RE RESOURCE DEVELOPMENT GROUP LIMITED (ADMINISTRATORS APPOINTED); EX PARTE IRELAND BRAUER & SMITH as joint and several administrators of RESOURCE DEVELOPMENT GROUP LIMITED (ADMINISTRATORS APPOINTED) [2025] WASC 408 (30 September 2025)

1. At the time the originating process was filed, the plaintiffs filed a certificate of urgency. For this reason, the matter has come before me today on an urgent basis.
2. In support of the application, the plaintiffs relied on three affidavits:

(a) two affidavits of Robert Conry Brauer, the second-named first plaintiff, filed on 6 and 7 August 2025; and

(b) an affidavit of Jaana Davidsson, a solicitor employed by the plaintiffs' solicitors, which confirmed service of the application and relevant court documents on the Australian Securities and Investments Commission (ASIC), as well as the Lender.

1. I have also been assisted by a short outline of submissions filed this morning, and oral submissions from counsel who appeared on behalf of the plaintiffs.
2. On the basis of the affidavits that have been filed, I am satisfied that notice of the hearing has been given to ASIC, the Lender, and the creditors of the Company (and its wholly‑owned subsidiaries). No one appeared at the hearing today to oppose the orders sought. Given the short notice that was given to these parties, the plaintiffs propose, which I accept is appropriate, that there be liberty to apply to modify or discharge these orders.

1. The factual background to the application is set out in the affidavit of Mr Brauer and can be summarised as follows.
2. On 28 July 2025, the first plaintiffs were appointed as joint and separate administrators (Administrators) of the Company and six of its wholly‑owned subsidiaries (together, the Companies), pursuant to s 436A of the Act.[1] The Companies deliver diversified services to the resource, energy, government, utilities, and defence sectors in Australia, and also own manganese and garnet mines in Western Australia, including the Lucky Bay garnet mining project.[2]
3. Since its original commissioning, the Lucky Bay project has operated below capacity. In its 2025 half‑year investor update, the Company highlighted that several remedial works were required to improve the performance of this project.[3]
4. From their initial review of the Companies' books and records, the Administrators believe that the Companies have 156 employees and 191 known creditors, although they acknowledge that these figures may change as more information becomes available during the course of the administration.[4]
5. Based on their preliminary investigations, the Administrators believe that the Companies owe almost $230 million to creditors, comprising:[5]

(a) approximately $143.7 million to the Lender, some or all of which is secured over specific assets of the Companies;

(b) approximately $2.6 million for employee entitlements;

(c) deferred tax liabilities of approximately $60.2 million (with the actual amount owing to taxation authorities being currently unknown);

(d) approximately $14.7 million to trade creditors and other payables; and

(e) approximately $3.6 million of other liabilities.

1. In addition, there are significant intercompany balances, particularly between the Company and Australian Garnet and Central Systems, although I note that these inter‑company balances are all eliminated on consolidation of their financial statements.
2. At present, the Companies have cash at bank of approximately $300,000. The Administrators believe the Companies' operations are currently cash flow negative, and, as a result, third‑party funding is required in order to fund the administration of the Companies.[6]
3. The Administrators believe a number of steps are required to be funded in the administration to enable the Companies' business and Lucky Bay project to continue to operate as going concerns. These include remediation work at the Lucky Bay project, as well as a marketing and sales process that is proposed to be undertaken.[7] The Administrators estimate that their fees and costs (including legal costs) of undertaking these steps will be approximately $2.6 million, and that the costs of the continued operation of the Companies' business during the administration will be in the order of almost $12 million.[8]
4. On 5 August 2025, the Administrators entered into the Funding Deed with the Lender (who I note is the majority shareholder of the Company). Under the Funding Agreement, the Lender proposes to make available to the Administrators the sum of $14.5 million.[9] The Funding Deed is supported by a general security deed that was executed on the same date (General Security Deed).[10]
5. The Administrators believe that these funds are required to enable them to continue to operate the Companies as a going concern during the administration and will allow them to progress the proposed restructure or recapitalisation of the Companies.[11]

Should directions be given to relieve the plaintiffs from personal liability?

1. I note that this is, as counsel acknowledged in submissions before me today, a relatively common application. Pursuant to s 443A of the Act, an administrator is personally liable for any debts incurred in the performance or exercise, or purported performance or exercise of their functions and powers as administrators.
2. Pursuant to s 443D of the Act, an administrator is entitled to be indemnified out of the company's property for the debts for which they are liable under s 443A.
3. Where an administrator enters into a loan agreement, the loan and the interest payable on it are not considered to be a debt falling within the terms of s 443A of the Act, and the indemnity that is the subject of s 443D. For this reason, unless an order is made by the court modifying the operation of pt 5.3A of the Act, the administrators will be personally liable for the loan and any interest that is payable on it.
4. It is well accepted by the courts that s 447A of the Act empowers the court to make orders limiting the personal liability of an administrator, where it is satisfied that the loan agreement is made for the purpose of allowing the company in administration to trade, or to continue operating for the benefit of creditors.[12]
5. Where these circumstances arise, courts have generally expressed the view that administrators should not be expected to expose themselves to substantial personal liabilities. Where orders are made relieving administrators from personal liabilities in respect of borrowings, the orders permit the administrators to make commercial decisions about the ongoing operations of the company under administration by focusing on what is in the best interests of creditors, without any influence on their decision making as to any concerns as to their personal liability.
6. The factors that the court will take into account on an application under s 447A of the Act to vary the liability of administrators under s 443A were summarised by Gilmour J in Mentha, Re Griffin Coal Mining Company Proprietary Limited (admins apptd).[13]
7. In this case, the key terms of the Funding Deed can be summarised as follows:

(a) the first plaintiffs have entered into the Funding Deed in their capacities as joint and several administrators of the Companies;[14]

(b) the Lender will make available to the plaintiffs a loan facility of $14.5 million, with an interest of 12% per annum. The loan facility includes an advance of $1.5 million that has already been provided to the Administrators;[15] and

(c) the terms of the Funding Deed set out how that loan facility can be accessed, what the funds can be used for, and includes provisions for its repayment.

