RE BAYVIEW HEALTH - MATILDA BAY PHARMACY PTY LTD (ADMINISTRATORS APPOINTED) AND BAYVIEW HEALTH NORTH SHORE PHARMACY PTY LTD (ADMINISTRATORS APPOINTED); EX PARTE ANDREW MICHAEL SMITH AND ROBERT ALLAN JACOBS [No 2] [2025] WASC 405 (30 September 2025)

1. On the same date, the plaintiffs filed a certificate of urgency certifying that the application was of such an urgent nature that it was 'required to be heard urgently'. The basis for the urgency was due to the resumed second meeting of creditors of the Companies, which, at the time the originating process was filed, was scheduled to be held this afternoon at 2.00 pm. The plaintiffs submitted, which I accept, that it was necessary for creditors to have certainty as to the validity of the appointment and acts of the Administrators prior to this meeting taking place. On that basis, the originating process was listed before me at midday on 21 August 2025 on an urgent basis.
2. Shortly after the originating process was filed, the plaintiffs filed an interlocutory process, seeking further orders under s 447A(1) of the Act to vary the operation of pt 5.3A of the Act. This interlocutory process also came before me at midday on 21 August 2025. At that time, I made orders adjourning the creditors' meeting until 4 September 2025. While this removed the extreme urgency of the originating process, it is still necessary for the issue raised on the applications to be resolved well prior to the second creditors' meeting. On this basis, I adjourned the originating process until not before 10.00 am today, and following an exchange with counsel for the plaintiffs, requested that the plaintiffs file further submissions in relation to the orders sought in the originating process.
3. In support of the applications, the plaintiffs relied on:

(a) three affidavits of Andrew Michael Smith, the first-named first and second plaintiff, filed 21 August 2025; and

(b) two affidavits of service of Eimear McNamara, filed 21 and 22 August 2025.

1. I have also had the significant benefit of submissions and supplementary submissions filed by the plaintiffs, as well as oral submissions from counsel for the plaintiffs both yesterday and today.
2. On the evidence before me, I am satisfied that the originating process has been served on all relevant parties, including the director and shareholder of the Companies (Julie Adams) who raised the issue that led to the application. The solicitors for Ms Adams have informed the plaintiffs that she consents to the orders sought, although she does not accept that the other directors and shareholders of the Companies were acting honestly in holding the directors' meeting on 15 May 2025. The other directors and shareholders support orders being made in the terms sought by the plaintiffs.

1. Both Companies are pharmacies which offer healthcare and pharmacy solutions and trade under the 'Bayview Health' brand.
2. Since their registration, each of the Companies have had three directors, Scott McGregor, Rebecca Godfrey, and Ms Adams.[1] Ms Adams is the company secretary of the third plaintiff (Matilda Bay), and Mr McGregor is the company secretary of the fourth plaintiff (North Shore).
3. Matilda Bay has two shares on issue: one owned by S & R McGregor Pty Ltd, and the other by Ms Adams. North Shore has 1,200 shares on issue: 600 owned by Ms Godfrey and Mr McGregor jointly, and 600 owned by Ms Adams.
4. Clause 15 of the constitution of Matilda Bay (dated 30 July 2017) sets out the procedure for the meetings of directors and provides, in cl 15.2, that where the number of directors is two or more, a quorum for a meeting of directors is two. Pursuant to cl 15.5, resolutions are decided by a majority of directors present and voting at any meeting.
5. There is also a directors and shareholders agreement in relation to Matilda Bay, which was signed by the directors, shareholders, and the Company on 6 February 2018 (Shareholders Agreement). Clause 4 of the Shareholders Agreement sets out the parties' agreement as to the management and operation of the Company. Pursuant to cl 4.2(a) of the Shareholders Agreement, the parties agreed that the affairs of Matilda Bay would be conducted in accordance with the provisions of the constitution and Shareholders Agreement, and that in the event of any conflict, the provisions of the Shareholders Agreement would prevail. Clause 4.2(g) required not less than seven days' notice to be given to all directors of any directors meeting.
6. The Shareholders Agreement contains two inconsistent clauses in respect of the quorum for directors' meetings. The first, cl 4.2(f), provides that 'subject to cl 4.1, the quorum necessary for meetings of directors is two'. Clause 4.1 deals with the appointment of the board, including the right of each shareholder to nominate a director, but does not address any issues relevant to quorum. In contrast, cl 4.2(i) provides that:

If one (1) of the Directors is not present and not less than two (2) weeks' notice has been served on that Director in accordance with clause 21, the two (2) Directors present, will constitute a quorum.

