Macpherson v Warringah Bowling Club Ltd, in the matter of Warringah Bowling Club Ltd

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

(Delivered ex tempore, revised from the transcript)

1. Warringah Bowling Club Ltd is a company limited by guarantee and carries on business as a registered club under the Registered Clubs Act 1976 (NSW). The club has been operating as a bowling club from premises on Bradleys Head Road, Mosman, since 1903 although the company was not registered until 1924.
2. On 8 August 2025, the club was placed in voluntary administration by a resolution of its directors pursuant to s 436A of the Corporations Act 2001 (Cth). The catalyst for that decision is that the directors received Director Penalty Notices from the Australian Taxation Office in respect of their personal liability for unpaid tax debts of the club in the sum of a little under $100,000. The directors arranged the payment of the debt on 7 August 2025. The debt had been unpaid because of some problems in the transition of bookkeeping responsibilities from one firm of accountants to another and the ATO's reminders and demands to the club not being received because they were addressed to a former treasurer who had ceased that role in 2008 and died in 2019. At the time of the resolution, the current treasurer expected that because of the strong asset base of the club, to which I will return, a successful Deed of Company Arrangement would likely be proposed "to compromise all unsecured creditor claims 100 cents in the dollar".
3. The administrators are Michael James Billingsley and Anthony Phillip Wright of Olvera Advisors. On 4 September 2025, they obtained an order in the Supreme Court of New South Wales extending the convening period for the purpose of the second meeting of creditors of the company to midnight on 5 May 2026. As is customary, the orders included an order that the second meeting may be held at any time in the period up to five business days after that date and an order that any party with sufficient interest has liberty to apply to discharge or modify the orders.
4. The club has approximately 530 members. Among other things, the club provides food and beverages and runs events and activities including sports and community events. Since the appointment of the administrators, they have continued to operate the club as a registered club on a "business-as-usual" basis. The club employs six people, and the administrators have caused additional casual employees to be employed.
5. The matter comes to the Court today as a matter of urgency in the duty system. The chairperson of the board of directors of the club, Leo Macpherson, on behalf of the members of the board seeks, first, an order pursuant to s 447A(1) of the Corporations Act that the administration of the club immediately end. That is for the reason identified in s 447A(2)(a), namely because the company is solvent. He also seeks, secondly, an order that the administrators pay the costs of the proceeding without recourse to the assets of the club (ie that they bear that liability personally) and, thirdly, that the administrators be disentitled from claiming any amount for remuneration and expenses incurred or arising after 5 November 2025. Mr Macpherson accepts that there is no urgency to the second and third orders. However, he submits that the costs question should be dealt with as part of the application for the substantive relief to end the administration, but accepts that the remuneration question can be dealt with sometime in the future.
6. The administrators by interlocutory process seek an order pursuant to s 447A that Pt 5.3A operate in relation to the company so as to extinguish any personal liability of the administrators in connection with the use of the club's premises in breach of any provision of the Registered Clubs Act. Also, in the event that any orders are made to end the administration of the club, they seek an order that the club pay or procure payment of a sum into court on account of their approximate remuneration and expenses in the administration, such sum to be held until further order. They say that their expenses and remuneration to 30 November 2025 amount to $642,268.75. The administrators accept that there is no urgency to the relief that they seek and that it can be dealt with in due course.
7. The administrators have not opposed the termination of the administration, but have sought to assist the court by way of evidence and submissions. They do, however, oppose the orders sought by Mr Macpherson that they personally pay the costs of the proceeding.

1. As a result of the administrators' review of the books and records of the club, they have concluded that it has the following significant assets:

(1) cash: $25,000;

(2) bar and restaurant equipment and inventory: $18,000;

(3) gaming machine entitlements; and

(4) two lots of real property on Bradleys Head Road having values in the many millions of dollars - Mr Billingsley's affidavit in the Supreme Court proceeding states that he anticipated that "an up-to-date valuation of both Company Properties will reveal significant value greatly exceeding the total sum of the secured debt and the unsecured creditor claims". Mr Macpherson has said that the value of the properties exceeds $10 million. There are no formal valuations in evidence.

1. On the evidence, at the time of the appointment of the administrators the club had the following liabilities (the amounts are approximate):

(1) a debt in favour of Judo Bank Pty Ltd secured by a registered mortgage over part of the club's real property and a registered security interest over all of the club's present and after-acquired personal property: $2 million;

(2) employee priority creditors: $40,000; and

(3) unsecured creditors, including the ATO: $325,000.