1. On the basis of the evidence before me, I am satisfied it is appropriate to make the orders sought by the plaintiffs for two primary reasons.
2. First, on the evidence before me, I accept that the purpose of the funding is to provide working capital for the administration and to fund the continued operation of the Companies during their period of administration. Without this funding, given the cash at bank, I accept that the Companies would be unable to continue to trade, and that, as a consequence, there would be a significant risk that the value of the Companies' assets would be substantially diminished.
3. Second, the proposed orders sought by the plaintiffs are, in my view, consistent with the objects of pt 5.3A of the Act and the interests of unsecured creditors.

Is relief required under s 588FM of the Act in relation to the registration of security interest required by the Funding Deed?

1. This issue arises because of the question as to whether, by operation of s 588FL of the Act, the security interest created by the Funding Deed (namely, the General Security Deed, which occurred after the appointment of the first plaintiffs as external administrators) has vested in the Company. This issue arises because the General Security Deed will not be registered until after the 'critical time' referred to in s 588FL(7)(a) of the Act, being the appointment of external administrators.
2. In this case, there is no question that the General Security Deed which is proposed to be entered into is a security interest within the meaning of s 12 of the Personal Property Securities Act 2009 (Cth) (PPSA), as it secures payment of the obligations under the Funding Deed.
3. Where a security interest is not perfected in the manner prescribed by the PPSA prior to the appointment of an external administrator, the security interest vests in the grantor.[16] This vesting is irreversible.[17]
4. A security interest is perfected if it has attached to collateral, is enforceable against third parties, and certain extra steps (such as possession or control of the collateral or registration on the PPSR) have been taken to protect the interest.[18]
5. Pursuant to s 588FL of the Act, a security interest under the PPSA vests in the company on the appointment of a voluntary administrator if:

(a) the security interest is enforceable and was perfected by registration;

(b) it was registered within the six months preceding the administration or liquidation; but

(c) it was not registered within 20 business days after the grant, unless it was registered within such later time as is ordered by the court under s 588FM of the Act.

1. At the moment, there is still some divergence on the authorities as to the extent to which s 588FL of the Act applies to security interests that arise after the 'critical time' and before the company is no longer the subject of external administration. Importantly in this regard, I note that there is no intermediate Court of Appeal authority that finally determines the matter. I have considered the previous authorities and the different views in my reasons for decision in Re Yeeda Pastoral Company Pty Ltd (admins apptd); Ex parte Tucker,[19] which represent my views on the matter.
2. The order sought by the plaintiff is conditional on there being a requirement that for an extension of time for registration under s 588FM of the Act. I consider that these orders are practical and are an appropriate resolution of the issue that is confronted by the plaintiffs in the absence of any intermediate Court of Appeal authority.
3. For this reason, I consider it is appropriate to make the order sought in order 3 of the minute of the proposed orders.
4. In my view, it would be just and equitable to make this order as required by s 588FM(2)(b) of the Act. This is because the security interest granted by the plaintiffs form part of a transaction that has been entered into in order to enable the Companies to maintain their assets during the period it is under external administration. In my view, the continued operation of the Companies will maximise the potential return to creditors, and, on this basis, I consider it is just and equitable to make the order sought.

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

[1] Affidavit of Robert Conry Brauer filed 6 August 2025 [2], [6], [14], 'RB-2' - 'RB-3'.

[2] Affidavit of Robert Conry Brauer filed 6 August 2025 [8] - [11].

[3] Affidavit of Robert Conry Brauer filed 6 August 2025 [12], 'RB-6'.

[4] Affidavit of Robert Conry Brauer filed 6 August 2025 [17].

[5] Affidavit of Robert Conry Brauer filed 6 August 2025 [18].

[6] Affidavit of Robert Conry Brauer filed 6 August 2025 [22] - [23].

[7] Affidavit of Robert Michael Kirman filed 4 April 2025 [23].

[8] Affidavit of Robert Michael Kirman filed 4 April 2025 [24] - [25].

[9] Affidavit of Robert Michael Kirman filed 4 April 2025 [28], 'RB-1'.

[10] Affidavit of Robert Michael Kirman filed 4 April 2025 [28], 'RB-7'.

[11] Affidavit of Robert Michael Kirman filed 4 April 2025 [30].

[12] Secatore, Re Fletcher Jones and Staff Pty Ltd (admins apptd) [2011] FCA 1493.

[13] Mentha, Re Griffin Coal Mining Company Pty Ltd (admins apptd) [2010] FCA 1469; (2010) 82 ACSR 142 [30].

[14] Affidavit of Robert Michael Kirman filed 4 April 2025 [28], 'RB-1', page 37.

[15] Affidavit of Robert Michael Kirman filed 4 April 2025 [28], 'RB-1', page 31.

[16] Personal Property Securities Act 2009 (Cth) s 267.

[17] Re One Steel Manufacturing Pty Ltd (admin apptd) [2017] NSWSC 21; (2017) 93 NSWLR 611 [82] (Brereton J).

[18] Personal Property Securities Act 2009 (Cth) s 21.

[19] Re Yeeda Pastoral Company Pty Ltd (admins apptd); Ex parte Tucker [2024] WASC 120.