in March 2000. Validity of Mr Whittingham's appointment Compliance with constitutional requirements as to minimum number of directors 12The Club was at all relevant times and is a company limited by guarantee and a registered club under the Registered Clubs Act 1976 (NSW). At some time between 14 November 2008 and 17 November 2008, Mr Whittingham was appointed, or purportedly appointed, as voluntary administrator of the Club by a resolution passed, or purportedly passed, by the Club's directors under s 436A of the Corporations Act. The date on which that appointment took effect and the validity of the appointment are in issue in these proceedings. 13The Plaintiffs seek a declaration that Mr Whittingham was not validly appointed as voluntary administrator and consequently, was not validly appointed as deed administrator of the Club and was a trespasser to the Club's property and assets. That declaration was sought at general law and not under s 447G of the Corporations Act which confers power on the Court to make such declarations in respect of an administration. The Plaintiffs contend that Mr Whittingham should not be entitled to recover his fees and expenses of acting as administrator and deed administrator and should be required to disgorge the fees and expenses which have already been paid to him. The Plaintiffs' submissions indicate that the primary foundation for that claim is their contention that Mr Whittingham was not validly appointed and that any defect in his appointment should not be cured under s 447A or s 1322 of the Corporations Act. 14It is necessary to identify the events surrounding Mr Whittingham's appointment and various criticisms made by the Plaintiffs of his conduct in respect of that appointment in order to deal with the challenge to the validity of his appointment. I will then address the specific grounds of challenge to that appointment below. 15On 12 November 2008, Mr Whittingham attended a meeting with Ms Yolanda Sanchez, a director of the Club. Mr Whittingham made notes of that meeting (Ex KMW-5, 626-633). Ms Sanchez advised him that the Club was trading at a loss and that the Club's annual accounts had not been prepared since 2005. There was discussion as to the Club's two properties, 86 and 88 Liverpool Street; the level of its debt to a secured lender, Australian Unity; the fact that there were issues between members; that two proceedings had been brought against the Club in the Land and Environment Court for fire ordinance issues; that proceedings had also been brought against the Club by a member, Mr Martin, in relation to its failure to prepare accounts and conduct annual general meetings; and that claims of creditors of the Club were unpaid and they were demanding payment. Mr Whittingham recommended that the Club appoint a voluntary administrator (Whittingham [12], T69-70). 16A company search obtained by Mr Whittingham on the same day disclosed that the Club had four directors, Ms Yolanda Sanchez, Ms Maria Sanchez, Mr Faustino Garcia and Mr Daniel Garcia (Whittingham [13], Ex KMW-5, 38-75). Mr Whittingham caused his assistant to prepare draft minutes of a directors meeting to appoint an administrator and a draft instrument of appointment (Ex KMW-5, 77-78), which would have been prepared by reference to that company search (T79-80). The draft minutes were provided to Ms Sanchez between 12 and 14 November 2008, and contemplated that Mr Faustino Garcia would be chairperson of the meeting at which the resolution for Mr Whittingham's appointment would be considered. 17Ms Sanchez sent documents relating to the appointment of Mr Whittingham as administrator to Mr Whittingham by email at 4.52pm on 14 November 2008 (Ex KMW-5, 79-81). While Mr Whittingham gave evidence in his affidavit that he received the documents back on Friday 14 November 2008, he fairly acknowledged in cross-examination that that evidence was based on the date which the email bears (T80-81). It appears that Mr Whittingham read that email that afternoon or on Monday 17 November 2008 (Whittingham [16]). The form of resolution of directors appointing Mr Whittingham which was returned by Ms Sanchez to Mr Whittingham was signed by her as chairperson and did not state the names of those in attendance or the date, time and location of the relevant meeting. The instrument of appointment of Mr Whittingham as administrator was signed by Ms Sanchez and Ms Maria Sanchez as directors of the Club. Mr Whittingham raised a question as to the form of those minutes with Ms Sanchez on 17 November 2008 and asked her to advise who was present at the relevant directors meeting, and Ms Sanchez advised him that: "I phoned the other two directors and they indicated that they were in agreement with the appointment. However they did not want their names associated with the appointment because they are frightened of recriminations from people within the Spanish Club" (Whittingham [17]; similar evidence was given in cross-examination at T92). 18The Plaintiffs rely upon a letter which Mr Whittingham caused to be sent by facsimile to the Office of Liquor Gaming and Racing ("OLGR") at 9.26am on 17 November 2008 (Ex P3), which stated that: "I was appointed Administrator of the [Club] on 17 November, 2008 pursuant to section 436A of the Corporations Act 2001". The Plaintiffs submit that this letter demonstrates that Mr Whittingham must have given his consent to appointment as administrator and had been appointed as administrator by that time, prior to a conversation with Mr Transfield of OLGR to which I will refer below and that that is inconsistent with his recollection of events on that day. In my view, this letter (and a similar letter to the Casino Liquor & Gaming Control Authority at about the same time) indicate that Mr Whittingham then understood that his appointment had occurred by the time those letters were sent and prior to the conversation with Mr Transfield, and to that extent are inconsistent with Mr Whittingham's evidence of his recollection of the sequence of events on that day. It is, of course, also possible that Mr Whittingham had simply not given careful consideration to the time at which his appointment became effective when those letters were sent. 19The Plaintiffs also submit that Mr Whittingham "concealed" the existence of that letter to OLGR by not including it in his affidavit evidence in chief. I do not accept that submission and note that Mr Whittingham had referred in his affidavit to the substantially similar letter which was sent by facsimile at about 9.30am on that date to the Casino Liquor & Gaming Control Authority (Ex KMW-5, 679). I do not consider that any aspect of this matter suggests, as the Plaintiffs contend, that Mr Whittingham either sought to give false evidence or did so. While the Plaintiffs put further written submissions as to the implications of the situation where a party tells a falsehood, it is not necessary for me to address those submissions since their premise was not established. 20Mr Whittingham had a telephone conversation with Mr Transfield of OLGR later on 17 November 2008. Mr Whittingham's evidence was that he had been advised by Ms Sanchez and another partner in his firm that Mr Transfield was the right person to speak to within OLGR in respect of the Club. According to Mr Whittingham, he advised Mr Transfield that he was seeking endorsement to be appointed as voluntary administrator; Mr Transfield said that the OLGR had been looking at appointing its own administrator to the Club (a matter which is also established by other evidence); and Mr Transfield told him he was "okay to go ahead" with his appointment as administrator and that "written confirmation will follow through the post" (Whittingham [18], T73). Mr Whittingham's evidence was that he regarded Mr Transfield's statement as an approval by the Casino, Liquor & Gaming Control Authority for the purpose of s 41 of the Registered Clubs Act (to which I will refer below) (T74-75). Mr Transfield made a file note of the conversation which did not record that statement having been made. Mr Transfield's file note of that conversation was not complete and in some respects it seems to have been in error; in particular, the file note recorded Mr Transfield as having called Mr Whittingham whereas it appears from contemporaneous telephone records that Mr Whittingham called Mr Transfield. 21On balance, I consider that Mr Whittingham was mistaken in his evidence that Mr Transfield gave him express oral approval for appointment as administrator and the letters to OLGR and the Casino Liquor & Gaming Control Authority to which I have referred above indicate that he was also mistaken in his evidence that any such approval was given prior to his accepting appointment. There may have been a degree of reconstruction involved in Mr Whittingham's recollection of events in this regard. However, I do not accept the Plaintiffs' submission that Mr Whittingham was untruthful and dishonest in that evidence. 22Mr Whittingham's evidence is that, after the conversation with Mr Transfield, he accepted appointment as administrator on 17 November 2008 and Ms Sanchez authorised the resolution and notice of appointment being dated with that date (Whittingham [19]). Mr Whittingham also gives evidence that he signed a consent to act as administrator and handed it to Ms Sanchez on that date. 23Mr Whittingham sought advice from external solicitors on 17 November 2008 as to the validity of his appointment and was advised that his appointment was valid (Whittingham [75], Ex KMW-5, 629, T91). I will address the significance of this advice below. 24OLGR sent an email to Mr Whittingham on 25 November 2008 requesting that he apply for the Authority's approval to his appointment as administrator under s 41 of the Registered Clubs Act (to which I will refer below) (Ex KMW-5, 677) and he wrote to OLGR on 26 November 2008 applying for that approval (Whittingham [96]-[97], Ex KMW-5, 678-693). On 28 November 2008, OLGR gave written approval for Mr Whittingham's appointment as administrator (Whittingham [98], Ex KMW-5, 695). This occurred 11 days after Mr Whittingham, on his evidence, accepted appointment as voluntary administrator. I will return to this matter below in dealing with the Club's contention that Mr Whittingham's appointment was invalid because it was not approved under s 41 of the Registered Clubs Act before it occurred. Minimum number of directors 25The Plaintiffs contend, first, that Mr Whittingham's appointment was not valid because the Club did not at the relevant time have the number of directors required by its articles of association (to which I will refer, for convenience, as its constitution) and its board was incapable of functioning. At the time of Mr Whittingham's appointment or purported appointment as voluntary administrator of the Club, there were only four directors of the Club, namely Mr Faustino Garcia, Mr Daniel Garcia, Ms Yolanda Sanchez and Ms Maria Sanchez. At that time, the Club's constitution (as varied by a special resolution, notice of which was lodged with the Australian Securities and Investments Commission on or about 21 August 2006) provided that its board of directors was to consist of 7 directors and that a quorum for any meeting of the board was 4 directors (Ex P9A 398D). The Plaintiffs put their case on that basis in their Amended Points of Claim, although they conducted their case at the hearing on the primary basis that the number of directors specified in the constitution was 13, the number of directors required prior to the amendment of the Club's constitution. On either basis, the number of directors at the relevant time was less than the number specified in the Club's constitution. 26There is authority that, if the number of a company's directors has fallen below the minimum prescribed in the constitution, but sufficient directors attend a meeting to constitute a quorum, those directors may validly act provided a company's constitution expressly or impliedly authorises them to do so: Re Scottish Petroleum Co (1883) 23 Ch D 413 at 431; Re Bank of Syria [1900] 2 Ch 272 at 278, aff'd Re Bank of Syria [1901] 1 Ch 115 at 120-121; and see Halsbury's Laws of Australia at [120.8185]. However, the provisions of the constitutions considered in those cases typically authorised the directors to continue to act either generally or for a specified purpose notwithstanding that the number of directors had fallen beneath the specified minimum. There is no corresponding provision in the Club's constitution and Mr Whittingham did not contend such a provision could be implied. Where the Club's constitution does not expressly or impliedly authorise directors to act where the numerical requirement as to the number of directors is not satisfied, then acts of a board will not be valid in that situation: Re Sly, Spink & Co [1911] 2 Ch 430; Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 at [54]ff; Singh v Singh [2008] NSWSC 386 at [95]. 27As the Plaintiffs contend, this has the consequence that there could not be a valid directors' meeting and there could be no proper authority to pass the resolution to appoint the administrator until the board was first brought back to the constitutional minimum of 7 directors. Mr Whittingham accepts that, absent an entitlement on his part to prevent the Club asserting the invalidity of the resolution by the board, the fact that only 4 rather than 7 directors were in office would invalidate the resolution for his appointment. Subject to the application of ss 128-129 of the Corporations Act and to the Court's powers under s 447A and s 1322 of the Corporations Act (to which I will refer below), this finding would be sufficient to invalidate Mr Whittingham's appointment. 28The Plaintiffs also submit that no directors were in office at the relevant time by reason of the Club's failure to hold annual general meetings in 2007 and 2008. This submission is outside the matters raised by the Points of Claim and I declined to grant leave to amend the Points of Claim to permit this matter to be raised. This submission is therefore not open to the Plaintiffs. Quorum at meeting approving Mr Whittingham's appointment 29The Plaintiffs also contend that Mr Whittingham's appointment was invalid because a quorum was not established for any meeting of directors at which that appointment was made. I have referred to the form of resolution of directors appointing Mr Whittingham which was returned by Ms Yolanda Sanchez to Mr Whittingham in paragraph 17 above. The form of that resolution did not comply with the guidelines provided in John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'Asia) Pty Ltd (1991) 6 ACSR 63, where Young J observed that minutes of a directors' meeting should contain a note of the time of commencement of the meeting and a list of those present. 30The Club's constitution originally provided that the quorum for a meeting of the Committee was 6 members of the Committee (cl 32(a)). However, that clause was amended by the special resolution passed on 30 January 2005 to reduce the quorum of the Committee to 4 members. The Plaintiffs contend that the meeting at which the resolution to appoint Mr Whittingham was purportedly passed was attended only by Ms Yolanda Sanchez and Ms Maria Sanchez. That contention was not, in my view, established by the evidence. Neither Ms Yolanda Sanchez or Ms Maria Sanchez gave evidence in the proceedings. One of the other two directors in office at the time, Mr Faustino Garcia had sworn an affidavit in the Plaintiffs' case but that affidavit was not read. Various emails were tendered which made various assertions as to what occurred at that meeting but those communications were admitted only as evidence of the communications and not as truth of the matters asserted and provide no basis for any factual inference as to what occurred at the meeting. 31The Plaintiffs rely on Recital A of the Deed of Company Arrangement ("DOCA") subsequently prepared by Mr Whittingham's solicitors which stated that: "On 17 November 2008, two directors of the board of the Company resolved that, in the opinion of each director, the Company was insolvent, or was likely to become insolvent at some future time, and an administrator of the Company should be appointed. ..." The Plaintiffs contend that it was not to Whittingham's credit that in cross-examination he then tried to suggest that Recital A was in error, noting that he had asked his solicitors to draw up the deed of company arrangement. I am unable to accept this submission. The explanation for the suggested error offered by Mr Whittingham, in response to an invitation by the cross-examiner to explain the matter, was that the draftsperson of the recital may have assumed that two directors were present because two directors had signed the instrument of appointment and that explanation is not implausible. Neither Mr Whittingham nor his solicitors had personal knowledge of the facts and, as noted above, the members of the Club who could have given evidence of that matter did not do so. 32The Plaintiffs also contend that the fact that Ms Sanchez signed the minute of resolution as chairperson meant that Mr Faustino Garcia (who was president of the Club) must not have attended the meeting and accordingly there would have only been three directors in attendance which rendered the meeting inquorate; however, that would not follow if Mr Faustino Garcia and Mr Daniel Garcia had attended the meeting by telephone and (as Ms Sanchez advised Mr Whittingham) supported the resolution but did not wish to be seen to have signed it. 33Several questions put to Mr Whittingham in cross-examination assumed that the other directors of the Club had been contacted separately (rather than when they were together in a single place and the phone placed on speaker or by way of a conference call) but that proposition was not squarely put to him and, in any event, Mr Whittingham's understanding of what occurred could only have been derived from what he was told since he was not personally present at the directors' meeting, and he accepted that the only basis for his belief that other directors knew about his appointment was what Ms Sanchez had told him (T92). The Plaintiffs have also not established that the meeting took place by Ms Sanchez separately and successively telephoning the directors, in which case the meeting is likely to have been ineffective as a directors meeting, rather than by a means which allowed the four directors to consult together in which case it is likely to have constituted a valid meeting: Re GIGA Investments Pty Ltd (in admin) (1995) 17 ACSR 472. Where the position in that regard is unknown, the Plaintiffs have not shown that the manner in which the meeting took place led to its invalidity. 34Mr Whittingham contends that I should draw an adverse inference from the Plaintiffs' failure to call Mr Faustino Garcia to make good the allegation that the meeting of the board at which Mr Whittingham was established was inquorate. It is not necessary for me to do so since that allegation fails simply because the Club has not led the evidence which would be necessary to establish that proposition. 35The Plaintiffs conversely contend that I should draw an inference adverse to Mr Whittingham because there is evidence that he, or his advisers, had considered leading evidence from Ms Sanchez but had not done so. The principle in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 applies where a party is "required to explain or contradict" a matter and its basis is "plain commonsense": Jones v Dunkel per Windeyer J at 320-322. In Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 at [63], Heydon, Crennan and Bell JJ observed in their joint judgment that: "The rule in Jones v Dunkel is that the unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party's case." The principle in Jones v Dunkel does not compel the drawing of such an inference: Galea v Bagtrans Pty Ltd [2010] NSWCA 350 at [2]; CSG Ltd v Fuji Xerox Australia Pty Ltd [2011] NSWCA 335 at [82]; Commonwealth Bank of Australia v Hamilton [2012] NSWSC 242 at [204]. 36In my view, Mr Whittingham's failure to call Ms Sanchez does not give rise to an inference that her evidence would not have assisted his case, where his not calling such evidence is equally consistent with his advisers having formed the view that he had no need to lead that evidence where the Plaintiffs had not led evidence from either Mr Faustino Garcia and Mr Daniel Garcia that they had not participated in the relevant meeting by telephone or approved his appointment so that there was no case to be answered by Mr Whittingham in that regard. 37The appointment of an administrator under s 436A of the Corporations Act requires the board to have resolved to the effect that, in the opinion of the directors voting for the resolution, the company is insolvent or likely to become insolvent at a future time. The formation of such an opinion is a precondition to the valid exercise of the power to appoint an administrator: Kazaar v Duss [1998] FCA 1378; (1998) 88 FCR 218; 29 ACSR 321. The Plaintiffs also contend that the Club's board had failed to form a genuine opinion as to the Club's insolvency. 38So far as that contention depends on directors' subjective reasoning process, the Plaintiffs have not established it where no director has given evidence, and it is not to the point that no director of the Club had filed an affidavit on behalf of Mr Whittingham deposing to any belief that the Club was insolvent where it was a matter for the Plaintiffs to establish the case which they advanced. So far as the Plaintiffs contend that the directors of the Club had failed to form such a view because Mr Faustino Garcia and Mr Daniel Garcia did not hold that view or did not participate in the relevant meeting, that contention must fail for the reasons noted above. So far as the Plaintiffs contend that Ms Sanchez did not have access to audited accounts, she knew or should have known the matters to which I have referred above and the Club's failure to prepare accounts was not a matter that would have provided any basis for comfort as to its solvency. As I note below, the information which was available to the Club's directors at that time (including the fact of continuing trading losses, a deficiency in current assets, suppliers having placed the Club on a cash on delivery basis and the Club's failure to meet its statutory obligations in respect of employee contributions) provided a strong basis for a view that the Club was in fact insolvent at the relevant time. Application of indoor management rule 39Mr Whittingham contends that his appointment is valid by reason of the statutory assumptions under ss 128-129 of the Corporations Act. The Plaintiffs contended in closing submissions that it was not open to Mr Whittingham to rely on those sections because they were not specifically referred to in Mr Whittingham's Points of Defence. The Plaintiffs also contend that Mr Whittingham did not depose that he made any relevant assumption and that any reliance by Mr Whittingham upon any such assumption would depend on the evidence that he made it and further evidence (which they do not further identify) might have been led to challenge or refute it. 40In my view, it is open to Mr Whittingham to rely on the statutory assumptions in ss 128-129 of the Corporations Act. Mr Whittingham's Points of Defence pleaded that he formed the view that he was validly appointed, he gave evidence of his understanding that he had been validly appointed and was cross-examined at length as to the basis for that understanding. Mr Whittingham's reliance on ss 128-129 of the Corporations Act was identified in his opening outline and the Plaintiffs did not then suggest that they were in any way disadvantaged by that matter or were deprived of the opportunity to lead relevant evidence. In my view, the case was thereafter conducted on the basis that this matter was in issue. The Plaintiffs have identified no specific evidence that could or would have been led in order to meet Mr Whittingham's reliance on the statutory assumptions. Moreover, once the Club successfully applied, on the first day of the hearing, to be joined as Second Plaintiff in the proceedings, Mr Whittingham was entitled to the opportunity to raise such defences as might be available to the Club's claim. 