RE DUNDAS MINING PTY LTD (IN LIQ); EX PARTE JOHN ALLAN BUMBAK as joint and several liquidator of DUNDAS MINING PTY LTD (IN LIQ) (ACN 608 839 050) [2025] WASC 157 (6 May 2025)

1. In support of the application, the plaintiffs relied on six affidavits being:

(a) three affidavits of Richard Scott Tucker: two filed on 9 April 2025 (one open and one confidential); and one filed on 28 April 2025;

(b) an affidavit of service of Stephanie Alexandra Ford filed on 23 April 2025; and

(c) two affidavits of Amelia Richmond-Scott filed on 24 April 2025 and 28 April 2025.

1. I have also had the benefit of a detailed outline of written submissions filed by the plaintiffs on 24 April 2025.

1. The factual background that gives rise to the application can be briefly summarised as follows.
2. Prior to entering into external administration, the Company was a mining services company.
3. On 30 November 2021, pursuant to s 436A of the Act, the plaintiffs were appointed as joint and several administrators of the Company, as well as to three of its shareholders, being:

(a) Colour Metal Pty Ltd;

(b) AGG Fortune Pty Ltd; and

(c) Winched Investment Pty Ltd,

1. On the same date, the plaintiffs were also appointed as joint and several administrators of Allegiance Mining Pty Ltd (Allegiance), a wholly owned subsidiary of the Company.
2. On 22 February 2022, a consolidated meeting of creditors of the Dundas Group and Allegiance was held. At this meeting:

(a) the creditors of each of the companies in the Dundas Group resolved to wind up the companies and appoint the plaintiffs as joint and several liquidators; and

(b) the creditors of Allegiance resolved that Allegiance enter into a DOCA and appoint the plaintiffs as joint and several deed administrators.

1. On 7 March 2022, Allegiance, the plaintiffs, the Company, and Mallee Resources entered into a DOCA (Allegiance DOCA). Relevantly, under the terms of the Allegiance DOCA:

(a) Mallee Resources acquired the Company's shares in Allegiance; and

(b) in consideration for the transfer of the shares, Mallee Resources was required to pay $3.4 million and transfer shares in Mallee Resources to the value of $12.5 million to the Company.

1. At that time, the plaintiffs intended to sell the shares in order to fund the liquidation of the Company.
2. The cash payment was made in March 2022 and the shares issued on 9 July 2022. At the time it was resolved to enter into the Allegiance DOCA, Mallee Resources was listed on the Australian Securities Exchange (ASX), although its shares were then suspended from trading. Since then, Mallee Resources has been delisted from the ASX and entered voluntary administration.
3. By about September 2022, the plaintiffs had exhausted the funds available to them from the cash payment and have had no assets to fund the liquidation of the Company.
4. On 17 August 2022, the plaintiffs obtained orders from the Federal Court for the production of documents from, as well as orders for the examination of, various individuals and related entities. The purpose of these orders was to enable the plaintiffs to consider whether or not there was any prospect of a return to creditors from the liquidation. The public examinations were initially listed in the Federal Court in February and March 2025.
5. On 29 November 2024, the plaintiffs commenced proceedings in this court seeking orders for an extension of time to commence an application in respect of any voidable transaction in relation to the company. This application is being case managed by Cobby J and was initially listed for hearing on 31 January 2025.
6. Since about late September 2024, the plaintiffs and their solicitors have been engaged in without prejudice discussions with the solicitors for certain of the examinees and entities.
7. On 29 January 2025, the plaintiffs, a former officer of the Company, and the Company entered into a term sheet recording the key terms of a proposed DOCA (Term Sheet). One of the conditions precedent to the DOCA proposal was that a payment be made into the trust account of the plaintiffs' solicitors. The evidence before the court is that this payment has been made.
8. As a consequence of entry into the Term Sheet, the public examinations were adjourned sine die and the application for an extension of time before Cobby J was adjourned until 13 May 2025.

Should leave be granted to the plaintiffs to be appointed as voluntary administrators of the Company?