1. North Shore also has a constitution as well as a shareholders agreement, albeit in different terms. Its constitution, which is undated, provides in cl 72 that 'the quorum for a directors meeting is two, unless otherwise determined'. There is no evidence that it has been otherwise determined. This is consistent with the shareholders agreement, which is undated and the copy before me unsigned, and provides in cl 4.3(f)(ii) that a quorum for a directors' meeting is two.
2. On 7 May 2025, Mr McGregor sent an email to Ms Godfrey and Ms Adams, giving notice of a directors' meeting of Matilda Bay to be held on 15 May 2025 at 12.30 pm (Directors' Meeting).[2] Included on the agenda of the Directors' Meeting was consideration of whether the company was insolvent or likely to become insolvent, and whether voluntary administrators should be appointed to Matilda Bay pursuant to s 436A of the Act.
3. On the same date, Mr McGregor sent a separate email to Ms Godfrey and Ms Adams, giving notice of a directors' meeting of North Shore to be held on 15 May 2025 at 12.45 pm. The agenda for this meeting also included as an item consideration of whether North Shore was insolvent or likely to become insolvent, and whether voluntary administrators should be appointed to North Shore pursuant to s 436A of the Act.
4. On 14 May 2025, Thomson Geer (the solicitors for Ms Adams) wrote to MPH Lawyers, who at that date acted for the Companies.[3] The letter noted that the Companies had overpaid tax and were due a significant refund, which in their view would be sufficient to render the Companies solvent. The letter stated that the meeting should not occur until further information had been provided to Ms Adams, and that she had a reasonable opportunity to consider the material. The letters also referred to the provisions of the Shareholders Agreement, which I have already referred to, which was said to result in any meeting held in the absence of Ms Adams being inquorate.[4]
5. Ms Adams did not attend either of the directors' meetings scheduled for 15 May 2025. Mr McGregor and Ms Godfrey proceeded to hold both meetings and passed resolutions to appoint the first and second plaintiffs as voluntary administrators of the Companies.
6. On 15 May 2025, Mr Smith received a letter from Thomson Geer, which attached a copy of their letter of 14 May 2025. Following receipt of this letter, Mr Smith spoke to Dan Butler, a partner of MPH Lawyers (the previous solicitors for the Companies), who advised him that sufficient notice had been given to Ms Adams of the directors' meetings in accordance with s 248C of the Act.[5] On this basis, Mr Smith did not consider there was any issue concerning the validity of the Administrators' appointment.
7. On 22 May 2025, Mr Smith met with Ms Adams and Thomson Geer. During this meeting, Ms Adams indicated she was considering putting forward a deed of company arrangement (DOCA) proposal for the Companies. At the meeting, the validity of the Administrators' appointment was not raised as an issue.
8. On 27 May 2025, the first meeting of creditors of the Companies was held. The evidence is that Ms Adams attended this meeting, but once again, did not raise any issue about the validity of the Administrators' appointment.
9. On 13 June 2025, a report was issued to creditors of the Companies, which included a circular convening the second meeting of creditors on 20 June 2025. At this meeting, the Administrators proposed the meeting be adjourned for 45 business days to allow the Administrators further time to consider and recommend the implementation of a DOCA. Ms Adams attended this meeting and voted in favour of the adjournment. Once again, no issue was raised by her about the validity of the appointment of the Administrators.
10. On 8 August 2025, Mr Smith received a letter from Thomson Geer. In this letter, the issue of the validity of the appointment of the Administrators was raised once again. Specifically, the letter stated that the appointment of the Administrators on 15 May 2024:

occurred without a proper quorum of a meeting of the directors of the Companies, as Ms Adams was not present and was, pursuant to the Directors and Shareholders Agreement for Matilda Bay, required to be at the relevant meeting for the resolution appointing the administrators to [be] properly valid.

1. No further details were provided in the letter as to the basis for this contention.
2. Subsequently, on 24 August 2025, Ms Adams, via her solicitors, provided a term sheet for a DOCA to the Administrators and their solicitors. It is this term sheet that caused the meeting to be adjourned by orders of the court yesterday.

What orders, if any, should be made in relation to the appointment of the Administrators?