41The Plaintiffs also contended that Mr Whittingham could not rely on ss 128-129 of the Corporations Act in response to Ms Correa's claim by reason that each creditor is entitled to bring proceedings to obtain a declaratory order as to the validity of an administrator's appointment under s 447C of the Corporations Act and, the Plaintiffs contend: "it follows that the right of action is each individual creditor's own right of action and cannot be affected by any act or omission by the Club or by any other creditor or member". I do not accept this submission. Section 447C of the Corporations Act allows each creditor to seek such a declaration but the creditor's entitlement to that declaration must be determined by reference to the circumstances of the administrator's appointment including any dealings between the administrator and the relevant company. If the consequence of those circumstances and the applicable legal principles (including ss 128-129 of the Corporations Act) is that the administrator was validly appointed to the company, then the Court would make a declaration to that effect irrespective of whether the company, a member or a creditor sought the relevant declaration. The Plaintiffs' submission would lead to the surprising result that an administrator's appointment could at the same time (and, in this case, in the same proceedings) be declared to be valid in an application brought by the Club, by the application of ss 128-129 of the Corporations Act, and declared to be invalid in an application by a creditor or member of the Club relying on the same facts. 42Turning now to the application of these sections, a person is entitled to make the assumptions specified in s 129 of the Corporations Act in relation to dealings with a company and the company is not entitled to assert that any of those assumptions are incorrect in proceedings in relation to those dealings: s 128(1). The purpose of these sections is "to protect outsiders from unreasonable reliance by a company on any failure to comply with the requirements of the memorandum and articles or any other rules of law relating to the administration of a company": Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279; (1991) 6 ACSR 464; 10 ACLC 253. The assumptions available under ss 128-129 of the Corporations Act are available to a person who has "dealings" with a company. Different views as to the scope of that concept have been taken in the authorities: Barclays Finance Holdings Ltd v Sturgess (1985) 3 ACLC 662 at 667; Bell Resources Holdings Pty Ltd v Commissioner for ACT Revenue Collections (1990) 22 FCR 178; 2 ACSR 211; Australian Capital Television Pty Ltd v Minister for Transport and Communications (1989) 17 ALD 658; 86 ALR 119; 7 ACLC 525; Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1990) 3 ACSR 649; 9 ACLC 324; Story v Advance Bank of Australia Ltd (1993) 31 NSWLR 722; 10 ACSR 699; 11 ACLC 629. On any view, it seems to me that the steps involved in a person's appointment as administrator of a company is such a dealing with the company. In Wagner v International Health Promotions (admin apptd) (1994) 15 ACSR 419 at 422, Santow J accepted that these provisions would be available to an administrator where an issue arose as to the authority of those purporting to execute an instrument of appointment under seal. 43The assumptions available under s 129(1) of the Corporations Act include that the company's constitution has been complied with and are an expression of the indoor management rule, by which persons dealing with the company may assume that acts within its constitution are duly and properly performed and are not bound to inquire whether acts of internal management have been regular: County of Gloucester Bank v Rudry Merthyr Steam and House Coal Colliery Co [1895] 1 Ch 629; Morris v Kanssen [1946] AC 459; Australian Capital Television Pty Ltd v Minister for Transport and Communications above; Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146; 2 ACSR 161. If that assumption is available to Mr Whittingham, it would be an answer to the Plaintiffs' claims that the requirements in the Club's constitution as to the minimum number of directors constituting the board and the number of directors constituting a quorum for a directors' meeting were not satisfied in respect of his appointment as administrator. 44A person is not entitled to make an assumption specified in s 129 of the Corporations Act if, at the time of the dealing, he or she knew or suspected that that assumption was incorrect: s 128(4). A company seeking to avoid the application of the statutory assumptions bears the burden of persuasion that a person claiming to make an assumption knew or suspected that the assumption was incorrect: Ford's Principles of Corporations Law at [13.300]. In the present case, the assumption that the Club's constitution was complied with in respect of his appointment is available to Mr Whittingham unless he knew or suspected that it was incorrect, at the time of his purported appointment as administrator. 45The Plaintiffs contend that, at the time of his purported appointment and thereafter, Mr Whittingham knew or ought reasonably to have known that his appointment was invalid or alternatively was put on notice or inquiry that his appointment was invalid (Points of Claim [8]). The latter proposition would not be sufficient to deprive him of the ability to rely on the assumptions permitted under s 129 of the Corporations Act, since that section requires actual knowledge or suspicion that the assumption is incorrect, and does not adopt the "put on inquiry" test which had previously been adopted in Bank of New Zealand v Fiberi Pty Ltd (1993) 14 ACSR 736; 12 ACLC 48. I will deal with the several matters on which the Plaintiffs rely to establish such knowledge or suspicion in turn. 46First, the Plaintiffs rely on the fact that an ASIC search undertaken by Mr Whittingham would have disclosed that the Club's constitution required at least seven directors to be appointed and four directors to form a quorum for a directors' meeting. The Plaintiffs also contend that a "cursory review" of the Club's constitution would have revealed that the directors' meeting was not in accordance with the constitution because the board was not then validly constituted and the number of directors at the meeting was below that fixed for a quorum. Mr Whittingham's evidence was that it was not normal practice of administrators to review a company's constitution at the point of appointment and that he asked the legal advisers which he had retained in respect of the matter to review the Club's constitution and advise him in that regard. Mr Grellman also did not accept that it was necessary for an administrator to personally review a company's constitution when considering the validity of his appointment, but accepted that it would be best practice to obtain legal advice (T426). Mr Whittingham had taken that course. 47The expert witness called by the Plaintiffs, Mr Silvia, outlined the steps which he considered a reasonably competent administrator would take prior to accepting appointment as administrator, which included, inter alia, obtaining a copy of an ASIC search for the Club and obtaining a copy of the Club's constitution. However, Mr Silvia acknowledged on cross-examination that he could not recall if he had personally read the constitution of the one registered club to which he had in fact been appointed as administrator (T283). Mr Silvia also expressed the view that a reasonably competent administrator would have concluded that article 26 of the Club's constitution required the Club's board to comprise at least 13 ordinary members and a quorum was to comprise at least 7 members. That conclusion neglected the amendment to the Club's constitution which had been filed with ASIC, which had reduced the minimum number of directors to 7 and the quorum for a directors meeting to 4. I will refer below to Mr Silvia's evidence in respect of legal advice obtained by Mr Whittingham as to the validity of his appointment. 48The expert called by Mr Whittingham, Mr Grellman, was also asked a series of questions in cross-examination as to the steps which an administrator could or should have taken to have confirmed what he had been informed as to the circumstances in which he had been told his appointment had occurred. Mr Grellman indicated that he would be inclined to take assurances given by a director on face value but would certainly seek legal advice, but also accepted that it would be preferable for an administrator to satisfy himself that all of the directors were of one mind. I do not consider that this evidence ultimately assists in resolution of the proceedings, in circumstances that, first, it has not been established that the directors were not of one mind in respect of the appointment of Mr Whittingham and second, the disqualifying factor for the purposes of s 128(4) of the Corporations Act is not being placed on inquiry but knowing or suspecting that the Club's constitution was not complied with. The fact that Mr Whittingham could, or should, have made further inquiries as to these matters does not establish that he knew or suspected that his appointment did not comply with the requirements of the Club's constitution. 49The Plaintiffs also rely on a subsequent review of the Club's constitution by Mr Whittingham on 6 February 2009, recorded in his time sheet and referred to in his supplementary report to creditors dated 17 February 2009, and submit that Mr Whittingham must thereafter have had serious doubts about the validity of his own appointment and was obliged to approach the Court to seek a validation order. However, that matter cannot establish that he knew or suspected that his appointment did not comply with the Club's constitution at the time it was made. 50Second, the Plaintiffs contend that Mr Whittingham knew or should have known that Ms Yolanda Sanchez and Ms Maria Sanchez had not been validly appointed as directors of the Club as at 14 and 17 November 2008, because Ms Sanchez had variously resigned and been reappointed as a director of the Club on previous occasions; there were only two directors of the Club between 29 September 2008 and 1 October 2008, and article 35 of the Club's constitution required its board to appoint a successor if the office of any director became vacant. I do not consider that the relatively complex line of reasoning articulated in this submission is such that I should find that Mr Whittingham either knew or suspected that his appointment did not comply with the Club's constitution at the time it was made. 51Third, the Plaintiffs contend that the fact that the minute of the resolution of directors appointing Mr Whittingham did not on its face disclose who attended the meeting of the directors should have put Mr Whittingham on notice and inquiry to investigate the circumstances of his appointment. I accept that further inquiries could have been made by Mr Whittingham in respect of the conduct of the directors' meeting, given the absence of detail contained on the face of the minutes. An administrator should seek to confirm the validity of his appointment if, immediately after appointment, the resolution or instrument of appointment does not appear to be valid or if, during the course of the administration, he is put on inquiry about the validity of his appointment: Deputy Commissioner of Taxation v Portinex Pty Ltd (No 2) [2000] NSWSC 557; (2000) 34 ACSR 422 at 423; Wilson v Manna Hill Mining Company Pty Ltd (2004) 51 ACSR 404 at [63]. The Plaintiffs contend that the standard of investigation is not discharged by relying on the assurances of others, including the company's directors or solicitors: Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; (2002) 43 ACSR 257 at [60]; Mentha v Colorbus Pty Ltd (in liq) [2004] VSC 486; (2004) 51 ACSR 677. I also accept that reliance on such assurances is not conclusive. On balance, I consider that Mr Whittingham could and probably should have made such further inquiries in the circumstances of this case, including potentially contacting the other three directors disclosed by the ASIC search. However, as I have noted above, being put "on inquiry" is not sufficient to prevent Mr Whittingham relying on the statutory assumptions under ss 128-129 of the Corporations Act. 52I do not accept the next step in the Plaintiffs' submissions, that, had Mr Whittingham made further inquiry of any director of the Club other than Ms Yolanda Sanchez, "he would have learned of the serious defects in his purported appointment". I cannot accept that contention since there is no evidence of how the other directors would have responded to such an inquiry. Those other directors did not give evidence that they had not in fact participated in the relevant meeting by telephone or had not assented to Mr Whittingham's appointment. No issue was raised by the other directors of the Club with Mr Whittingham, at the time of his appointment, to indicate that they had not participated in the meeting at which he was appointed, at least by telephone, or did not support that appointment. In particular:

On 17 November 2008, Mr Whittingham sent letters to Mr Faustino Garcia and Mr Daniel Garcia to advise them of his appointment as administrator and that, as officers of the Club, they were not entitled to exercise any function or power without his approval and also gave them notice of the first creditors' meeting and required they provide him with specified information.
By letter dated 17 November 2008, the Australian Securities and Investments Commission also wrote to each of Mr Faustino Garcia and Mr Daniel Garcia advising them of Mr Whittingham's appointment as administrator.
Mr Faustino Garcia and Mr Daniel Garcia did not then respond to Mr Whittingham with any suggestion that there had been no meeting of directors to appoint Mr Whittingham as administrator or that they had not participated in such a meeting by telephone or otherwise or had not voted in favour of a resolution for his appointment.
By email dated 28 November 2008, Mr Daniel Garcia advised ASIC of a claim that the board had not properly appointed Mr Whittingham as administrator, by reason that the directors were deadlocked as to that appointment, not by reason of any failure of Mr Faustino Garcia and Mr Daniel Garcia to participate in the relevant meeting. Mr Daniel Garcia was not called by the Plaintiffs to give evidence to support the allegation made in the email to ASIC, which was admitted only as evidence of the communication and not as evidence of the truth of its content. Mr Daniel Garcia did not advise Mr Whittingham of this contention until nearly 7 months later, when he forwarded his communication to ASIC to Mr Whittingham by email dated 18 July 2009.
The expert witness called by the Plaintiffs, Mr Silvia, accepted in cross-examination that a reasonably competent administrator could understand that, when he and ASIC had advised directors of his appointment as administrator, they would advise him if they had not agreed to that appointment (T282). 53In my view, Mr Faustino Garcia's and Mr Daniel Garcia's failure to advise Mr Whittingham of any issue as to their consent to his appointment at the time it took place tends against any finding that Mr Whittingham knew or suspected that they had not participated, at least by telephone, in the meeting at which he was appointed. The Plaintiffs also rely on statements by two members and former directors of the Club, after Mr Whittingham's appointment, that they had concerns about the validity of his appointment. However, those matters were admitted only as proof of the communications and not as proof of their truth and those members have not given evidence in the proceedings. I do not consider that those matters establish that Mr Whittingham either knew or suspected that his appointment was invalid. 54Fourth, the Plaintiffs contend that the instrument of Mr Whittingham's appointment was signed by Ms Yolanda Sanchez and Ms Maria Sanchez as directors of the Club and persons authorised to sign for the Club; the common surname implied that the two signatories were related and may not be truly independent of each other; and article 63 of the Club's constitution provided that the seal could not be used except by authority of the board and in the presence of two members of the board. I do not consider that these matters established that Mr Whittingham knew or suspected that his appointment did not comply with the requirements of the Club's constitution. He had been provided with a minute which purportedly recorded a resolution of the directors for his appointment and there is no principle that persons who are related to each other or have a common surname may not attest the application of a common seal if properly authorised to do so. 55There are other factors which lead me to conclude that Mr Whittingham did not in fact know or suspect that his appointment did not comply with the Club's constitution at the time it was made. As I have noted above, Mr Whittingham sought advice from external solicitors on 17 November 2008 as to the validity of his appointment (Whittingham [75]). His evidence was that he sought that advice because of the form of the minute and instrument of appointment which he had received from Ms Sanchez and because a former director of the Club, Mr Martin, had brought proceedings against the Club in respect of matters such as its failure to hold annual general meetings or prepare accounts and he had arranged a meeting with Mr Martin and his legal advisers on 18 November 2008 (T91). His account of his conversation with his solicitor indicated that he had disclosed relevant matters to that solicitor, including that the minutes did not indicate which directors were present at the meeting; the inquiry which he had made of Ms Sanchez about the difference between the draft minute which he provided to her and the minute she returned to him and her explanation that the other two directors had confirmed their agreement with the appointment by phone; his conversation with Mr Transfield, to which I will refer below; and that the resolution and instrument of appointment had been dated 17 November 2008 on the basis of discussion with Ms Sanchez (T96.30). The solicitor expressed a preliminary view that Mr Whittingham had been validly appointed, subsequently reviewed the Club's constitution and considered the issue of the validity of the appointment of directors, and advised Mr Whittingham on 18 or 19 November 2008 that he had been validly appointed (Whittingham [76]). Mr Whittingham made a contemporaneous note of that advice in his notes in preparation for the meeting with Mr Martin and his lawyers which corroborates his evidence that such advice was obtained (Whittingham [75], Ex KMW-5, 629, T102). 56The Plaintiffs criticised Mr Whittingham for not obtaining confirmation of his solicitor's advice as to the validity of his appointment in writing. The relevance of this criticism is not immediately apparent, particularly where Mr Whittingham's contemporaneous note corroborates his evidence that such advice was given. However, I should observe that, in my view, Mr Whittingham was entitled to rely on oral advice given by an experienced firm and it was not unreasonable for him to be "very conscious of expending money at that time" as he indicated in his cross-examination (T102). The Plaintiffs also rely on Mr Silvia's evidence that he would personally review company constitutions rather than engaging a solicitor to do so; that insolvency practitioners are responsible for their own actions and quite often are given erroneous advice; that a reasonably competent administrator cannot simply rely on legal advice but must test that advice and bring his own commercial judgment to bear on that advice; and, ultimately, that the administrator "may rely on advice from the solicitor having tested the advice given" (T284-285). That evidence appeared to largely reflect Mr Silvia's individual practice rather than being evidence of the practice of the body of reasonably competent administrators, and I am not persuaded that an administrator's exercise of commercial judgment would provide particular assistance in respect of legal issues such as the application of a company's constitution in particular circumstances, the validity of a board meeting or the possible application of the indoor management rule in the relevant circumstances. 57The Plaintiffs also advanced the further submission, derivative of their submission in respect of the letter to OLGR, that Mr Whittingham could not rely on legal advice because "he did not act in good faith" and withheld important information from his solicitor that he had accepted his appointment prior to giving a written consent to act and before being approved to act by the OLGR. I do not accept that either a failure to act in good faith or any intentional withholding of important information were established. It was not established that either Mr Whittingham, or indeed OLGR, then recognised that the assent of the Casino Liquor & Gaming Authority to Mr Whittingham's appointment had the importance which has emerged in these proceedings. 58Acceptance of the Club's submission would also require the Court to accept the unlikely proposition that Mr Whittingham, knowing or suspecting that his appointment was invalid, chose not to take the simple steps which were available to him to seek a declaration of the validity of that appointment from the Court, at a time when any invalidity as to that appointment could readily be cured. That course is not an inherently likely one and the evidence before me did not disclose any explanation as to why Mr Whittingham would have chosen to take it. 59In summary, Mr Whittingham could and probably should have made further inquiries of the Club's other directors as to the circumstances of his appointment. However, Mr Whittingham had at least sought to confirm the circumstances surrounding his appointment with Ms Sanchez and had been advised by an experienced firm of solicitors that his appointment was valid. Even if the matters to which I have referred were sufficient to establish that Mr Whittingham was on inquiry as to whether his appointment had complied with the Club's constitution, they do not, in my view, establish that he suspected, still less that he knew, that his appointment did not comply with that constitution. Had Mr Whittingham known or suspected that matter, it would have been a simple matter for him to seek validation of his appointment by the Court and there is no obvious reason why he would not have done so. Even if Mr Whittingham was on inquiry as to the validity of his appointment, this is not sufficient, in the absence of the requisite knowledge or suspicion, to deprive Mr Whittingham of the ability to rely on the statutory assumptions under ss 128-129 of the Corporations Act. 60Accordingly, I have concluded that it is not open to the Club (or to Ms Correa, to the extent that she seeks to establish the position of the Club) to rely on any failure to comply with the requirements of its constitution in respect of the minimum number of directors or the quorum requirement for director's meetings to invalidate Mr Whittingham's appointment as administrator. Consent to appointment 61The Plaintiffs also rely, in support of the allegation that Mr Whittingham knew, or ought reasonably to have known or was put on inquiry that his appointment was invalid, on a particular to the Amended Points of Claim that Mr Whittingham did not execute a consent to act in accordance with s 448A of the Corporations Act prior to accepting his appointment on 14 November 2008. The particular does not make clear whether it is contended that Mr Whittingham had failed to provide a consent at all or only that he had failed to do so prior to 14 November 2008. That matter is not separately identified in the Amended Points of Claim as a matter giving rise to invalidity of the appointment, as distinct from a matter going to Mr Whittingham's state of knowledge. Mr Whittingham contends that he provided such a consent on 17 November 2008 and that his appointment was effective from that time. 62Section 448A of the Corporations Act provides: "A person cannot be appointed as administrator of a company or of a deed of company arrangement unless: (a) the person has consented in writing to the appointment; and (b) as at the time of the appointment, the person has not withdrawn the consent". 63The Plaintiffs' contention depends on the proposition that Mr Whittingham was appointed as administrator when the directors' resolution was passed on or before 14 November 2008 or the instrument of appointment was signed (in undated form) by two of the Club's directors on or before that date and that Mr Whittingham did not consent to appointment, either at all or at least until after he had reviewed those documents on 17 November 2008. Mr Whittingham's evidence, which I accept, was that he prepared such a consent which he signed and gave to Ms Yolanda Sanchez on 17 November 2008 (Whittingham 1.03.2012 [7], Annexure "A"). Mr Whittingham subsequently inserted the date 17 November 2008 in the directors' resolution and instrument of appointment (Whittingham [19], Ex KMW-5, 83-84). In my view, it was inappropriate to insert that date on the resolution where the meeting of the directors must have taken place prior to the return of the signed minutes of that meeting to Mr Whittingham. It is an open question, which it is not necessary for me to decide, whether that date could properly be inserted in the instrument of appointment where Mr Whittingham did not consent to his appointment as administrator until after he had seen the minutes which were not sent until late on Friday 14 November 2008. I do not accept the Plaintiffs' contention that Mr Whittingham's conduct in dating the resolution and instrument of appointment 17 November 2008 was "deliberately misleading". 