1. With that background in mind, I turn to the question as to whether leave should be granted to the plaintiffs to be appointed as voluntary administrators of the Company.
2. Pursuant to s 436B(1) of the Act, a liquidator of a company may appoint a voluntary administrator if they think that the company is insolvent or is likely to become insolvent at some future time. However, under s 436B(2) and s 448C(1)(b)(v) of the Act, a liquidator cannot seek or consent to their appointment as a voluntary administrator without leave being obtained from the court.
3. The test for leave is not an onerous one, although the courts have cautioned that it should not be treated as a 'mere formality, or mere procedural obstacle'.[1] A liquidator will generally be granted leave to appoint themselves as administrator of the company, unless there are distinct reasons why they are not a suitable person. This is because the court recognises that it is desirable to have continuity in the people who are in charge of the management of the company.[2]
4. The relevant matters that the court will take into account on an application for leave were summarised by Halley J in Mansfield (liquidator), in the matter of NR Complex Pty Ltd (in liquidation) (receivers and managers appointed).[3] These factors can be summarised as follows.
5. The primary question for the court is whether the liquidator is an appropriate person to be an administrator. If the person is an official liquidator with no prior association with the company and its officers, and there is no distinct reason why their appointment would be inappropriate, the court will generally grant leave. In considering whether the liquidator is an appropriate person, the court will have regard to whether there are any matters, such as a 'conflict of interest, threat to independence, or anything else offensive to commercial morality' which would tell against their appointment.
6. Relevant considerations include the proposed appointee's familiarity with the business and affairs of the subject company, the likely reduction in duplication and associated costs where a liquidator is appointed as administrator, including where considerable work has already been undertaken, and where continuity of appointees is desirable, having regard to ongoing negotiations and/or complex arrangements.
7. In this case, there are three major factors that favour the granting of leave to the plaintiffs to appoint themselves as joint and several voluntary administrators of the Company.
8. First, the plaintiffs have been acting as external administrators of the Company for more than three years. I accept that they are familiar with the affairs of the Company.
9. Second, the Company has no assets and the liquidation is presently unfunded. I accept that the appointment of the plaintiffs will avoid the incurring of further costs, as well as the duplication of costs that inevitably will arise if it were necessary to appoint an alternative administrator.
10. Third, the plaintiffs have been involved in negotiations with the deed proponents, who have deposited funds into the trust account of the plaintiffs' solicitors. Given this, I accept there is likely to be an advantage in the efficient administration of the Company in maintaining the continuity between the liquidation and the voluntary administration of the Company.
11. The major factor that weighs against leave being granted is the question as to whether the liquidators are independent. This is essentially for two reasons. First, the plaintiffs will remain liquidators of a number of creditors of the Company, namely Colour Metal, AGG Fortune, and Winched Investments. On behalf of these companies, the plaintiffs will be required to lodge claims in the administration of the Company to enable these companies to vote at the second creditors meeting. The potential 'threat to independence' is that the plaintiffs, as administrators, will be required to adjudicate on the value and existence of these debts over which there is some uncertainty because of the adequacy of the books and records of the Company. Second, under the terms of the proposed DOCA, the plaintiffs have received money from the deed proponent and will receive further funds if creditors resolve to enter into the proposed DOCA.
12. On the facts of this case, I do not consider that either of these matters mean that the plaintiffs' appointment as voluntary administrators would 'be offensive to commercial reality'. In respect of the first issue, I am satisfied that the plaintiffs will exercise their own professional judgment, as experienced insolvency practitioners, on the appropriate course to take in the circumstances. In relation to the second issue, I accept that it is common practice for the proponent of a DOCA to make provision for the payment of the external administrator's fees on execution of a DOCA.
13. Ultimately, the question as to whether the proposed DOCA should be entered into and, in doing so, to not pursue any claims in the liquidation is a decision for the creditors of the Company. This decision will then be subject to further consideration by the court if and when the plaintiffs apply to terminate the winding up of the Company.
14. In the circumstances of this case, I accept that at this stage it is appropriate to grant the leave sought by the plaintiffs.
15. I turn then to the remaining relief sought by the plaintiffs.