1. The contention raised by Ms Adams' solicitors in their correspondence is that the meetings of directors were inquorate and that, accordingly, no valid resolutions were passed at either meeting. I accept that this contention can only refer to Matilda Bay, as the shareholders agreement of North Shore only requires two directors to be present at any directors' meeting.
2. There is a debate on the authorities as to whether a shareholders agreement entered into between all shareholders has the effect of amending the constitution of the company, notwithstanding the provisions of s 136(2) of the Act.[6] This issue, although quite properly drawn to my attention, was not argued before me. Ultimately, it is unnecessary for me to resolve that question, and, in my view, is not appropriate to do so in the absence of a proper contradictor.
3. It is sufficient for the purposes of this application to note the following. First, the constitution of Matilda Bay requires a quorum of two directors. Second, the Shareholders Agreement provides that a quorum is two directors, or two directors where 14 days' notice has been given of the meeting.
4. There is no dispute that 14 days' notice of the meeting held on 15 May 2025 was not given; notice of seven days was given. That is, the defect identified by Ms Adams' solicitors was a defect of notice which is contended to have caused the meeting to be inquorate.
5. In my view, notice of seven days was reasonable notice of the directors' meeting, given the items on the agenda. On this basis, it is my view that any defect of notice that occurred is a procedural irregularity, which is validated by s 1322(2) of the Act, unless it has caused or may cause substantial injustice that cannot be remedied by any order of the court.
6. For the following reasons, I do not accept that any irregularity that may have occurred in the notice of the directors' meeting of Matilda Bay has caused any injustice or may cause any substantial injustice.
7. First, Ms Adams had reasonable notice of the directors' meeting, including the proposed resolution for the appointment of Administrators, and chose not to attend the meeting.
8. Second, on the evidence before me, I accept that even if 14 days' notice of the meeting had been given, the result would have been the same (namely, the Administrators would have been appointed to Matilda Bay).
9. Third, having raised the issue initially on 14 May 2025 (prior to the meeting being held) and then on 15 May 2025 (after the meeting was held), no steps were taken by Ms Adams to challenge the appointment of the Administrators. All of her conduct since that date, apart from the letter sent on 8 August 2025, is consistent only with the appointment of the Administrators being valid. This includes attending and voting at the creditors' meeting and providing a DOCA proposal to the Administrators for consideration.
10. In this case, to avoid there being any issue as to their appointment, the plaintiffs seek orders under s 1322(4)(a) of the Act, alternatively s 447A of the Act, to validate their appointment.
11. In the event that the Shareholders Agreement is considered to be a variation or an amendment of the constitution, on which I make no finding, I accept that it would be appropriate to make the orders sought under s 1322(4)(a) of the Act. Declarations can be made under this section where one of the conditions in s 1322(6)(a) are satisfied, and no substantial injustice has been or is likely to be caused to any person. In this case, I accept that the conditions in both s 1322(6)(a)(i) and s 1322(6)(a)(ii) are satisfied. Particularly, I note that there is no evidence that Mr McGregor and Ms Godfrey were not acting honestly in proceeding to convene and hold a directors' meeting on 15 May 2025.
12. I also accept that it would be just and equitable to make the orders sought, given the potential insolvency of Matilda Bay and the issues that any uncertainty about the Administrators' appointment could cause for employees and creditors.
13. For the reasons that I have already given, I do not consider there would be any substantial injustice to Ms Adams or to any other party if the relief sought were granted.
14. Finally, to the extent necessary, I also accept it would be appropriate to make the orders sought under s 447A of the Act.
15. Section 447A of the Act permits the court to make orders as to how pt 5.3A of the Act is to operate in respect of a particular company.[7] An established category of orders under s 447A are those to cure a deficiency or invalidity in the appointment of administrators, for example, because of an inquorate board meeting, or a board meeting that was not properly convened.
16. An administrator who may have been invalidly appointed and who has acted on that potentially invalid appointment has standing as an 'interested person' to bring an application under s 447A of the Act.
17. In the event that the Shareholders Agreement does not have the effect of varying or amending the constitution, relief would not be available under s 1322(4) of the Act. In that case, it would be necessary for orders to be made under s 447A of the Act. For the reasons I have already given, I accept there is some doubt about the validity of the Administrators' appointment. Taking into account all of the circumstances of the case, as I have already outlined, I accept it would be appropriate to make the orders sought under s 447A of the Act.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Affidavit of Andrew Michael Smith filed 20 August 2025, 'AMS-1', pages 12, 37.

[2] Affidavit of Andrew Michael Smith filed 20 August 2025, 'AMS-3'.

[3] Affidavit of Andrew Michael Smith filed 20 August 2025, 'AMS-11'.

[4] Affidavit of Andrew Michael Smith filed 20 August 2025, 'AMS-11', pages 437 - 438.

[5] Affidavit of Andrew Michael Smith filed 20 August 2025 [19].

[6] See for example Rectron Australia BV v Lu [2013] VSC 384 [68] ‑ [71]; cf Elders Forestry Ltd v Bosi Security Services Ltd [2010] SASC 223; (2010) 80 ACSR 122 [75] ‑ [78].

[7] Hayes v Doran [No 2] [2012] WASC 486 [406]; Hutton, Re Big Village Australia Pty Ltd (Administrators Appointed) [2023] FCA 48 [30] ‑ [32].