64It is, however, clear that the instrument of Mr Whittingham's appointment was signed before he consented to that appointment. It is at least arguable that an administrator's appointment is invalid if he or she had not consented to his appointment at the time he or she was appointed: Gould v Companies Auditors and Liquidators Disciplinary Board [2009] FCA 475; (2009) 71 ACSR 648 and Calabretta v Redpen Developments Pty Ltd (in liq) [2010] FCA 81; (2010) 183 FCR 47. However, whether that issue arises in the present case depends on whether the instrument of appointment is construed as appointing Mr Whittingham only with immediate effect (so that the appointment would arguably be invalid) or as remaining, in effect, in suspended operation so that it took effect when and if he consented to that appointment. 65The Plaintiffs contend that a voluntary administration begins when the instrument of appointment is executed by the directors, relying on the combined effect of s 435C(1) and s 436A of the Corporations Act. Section 436A of the Corporations Act provides that a company may, by writing, appoint an administrator if the board has resolved as set out in that section. That section contemplates an appointment by an instrument in writing which has been authorised by the board. It does not contemplate that the directors' resolution, as distinct from that instrument in writing, amounts to the appointment of an administrator under s 436A of the Act. 66The Plaintiffs also contend that a resolution appointing an administrator can only be passed by directors after the administrator has consented in writing to appointment. I do not accept that contention, which would be capable of causing considerable practicable difficulties if there are constraints on the availability of either the directors to pass the resolution or the administrator to sign the relevant consent. The contention is also inconsistent with the reasoning of Lindgren J in Gould v Companies Auditors and Liquidators Disciplinary Board above, where Lindgren J upheld the validity of the appointment of an administrator where a consent to act was not signed until two weeks after the directors' resolution authorising the appointment. His Honour there construed the particular resolution, which used the language "be appointed", as providing that the administrator was not appointed as administrator until he consented in writing to that appointment, so that the prospective appointment became a present appointment immediately on that consent. 67On balance, it seems to me that the terms of the instrument of appointment in this case and s 436A and s 448A of the Corporations Act have the effect that Mr Whittingham's appointment took effect from the point at which he consented to his appointment, on 17 November 2008. The minute of the resolution passed at the directors meeting of the Club held on or before 14 November 2008 (had it been effective, which I have held it was not by reason that the board was not then constituted by the minimum number of directors necessary for decision-making) authorised the execution of the instrument of appointment of administrator but did not specify the time at which that instrument would take effect. The instrument of appointment was undated and used the language "the company hereby appoints" which indicates that its intended operation was that the appointment would take effect by the instrument of appointment. The terms of that instrument do not indicate an intent that the appointment would only take effect at the moment it was executed, rather than taking effect when it was possible for it to do so. In my view, that instrument of appointment could remain in a state of suspended effect until Mr Whittingham's consent was given, and (had it otherwise been effectively authorised by the board) take effect when that consent was given on 17 November 2008. 68This result is consistent with the reasoning in Gould v Companies Auditors and Liquidators Disciplinary Board above, albeit the language of the resolution in that case differed from the language to which I have referred above. This result is also consistent with the decision in NZI Securities Australia Ltd v Poignand (1994) 51 FCR 584, dealing with the appointment of a receiver, where the Court held that the receiver's appointment became effective when the document appointing him was handed to the receiver by a person with apparent authority to do so and the receiver accepted appointment; I accept, however, that that decision did not involve the construction of the statutory provisions to which I have referred above. This result is also consistent with that contemplated by Glass JA (with whom Moffitt P and Samuels JA agreed) in National Mutual Fire Insurance Co Ltd v Commonwealth of Australia [1981] 1 NSWLR 400 at 408, in that an appointment can be treated as in a state of "suspended validity" pending a necessary approval to an appointment, such that it will be valid if that approval is granted. I will consider that principle further below. 69Against the contingency that an appellate Court may take a different view from mine in respect of this issue, I deal below with the question whether the appointment can be validated under s 447A and s 1322 of the Corporations Act so far as this issue is concerned. Orders under ss 447A and 447C of the Corporations Act 70The Plaintiffs contend that Mr Whittingham is not entitled to seek any relief validating his appointment under s 447A, 447C or 1322 of the Corporations Act because he had failed previously to make any application for a declaration as to whether he was validly appointed (Amended Points of Claim [11]-[12]). I do not accept that proposition in that form. While delay by Mr Whittingham in making such an application is a relevant matter to determining whether the applications for relief now brought by Mr Whittingham in his Cross-Claim should be granted, I do not consider that it disentitles him from bringing such an application or deprives the Court of jurisdiction to determine it. 71Mr Whittingham seeks an order under s 447C of the Corporations Act declaring that he was validly appointed as administrator of the Club under s 436A of the Corporations Act on 17 November 2008. This section relevantly provides that: "447C(1) If there is doubt, on a specific ground, about whether a purported appointment of a person as administrator of a company, or of a deed of company arrangement, is valid, the person, the company or any of the company's creditors may apply to the Court for an order under sub-section (2). 447C(2) On an application, the Court may make an order declaring whether or not the purported appointment was valid on the grounds specified in the application or on some other ground." The orders made by the Court under this section are declaratory rather than curative: Smolarek v McMaster [2006] WASCA 216 at [25]; Re HPI Australia Pty Ltd [2008] NSWSC 1106 at [8]. I do not consider that I can make such an order having regard to the finding which I have made above that the board of the Club did not then have the number of directors required by the constitution so as to allow it to act by authorising the appointment. 72Alternatively, Mr Whittingham seeks an order under s 447A of Corporations Act that Pt 5.3A of the Act is to operate in relation to the Club as if he were validly appointed as administrator of the Club on 17 November 2008 pursuant to s 436A of the Act. Such an order may be made on the application of, inter alia, the administrator of a company under administration or the deed administrator where a company has executed a deed of company arrangement. That section relevantly provides that the Court may make such order as it thinks appropriate about how Pt 5.3A is to operate in relation to a particular company. Such an order may be made subject to conditions. 73In Shirlaw v Graham [2001] NSWSC 612 at [14], Young CJ in Eq noted that s 447A of the Corporations Act is a plenary power which may be used to overcome a defect in compliance with the appointment procedure under s 436A of the Corporations Act. Orders validating the appointment of an administrator have been made under this section where, inter alia:

An administrator was appointed by persons who were not validly appointed as directors or whose appointment as directors had terminated on bankruptcy: Re Wood Parsons Pty Ltd (in liq); Arnautovic v Kukulovski [2009] NSWSC 1444; Calabretta v Redpen Developments Pty Ltd (in liq) above. 74In Calabretta v Redpen Developments Pty Ltd (in liq) above at [37], Yates J observed that: "The discretion whether to exercise the power is undoubtedly a plenary one, to be exercised having regard to all the circumstances of the case that have been brought to the Court's attention by the applicant for relief and by those who have an interest in the matter and who may be affected by the granting of that relief. One relevant consideration is whether substantial injustice would be caused by effectively validating an otherwise invalid appointment: McIntosh 56 ACSR 283 at [32]". His Honour held at [41] that substantial injustice was not established (albeit in circumstances where an administrator's right of indemnity would depend on the extent of recoveries by the liquidator) by validating an administrator's appointment and thereby establishing his right to remuneration under the Act, where he had carried out the work required of an administrator and that work had been of value. An order made under this section may have retrospective effect so that, as and from the date of the order, no-one can assert that a previous transaction is invalid: Re Panasystems Pty Ltd v Voodoo Tech Pty Ltd above; Re Vouris; Epromotions Australia Pty Ltd & Relectronic-Remech Pty Ltd (in liq) [2003] NSWSC 702; (2003) 47 ACSR 155 at [70]. 75The Plaintiffs accept that, at an early stage of an administration, the questions, inter alia, of the Club's insolvency, whether it could have continued if it was returned to the control of the board, whether the continued administration was in creditors' interests and whether there were better options available to deal with the Club's future, inter alia, would be relevant matters to whether the Court would validate Mr Whittingham's appointment as administrator under s 447A of the Corporations Act. The Plaintiffs contend that, if such an application is made later, when the administration is substantially complete, those matters are irrelevant or give way to questions whether the administrator took reasonable steps to satisfy himself immediately of the validity of the appointment; whether the administrator was on notice that the validity of the appointment was "open to doubt"; and whether the administrator could have applied to the Court earlier seeking a declaration under s 447A of the Corporations Act. 76In my view, the matters which would be considered in an application for validation early in the administration will still be relevant in such an application brought late in the administration, where the question is whether the Court should exercise its power of validation so that the apparent position that an administrator was appointed and a DOCA adopted is given legal effect. The Court will be more likely to exercise its powers to give such effect to the apparent position if that was in fact the preferable position for the Club at the relevant time. I would give significantly less weight to the factors identified by the Plaintiffs as prevailing at a late stage, which appear to me to be matters primarily relevant to the exercise of any disciplinary jurisdiction so far as the administrator is concerned rather than to the question of validation of his or her appointment. I do not consider that, as the Plaintiffs appeared to suggest, that the Court would be "condoning" administrators continuing with invalid appointments by validating such appointments in appropriate circumstances where an application has been delayed. In a proper case, the Court would not grant such validation and, in any event, the disciplinary sanctions available to the regulatory bodies are amply sufficient to deal with any inappropriate delay in such an application. 77The Plaintiffs submit that the focus of the Court when making a remedial order under this section is on the position of the company at the time of the making of the order and what is best for the company in the future: Xie v Crisp [2011] VSC 154; (2011) 248 FLR 265 at [222]; Re Australian Art Investment Pty Ltd above at [6]. However, it does not follow that the Court's exercise of its remedial jurisdiction under s 447A of the Corporations Act should necessarily be exercised in a manner which will minimise any liability of the Club to pay the remuneration and expenses of an administrator, so as to maximise the Club's financial position, where Pt 5.3A of the Corporations Act assumes that administrators will be entitled to payment of their costs and expenses and provides a statutory means for the assessment of the administrator's proper remuneration. Consideration of relevant matters 78A number of matters are relevant to the exercise of the discretion under s 447A of the Corporations Act whether to order that Pt 5.3A take effect as if Mr Whittingham was appointed as administrator of the Club on 17 November. 79First, so far as the Plaintiffs attack the validity of Mr Whittingham's appointment by reason that there were an insufficient number of directors appointed to the Club's board at the time of that appointment, I consider that the legislative purpose of Pt 5.3A would be served by validating the appointment of an administrator where, on the Plaintiffs' case, the appointment of at least 3 (and up to 9) additional directors to the board would have been required to allow a valid appointment of an administrator. There is particular reason to validate an appointment of an administrator made by the directors of a company where their number is short of constitutional requirements, given the likely difficulty in persuading another person to become a director where a company is, or is expected, to become insolvent: Re Ethan Minerals Ltd (admins apptd) above. 80Second, so far as the Plaintiffs attack the validity of Mr Whittingham's appointment by reason that it took effect before he had consented to appointment, and if I am incorrect in the views which I have expressed above, I consider that the legislative purpose of Pt 5.3A would be served by validating the appointment where Mr Whittingham had consented to appointment within a short time after the appointment had occurred. 81Third, the steps Mr Whittingham should have taken in verifying the validity of his appointment are relevant to the exercise of my discretion. I have referred to those steps and the evidence in respect of that matter above. I have had regard to the fact that Mr Whittingham took some steps to confirm the validity of his appointment by seeking further information from Ms Sanchez as to the circumstances of his appointment and seeking external legal advice as to that matter. The importance of legal advice as to the validity of an administrator's appointment, in supporting an application for validation of that appointment under s 447A or s 1322 of the Act was recognised in Re Colorbus Pty Ltd (In liq); Mentha v Colorbus Pty Ltd (in liq) [2004] VSC 486; (2004) 51 ACSR 677 at [23]. I have noted above that Mr Whittingham could and probably should have made further inquiries to confirm the validity of his appointment and I have had regard to that matter. 82The expert witness called by the Plaintiffs, Mr Silvia, expressed the view that a reasonably competent administrator would have a real doubt as to whether he was validly appointed and would have instructed solicitors to make an application to the Court under s 447C of the Corporations Act. I understand that evidence to reflect Mr Silvia's views as to the facts of this case and, in particular, the fact that Mr Silvia gives less weight to the significance of the legal advice taken by Mr Whittingham than I have done. I would not conclude that Mr Whittingham should have brought an application to the Court under s 447A of the Corporations Act, involving additional costs to the Club, where he had received advice from external legal advisers that his appointment was valid. 83Fourth, it is relevant to the exercise of the discretion to validate Mr Whittingham's appointment under s 447A of the Corporations Act that, in my view, the Club was insolvent or very likely to become insolvent when the appointment was made: Panasystems Pty Ltd v Voodoo Tech Pty Ltd above; Re Australian Property Custodian Holdings Limited (admins apptd) (recs and mgrs apptd) [2010] VSC 492. In my view, there is compelling evidence that the Club was, or was very likely to become, insolvent when Mr Whittingham was appointed, including that:

Mr Whittingham's report to creditors dated 11 December 2008 noted several indicators of insolvency and expressed the view that it was likely that the Club had traded while insolvent prior to his appointment (Ex KMW-5, 747). 84While the Plaintiffs place substantial emphasis on the value of its properties at 86 and 88 Liverpool Street, subsequent events made clear that those properties were not readily realisable and the amount which they would realise on sale was dependent on the extent of purchaser interest. The Plaintiffs contend that the fact that Perpetual (as trustee for Australian Unity) had previously advanced money to the Club as a secured lender, when it had a current account deficit of more than $3 million and substantial trading losses "is ample evidence that the Club had an ability to procure cash resources by mortgage or pledge of its assets within a relatively short time". I do not accept that submission. After his appointment as administrator, Mr Whittingham unsuccessfully sought funding for the Club's continued operation from several sources and such further funding was not readily available to the Club whether on a secured basis or otherwise. Mr Whittingham also sought support from the secured creditor, Australian Unity but, although the Club had some undrawn capacity in its facility from Australian Unity, Australian Unity did not make additional funds available. Mr Whittingham also sought but was unable to obtain additional funding from St George Bank (Whittingham [99], [140]-[141]). 85The Plaintiffs submit that there is no evidence that, if the Club's board had been properly constituted and Mr Whittingham's appointment had been considered at a quorate meeting, the resolution to appoint Mr Whittingham would have been made. That is strictly correct, since none of the then directors of the Club gave evidence in the proceedings. However, it is difficult to see how the then directors of the Club, acting properly and in accordance with their duties, could have permitted a situation to continue where the Club was not preparing audited accounts, was being required to deal with suppliers on a cash on delivery basis and was not making statutory contributions in respect of employee entitlements, all of which are common indicators of insolvency. I do not accept the Plaintiffs' submission that "[t]his is not a case where the Club manifestly needed to be in administration". By contrast with the position in Sherred v McDonald [2005] QSC 153, where the Court declined to make curative or remedial orders, I consider that the evidence in this case supports a conclusion that the administration was necessary, given the matters indicating the Club's insolvency or likely insolvency to which I have referred above. 86Fifth, it is relevant to the exercise of the discretion whether to validate Mr Whittingham's appointment that, when a challenge to the validity of Mr Whittingham's appointment was raised by Ms Correa, she did not promptly pursue it and the Court thereafter made consent orders and Mr Whittingham completed work on the footing that the DOCA was valid, and the Club has ratified and adopted Ms Correa's conduct of the proceedings. The chronology of events is as follows:

Ms Correa did not file proceedings seeking declarations as to the invalidity of Mr Whittingham's appointment as voluntary administrator and deed administrator until 28 February 2011, after the DOCA as varied by the Court's order (with her consent) had been substantially implemented. On 29 February 2012, the directors of the Club resolved, among other things, that all steps taken by Ms Correa in the proceedings should be treated as if they were steps taken by the Club. 87In my view, the fact that the Court made consent orders on 6 May 2010, a fortiori where that occurred with Ms Correa's consent and where the Club has now ratified her conduct in the proceedings, and the fact that subsequent steps were taken to implement the DOCA as varied, strongly support the validation of Mr Whittingham's appointment as administrator, which is the basis on which the DOCA was formed. It also seems to me that it would be inconsistent with the purposes of Pt 5.3A for companies and their creditors or members to delay challenges to the validity of the appointment of an administrator until after he or she had completed his or her work and steps had been taken (in this case, including by the Court) on the basis that the administration and DOCA were valid. The significance of such delay has been recognised in respect of the question of declarations as to the validity of an administrator's appointment under s 445G of the Corporations Act. It is well-established that any application under that section must be made promptly, and that significant delay between the execution of a DOCA and the hearing of an application to declare the DOCA to be void under s 445G will provide a strong factor tending against the exercise of the Court's discretion in favour of such a declaration: Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (1996) 63 FCR 391; 19 ACSR 160 at 171; Khoury v Zambena Pty Limited (1997) 23 ACSR 344 at 352-353. The factors which would lead the Court not to declare a DOCA to be invalid, in the exercise of its discretion whether to grant declaratory relief under s 445G of the Act, are in my view also relevant to the Court's exercise of its discretion whether to validate the DOCA under s 447A of the Act. The acquiescence of the persons who challenged the DOCA in the administration was treated as a relevant factor in Natarajan v ACIB Accumulus Pty Ltd above. 88I should note, for completeness, that the Plaintiffs contend (albeit in respect of the different question whether delay could be raised by Mr Whittingham to resist declaratory relief generally) that it is not open to Mr Whittingham to rely on any question of delay because that matter was also not identified in his Points of Defence. The Plaintiffs do not suggest that they would have led any further evidence in response to such a defence or that they have been deprived of the opportunity to do so. Mr Whittingham's statement of the issues for determination in the proceedings had identified the relevance of the orders previously made by the Court that the DOCA take effect as varied and whether Ms Correa's conduct in the course of the administration was such that she had elected not to raise, or waived, her right to assert the invalidity of the administrator's appointment. Ms Correa's delay in raising any question of possible invalidity of Mr Whittingham's appointment was addressed in Mr Whittingham's opening submissions, as were the subsequent dealings which, Mr Whittingham contends, took place on the basis that his appointment was valid. In my view, these proceedings were conducted on the basis that these matters were in issue. Other matters on which the Plaintiffs rely in opposing a validation order 89The Plaintiffs contend that the Court should not validate Mr Whittingham's appointment because he had engaged in "improper and misleading conduct such as deliberately postdating the Resolution and Instrument of Appointment in contravention of s 1308 of the Act". The Plaintiffs also submit that validation of Mr Whittingham's conduct would amount to the Court: "giving its imprimatur to conduct involving not only blatant and deliberate breaches (and disregard) of the law but also dishonesty". In my view, no proper basis for those submissions was established by the evidence. The Plaintiffs also submit that, if the Court validates Mr Whittingham's appointment, it would be validating an administration in which Mr Whittingham sought to maximise his opportunity to earn fees while minimising the chances of the Club continuing in existence in disconformity with Pt 5.3 of the Act. The Plaintiffs have not, in my view, established that Mr Whittingham sought to conduct the administration to maximise his fees, still less that he sought to minimise the chances of the Club continuing in existence. The findings which I set out below in respect of the particular criticisms advanced by the Plaintiffs of Mr Whittingham's conduct of the administration indicate that the steps which he took were consistent with the Club maximising the prospect of selling its property so as to pay out its creditors at the earliest possible opportunity and, had Mr Whittingham been successful in implementing those steps, his fees would have been minimised. 