Should the voluntary administration process be truncated?

1. Pursuant to s 447A(1) of the Act, the court may make any order it considers appropriate as to how pt 5.3A of the Act is to operate in relation to a particular company. In making such an order, the court's main concern is whether the order is in the best interests of the company's creditors as a whole.
2. In this case, the plaintiffs seek orders to truncate the administration process. These orders are commonly sought and made when an application is made by a liquidator for leave to act as a voluntary administrator.
3. I accept that in this case it is appropriate to make the orders sought, given that the Company has already been in administration and that a first meeting of creditors has been held.
4. These orders will avoid further duplication of costs and enable a meeting of creditors to be convened at an earlier stage to enable creditors to decide whether or not to enter into the proposed DOCA.

Should directions be made under s 90-15(1) of the IPS?

1. Pursuant to s 90-15(1) of the IPS, the court may make any orders it thinks fit in relation to the external administration of a company.
2. It is accepted by the courts that this is a very broad power. The principles which govern the exercise of the power are well established and can be summarised as follows:

(a) The power to give advice is intended to facilitate external administrators' performance of their functions and should be interpreted widely to give effect to that purpose.

(b) The court may give a direction where it is just and beneficial to do so.

(c) The function of the power is to give an external administrator advice as to the proper course of action to take in the external administration.

(d) The court will not give a direction as to a matter of commercial or business judgment. It is necessary that there be a legal issue of substance or procedure, including an issue of power, propriety or reasonableness.

1. In this case, the plaintiffs seek directions that they would be justified in not requiring a ROCAP from the directors, not conducting any further investigations, and not reporting to creditors on possible recovery actions. I am satisfied that each of these directions do not concern a matter of commercial or business judgment but involve a legal issue of procedure.
2. In this case, for two primary reasons, I am satisfied that it is appropriate to make the directions sought.
3. First, I consider that each of these directions will aid the transition from a liquidation to voluntary administration.
4. Second, the directions sought are consistent with and complement the relief sought by the plaintiffs under s 447A of the Act.

Should the winding up of the Company be stayed?

1. Pursuant to s 482(1) of the Act, the court may make an order staying the winding up of a company, either indefinitely or for a limited time, or to terminate the winding up.
2. Courts have previously accepted that a stay of the winding up upon the appointment of an administrator 'may be appropriate where it is designed to facilitate the proposed restructuring transaction and finalise the external administration, rather than restore the company to ordinary trading operations'.[4]
3. In this case, the plaintiffs seek a stay of the winding up of the Company until further order. For the following reasons, I am satisfied that it is appropriate to make the order sought.
4. First, I accept the stay will facilitate the proposed restructuring transaction, namely the proposed DOCA, and will aid the finalisation of the external administration of the Company.
5. Second, any continuation of the liquidation while the Company is also in voluntary administration is likely to duplicate costs and be unnecessary.
6. Third, and importantly, neither the Australian Securities and Investments Commission nor any creditors of the Company have objected to the proposed application or sought to be heard.
7. Fourth, the plaintiffs do not seek a termination of the winding up, but only to stay the winding up to enable a creditors' meeting to be convened to consider the proposed DOCA. Ultimately, consideration of whether the winding up should be terminated is a question for another day.

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

[1] Re Keldane Pty Ltd (in liq) [2011] VSC 385 [13].

[2] Parkes Leagues Club Co-op Limited (In Liq) [2004] NSWSC 16 at [5], citing Re Cobar Mines Pty Ltd (1998) 30 ACSR 125, 126.

[3] Mansfield (liquidator), in the matter of NR Complex Pty Ltd (in liquidation) (receivers and managers appointed [2023] FCA 614 [20] - [22].

[4] Re Hughes (in his capacity as liquidator of each of Vah Newco No 2 Pty Ltd) (in liq) [2020] FCA 1121 [32].