1. The club has two principal sources of revenue. The one is rental from a childcare centre that operates on one of its properties and the other is trading revenue from its club activities, principally from the sale of food and beverages. Its operations are modest. Although in years gone by it has operated at a profit, in recent times it has operated at a modest loss. Its profit and loss statements for the last three years are as follows:

1. In or around mid-October 2025, Richard Hart, a director of the club, and a consortium of investors friendly to the club, put forward a proposal to the administrators to bring the administration to an end. The proposal made to the club was to the following effect:

(1) The investor group, through a special purpose vehicle (SPV) to be incorporated by the group, would purchase by assignment the debt and securities of Judo Bank, the secured creditor of the club, for an amount of approximately $2 million;

(2) Subject to the administration being brought to an end, the SPV would advance additional funds needed to pay out in full all remaining unsecured creditors of the club including the reasonable remuneration and expenses of the administrators as may be approved by the creditors of the club or the Court; and

(3) The SPV would also advance sufficient funds to the club as working capital to ensure both the club's solvency and its ability to continue to trade.

1. Over the following three weeks, Mr Hart and other investors incorporated FOWB Pty Ltd as the SPV which would act as a "White Knight" to pay out the secured and unsecured liabilities of the club in full. On 3 November 2025, Judo Bank's debt and securities were assigned to FOWB. The gross consideration paid by FOWB to Judo Bank to acquire the debt and securities was $2,042,620.95.
2. By letter dated 21 November 2025, FOWB increased the debt facility previously offered by Judo Bank to the club from $501,000 to $1,651,000. It is a condition of that facility that the administration of the club ends. FOWB has undertaken not to call in its loan to the club in the 12 months following the end of the administration unless the club sells the property on which the childcare centre operates and in respect of which it has a mortgage, in which case it will presumably enforce the mortgage and require it to be paid out of the proceeds of such sale. FOWB has also indemnified and released the administrators from all claims arising from or in connection with the deed of assignment of the debt and securities from Judo Bank, and it has indemnified them for their remuneration and expenses as approved in due course.
3. On 4 December 2025, Mr Macpherson's solicitor received into his firm's trust account on behalf of an investor the sum of $1.1 million. He has been directed to pay this sum to FOWB for on-lending to the club immediately upon the administration ending.

1. The evidence establishes that the club's assets vastly exceed its liabilities, including its liability to FOWB. That, of course, is not the end of the solvency inquiry. In s 95A(1) of the Corporations Act it is stated that a person "is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable". That definition applies to the requirement that the company be "solvent" in order to end the administration under s 447A(2)(a).
2. A loan to the company, as in this case, to pay debts as and when they become due and payable will not be excluded from consideration with respect to the company's ability to pay its debts if it is itself "part of the debts due or near due" so that funds that are borrowed only "for a very short term or payable on demand" will not enhance solvency: Australian Securities and Investments Commission v Edwards [2005] NSWSC 831; 54 ACSR 583 at [99] per Barrett J, upheld in Edwards v Australian Securities and Investments Commission [2009] NSWCA 424; 76 ACSR 369 at [163] per Macfarlan JA, Spigelman CJ and Campbell JA agreeing.
3. Because of the facility available to the club provided by FOWB, the club is able to pay its debts as and when they become due. Moreover, the undertaking by FOWB that it will not call on the loan for at least 12 months means that the loan debt can be put to one side in the solvency calculus.
4. In those circumstances, I am satisfied that the club is solvent. That is sufficient reason to bring the administration to an end, and there is no apparent reason why an order to that effect should not be made.
5. I wish to further and more fully consider the question of whether the administrators should be personally liable for the costs of the proceeding to date. I will therefore reserve on that question.

(1) Pursuant to s 447A of the Corporations Act 2001 (Cth), the administration of the first defendant, Warringah Bowling Club Ltd ACN 000 104 219, is to and hereby ends with immediate effect.

(2) The costs of the proceeding to date be reserved.

(3) The matter be referred to the National Operations Registrar for allocation to a docket judge for the determination of the remaining relief in the originating process dated 26 November 2025 and the second defendants' interlocutory process dated 3 December 2025, with a view to a case management hearing being listed in early February 2026.

(4) Liberty to apply.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.