90The Plaintiffs also contend that no useful purpose would be served by a validation order where the administration has ended. There is plainly a useful purpose in such an order so far as Mr Whittingham is concerned where it preserves, or allows, his access to the regime for determination of his remuneration under s 449E of the Corporations Act. I am not satisfied that there is no useful purpose in such an order so far as third parties are concerned, since the extent to which the invalidity of Mr Whittingham's appointment may impact upon third parties who dealt with Mr Whittingham during the course of the administration is not clear, particularly where persons who might be impacted by such an invalidity have not been joined by the Plaintiffs as party to the proceedings. A validating order will support the legal validity of steps which have been taken predicated upon the Club having validly entered into that DOCA and thereby avoid potential inconsistency between the operation of Pt 5.3A (as varied under s 447A of the Corporations Act) and the rights which have accrued in the intervening period: Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 at [29]-[31]; National Australia Bank Ltd v Horne [2011] VSCA 280; (2011) 253 FLR 205; 85 ACSR 639 at [41]-[42]. I also consider that a useful purpose would be served by such orders in preserving the integrity of Pt 5.3A by ensuring that the validity of a completed administration and completed DOCA is not undermined by matters which the Club and Ms Correa did not take steps to raise in a timely way, as I have noted above. 91The Plaintiffs also submit that a remedial order which has the effect of validating Mr Whittingham's appointment may validate the terms of a deed of variation which purported to vary the DOCA by including a release in Mr Whittingham's favour which, they contend (by an amendment to the Points of Claim allowed on the first day of the hearing) was not disclosed to creditors. That contention must fail because, as the Plaintiffs conceded in closing submissions, creditors had been given such notice (Ex KMW-5, 2181). The Plaintiffs also contend that Mr Whittingham did not disclose that matter to members of the Club. However, that contention is not open to the Plaintiffs since they were not successful in a further application to amend their Points of Claim to extend the allegation of non-disclosure to creditors to an allegation of non-disclosure to members. 92The Plaintiffs contend that any order validating the appointment of Mr Whittingham under s 447A of the Corporations Act could be made on a condition that the order would not have effect to permit Mr Whittingham's remuneration to be determined in the manner provided under Pt 5.3A of the Corporations Act. I do not consider that I should impose that condition, so that Mr Whittingham's rights to remuneration would not be determined in the manner contemplated by Pt 5.3A of the Corporations Act but at general law. The factors which I have identified above as supporting the exercise of the Court's discretion to validate Mr Whittingham's appointment tend strongly against the imposition of such a condition. 93For these reasons, I will make an order that Pt 5.3A of the Corporations Act is to operate in relation to the Club as if Mr Whittingham was appointed as administrator of the Club on 17 November 2008 pursuant to s 436A of the Corporations Act. Orders under s 1322 of the Corporations Act 94Further or alternatively, Mr Whittingham seeks an order under s 1322(4)(a) of the Corporations Act declaring his appointment as administrator of the Club on 17 November 2008 and all acts, matters or things purporting to have been done or any proceedings purporting to have been instituted or taken, under the Corporations Act or in relation to the Club pursuant to that appointment are not invalid by reason of any contravention of a provision of the Corporations Act or a provision of the Club's constitution. 95Section 1322(4)(a) of the Corporations Act provides that the Court may, on application by any interested person, make an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under the Corporations Act or in relation to a corporation is not invalid by reason of any contravention of a provision of the Corporations Act or a provision of the corporation's constitution. The Court may not make such an order unless it is satisfied that (1) the act, matter or thing, or the proceeding, is essentially of a procedural nature; or (2) that the person or persons concerned in or party to the contravention or failure acted honestly; or (3) that it is just and equitable that the order be made. 96The Court's power to make such an order is available even in cases where s 447A of the Corporations Act is available and that section extends to validating past conduct: Deputy Commissioner of Taxation v Portinex above at [42]. In Sutherland (as liquidator of Sydney Appliances Pty Ltd (in liq)) v Robert Bosch (Australia) Pty Ltd [2000] NSWSC 32; (2000) 33 ACSR 680, Santow J indicated that he would have cured a lack of quorum of a board meeting which purported to appoint an administrator by making remedial orders under s 447A or s 1322(4) of the Corporations Act had it been necessary to do so. In Re Wood Parsons (in liq) above at [52]-[53], Austin J noted that the appointment of an administrator could be validated under s 1322(4) in cases where an order under s 447A was available, and that similar considerations would arise under the two provisions. I am satisfied that the prerequisites to an order under s 1322(4) are satisfied. A resolution to appoint an administrator is of a procedural character, because it authorises the taking of a procedural step, namely an administrator's appointment, and the word "procedural" does not connote triviality: Deputy Commissioner of Taxation v Portinex above at [53]. I am also satisfied that it is just and equitable that the order be made for the reasons set out above and that provides an alternative basis for the making of that order. 97Before making such an order, the Court must also be satisfied that no substantial injustice has been or is likely to be caused to any person, and I am also satisfied of that matter. The Plaintiffs contend that there would be substantial injustice to the Club and its members if curative orders were made such that Mr Whittingham is able to cover fees and expenses regardless of whether the work he did was productive of "incontrovertible benefit" to the Club. Conversely, the Plaintiffs contend that there is no injustice to Mr Whittingham by not making remedial or curative orders, which would establish Mr Whittingham's entitlement to remuneration under the Act, because an invalidly appointed administrator can still recover reasonable remuneration for work done which was of incontrovertible benefit to the Club. 98The making of orders under ss 447A and 1322 of the Corporations Act will place Mr Whittingham in the same position as any other administrator who had been validly appointed and he will need to establish his entitlement to remuneration in accordance with the statutory regime established by s 449E of the Corporations Act. Mr Whittingham has commenced proceedings to do so, as I note below. I do not consider that the Club faces any substantial injustice by being exposed to that statutory regime. No doubt, it would be to the Club's advantage to reduce the risk that it is required to remunerate Mr Whittingham for the work which he has done and the expenses which he has incurred and the contrary result to its disadvantage. However, as Santow J observed in Sutherland (as liquidator of Sydney Appliances Pty Limited (in liq)) v Robert Bosch (Australia) Pty Limited above at 689, "It must not be forgotten that individual prejudice or detriment per se is not injustice, substantial or otherwise." In my view, the observation in Cheerine Group (International) Pty Ltd v Yeung [2006] NSWSC 1047 at [20] that a company's liability for professional fees and expenses is within the concept of "substantial injustice" should be treated as a finding on the particular facts rather than as expressing a general principle, and the question of "substantial injustice" must in any event be determined in the relevant factual circumstances. If that observation had a wider operation, I would prefer the approach adopted in Calabretta v Redpen Developments Pty Ltd (in liq) above. 99Accordingly, I will also make an order under s 1322(4)(a) of the Corporations Act declaring Mr Whittingham's appointment as administrator of the Club on 17 November 2008 and all acts, matters or things purporting to have been done or any proceedings purporting to have been instituted or taken, under the Corporations Act or in relation to the Club pursuant to that appointment are not invalid by reason of a contravention of a provision of the Corporations Act or a provision of the Club's constitution. Whether administration ended on 19 December 2008 100The Plaintiffs also seek a declaration that the administration ended on 19 December 2008 pursuant to s 435C(3)(b)(i) of the Corporations Act without any meeting being convened in accordance with s 439A of the Act. Section 439A(1) of the Corporations Act provides that the administrator of a company under administration must convene a meeting of the company's creditors within the convening period specified in s 439A(5) and hold that meeting within five business days after the end of the convening period. The convening period is relevantly the period of 20 business days beginning on the day after the administration begins. Section 435C(3)(b)(i) provides that the administration of a company may end because the convening period fixed by s 439A(5) for a meeting of the company's creditors ends without the meeting being convened in accordance with s 439A and without any application being made for the Court to extend that period under s 439A(6). The Plaintiffs' entitlement to such a declaration depends on the date on which the administration properly commenced. 101The Plaintiffs contend that the meeting of creditors was required to be held no later than 19 December 2008, on the footing that Mr Whittingham's appointment became effective, if at all, on 14 November 2008 rather than 17 November 2008. Mr Whittingham in fact held the second creditors meeting on 22 December 2008. The Plaintiffs contend that, in consequence, the resolution passed by creditors at the second creditors meeting on 27 February 2009 that the Club execute the DOCA was of no legal effect and that the DOCA was not a deed of company arrangement under Pt 5.3 of the Corporations Act. This contention must fail since the orders which I propose to make under ss 447A and 1322 of the Corporations Act will treat Mr Whittingham's appointment as taking effect on 17 November 2008 and the creditors meeting held on 22 December 2008 was therefore held in compliance with s 439A of the Corporations Act. Section 41 of the Registered Clubs Act 1976 102The Plaintiffs also contend that Mr Whittingham was unable to be appointed or to act as voluntary administrator of the Club on 14 or 17 November 2008 as he did not obtain the approval of the Authority (as that term is defined under the Registered Clubs Act 1976 (NSW)) to his appointment, for the purposes of s 41 of the Registered Clubs Act, until 28 November 2008. The Plaintiffs submit, and I accept, that there is no power under s 447A of the Corporations Act to validate an invalidity of an administrator's appointment arising from s 41 of the Registered Clubs Act, since the former section is directed to how Pt 5.3A of the Corporations Act operates in relation to a company, not to the operation of separate State legislation. 103Section 41 of the Registered Clubs Act provides that: "A person is not capable of being appointed to act in the capacity of the administrator ... of a registered club that is a company within the meaning of the Corporations Act ... unless the person has been: (a) appointed to act in that capacity by the Supreme Court, or (b) approved to act in that capacity by the Authority." The reference to "Authority" in that section is to the Casino Liquor & Gaming Control Authority, although it appears that relevant functions are carried out by the OLGR. Section 41A of the Registered Clubs Act in turn authorises the Authority to appoint a person to administer a club's affairs until an appointment is made under s 41, but only if the Authority is of the opinion that the governing body of the Club has ceased to be effective as a governing body. Accordingly, the Authority could not make a temporary appointment of an administrator to a registered club which was, for example, insolvent, if its governing body remained effective. 104Section 41 of the Registered Clubs Act does not require that the relevant approval be given in writing nor is there any reason to read such a requirement into the section, where an administrator may need to be appointed in circumstances of urgency, particularly where matters have come to directors' attention which are indicative of insolvency. However, Mr Whittingham accepted in his closing submissions that the evidence does not establish that Mr Transfield was a delegate of the Authority for the purposes of giving approval under s 41 of the Registered Clubs Act, so the content of the telephone conversation between Mr Transfield and Mr Whittingham on 17 November 2008 (to which I referred above) is not capable of constituting approval of the Authority for the purposes of the Registered Clubs Act. The Authority granted approval under s 41 of the Registered Clubs Act for Mr Whittingham to act as administrator of the Club by an Instrument of Approval dated 28 November 2008 (Ex KMW-5, 695). 105The question whether s 41 of the Registered Clubs Act invalidates an appointment of an administrator which occurs prior to the giving of the relevant approval is to be determined by reference to the principles identified by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 390-391, where the plurality observed that (citations omitted): ".. [a] court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of the courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to 'the language of the relevant provision and the scope and object of the whole statute'". 106Mr Whittingham contends that the statutory purpose of this section does not require invalidation of an administrator's appointment without the Authority's prior approval since an alternative sanction is available for non-compliance with the section on the basis that the appointment of an administrator is an act of the Club, by its board of directors, and an appointment without the Authority's approval would contravene s 41 of the Registered Clubs Act and expose the Club to disciplinary action under s 57F of the Registered Clubs Act. That submission has the difficulty that s 41 of the Registered Clubs Act is not framed as a prohibition on the act of appointment by the Club but instead as a restriction on the capacity of the person to be appointed as administrator. I consider that the purpose of s 41 of the Registered Clubs Act requires that an administrator's appointment be treated as invalid in circumstances that no approval was ever given for that appointment. I reach this result because I am not satisfied that s 41 of the Registered Clubs Act is framed in terms which establishes a contravention by the Club if a person who is not capable of appointment is appointed, so as to give rise to disciplinary consequences in respect of such an appointment. 107However, that is not the end of the inquiry in the present case, since the Authority in fact approved Mr Whittingham's appointment shortly after it had occurred. While the language "a person is not capable of being appointed" in s 41 of the Registered Clubs Act speaks as at the date of the administrator's appointment, that section does not in terms require a prior application for such approval, and the question whether a person was capable of being appointed as at the date of his or her appointment may be determined by reference to subsequent events, including a grant of approval made after his or her appointment. This approach is consistent with that contemplated by Glass JA (with whom Moffitt P and Samuels JA agreed) in National Mutual Fire Insurance Co Ltd v Commonwealth of Australia above at 408, in that an appointment can be treated as in a state of "suspended validity" pending the relevant approval, such that it will be valid if approval is later granted and invalid if such approval is either not sought or sought but not later granted. A similar approach is adopted in granting leave, with retrospective effect, for the appointment of an administrator under s 448C of the Corporations Act: Re Chilia Properties Pty Ltd (1997) 73 FCR 171; Skafcorp Limited v Jarol Pty Limited [2002] NSWSC 1183; (2002) 44 ACSR 138. 108I do not read s 41 of the Registered Clubs Act as invalidating the appointment of an administrator where that appointment is subsequently approved by the Authority. In my view, this approach is consistent with the statutory purpose of the section. If the Authority was unable to give immediate approval to an administrator's appointment, but ultimately considered that the circumstances warranted giving such approval, it would frustrate and not promote the objectives of the Registered Clubs Act and the objects of Pt 5.3A of the Corporations Act to treat that appointment as invalid when the Authority in fact approved it with the intent that it have effect. Conversely, the Authority can take into account the lateness of an application for approval of an administrator's appointment in determining whether to grant that approval and could deny that approval resulting in the invalidity of the appointment if the application was not made in an appropriate timeframe and the Authority considered that other factors did not support the making of the relevant appointment. 109The contrary approach would have the result that, if the Authority could not (or, acting in accordance with its duties, considered that it should not without some further inquiry) immediately approve the appointment of an administrator, that administrator could not immediately be appointed in circumstances of a registered club's insolvency, notwithstanding that the Corporations Act contemplates such an appointment can be made in accordance with the objectives of Pt 5.3A in that situation and such an appointment is a means of directors avoiding continuing liability for insolvent trading. I recognise that, if a registered club is in a position of impending insolvency, it would be possible for its directors to take other steps, for example by applying for the appointment of a provisional liquidator by the Supreme Court which would satisfy the requirements of s 41(a) of the Registered Clubs Act. However, I can see no legislative purpose to be served by a result where registered clubs may have to be placed in provisional liquidation if immediate steps are necessary to deal with impending insolvency, potentially depriving them of the desirable outcomes which the administration regime under Pt 5.3 of the Corporations Act are intended to deliver. 110It follows that, where the Authority in fact approved Mr Whittingham's appointment shortly after it occurred, that appointment is not invalidated under s 41 of the Registered Clubs Act. Even if, contrary to my view, s 41 of the Registered Clubs Act had any invalidating effect in the present circumstances, I would read that section as ceasing to have that effect when the Authority provided formal approval for Mr Whittingham's appointment within 11 days of that appointment. Any lack of approval for those 11 days did not cause any practical prejudice to any party, where Mr Whittingham had advised OLGR and the Authority in writing and Mr Transfield orally of his appointment on the day it occurred and none of them had taken any objection to that appointment. 111I should add, for completeness, that the expert called by the Plaintiffs, Mr Silvia, gave evidence that a reasonably competent administrator would have contacted OLGR to seek approval to his proposed appointment prior to accepting appointment as an administrator. It emerged in cross-examination that Mr Silvia had in fact only been appointed as administrator to one registered club, which was not operating at the time of his appointment, and he conceded that he had no knowledge of the practice of insolvency practitioners generally in this area (T272). Mr Silvia indicated that that conclusion was based on his understanding of the provisions of the relevant legislation and on his own practice (T275). I do not consider that this evidence provides significant assistance as to the practice of reasonably competent administrators generally and, in any event, the question of the practice of administrators as to seeking such approval does not affect the questions of construction of s 41 of the Registered Clubs Act which I have determined above. 112The expert witness called by Mr Whittingham, Mr Grellman, was also cross-examined as to s 41 of the Registered Clubs Act and accepted that the "thrust of the section" required the approval of OLGR before an administrator accepted appointment. While no objection was taken to that question, the question of the construction of s 41 of the Registered Clubs Act is properly a matter for the Court. Mr Grellman also gave evidence that he believed that it was common practice to regard approval from OLGR as a formality and that it often occurs after the event. That evidence is more illuminating as to the practice of administrators generally but also does not assist as to the proper construction of s 41 of the Registered Clubs Act. Orders in relation to administrator's conduct 113The Plaintiffs also seek orders that Mr Whittingham is not entitled to claim remuneration and that he repay remuneration and other costs under s 447E of the Corporations Act. That section provides that: "447E(1) Where the Court is satisfied that the administrator of a company under administration, or of a deed of company arrangement: (a) has managed, or is managing, the company's business, property or affairs in a way that is prejudicial to the interests of some or all of the company's creditors or members; or (b) has done an act, or made an omission, or proposes to do an act, or to make an omission, that is or would be prejudicial to such interests; the Court may make such order as it thinks just." 114Section 447E empowers the Court to supervise administrators and has its equivalent, although not an exact equivalent, so far as liquidators are concerned in s 536 of the Corporations Act: Kirwan v Cresvale Far East Ltd (in liq) [2002] NSWCA 395; (2002) 44 ACSR 21 at [442]. As Brereton J observed in Honest Remark Pty Ltd v Allstate Explorations NL [2006] NSWSC 735; (2006) 234 ALR 765 at [79], the Court's jurisdiction under this section: "... requires satisfaction of the court that the administrator has managed or is managing the company's business property or affairs in a way that is prejudicial to the interests of some or all of the creditors or members, or has done or proposes to do an act or omission that is or will be prejudicial to such interests. It is insufficient that the conduct might be prejudicial; establishment of the ground for exercise of power under s 447E requires proof of conduct or proposed conduct that is or would be prejudicial - not that might be prejudicial." Demonstration of prejudice requires a comparison between the actual position of the creditors or members and their hypothetical position if the relevant prejudicial conduct did not occur: Honest Remark at [82]. In Honest Remark at [87], Brereton J also observed (while noting that observation was not exhaustive) that: "An order under s 447E must have a sufficient nexus with the administrator's prejudicial behaviour, for example by regulating or remedying or compensating it, or preventing its repetition, or prohibiting conduct of a similar nature." 115That section does not contemplate that the Court will enter into the field of commercial decision-making undertaken by an administrator or remake business and commercial decisions of an administrator, even if those decisions have a legal element or legal context, and the notion of what is or would be prejudicial in that section "must be set against the background of the Act and the sorts of considerations which have time and again been identified by the Courts about the care with which interference with business decisions especially of people such as liquidators and administrators should be made": Naumoski v Parbery [2002] NSWSC 1097; (2002) 171 FLR 332 at [13]-[15]; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1; 27 ACSR 535 at [53]-[54]; Re Pan Pharmaceuticals Ltd (admins apptd); Selim v McGrath [2003] FCA 855; (2003) 47 ACSR 139 at [50]-[51]. 116The Plaintiffs advanced numerous criticisms of Mr Whittingham's conduct of the administration, in the alternative to their contention that he was not validly appointed and that the DOCA was not validly entered into, although some of those criticisms have now been abandoned in the manner to which I will refer below. It is necessary for me to reach findings as to the specific criticisms advanced by the Plaintiffs of Mr Whittingham's conduct of the administration, both because they are relevant to the exercise of the discretion whether to validate Mr Whittingham's conduct and, against the contingency that an appeal is brought from my decision, because they are relevant to the Club's claim that Mr Whittingham did little work productive of benefit or "incontrovertible benefit" (in the sense referred to in the decision of the Queensland Supreme Court in Sherred v McDonald above) to the Club and to Mr Whittingham's alternative claim to remuneration under unjust enrichment principles. Eviction of tenants and closure of restaurant (Amended Points of Claim [31]-[34]) 117The Plaintiffs attacked Mr Whittingham's conduct in respect of the eviction of tenants from 86 and 88 Liverpool Street and closure of the Club's restaurant. The Plaintiffs contended that, in evicting tenants from 86 and 88 Liverpool Street and closing the restaurant, Mr Whittingham (1) caused financial harm to the Club's profitability; (2) acted in breach of clause 3.5 of the DOCA which provided that he would continue to trade the Club under the DOCA; (3) acted in a manner contrary to the interest of creditors and members of the Club; (4) acted in a manner contrary to statements he had made to both creditors and members in reports and notices that he would continue to trade the Club's business; and (5) acted in a manner prejudicial to the interests of the Club's members or did an act or made an omission that was prejudicial to such interests (Amended Points of Claim [32]). The Plaintiffs contend that, so far as the restaurant was closed as a result of the Improvement Notice: "... it was unreasonable for the Administrator not to have incurred the costs needed to comply with the Notice having regard to the relatively small cost involved in complying with the Notice as against the substantial receipts that the restaurant was generating for the Club and to the fact that an operating restaurant was an activity identified by the Administrator as being essential for the generation of income by a registered Club. Alternatively, in failing to comply with the Improvement Notice the Administrator managed, or was managing, the Club's business, property or affairs in a manner prejudicial to the interests of the Club's members, or did an act, or made an omission that was prejudicial to such interests". (Amended Points of Claim [34]). 118The claims relating to these matters were pressed throughout the hearing then abandoned, in a somewhat oblique way, in written submissions after the hearing. The Plaintiffs' solicitors initially advised my Associate that the Plaintiffs did not press specified claims raised in the Points of Claim "except to the extent referred to in the plaintiffs' written submissions." My Associate then requested the Plaintiff's solicitors to indicate where those matters were addressed in the Plaintiff's written submissions and was advised that those matters were not addressed in those submissions. It follows that they were abandoned. While it is not strictly necessary for me to deal with this and other claims which were similarly abandoned, I should make brief observations as to the evidence concerning these matters, which may well be relevant to the question of the costs of the proceedings. 119I first deal with the eviction of two tenants of the Club's property at 86 Liverpool Street. Prior to Mr Whittingham's appointment, the Council had commenced proceedings against the Club in the Land and Environment Court to enforce a fire safety order dated 16 May 2008 in relation to 86 Liverpool Street (Whittingham [87]). The funds available to Mr Whittingham at the date of his appointment were $32,534 with the Club having made losses of over $50,000 per month in the previous two months (Whittingham [78]). The eviction of two tenants resulted from Mr Whittingham's decision not to incur the substantial cost of undertaking the work at 86 Liverpool Street necessary to comply with that fire safety order (Whittingham [87]-[91], [103]-[105], [112]-[115], [133]-[139]). The Club has not established that Mr Whittingham's decision to evict those tenants rather than incur the cost of undertaking that work was not a prudent commercial decision. While Mr Silvia criticised Mr Whittingham's failure to give members notice of that step so that they could have funded works necessary to permit the tenants to continue to occupy the premises, the Plaintiffs led no evidence that Club members would have funded that work. 120So far as closure of the restaurant is concerned, that restaurant was not operating at the time Mr Whittingham was appointed and he took steps to open it (Whittingham [30]). On 12 February 2009, Council issued an improvement notice relating to the restaurant requiring rectification of a number of matters (Ex KMW-5, 1088-1091) and Mr Whittingham was advised by the manager that he had retained in respect of the Club that it would cost the Club $80,000 to comply with the Council's requirements (Whittingham [153]-[154]). A customer at the restaurant had also recently claimed that she had suffered food poisoning from a meal at the restaurant and had brought proceedings against the Club in the Consumer Trader and Tenancy Tribunal; the Club's accounting system then showed the restaurant to be barely profitable; and Mr Whittingham decided to close the restaurant (Whittingham [155]-[157]). 121Mr Grellman gives evidence, which I accept, that the costs of continuing to operate the restaurant were likely to have been disadvantageous to the Club (Grellman [5.6(2)]). Mr Silvia's written report had expressed the view that a reasonably competent administrator would have complied with the improvement notice issued by the Council and continued to operate the restaurant at the Club; Mr Silvia conceded in cross-examination that he did not have knowledge of the profitability of the restaurant when giving that evidence and that he could understand the closure of the restaurant (T285-286). While Mr Silvia criticised Mr Whittingham for not seeking funding from members to keep the restaurant open, he also conceded that he had no knowledge whether members would have agreed to provide such funding (T286-288). 122In my view, the Plaintiffs did not establish that Mr Whittingham's decision to close the restaurant, rather than incur the substantial cost of complying with the improvement notice was inappropriate. 123The Plaintiffs contended (until abandoning that contention as noted above in its written submissions) that Mr Whittingham's conduct in evicting tenants from 86 and 88 Liverpool Street and closing the restaurant was also in breach of clause 3.5 of the DOCA which provided that Mr Whittingham "will continue to trade the Club under this Deed". In my view, that clause simply acknowledges Mr Whittingham's then intent to trade the Club and that his doing so would be on the terms of the DOCA, rather than imposing any mandatory obligation to do so. The Plaintiffs' construction of this clause would require Mr Whittingham to trade the Club without time limitation and notwithstanding the level of losses which might be incurred in doing so or the level of costs which might be incurred in undertaking fire safety and other works necessary to continue trading, irrespective of whether he had funds available to him to do so and irrespective of the extent to which any equity available to members of the Club would be dissipated by doing so. That construction would be inconsistent with the obvious commercial purpose of the DOCA as summarised, for example, in Recital J of the DOCA. 124The Plaintiffs also contended (until abandoning that contention as noted above) that Mr Whittingham's conduct in evicting tenants from 86 and 88 Liverpool Street and closing the restaurant was contrary to statements that he would continue to trade the Club's business. The representations on which the Plaintiffs rely expressly recognised the need for continued funding in order to continue that business; for example, Mr Whittingham's report to creditors dated 11 December 2008 noted that his ability to continue to trade the Club would depend, inter alia, upon whether Australian Unity would provide funding (which ultimately it did not) (Ex KMW-5, 743) and Mr Whittingham's notice to members placed on the Club noticeboard in December 2008 expressly referred to his intent to "[c]ontinue trading the company (subject to funding)" (Ex KMW-5, 761). At the meeting of members of 31 March 2009, Mr Whittingham made clear to members that the Club's continuing to trade was possible by reason of members' support and the fact that creditors were not pressing for payment (Ex KMW-5, 1242). Those representations were, in my view, a statement of Mr Whittingham's intention to continue to trade the Club, so long as it was commercially feasible to do so, and there is no evidence that he did not hold that intention at the time those statements were made. 125In any event, adopting the approach set out in Honest Remark at [82], the Plaintiffs have not established prejudice arising from these matters by showing that the Club would have been in a better position had the costs of complying with the improvement notice been incurred and the tenants not been evicted or had the restaurant continued to trade. The evidence before me would support the contrary conclusion. Sale of Club properties (Amended Points of Claim [35]-[48C]) 126The Plaintiffs advance complaints as to Mr Whittingham's conduct in respect of the sale of Club properties, relating to the manner in which he conducted an expression of interest ("EOI") campaign for sale of the Club's properties, the conduct of a meeting of members on 20 March 2009 and the entry into a contract for sale of the Club's properties to Drivas on 1 July 2009. The Plaintiffs contend that: "In entering into the Contract for Sale, and in conducting the EOI campaign in the manner which he did, the Administrator: (a) acted in contravention of the express representations and statements made to members during the voluntary administration period, namely: (i) that he would not sell the properties without the consent of the members; (ii)that he would not sell the properties without the prior approval of members; and (iii) that he would receive and communicate proposals for the rationalisation of the Club's property to members and have members decide on an appropriate way to proceed. (b) well knew that the sale to Drivas was contrary to the interests and wishes of the members of the Club which he understood involved selling 88 Liverpool Street and from the proceeds of sale satisfy the outstanding secured and unsecured liabilities in full and from the residual funds fully refurbish 86 Liverpool Street; (c) acted in a manner prejudicial to the interests of the Club's members, or did an act, or made an omission that was prejudicial to such interests" (Amended Points of Claim [40]). 127I should first set out the chronology of the relevant events. On 11 December 2008 (Ex KMW-5, 761), Mr Whittingham wrote to members setting out a description of his intentions as to the administration and provided a report to creditors with notice of the second meeting of creditors. Mr Whittingham's letter to members stated that his "proposed course of action" was, inter alia, to receive and finalise a deed of company arrangement; receive and communicate proposals for the rationalisation of the Club's property to members and have members decide on an appropriate way to proceed; receive the proceeds from the rationalisation of property and make a distribution to admitted creditors which he expected to be in the amount of 100¢ in the dollar; and return the control of the Club to a new independent board of directors. Mr Whittingham's report to creditors dated 11 December 2008 (Ex KMW-5, 734) contained statements to broadly corresponding effect to the letter dated 11 December 2008 to the Club's members. 128In my view, Mr Whittingham's letter to members dated 11 December 2008 was a statement of his then intention as to the process for sale of the Club's properties. The language "proposed course of action" has an obviously tentative quality and is consistent with that reading. Mr Whittingham plainly held that intention at that time and acted in accordance with it for a considerable time. In my view, that statement was not an undertaking to act in that manner irrespective of future events nor did it prevent Mr Whittingham changing his approach in the future, if he considered that it was preferable to do so as circumstances changed. The Plaintiffs draw attention to, and I have had regard to, the IPAA Code of Professional Practice which emphasises the importance of insolvency practitioners communicating with effected parties in an honest, open and clear manner (Ex P4). I do not regard these communications of Mr Whittingham's then intentions as inconsistent with the values expressed by that Code. I will refer below to the later change in Mr Whittingham's approach. 129On 16 January 2009, Mr Whittingham obtained a valuation from Valuecorp of the Club's property at 86 Liverpool Street at $3,150,000, at 88 Liverpool Street at $7,600,000 and of the combined market value of the properties as $9,900,000 (Whittingham [64], Ex KMW-5, 513). Mr Whittingham then sought proposals from four estate agents in respect of a sale process for those properties, selected one of those agents, Colliers International (NSW) Pty Ltd ("Colliers"), to conduct a sale process in early February 2009 and took advice from Colliers in respect of the EOI campaign (Whittingham [123]-[128], [142]-[145], [202]-[222], [230]-[259]). Mr Whittingham's evidence, which I accept, was that he expected that the EOI campaign would generate a number of offers which could be put to members for the sale of either or both of the Club's properties (Whittingham [195]-[196]). 130It is clear that members of the Club at this time had differing, and potentially irreconcilable, views as to the EOI process. One member of the Club, Mr Montes, sent an email to several members expressing the view that the Club's properties were worth up to double the amount at which they had been independently valued and opposing the sale of any part of the Club's property (Whittingham [171], Ex KMW-5, 1116). At a meeting on 11 February 2009, another member, Mr Martin, told Mr Whittingham he favoured the Club retaining both of its properties (Whittingham [167]). On 12 February 2009, Mr Whittingham received a letter from another member of the Club saying that a group of the Club's older members would like it to be "debt free" (Whittingham [168]). Also in February 2009, Mr Whittingham was informed by some Club members that they wanted the Club to remain in its present premises (Whittingham [174]). 131The expression of interest campaign undertaken by Colliers commenced on 16 February 2009 (Whittingham [202]). 132On 17 February 2009, Mr Whittingham sent creditors a notice and supplementary report convening a creditors meeting for 27 February 2009 (Whittingham [175]). A proposed deed of company arrangement was also provided to creditors together with Mr Whittingham's supplementary report (Ex KMW-5, 1119A-1158) which stated that: "I also note that 88 Liverpool Street is a 'core asset' and will require member approval prior to its sale. In this regard I will also seek member approval for the sale of 86 Liverpool Street." "The intended future direction of the Club is to continue its operation in 88 Liverpool Street until asset realisation occurs ... I am of the understanding a desirable result would be to sell 88 Liverpool Street and from the proceeds of sale satisfy the outstanding secured and unsecured liabilities in full and from the residual funds fully refurbish 86 Liverpool Street. However, the ultimate direction of the Club will be decided by members in conjunction with the results from the EOI." (Ex KMW-5, 1127). 133Mr Whittingham's affidavit evidence was to the effect that he also advised members at the second meeting of creditors held on 27 February 2009 (Ex KMW-5, 1161) (as the minutes record) that the intention was to rationalise the Club's property by selling either 86 or 88 Liverpool Street or both to allow a return of 100¢ in the dollar to creditors and that his first responsibility was to creditors. Mr Whittingham also made statements at the meeting to the effect that: "88 Liverpool Street is a core asset that needs approval of the members prior to sale. 86 Liverpool Street is not a core asset but he would obtain members approval prior to sale." Mr Whittingham's affidavit evidence also conceded that he had advised members that "I will not sell the property without the consent of members" (Whittingham [178]). 134In my view, each of the statements in Mr Whittingham's supplementary report and at the second creditors' meeting was a statement of Mr Whittingham's then understanding of the requirements of the Registered Clubs Act and of his then intention as to the sale process. There is no evidence that Mr Whittingham did not then hold that intention or that understanding or that the views he expressed to members did not accurately record the intention and understanding which he then held. That intention and understanding is not falsified by the fact that Mr Whittingham later changed that intention, as circumstances developed, or changed his understanding of the requirements of the Registered Clubs Act. 135Creditors resolved at the second meeting of creditors that the Club execute the DOCA and approve Mr Whittingham's fees for the period to 26 February 2009 up to an amount of $263,173 plus GST and resolved to approve his fees for the period from 27 February 2009 to completion of the DOCA up to a maximum of $275,000 (Whittingham [178]-[179]). 136In early March 2009, Council issued the Club with an emergency order requiring rectification work at 88 Liverpool Street (Whittingham [183], Ex KMW-5, 1177-1179). 137Mr Whittingham and the Club executed the DOCA on 16 March 2009 (Whittingham [189]ff, Ex KMW-5, 1216-1235). 138Mr Whittingham held a meeting with members on 20 March 2009 where reports were given by the Club's manager as to its trading; by Mr Kovacs of Colliers about the EOI campaign; by an external consultant as to the Club's space requirements; and also as to possible amendments to the Club's by-laws and constitution and the audit of the 2006-2008 accounts. That meeting was attended by approximately 300 members of the Club and the proceedings were translated by a Spanish interpreter. Mr Whittingham acknowledges in his affidavit that he said, at the meeting with members on 20 March 2009, that "[a] condition of the DOCA is that it [the sale of the Club's properties] will come back to members before finalising a sale so members can vote" (Whittingham [193]). In my view, that statement was also a representation as to Mr Whittingham's understanding of the DOCA and his then intention as to the sale process in respect of the Club's properties. 139Mr Whittingham gave evidence in cross-examination that, as he perceived the position on 20 March 2009, he could complete a sale of the Club's core and non-core properties without member approval (T157) but also gave apparently inconsistent evidence that this matter (or, on another view of his answer, a need to disclose it) "wasn't something that occurred to me at the time" (T158). If Mr Whittingham in fact had that view in mind at or prior to the members' meeting on 20 March, then the information provided to that meeting did not adequately disclose that view. The materiality of the omitted information was reduced, to some extent, by the fact that Mr Whittingham's evidence was that he did not then regard, and I do not think a reasonable person would then have regarded, the prospect that the Club would not receive several proposals which could have been put to members for approval, contemplating sale of one or other or both of the Club's properties, or that members would not approve the sale of the Club's properties when it was put to them for approval in the Club's then circumstances, as a likely one. 140Offers were received in response to the EOI campaign in early April 2009 and Mr Whittingham accepted Colliers' recommendation that he should negotiate with the persons who had made the three highest offers (Whittingham [216]-[218]). No offer was received to purchase 88 Liverpool Street only and the two offers to purchase 86 Liverpool Street only were at prices substantially less than the valuation previously obtained by Mr Whittingham for that property; sales in accordance with those offers would not have permitted the discharge of the Club's pre- administration debts, even excluding its post-administration debts; and Mr Whittingham's evidence is that he concluded that the sale of 86 Liverpool Street alone would not allow the repayment of all of the Club's creditors and the refurbishment of 88 Liverpool Street (Whittingham [214]). In early April 2009, Mr Whittingham formed the view that, although members of the Club had differing views, a proposal which was likely to be acceptable to most members was a sale of both the Club's properties with a long term lease back, where a sale of 86 Liverpool Street would not realise sufficient monies to clear the Club's debts and no offers had been received for 88 Liverpool Street separately (Whittingham [220]-[222]). 141On 29 April 2009, Mr Whittingham's solicitors, Deacons, sent proposed heads of agreement for sale of both 86 and 88 Liverpool Street to prospective purchasers (Whittingham [236]). By mid June 2009, some potential purchasers had withdrawn and Mr Whittingham concluded that Drivas was the only prospective purchaser of the buildings on terms which the Club could accept (Whittingham [260]-[261]). Mr Whittingham's view was supported by Colliers advice that Drivas was the only buyer at the relevant price level which would commit to a contract for the purchase of the properties (Kovacs [49]). Mr Kovacs gave evidence, was cross-examined and was an impressive witness and I accept his evidence in this regard. Drivas later sought to reduce their offer for both buildings but Mr Whittingham (by his solicitors) rejected the suggested reduction (Whittingham [268]-[269]). 142Mr Whittingham provided Ms Sanchez and other interested members with updates as to the sale process in April-June 2009 (Whittingham [263]-[266]). 143On 1 July 2009, Mr Whittingham entered a contract for sale of 86 and 88 Liverpool Street to Drivas for a price of $9,250,000 plus GST, on terms which included an interim lease for parts of 86 and 88 Liverpool Street for 12 months with two six month options while Drivas secured approval for development of the property and a long term lease of 1000 sqm on two adjoining floors of 88 Liverpool Street for a period of 10 years with two further 10 year options. Special condition 44.1 of the Drivas contract provided that completion was subject to members approving the sale under s 41J of the Registered Clubs Act and/or cl 47I of the Registered Clubs Regulation 1996 (NSW) and that, if the Club did not satisfy that clause within the time permitted by clause 44.2 (being a date no later than 60 days after the completion date), then either party could rescind the contract under clause 44.3 (Whittingham [270]-[274], Ex KMW-5, 1665-1878). 144Mr Whittingham's decision to enter a binding sales contract with Drivas was consistent with the advice that he had received from Colliers concerning the volatility of market conditions (Ex KMW-5, 1333-1334) and his concern that otherwise Drivas could seek to renegotiate the sale price downwards (Whittingham [261]). Mr Grellman noted that the sale process was conducted in an environment that the global financial crisis had resulted in falling prices in the commercial real estate market and limited the availability of corporate debt (Grellman [7.10(11)]). Mr Grellman's evidence was that the sale process adopted placed Mr Whittingham in a strong position to form the view that the sale to Drivas was the best available option and that the entry into a binding contract with Drivas in a deteriorating commercial property market was consistent with Mr Whittingham's performance of his duties as administrator (Grellman [9.6]). 145The Plaintiffs strongly criticise Mr Whittingham for contemplating a sale of the Club's properties in one line where sale of the properties separately would, on the valuation he initially obtained from Valuecorp (to which I refer above), have generated greater sale proceeds. An associated criticism is that, although Mr Whittingham's supplementary report to creditors dated 17 February 2009 recognised the desirability of a sale of 88 Liverpool Street and the retention and refurbishment of 86 Liverpool Street, he did not instruct Colliers to simply sell 88 Liverpool Street and retain 86 Liverpool Street (T351-352). Mr Silvia's report expressed the view that Mr Whittingham should have sought to sell only 88 Liverpool Street. However, Mr Silvia acknowledged in cross-examination that the meeting with members on 20 March 2009 made clear that either one or both of the properties would be sold depending on market circumstances (T292). 146I do not consider that these criticisms of the sale process are well-founded. I note that:

Mr Kovacs' evidence was that the form in which the offer was made did not prevent a person who was interested in buying 88 Liverpool Street alone from making an offer to purchase it (Kovacs [34]). Mr Grellman, in cross-examination, also observed that a potential purchaser would put an alternative proposal if it was uncomfortable with the terms of sale of both properties (T 402). 147Mr Whittingham acted in accordance with well qualified professional advice in respect of the sale process, and it was not unreasonable for him to consider that a sale process that left open the sale of either property individually or both properties was likely to maximise the prospects of a successful sale. While Valuecorp had expressed a view that the relevant premises would be saleable over a 3-6 month selling program, assuming a professional marketing and sales program, it does not follow that Mr Whittingham should have rejected Colliers' advice which left open the possibility for purchasers to make offers in one-line or separately. Little comfort could be drawn from the valuation of 88 Liverpool Street where there was no certainty that any offers for that property alone would be received and, in fact, no offers were made for that property alone in the EOI process. 148Mr Silvia advanced a further criticism of the sale process in cross-examination which had not been developed in his report, that a sale process involving a proposal for a short term lease-back to the Club for an initial period of 12 months with two further 6 month options might have limited the sale opportunities (T289-290, T294). However, Mr Silvia conceded in cross-examination that he had no basis for knowing why no offers were made for 88 Liverpool Street in the course of the EOI campaign and that any suggestion that this related to the proposal for a lease-back to the Spanish Club is a matter of speculation (T293, T296). Mr Silvia also raised a criticism in cross-examination, which was not made in his report (T303), that Mr Whittingham did not provide information to members as to the economic feasibility of the Club's entry into the lease-back arrangement contained in the Drivas contract prior to the members meeting on 31 July 2009. That criticism is undermined by the fact that, as Mr Silvia conceded in cross-examination, he did not have information before him which would allow him to know what Mr Whittingham had in fact done in this regard (T300). 149The Plaintiffs also advance complaints as to a failure by Mr Whittingham to provide details of other offers received under the EOI campaign to members, the conduct of a meeting of members on 31 July 2009 and a circular to members dated 4 September 2009. The Plaintiffs contend that, in failing to provide details of the other offers made under the EOI campaign to members, Mr Whittingham: "(a) acted in breach of the representation he made to members that he would receive and communicate proposals for the rationalisation of the Club's property to members and have members decide on an appropriate way to proceed; and (b) acted in a manner prejudicial to the interests of the Club's members, or did an act, or made an omission that was prejudicial to such interests" (Points of Claim [44]). 150Mr Whittingham gives evidence of his concern, which I accept was reasonably held, that the provision of details of all the offers received from the EOI campaign to members might have compromised commercial negotiations with potential purchasers (Whittingham [194]). No committee of creditors existed to which such information could be provided, since there were no nominations to join such a committee at the first creditors meeting on 27 November 2008 (Ex KMW-5, 713-719). Mr Grellman pointed to the risk that the provision of too much information as to the offers received for the properties to creditors or members would have risked compromising the commercial negotiations (Grellman [8.4]). 151I turn now to the conduct of the meeting of members on 31 July 2009. In July 2009, Mr Whittingham had met with Ms Sanchez and other members of the Club to discuss the results of the EOI process. On 27 July 2009, Australian Unity advised Mr Whittingham that its loan facility to the Club had expired on 19 July 2009 and indicated that it required that the secured property be realised (Whittingham [285]). The debt owed to Australian Unity was $3,491,065.85 as at 31 July 2009 (Whittingham [293]). Mr Whittingham sought members' approval under s 41J of the Registered Clubs Act for the sale of 86 and 88 Liverpool Street to Drivas at the further extraordinary general meeting of the Club which was attended by about 178 members on 31 July 2009 (Whittingham [300]). Members present at the meeting on 31 July 2009 voted against the resolution to approve the sale of the properties to Drivas, by a substantial majority. 152In my view, Mr Whittingham's conduct in putting the Drivas sale contract to members for approval at the meeting on 31 July 2009 was consistent with the representations he had previously made to members as to the manner in which he would proceed. I will deal below with the criticisms that Mr Whittingham's conduct after that date was inconsistent with those representations. 153The Plaintiffs complain that Mr Whittingham did not disclose the existence and effect of clause 44.3 of the Drivas contract at the meeting on 31 July (Amended Points of Claim [42]). The Plaintiffs also complain as to an answer provided by Mr Whittingham's solicitor in relation to a question at the meeting on 31 July 2009 as to what would happen if the Drivas contract was not approved. It is alleged that, in answer to that question, Mr Whittingham's solicitor advised members that the DOCA would fail, the Club would go into liquidation, and the secured creditor had sent a letter to Mr Whittingham advising that if the sale was not approved or completed, it would exercise its rights under the mortgage and appoint a receiver (Ex KMW-5, 1924-1932, Amended Points of Claim [46]). The Plaintiffs contend that: "The answer given by the Administrator's representatives ... was false and misleading and the Administrator well knew that in the event members did not approve the sale to Drivas the DOCA would not fail, the Club would not necessarily go into liquidation and the secured creditor would not be entitled to enforce its mortgage" (Amended Points of Claim [47]). 154The Plaintiffs contend that Mr Whittingham knew and understood that, if the Drivas contract was not completed or if members did not approve the sale to Drivas, neither event constituted a breach of the DOCA which would remain on foot and binding on the secured creditor which, by the terms of clause 8 of the DOCA, was not entitled to realise or enforce its security during the deed administration period (Amended Points of Claim [48]). The Plaintiffs also contend that Mr Whittingham "deliberately suppressed such information with the intention of thereby inducing those present at the meeting to believe to be true what the Administrator knew was false" (Amended Points of Claim [48A]). 155I do not consider the information provided to members on 31 July 2009 concerning these matters was misleading. It accurately recorded the position adopted by Australian Unity and accurately pointed to the risk of the appointment of a receivership and an unqualified reference to clause 8 of the DOCA may well itself have been misleading, where Australian Unity would have been entitled to apply to the Court (as it ultimately did) to vary the deed under s 445A of the Corporations Act or terminate it under s 445D of the Corporations Act so as to be released from the provisions of the DOCA preventing the sale of the secured property. 156The expert called by the Plaintiffs, Mr Silvia, criticised Mr Whittingham for failing to more fully involve members in the conduct of the sale process and raised the possibility that a different result may have occurred at the meeting on 31 July 2009 had Mr Whittingham taken a different approach. While Mr Silvia contended in cross-examination that Mr Whittingham should have established an informal committee of members, he accepted that it was open to a reasonably competent administrator to deal with directors and members of the Club who were interested in participating in the process in a more informal way and he properly accepted that there was no basis for a conclusion that the creation of an informal committee would have led to a different outcome than other processes for communication with members (T269). In my view, the proposition that a different approach or the creation of such a committee would have led to a different result was speculative, since at least some Club members took the view that the Club's properties should not be sold at all and no members gave evidence that they would or might have taken a different position at that meeting had Mr Whittingham taken a different approach. 157A circular to creditors dated 4 September 2009 stated that: "The secured creditor, Australian Unity has informed the Deed Administrator that it will exercise its rights pursuant to the Instrument of Mortgage and Charge, including appointing a receiver and manager to realise the sale of the Club's real property. If this occurs, the receiver and manager of the properties will act only as the agent of the secured creditor and will not consider the interests or future of the [Club]". "On 27 July 2009, [the Administrator] received a letter from Australian Unity confirming their support for the sale of the properties and confirming that they will seek to terminate the Deed and enforce their rights under the Mortgage and Charge, including appointing a receiver and manager if the sale of the properties to G & J Drivas does not complete". The Plaintiffs complain that, in making these statements, Mr Whittingham did not refer to the provisions of clause 8 of the DOCA or to the provisions of s 445CA of the Corporations Act (Amended Points of Claim [48B]-[48C]). Mr Whittingham acknowledged that he was not aware of and did not inform creditors or members at the meeting on 31 July 2009 that creditors may be unable to vote to terminate the DOCA unless there had first been a breach of the DOCA, by reason of ss 445C and 445CA of the Corporations Act, and his evidence is that he had not considered that requirement until Brereton J referred to it in the course of a hearing on 3 December 2009 (Whittingham [403]). However, Mr Whittingham had engaged experienced legal advisers and the absence of reference to those sections should be understood in that context. 158Applying the approach adopted in Honest Remark at [82], the Plaintiffs have not established that the Club or members would have been in a better position had Mr Whittingham put up only one property for sale, since there is no evidentiary basis for a finding that such a sale would or would likely have occurred at an acceptable price. The Plaintiffs have also not established that the Club or members would have been in a better position had Mr Whittingham not entered the Drivas contract, since it has not been shown that a more favourable contract would or would likely have been completed. The Plaintiffs have not established that the Club or members would have been in a better position had Mr Whittingham made fuller disclosure, at the meeting of members on 20 March 2009, of the possibility (which was, in my view, still a remote contingency in March 2009) that he would later seek to sell the Club's property at 88 Liverpool Street without member approval. There is no evidence that members would have acted differently had that occurred. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of these matters and the relief sought of depriving him of remuneration. Mr Whittingham's conduct after 31 July 2008 (Amended Points of Claim [49]-[53]) 159The Plaintiffs advance complaints as to Mr Whittingham's conduct after 31 July 2009, relating to an exemption sought by Mr Whittingham from OLGR. The Plaintiffs complain that Mr Whittingham did not prior to 22 September 2009 disclose to Ms Correa or other members or creditors of the Club that he had made an application to OLGR seeking to be exempted from having to comply with s 41J of the Registered Clubs Act so as to permit the sale of the Club's core property without member approval (Amended Points of Claim [51]). 160I should first set out the relevant facts. Mr Whittingham's evidence is that, after members rejected the proposed motion for sale of the Club's properties, he formed the view that the Club had no commercially viable alternative to a sale to Drivas and decided to seek approval from the OLGR to sell 88 Liverpool Street without member approval (Whittingham [322]). Mr Whittingham confirmed in cross-examination that he believed it was in the Club's best interest to complete the Drivas contract notwithstanding members' refusal to approve the sale under that contract at the meeting on 31 July (T159). He also accepted in cross-examination that his conduct in seeking to complete the Drivas contract after 31 July 2009 was inconsistent with what he had told members up to 20 March 2009 (T162). 161On 4 August 2009, Mr Whittingham's solicitors wrote to OLGR and requested an exemption from the requirement for compliance with s 41J of the Registered Clubs Act in respect of the Drivas contract, so as to permit the sale of the Club's core property without member approval (Whittingham [330]). That exemption could be granted under reg 19 of the Registered Clubs Regulation 2009 (NSW) which provides: 19 Exceptions relating to disposal of core property (1) Section 41J (3) of the Act does not apply in relation to the disposal of any core property of a registered club in any of the following circumstances: ... (h) the Director-General has, on application by the registered club, approved of the property being disposed of otherwise than in accordance with section 41J (3) of the Act. 162By letter dated 11 August 2009, the Delegate of the Director-General advised Mr Whittingham's solicitors stating that: "It is my view, that where an administrator of a company that is a registered club is acting in that capacity, that the administrator is not required to comply with the requirements of s 41J of the Registered Clubs Act whilst the administrator is exercising a power of sale pursuant to the Corporations Act. Accordingly, neither the administrator nor the registered club is contravening the provisions of the Registered Clubs Act should a sale not comply with the requirements of s 41J. As I consider s 41J has no application to the disposal of land in this matter, there is no requirement to consider any exemption. 163As Brereton J noted in Correa v The Spanish Club Ltd [2009] NSWSC 1225 at [14], it appears that the Delegate's opinion that s 41J of the Registered Clubs Act did not apply to the disposal of a registered club's property by an administrator acting under the Corporations Act reflected a view that the administrator's power to sell property conferred by the Corporations Act prevails over any restriction imposed by State legislation. Schedule 8 to the Corporations Regulations 2001 (Cth) confers power to sell assets and property of a corporation on a deed administrator and s 444A(5) of the Corporations Act provides that a deed is taken to include that provision except so far as it provides otherwise. Whether the Delegate's view was correct (and it was questioned by Brereton J) does not need to be determined in this case since Mr Whittingham was, in my view, entitled to rely on legal advice which he received on 12 August 2009 that the Drivas sale contract was unconditional, having regard to s 41J of the Registered Clubs Act and the views expressed by the Delegate. 164Mr Whittingham thereafter formed the view that the contract to Mr Drivas was unconditional, since members' approval for the sale of Club properties was not required (Whittingham [332]). 165Several weeks later, Mr Whittingham's solicitors advised Ms Correa's solicitors of the approach to OLGR by letter dated 22 September 2009 (Ex KMW-5, 2260-2265). 166I do not consider that it was established that Mr Whittingham was obliged to disclose his solicitors' approach to OLGR to members at the time it took place, as distinct from making more general disclosure to members as to his proposed approach to the administration. The evidence does provide some support for a somewhat more general observation, that it would have been preferable if Mr Whittingham had, at some point after the 31 July meeting of members, advised members that he was contemplating a change of approach as a result of the view taken by members at that meeting and that, consistent with the view which he took as to the Club's interests, he was contemplating seeking to complete the sale to Drivas without their approval if he were able to do so. Mr Grellman noted in cross-examination that, notwithstanding a view expressed by an administrator at an early point in an administration, subsequent events may require the administrator to take an alternative course of action, and that there were many occasions in his experience as an insolvency practitioner where an administration ultimately took a different course to that which he had anticipated. However, Mr Grellman accepted that, where a change in approach was necessary, an administrator should make the relevant facts and the need for that change of direction clear to members to whom he had previously given "prior assurances". 167I accept that such disclosure of a change in Mr Whittingham's approach would have been desirable having regard to the emphasis on transparency in the IPAA Code of Professional Practice. However, it was not established that the absence of disclosure in that form had any adverse affect on the Club or members, so that the Club or members were worse off by reason of the absence of such disclosure; nor was it established that there was a link between the absence of such disclosure and denying Mr Whittingham the remuneration to which he would otherwise be entitled. The course which Mr Whittingham proposed became apparent to Ms Correa and her advisers within a relatively short time and steps were then taken by Ms Correa which were successful in, ultimately, promoting a different course involving a further sale process which, at least initially, had Ms Correa's support. 168The Plaintiffs also contend that, in pursuing the sale to Drivas from 1 August 2009 to 30 September 2009 and in failing to rescind the contract for the sale to Drivas pursuant to clause 44.3 of the sale contract and pursue alternatives for the sale of the Club's properties, Mr Whittingham: "(a) acted in breach of the express representations and statements made to members during the voluntary administration period, namely: (i) that he would not sell the properties without the consent of the members; (ii) that he would not sell the properties without the prior approval of members; and (iii) that he would receive and communicate proposals for the rationalisation of the Club's property to members and have members decide on an appropriate way to proceed. (b) knew that the sale to Drivas was contrary to the interests and wishes of the members which involved selling either 86 Liverpool Street only or 88 Liverpool Street and using the proceeds of sale, after discharge of the outstanding secured and unsecured liabilities of the Club, to refurbish 86 Liverpool Street; (c) acted in a manner prejudicial to the interests of the Club's members, or did an act, or made an omission that was prejudicial to such interests; and (d) acted in breach of clause 5.1 of the DOCA" (Amended Points of Claim [53]). 169Mr Whittingham's evidence was that he did not then consider it was in the Club's interests to conduct a further marketing campaign for 88 Liverpool Street, since a marketing campaign for the property had been completed a short time before and the Club had no funds for a further marketing campaign (Whittingham [328]). Section 7 of Mr Silvia's report expressed the view that Mr Whittingham should have rescinded the contract with Drivas, pursued negotiations with others who had expressed an interest in the property and undertaken a new sales campaign with the aim of selling only one of the properties and involved members in the process. Section 8 of his report expressed the view that Mr Whittingham should have rescinded the Drivas contract and entered into negotiations with Ecoblue and SRG, alternative buyers to which I will refer below. Mr Silvia conceded in cross-examination that the view expressed in his report that Mr Whittingham should have rescinded the contract with Drivas had been expressed without access to the information made available to Mr Grellman in respect of the extent of Mr Whittingham's attempts to obtain the best offer for the relevant properties (T317). It was ultimately unclear from Mr Silvia's evidence on cross-examination whether he held to the view that Mr Whittingham should have commenced a new sales process for 86 or 88 Liverpool Street after the 31 July meeting, and he appeared at one point to concede that it was open to Mr Whittingham to go back to earlier parties while keeping the Drivas contract on foot, rather than rescinding that contract (T320-321). 170The findings which I have made above in respect of the nature of the representations made to members in relation to the sale process have the result that Mr Whittingham's change of approach, as circumstances had developed after the 31 July meeting, did not falsify those representations. 171While the sale to Drivas was not consistent with the views of the majority of members who had not approved that sale, I also do not consider that it has been established that Mr Whittingham's conduct in that regard was in fact prejudicial to the interests of the Club's creditors or members for the purposes of s 447E of the Corporations Act. The evidence to which I have referred above does not establish any real prospect that a new sales campaign, conducted after 31 July 2009, could realistically have been funded by the Club or would have generated a significantly different offer which would have met with member's approval given the circumstances of the rejection of the Drivas contract by members on 31 July 2009, or that such a prospect warranted the loss of the benefit to the Club of a binding sales contract with Drivas (Whittingham [307]-[309]). The conduct of a further sales campaign would have necessarily incurred further costs and extended the period of the administration, for uncertain prospect of any benefit to the Club's creditors or the Club itself. As at 31 July 2009, debts owing to unsecured creditors had been outstanding for a substantial period and Australian Unity had contended that the amount of $3,491,065 was due for repayment on 19 July 2009 and that it would seek to convene a creditors' meeting to terminate the DOCA if Mr Whittingham did not realise the Club's property (Ex KMW-5, 1903). In my view, it would at least have been open to Australian Unity to seek to vary the deed under s 445A of the Corporations Act or terminate it under s 445D of the Corporations Act so as to obtain its release from the provisions under the DOCA which then prevented it taking steps to sell the secured property. 172I also do not consider that a breach of clause 5.1 of the DOCA is established. Clauses 5.1 and 5.2 of the DOCA respectively deal with the sale of core property and non-core property of the Club, as defined: 5.1 A sale of the Company's core property will be subject to the approval of members as required by the Registered Clubs Act 1976 (NSW) or the Company's Constitution. 5.2 A sale of the Company's Non-Core Property will not be subject to the approval of members under the Registered Clubs Act 1976 (NSW). However, prior to selling the Company's Non-Core Property, the Deed Administrator will seek member approval to sell the Company's Non-Core Property (but will not be bound by the failure of that resolution or even a resolution to the contrary). Clause 5.2 made clear that Mr Whittingham would not be bound by any failure on members' part to resolve to approve the sale of non-core property, namely 86 Liverpool Street. (I note, for completeness, that the Plaintiffs point to a disconformity between the statement made at the second creditors meeting held on 27 February 2009 that Mr Whittingham would obtain member approval prior to the sale of 86 Liverpool Street and clause 5.2 of the DOCA, which provided that Mr Whittingham would not be bound by the failure of a resolution for approval or a resolution to the contrary in respect of that property. However, no prejudice arising from that disconformity was established for the purposes of s 447E of the Corporations Act and no other relief relating to that matter was sought.) 173Clauses 5.1 and 5.2 of the DOCA in turn refer to the provisions of the Registered Clubs Act (NSW). Section 41J of that Act relevantly provided that: "Disposal by club of real property (1) In this section: "core property" of a registered club means any real property owned or occupied by the club that comprises: (a) the premises of the club, or (b) any facility provided by the club for the use of its members and their guests, or (c) any other property declared, by a resolution passed by a majority of the members present at a general meeting of the ordinary members of the club, to be core property of the club, but does not include any property referred to in paragraphs (a)-(c) that is declared, by a resolution passed by a majority of the members present at a general meeting of the ordinary members of the club, not to be core property of the club. "dispose" of property means to sell, lease or licence the property or to otherwise deal with the property in such manner as may be prescribed by the regulations. "non-core property" of a registered club means any real property owned or occupied by the club that is not core property. ... (3) A registered club must not dispose of any core property of the club unless: (a) the property has been valued by a registered valuer within the meaning of the Valuers Act 2003, and (b) the disposal has been approved at a general meeting of the ordinary members of the club at which a majority of the votes cast supported the approval, and (c) any sale is by way of public auction or open tender conducted by an independent real estate agent or auctioneer. 174In my view, clause 5.1 of the DOCA was directed to the possibility that member approval of the sale of the core property of the Club was required under the Registered Clubs Act. I do not consider that that clause should be read as establishing an independent requirement for member approval which does not arise under the Registered Clubs Act and the Club's constitution. Had that been the intention of the clause, then the words "as required by" and the references to the Registered Clubs Act and the Club's constitution in that clause would be wholly superfluous. I do not accept that this reading of the clause leaves it with no work to do, since there was every reason for the DOCA to make clear, as the clause does, that the sale process for the Club's properties was subject to approval where required by the Registered Clubs Act or the Club's constitution. That reading of the clause is reinforced by the reference to the Club's constitution in the clause, since it appears that no such approval was required under the Club's constitution in the relevant circumstances. 175I do not consider that the provision in clause 13 of the DOCA which permitted Mr Whittingham to convene a meeting of creditors to consider a resolution terminating the DOCA, if he considered it no longer practicable to implement the administration of the DOCA if members did not approve the sale of the Club's core property and he considered it essential to sell that property in order to implement the terms of the DOCA, requires the contrary result. That clause would apply if, as Mr Whittingham assumed when it was drafted, the Registered Clubs Act required member approval for a sale. It does not require that clause 5.1 of the DOCA be treated as an independent requirement for such approval, if the Registered Clubs Act did not require such approval. Reliance on that clause has the further difficulty that, as later emerged, that clause implicitly assumed that creditors were free to terminate the DOCA in that situation, whereas s 445CA of the Corporations Act would not permit them to do so in the absence of an unremedied breach of the DOCA. 176Mr Silvia's report expressed the view that member approval for the sale to Drivas was required because it included the Club's core property by reason of clause 5.1 of the DOCA and the representations made by Mr Whittingham to members and that a reasonably competent administrator would have sought member approval before selling the Club's property to Drivas. Mr Silvia's views as to these matters depend upon his views as to the effect of clause 5.1 of the DOCA and the statements made to members which are not consistent with the findings which I have reached above. 177There is some force in a criticism that Mr Whittingham gave insufficient weight to members' views and wishes in respect of a sale of 88 Liverpool Street, having regard to the structure of the DOCA. It could also fairly be said that, after 31 July 2009, Mr Whittingham placed too great a weight on his evaluation of the interests of the Club and gave too little weight to the fact that members did not share that evaluation. It may also have been preferable if Mr Whittingham had given greater weight to the fact that the surplus likely to be available to the Club after creditors were paid was sufficient to fund the further exploration of alternatives, to which Brereton J pointed in Application of Kenneth Michael Whittingham; Re The Spanish Club Ltd (subject to deed of company arrangement) [2009] NSWSC 1426. However, that factor needed to be balanced against the risk that the delay of the sale of the Club's property would put that surplus at risk and, if that surplus was dissipated, the Club could ultimately cease to exist, a matter which Palmer J rightly emphasised when the matter was listed before him in April 2010 (Ex KMW-5, 3199-3224). 178However, applying the approach adopted in Honest Remark at [82], the Plaintiffs have not established that the Club or members were actually prejudiced by these matters or would have been in a better position had Mr Whittingham acted differently after 31 July 2009, since there is no evidentiary basis for a finding that members would in that situation have approved a sale to another party, that any other party would have completed such a contract had it been formed or any other outcome favourable to the Club or members would have emerged. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of this matter and the relief sought by depriving him of his remuneration. I do not consider that the Plaintiffs' have established a basis for relief in s 447E of the Corporations Act in this regard. Sale of Club furniture (Amended Points of Claim [54]-[56]) 179The Plaintiffs criticise the Administrator's conduct, on 11 August 2009, in selling part of the Club's furniture for $391 without notice to members. The Plaintiffs contend that part of that furniture comprised "specially handcrafted pieces made by Spanish artisans and had significant cultural and sentimental value to the members of the Club"; however, no evidence was led to support that contention. The only evidence led in the proceedings was that the furniture was in poor condition; its sale was undertaken in anticipation of settlement of the sale of the properties to Drivas; and Mr Whittingham had received advice that the cost of removing the furniture would exceed any expected proceeds of its sale at auction (Whittingham [335]-[337]). 180The Plaintiffs contend that, in selling the furniture for nominal prices, Mr Whittingham acted in a manner prejudicial to the interests of the Club's members or did an act or made an omission that was prejudicial to such interests (Amended Points of Claim [54]-[56]). The Plaintiffs' submission in respect of this matter was limited to an assertion that the sale was "without justification or reason and without giving members the opportunity to purchase same". In my view, the sale of the furniture was reasonably undertaken having regard to the evidence to which I have referred above. Applying the approach adopted in Honest Remark at [82], the Plaintiffs have also not established that the Club or members would have been in a better position had Mr Whittingham acted differently in respect of the sale of the Club furniture. Failure to consider other options preferred by members (Amended Points of Claim [57]-[60]) 181The Plaintiffs contend that Mr Whittingham "well knew" in August and September 2009 that the majority of members were opposed to the sale of both properties to Drivas but were willing to support alternative proposals for rationalisation of the Club's property which included four proposals in a specified order of preference and that, in failing and refusing to consider any of those proposals, which Mr Whittingham knew, or ought reasonably to have known, would have met with the approval of the majority of members, he: "(a) acted in breach of the express representations and statements made to members during the voluntary administration period, that he would allow members to decide on an appropriate way to proceed; (b) acted contrary to the interests and wishes of the members; (c) acted in a manner prejudicial to the interest of the company's members, or did an act, or made an omission that was prejudicial to such interests" (Amended Points of Claim [60]). 182I do not consider this allegation was established. Mr Whittingham gives evidence, which I accept, that he sought to complete the sale to Drivas because he considered it to be in the best interests of the Club and its members in order to ensure that creditors, in particular Australian Unity, were paid (Whittingham [322]). Plainly, members were opposed to the sale of both properties to Drivas, since they voted against that sale, but there is no evidence that would allow me to conclude that they would in fact support any other proposal. No member of the Club gave evidence in the proceeding and there is no evidence in the proceedings which establishes the views of the majority of members as to alternative proposals. To the extent that communications made by members were admitted in evidence, they established the fact of the communication and not its truth. While Ms Correa and several other members claimed to speak for the majority of members, there is no evidence that they had the ability to cause members to support any particular proposal or any series of proposals in any order of preference. 183In cross-examination, Mr Silvia advanced a wide-ranging criticism of Mr Whittingham for failing to engage with members and to involve them in the sale process from an early stage, which had not been set out in any systematic way in his report. That criticism was advanced without any clear identification of the assumptions which Mr Silvia had made as to the extent of Mr Whittingham's engagement with members or the level of his attempts to involve them in the sale process, and the evidence does not establish that attempts to further engage with members would in fact have led them (as Mr Silvia speculated) to take a different view of that process. 184Mr Silvia also advanced a criticism in cross-examination as to the level of information which had been provided to members as to whether the Club could afford to accept long-term liabilities associated with a lease-back of the Club's premises under the Drivas contract. There is, however, no evidence that this matter had any material impact upon members' attitudes. Mr Grellman was invited to accept in cross-examination that, if members received no rational assurance that the Club could meet its obligations under such a lease, it would be perfectly rational for members not to agree for the Club to enter into such commitment and Mr Grellman accepted that would be a rational course. However, there is no evidence that members in fact took the view which was put to Mr Grellman or which he accepted it might be rational for them to take. As I have noted above, neither Ms Correa nor any other member gave evidence in the proceedings and, so far as the transcripts of meetings are concerned, it appears that members did not have a single view, and there is evidence which would suggest that at least some members simply objected to the sale of Club property under any circumstances. 185Questions were also put to Mr Grellman in cross-examination which drew his attention to clause 5 of the DOCA, to Mr Whittingham's affidavit, referred to "assurances" given by Mr Whittingham to members and invited him to accept that a reasonable administrator reading clause 5 of the DOCA would have understood it to have required him to put other offers referred to in Mr Whittingham's affidavit to members for approval. Mr Grellman expressed the view in cross-examination that it would be "usual to expect that those four offers would be conveyed, the details would be conveyed to members" (T418). Mr Grellman's evidence in respect of these matters depends upon the construction of clause 5 of the DOCA, the content of the "assurances" given to members and whether the relevant offers were credible and a conclusory statement of this kind made by an expert as to what it would be usual to expect without disclosing the assumptions on which it is based provided me with little assistance. 186Applying the approach adopted in Honest Remark at [82], the Plaintiffs have not established that the Club or members would have been in a better position had Mr Whittingham acted differently in respect of other options supported by Ms Correa, since there is no evidentiary basis for a finding that members generally would have in fact approved a sale to another party or that another party would have completed such a contract had it been formed. I refer to dealings with some other potential purchasers who had Ms Correa's support below. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of these options and the relief sought. Ecoblue offer (Amended Points of Claim [61]-[67]) 187The Plaintiffs criticise Mr Whittingham's failure to consider or act upon an offer made by Ecoblue Developments Pty Ltd ("Ecoblue") to acquire the Club's properties on 14 September 2009, which the Plaintiffs contend "was supported by a majority of members". The Plaintiffs contend that Mr Whittingham refused to consider or act upon that offer and continued to pursue a sale to Drivas and thereby: "(a) acted in breach of the express representations and statements made to members during the voluntary administration period, that he would allow members to decide on an appropriate way to proceed. (b) acted contrary to the interests and wishes of the members; (c) acted in a manner prejudicial to the interests of the company's members, or did an act, or made an omission that was prejudicial to such interests; (d) acted in breach of clause 5.1 of the DOCA" (Amended Points of Claim [62]. 188An offer was sent by Ecoblue to purchase 86 and 88 Liverpool Street on 14 September 2009, purporting to contain a cash component sufficient to pay all creditors; providing for a settlement period of 120 days and vendor finance of $3.5 million by the Club which would be subordinated to Ecoblue's development finance; and contemplating that the Club would be provided with 500m2 of space in redeveloped premises, which was half the space which Mr Whittingham had been advised that the Club required (Whittingham [346], Ex KMW-5, 2203). 189Colliers advised Mr Whittingham that Ecoblue did not have any record as a developer in the Sydney central business district and Mr Kovacs' evidence, which I accept, was that Colliers considered there was a significant risk that a purchaser with no experience in property development would either reduce its price before acceptance of its offer or not be able to proceed as a result of underestimation of development costs or failure to raise funding (Kovacs [52]-[54]). Mr Whittingham organised a meeting with representatives of Ecoblue and Ms Correa prior to the creditors meeting on 15 September 2009. His legal advisers asked Ecoblue to provide information to establish its financial "bona fides" to establish that it could support the initial payment under its offer and Ecoblue did not do so. When Mr Whittingham sought further details of the Ecoblue offer in late October 2009, Ecoblue revised that offer to provide that it need not proceed with the purchase if the total liability of the Spanish Club exceeded $6 million (Whittingham [372]). That offer was withdrawn, or replaced, in November 2009. 190Mr Whittingham's evidence, which I accept, was that he gave serious consideration to the offer from Ecoblue although he did not form the view that that offer was in the interests of members of the Club (Whittingham [348]). Mr Grellman expressed the view that Mr Whittingham's reasons for concluding the Ecoblue offer was inferior to the proposed sale to Drivas were open to an administrator acting reasonably (Grellman [11.5]). There is also no evidence that Ecoblue's offer was in fact supported by a majority of members, since neither Ms Correa nor any other member have given evidence. 191The Plaintiffs also contended that Mr Whittingham made "false and misleading statements" after the meeting of members held on 31 July 2009 to the effect that the Club was legally bound to complete the contract for sale to Drivas when that contract could be rescinded after 11 October 2009 pursuant to the special condition contained in the contract (Amended Points of Claim [65]). The statements relied on are made in correspondence between Mr Whittingham's legal advisers and Somerset Ryckmans by letters dated 4 September 2009 and 11 September 2009, in a letter dated 14 September 2009 from Deacons to Setter Shepard and in a letter dated 22 September 2009 from Deacons to Somerset Ryckmans. The matter was one of opinion, and, in my view, the opinion which Deacons expressed was reasonably open (although Somerset Ryckmans vigorously contended for the opposite position) having regard to the terms of clause 5.1 of the DOCA and the position expressed by OLGR that the Registered Clubs Act did not require members' approval for a sale of the Club's core property by an administrator. 192Applying the approach adopted in Honest Remark at [82], the Plaintiffs have not established that the Club or members would have been in a better position had Mr Whittingham acted differently in respect of the Ecoblue offer, since there is no evidentiary basis for a finding that members would have in fact approved a sale to Ecoblue or that Ecoblue would have completed such a contract had it been formed. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of the Ecoblue offer and the relief sought under s 447E of the Act. Variation of DOCA (Amended Points of Claim [68]-[71B]) 193The creditors of the Club voted to vary the DOCA at a meeting on 15 September 2009. That variation, inter alia, included a release in Mr Whittingham's favour. The Plaintiffs contend (by an amendment to the Points of Claim allowed on the first day of the hearing) that that release was not disclosed to creditors. That contention must fail because, as the Plaintiffs conceded in closing submissions, creditors had been given notice of the release (Ex KMW-5, 2181). Ms Correa's application for interlocutory relief (Amended Points of Claim [72]-[73]) 194The Plaintiffs attack Mr Whittingham's conduct in defending injunction proceedings brought by Ms Correa. Ms Correa advised Mr Whittingham on 17 September 2009 that she would seek an injunction to restrain the sale of 88 Liverpool Street to Drivas (Whittingham [358]) and Australian Unity's solicitors shortly thereafter advised Mr Whittingham that they would apply to intervene in the proceedings to support the sale to Drivas (Whittingham [360]). Ms Correa subsequently brought proceedings seeking to restrain completion of the Drivas contract and Mr Whittingham resisted that application given his assessment that the Drivas contract was the best available option for the Club (Whittingham [363]-[364]). 195On 30 September 2009, Brereton J granted an interlocutory injunction restraining completion of the sale to Drivas in Correa v Spanish Club Ltd [2009] NSWSC 1225. His Honour observed that the DOCA was not limited to advancing creditors' interests and also sought to preserve the Club and that Australian Unity had agreed to be bound by the DOCA. His Honour also held that there was a serious question to be tried as to whether the DOCA provided for Club members to have a veto over sale of core property and noted an argument that clause 5.1 of the DOCA would serve no purpose if it meant only that the sale must comply with the Registered Clubs Act s 41 if that section was inapplicable and must be given independent substantive effect. His Honour's observations in determining the application for injunctive relief were rightly framed as an assessment of whether the contentions advanced by Ms Correa were "seriously arguable". They do not amount to a finding that those contentions would have been upheld at a final hearing or that the arguments put by Mr Whittingham would not prevail at a final hearing. His Honour expressly observed that none of the matters to which he referred were directed to what would necessarily, or even probably, be the outcome of final proceedings. 196The fact that an administrator is unsuccessful in proceedings generally does not deprive him or her of indemnity for his or her remuneration and costs in respect of those proceedings: Re Clynton Court Pty Ltd [2005] FCA 543; (2005) 53 ACSR 432 at [16]. In my view, Mr Whittingham did not act unreasonably in defending Ms Correa's application for an injunction. As I have noted above, Mr Whittingham had formed the view that completion of the Drivas contract was in the Club's interests. While Australian Unity was then bound by the DOCA, that position would cease if Australian Unity successfully applied to the Court to vary the operation of the deed under s 445A of the Corporations Act or terminate the deed under s 445D of the Corporations Act (as it ultimately sought to do). Although Brereton J held that the construction of clause 5.1 propounded by Ms Correa was seriously arguable, an alternative construction was available (which I have accepted) that clause 5.1 of the DOCA was intended to do no more than recognise any operation of s 41 of the Registered Clubs Act and the Club's constitution. In my view, Mr Whittingham and his legal advisers were entitled to give weight to that argument in determining whether to resist Ms Correa's application for an interlocutory injunction. Given Mr Whittingham's assessment of the Club's interests, I do not consider that he was bound to abandon his attempt to complete the Drivas contract without a curial determination of Ms Correa's entitlement to interlocutory injunctive relief. In my view, a sufficient nexus was also not established between Mr Whittingham's behaviour in respect of this matter and the relief sought under s 447E of the Act. SRG offer (Amended Points of Claim [74]-[75]) 197The Plaintiffs attack Mr Whittingham's alleged refusal to consider or act on an offer from Sydney Realty Group Pty Limited ("SRG"). The Plaintiffs contend that, in failing to consider that offer, Mr Whittingham: "(a) acted in breach of the express representations and statements made to members during the voluntary administration period, that he would allow members to decide on an appropriate way to proceed. (b) acted contrary to the interests and wishes of the members; (c) acted in a manner prejudicial to the interests of the company's members, or did an act, or made an omission that was prejudicial to such interests" (Amended Points of Claim [74]-[75]). 198SRG's offer dated 2 November 2009 was to purchase the Club's properties for $10 million and SRG offered a deposit of $1 million which was to be paid into the vendor's solicitor's trust account (Whittingham [375], Ex KMW-5, 2370-2371). Mr Whittingham's solicitors requested further details in respect of SRG's offer (Whittingham [376]-[378]); SRG did not respond; and, within a relatively short time, Mr Whittingham formed the view that the offer was not a credible offer for the reasons he sets out in his affidavit and rejected that offer on 5 November 2009 (Whittingham [378]). On 11 November 2009, SRG put a further proposal to Mr Whittingham increasing its deposit to $3 million and offering a six month lease-back to the Club (Whittingham [384]). Further correspondence followed between Mr Whittingham's solicitors, SRG and Ms Correa's solicitors (Whittingham [391], Ex KMW-5, 2454-2457). The SRG offer was not repeated when offers were later reopened, and no evidence was led by the Plaintiffs before me to seek to establish its substance. I do not consider that it has been established either that Mr Whittingham acted unreasonably or that the Club suffered any loss in this regard. 199The Plaintiffs contend that Mr Whittingham knew the SRG offer was also supported by a majority of members of the Club. That matter was not established. Ms Correa's solicitors did not respond to a letter dated 15 December 2009 from Mr Whittingham's solicitors requesting advice as to the members who she represented in claiming that members were in favour of the SRG offer (Whittingham [414]). Neither Ms Correa nor other members gave evidence in the proceedings to establish that the SRG offer was in fact supported by a majority of members of the Club. 200Applying the approach adopted in Honest Remark at [82], the Plaintiffs have not established that the Club or members would have been in a better position had Mr Whittingham acted differently in respect of other options preferred by Ms Correa, since it was not established that members would have in fact approved a sale to SRG or that SRG would have completed such a contract had it been formed. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of the SRG offer and the relief sought under s 447E of the Act. Attempted variation of DOCA and application to Court for further directions (Amended Points of Claim [77]-[86]) 201The Plaintiffs attack Mr Whittingham's pursuing a revised DOCA in November and then seeking judicial directions in relation to that amendment. That criticism relates to an attempted variation of the DOCA to be considered at a meeting of creditors to be held on 18 November 2009 ("Alternative DOCA"). The Plaintiffs also complain that a Circular to Creditors dated 9 November 2009 referred to the Ecoblue offer and its subsequent withdrawal but failed to make any mention to creditors of the SRG offer which had been made on 2 November 2009 (Amended Points of Claim [78]). The Plaintiffs contend that the variations sought to be made in the DOCA included provision that Mr Whittingham could enter into a new contract for sale to sell the properties to Drivas on the same terms as the original Drivas contract and that such sale would not be subject to member approval and that Australian Unity would only be bound by the Alternative DOCA for a period of 30 days after which it would be at liberty to enforce its mortgage. The Plaintiffs contend that the proposed variations contained in the Alternative DOCA: "(a) were an abuse or contempt of the Court's orders made on 30 September 2009; (b) preferred the interests of the secured creditor to the position of unsecured creditors and members of the Club; (c) were contrary to the interests of unsecured creditors and members insofar as the Alternative Deed would only bind the secured creditor under the Alternative Deed for 30 days whereas under the existing DOCA, the secured creditor was prevented from realising or enforcing it[s] security so long as the DOCA remained on foot; (d) were contrary to the interests of members insofar as the Alternative Deed would permit the Administrator to sell the properties without requiring member approval." (Amended Points of Claim [80]). 202The Plaintiffs also contend that, in putting forward the Alternative DOCA, Mr Whittingham: "(a) acted in breach of the express representations and statements made to members during the voluntary administration period, that he would allow members to decide on an appropriate way to proceed; (b) acted contrary to the interests and wishes of the members; (c) acted in a manner prejudicial to the interests of the company's members, or did an act, or made an omission that was prejudicial to such interests" (Amended Points of Claim [81]. 203Mr Whittingham convened a further meeting of creditors to consider varying the DOCA or alternatively resolve that the Club be wound up on 9 November 2009. The proposed variation to the DOCA would remove the requirement for member approval of the sale of 88 Liverpool Street and release Australian Unity from the DOCA after 30 days (Whittingham [382]). The Plaintiffs' criticism of this proposal ignores the fact that creditors were not being asked to consider a single proposal of a variation of the DOCA, but two alternative proposals, namely, either to vary the DOCA so as to allow 88 Liverpool Street to be sold or to wind up the Club. In my view, Mr Whittingham and his advisers were justified in considering, at that point, that the only realistic alternatives were either to vary the DOCA in a way which would permit the sale of 88 Liverpool Street without member approval, since there was no certainty that member approval for that sale could ever be obtained, or to wind up the Club so that its creditors could be paid. In my view, the aspect of that proposal which provided for the release of Australian Unity from the DOCA after 30 days was properly open to Mr Whittingham, given the real risk that Australian Unity would otherwise seek (as it later did) and obtain orders to vary or terminate the DOCA from the Court. 204The Plaintiffs also contend that Mr Whittingham "[a]ttempted to subvert the protections for the Club in the DOCA" by seeking from the Court a direction in November 2009 that he be permitted to hold the relevant meeting of creditors. There was a difficulty with the form of the application for directions made to the Court, which was identified in the judgment of Brereton J in Application of Kenneth Michael Whittingham; Re The Spanish Club Ltd (subject to deed of company arrangement) [2009] NSWSC 1426, namely that s 445CA of the Corporations Act had the result that creditors could only pass a resolution to terminate the DOCA under 445C(b) of the Corporations Act if there had been a breach of it which had not been rectified before the resolution was passed, and no breach of the DOCA such as to fulfil the requirement of s 445CA had been identified. Mr Whittingham's evidence was that he was not aware of that matter until Brereton J delivered that judgment. The Court ultimately declined to grant that direction. 205The expert witness called by the Plaintiffs, Mr Silvia, ultimately accepted on cross-examination that it was open to a reasonable administrator to approach the Court to seek an order permitting completion of the Drivas sale (T271, T316). Part 5.3A of the Corporations Act authorises an administrator to approach the Court for directions and no basis was established before me to suggest that it was improper for Mr Whittingham to take that course. To the contrary, it seems to me that Mr Whittingham might well have been properly criticised had he permitted the then situation - where members would not approve the sale of the Club's properties, creditors could not be paid and the commercial objectives of the DOCA were increasingly less likely to be achieved - to continue without seeking to resolve that situation by directions from the Court. The difficulty with the particular form of direction sought is not a matter which, in my view, justifies relief under s 447E of the Corporations Act where Mr Whittingham was represented by legal advisers in respect of this application. Mr Whittingham's conduct from December 2009 (Amended Points of Claim [87]-[95]) 206The Plaintiffs also advance criticisms of Mr Whittingham's conduct in relation to a new sale process for sale of the properties from December 2009. The new sale process provided for Ms Correa to solicit new offers from prospective purchasers to be lodged with Mr Whittingham by 5 January 2010. The Plaintiffs contend that: "The period for [Ms Correa] to procure new offers for the purchase of the Club's properties was unreasonable and not given in good faith having regard to the intervening Christmas period and was only agreed to by [Ms Correa] under duress. Further, under the new sales process, the Administrator made no efforts or attempt to procure any further offers either by himself or through his appointed selling agents, Colliers" (Amended Points of Claim [89]) 207Mr Whittingham took steps to bring about a further sale process for the Club properties from mid December 2009 (Whittingham [411]), which extended both to Drivas and the interests represented by Somerset Ryckmans. Mr Whittingham obtained an updated valuation of the properties at that time of 86 Liverpool Street of $3,000,000; 88 Liverpool Street of $7,150,000 and the properties in one line of $9,500,000. This valuation was provided by Valuecorp which had originally valued the properties; it will be noted that the valuation provided for 86 Liverpool Street in December 2009 was $150,000 less than the valuation provided in January 2009; the valuation provided for 88 Liverpool Street was now $450,000 less than the valuation provided in January 2009; and the valuation for both properties was now $400,000 less than the valuation provided in January 2009. 208Three offers were made to purchase the Club properties by 5 January 2010, two from Drivas and a third from a third party which subsequently withdrew its offer. No offer was made by SRG. The Plaintiffs contend before me that this must have resulted from the relatively short period permitted for the sale process. I would not draw that inference, where Drivas was able to make two offers within that time period; a third party not previously involved in the process was able to make an offer in that period; and no witness was called by the Plaintiffs to establish that any difficulties of SRG in making an offer at this time arose from matters of timing. 209The Plaintiffs' allegation that the time limit for new offers in the sale process adopted between December 2009 and February 2010 was unreasonably short is inconsistent with the fact that Ms Correa's solicitors, Somerset Ryckmans, had suggested a 7 day period for the receipt of such offers in a letter dated 14 December 2009 (Ex KMW-5, 2669-2670) and Ms Correa had indicated her agreement with the revised sale process at the creditors' meeting on 17 December 2009 (Whittingham [419]; Ex KMW-5, 2681). The Plaintiffs also did not make good the allegation that Ms Correa only agreed to the sales process under "duress" where Ms Correa did not give evidence in the proceedings. 210The Plaintiffs also attack Mr Whittingham's conduct in respect of a refusal to allow members to put an adjournment motion at a meeting of members held on 8 February 2010 (Amended Points of Claim [93]-[95]). This claim was pressed throughout the hearing then abandoned in written submissions after the hearing. An extraordinary general meeting of the Club was convened on 1 February 2010 and subsequently adjourned to 8 February 2010. Mr Whittingham declined to further adjourn the meeting on that date and members voted by a substantial majority against the sale of the Club premises to Drivas. It was not established that Mr Whittingham's failure to adjourn the 8 February 2010 members' meeting was unreasonable, where it appears that there was continued opposition to the sale of the properties at that meeting and any adjournment would have resulted in further costs being incurred. 211I do not consider that actual prejudice has been established by reason of these matters, in the sense that the Club or members would have been in a better position had Mr Whittingham acted differently. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of these matters and the relief sought under s 447E of the Act. Matters after February 2010 (Amended Points of Claim [98]-[108] 212The Plaintiffs contend that, in March 2010, "out of malice towards the members, or otherwise unreasonably and contrary to the interests of the members", Mr Whittingham ceased to trade the Club "on the pretext of cashflow reasons and compliance issues" (Amended Points of Claim [101]). It does not appear that this allegation was abandoned but the Plaintiffs did not make it good. 213The evidence establishes that the Club's cash flow issues were real, not a pretext, in circumstances that the Club had incurred an operating loss of $528,789.12 in the period 1 December 2008 to 30 November 2009 (Whittingham [405], Ex KMW-5, 2618-2621). Compliance issues concerning the Club were also real, where Mr Whittingham had obtained quotes for the costs of fire safety works of around $74,000; had done some of those works and negotiated an extension of time with Council to perform the balance of those works; and the Club's insurers had required the outstanding fire safety works be completed by 31 March 2010 as a condition of continuing insurance over the property (Whittingham [428]). Mr Silvia accepted on cross-examination that it was reasonable to close the Club given its financial circumstances, although he criticised Mr Whittingham for not seeking funding from creditors and members beforehand to keep open the Club (T322). I have referred above to the evidence of the steps which had been taken by Mr Whittingham to obtain third party funding and noted that there is no evidence that members would in fact have provided any substantial funding, as Mr Silvia conceded elsewhere in his cross-examination (T288). The Plaintiffs did not establish the serious allegation that Mr Whittingham acted out of malice towards members. 214The Plaintiffs also criticise Mr Whittingham's conduct in respect of a lender's statement subsequently issued by Perpetual (as trustee for Australian Unity) to the administrator and to an entity, Trantin, to which Perpetual assigned its security in about April 2010. The Plaintiffs contend that, in failing to ensure that the amount being claimed by the secured creditor was correct, the administrator acted in a manner prejudicial to the interests of the Club's members, or did an act, or made an omission that was prejudicial to such interests (Amended Points of Claim [108]). The acceptance of the payout figure by Mr Whittingham's solicitor appears to have reflected a view that the lender's statement was binding on the Club except in the case of manifest error. No reason has been identified why the amount which Trantin was obliged to pay Australian Unity was not a matter to be resolved as between Trantin as the assignee of Australian Unity's debt and Australian Unity, and it was in fact resolved in that manner. Even if the Club had any economic interest in this matter, it suffered no loss by reason of this matter where the amount of the payout figure was reduced by direct dealings between Trantin and Australian Unity. A sufficient nexus has also not been established between Mr Whittingham's behaviour in respect of these matters and the relief sought under s 447E of the Act. Summary 215For the reason set out above, I do not consider that it has been established that the conduct of Mr Whittingham of which the Plaintiffs complain was in fact prejudicial to members, although it was undoubtedly inconsistent with Ms Correa's wishes as to several matters and, so far as Mr Whittingham continued to seek to complete the Drivas sale contract, also inconsistent with the majority of members' not having approved that sale. I also do not consider that the evidence before me establishes a link between those matters and Mr Whittingham's remuneration or part of it so as to support an order that Mr Whittingham is disentitled by reason of these matters to all or any quantified part of the remuneration to which he would otherwise be entitled. Remuneration and legal costs incurred by Mr Whittingham 216Section 449E of the Corporations Act relevantly provides: "449E(1A) The administrator of a company under a deed of company arrangement is entitled to receive such remuneration as is determined: (a) by agreement between the administrator and the committee of inspection (if any); or (b) by resolution of the company's creditors; (c) if there is no such agreement or resolution - by the Court. 449E(2) Where remuneration is determined under paragraph 1(a) or (b) or paragraph (1A)(a) or (b), the Court may, on the application of ASIC, of the administrator or of an officer, member or creditor of the company: (a) review the remuneration; and (b) confirm, increase or reduce it." 217The Plaintiffs seek an order that Mr Whittingham reimburse the company for an amount equal to legal costs, including Counsel's fees, incurred and paid by him from Club funds during the period of the voluntary administration and during the deed administration period, or alternatively for work undertaken in the period after 31 July 2009. It was common ground between the parties that the questions in relation to Mr Whittingham's remuneration in these proceedings arose at a general level, as to whether he was disentitled to any remuneration in respect of the DOCA or in respect of particular aspects of his activities, and these proceedings did not raise the question of quantification of the particular amount of remuneration to which the Mr Whittingham was entitled. 218The Plaintiffs claim that the remuneration incurred and claimed by Mr Whittingham from and after 17 November 2008 was and is: (a) unreasonable and excessive and involved the performance of work which was not necessary for the proper conduct of the administration; (b) related to work performed in trading the Club's business despite the fact that a manager had been retained by the Administrator at significant cost to manage on-going trading of the Club; (c) related to work performed by the Administrator which was manifestly in breach of the DOCA terms; (d) related to work performed by the Administrator which was contrary to the interests of, or prejudicial to, the members of the Club; (e) related to work performed which provided no benefit whatsoever to the Club, its creditors or members; and/or (f) related to work performed by the Administrator in circumstances where he was never validly appointed as administrator of the Company and therefore incurred by him as a trespasser to the property and assets of the Club. (Amended Points of Claim [117]) 219The Plaintiffs did not advance submissions in respect of all of these matters and, to the extent that submissions were advanced, the Plaintiffs did not establish these criticisms for the reasons noted above. The remuneration and expenses claimed by Mr Whittingham are undoubtedly substantial; however, a substantial claim which is found to be justified on review under s 449E of the Act is not improper, and the claim will not be permitted to the extent that it is not found to be justified under s 449E of the Act. At one point during his cross-examination, Mr Grellman expressed the view that he would expect an administrator to be charging between $5,000 and $20,000 per month for the overview and supervision of trading operations of a Club (T412). Mr Grellman rightly acknowledged that he had expressed that view without information as to the practical complications which may have existed in continuing the operations of the Club (T413). In my view, Mr Grellman's evidence in that regard is of little assistance. There was no other expert evidence before me as to the proper level of fees which would have been charged in an administration of this complexity or which would support a finding that the level of fees charged by Mr Whittingham were inappropriate by reason of their amount. 220The Plaintiffs allege that, so far as remuneration and legal costs were incurred by Mr Whittingham after 31 July 2009, they were incurred by him and his legal advisers: "(a) acting in a manner contrary to the provisions of the DOCA; (b) acting in a manner contrary to the interests of, and in a manner prejudicial to, the members; (c) unsuccessfully resisting the interlocutory injunctive relief sought by Ms Correa in proceedings 4777 of 2009; (d) unsuccessfully seeking to vary the DOCA and then subsequently unsuccessfully seeking judicial advice; (e) considering and rejecting offers for the purchase of the properties by Ecoblue Developments and SRG which the Administrator understood and well knew would have been acceptable to members; (f) undertaking a revised sales process which was both manifestly unreasonable in its terms and which process was ultimately rejected by members at the meeting on 8 February 2010." (Amended Points of Claim [97]) 221The Plaintiffs have not established these costs were improperly or unreasonably incurred, so far as these categories of work were undertaken, for the reasons set out above. Mr Silvia was critical of the extent of the costs and expenses incurred by Mr Whittingham after 31 July 2009, but that criticism appears to have reflected his criticisms of the sale process which I have addressed above. Mr Silvia did not seek to identify the proportion of the costs incurred after that date which he contended were unreasonable and, although he contended that such remuneration and expenses would have been reduced by taking a "more proactive" approach with members, he was unable to quantify the amount of any such reduction, and the premise that members might have taken a different view of the proposed sale to Drivas had a different approach been adopted is speculative for the reasons I have noted above. 222On the findings which I have made, the quantum of fees which are properly recoverable by Mr Whittingham will be determined in his application for the Court to order the payment of those fees under s 449E of the Corporations Act. Mr Whittingham's quantum meruit claim 223Mr Whittingham advanced a quantum meruit claim against the contingency that the Court found that his appointment as administrator was invalid and did not exercise its discretion to validate the appointment under s 447A and/or s 1322(4) of the Corporations Act. 224It appeared to be common ground between Mr Whittingham and the Club that, if Mr Whittingham had not been validly appointed (as the Club contends), then he would be entitled to remuneration on a quantum meruit basis: Monks v Poynice Pty Ltd (1987) 8 NSWLR 662; 11 ACLR 637; Sutherland v Take Seven Group Pty Ltd (1998) 29 ACSR 201 at 204; Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 1663; Young v ACN 081 162 512 Pty Ltd [2005] NSWSC 139; (2005) 218 ALR 449; Sherred v McDonald above; Coad v Wellness Pursuit Pty Ltd (in liq) [2009] WASCA 68; (2009) WAR 53; 71 ACSR 250. Mr Whittingham identifies 19 categories of work which he contends would be within the scope of the remuneration recoverable by him on a quantum meruit basis. I have dealt with the Plaintiffs' criticisms of a number of those categories of work above. 225It is not necessary to determine this claim having regard to my findings above, which have the result that Mr Whittingham is entitled to remuneration determined under s 449E of the Corporations Act. I can also see no utility in seeking to determine that alternate claim on the basis of my findings, where it is only likely to require determination in circumstances that an appellate court has set those findings aside. In any event, any determination as to Mr Whittingham's remuneration on a quantum meruit basis would depend upon the review of the particular work he had done and, if it becomes necessary, it may well be appropriate for determination by a referee appointed by the Court under Pt 20 r 14 of Uniform Civil Procedure Rules 2005 (NSW). Orders 226I direct the parties to submit Short Minutes to give effect to my judgment within 7 days, in agreed form or, if no agreement is reached between them, their respective drafts of those Short Minutes and short written submissions as to the Orders which they contend should be made. Costs 227The Plaintiffs also seek an order that Mr Whittingham pay their costs of the proceedings (and bear his own legal costs in connection with the proceedings) without any recourse to or right of reimbursement out of the Club's assets. The findings I have set out above do not support that order. I will hear the parties as to costs generally after they have had opportunity to consider my judgment.