SCOTT RUSSELL MCGREGOR -v- ANDREW MICHAEL SMITH AND ROBERT ALLAN JACOBS as joint and several administrators of BAYVIEW HEALTH - MATILDA BAY PHARMACY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [2025] WASC 462 (4 November 2025)
(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression.)
[2]
By originating process dated 3 October 2025, the plaintiffs seek orders pursuant to s 588FM of the Corporations Act 2001 (Cth) (Act) that would, to the extent necessary for the purposes of s 588FL(2)(b)(iv) of the Act, extend the time for the registration of two security interests.
Originally, the plaintiffs also sought orders pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) (IPS) (being sch 2 to the Corporations Act 2001 (Cth) (Act)) that the plaintiffs and defendants were justified in not seeking relief under of the Act in respect of these security interests. The plaintiffs have since indicated in their submissions filed with the court that these orders are no longer pressed.
At the time the originating process was filed, the plaintiffs filed a certificate of urgency. For this reason, the originating process has been listed before me today on an urgent basis.
In support of the application, the plaintiffs rely on three affidavits of Stephen James Kikiros, a senior associate employed by the plaintiffs' solicitors: two open affidavits filed 3 and 6 October 2025; and one confidential affidavit filed 3 October 2025 (Confidential Affidavit).
In considering the application, I have had the benefit of a written outline of submissions filed by the plaintiffs, as well as brief oral submissions from counsel who appeared before me today.
I am satisfied from the documents filed and the submissions from counsel that the application has been served on the Australian Securities and Investments Commission (ASIC) and the solicitors for the defendants, and that neither intends to appear at the hearing today or to be heard on the orders sought in the application.[1] I specifically note that the defendants have informed the court that they consent to the orders sought being made.
[3]
Much of the factual background to this application was canvassed in my previous decision concerning the administration of these companies.[2] I do not intend to repeat that summary and in these reasons adopt the definitions that I used in those original reasons.
Since the date of those reasons, the following matters have occurred.
On 4 September 2025, the Administrators convened a concurrent second creditors' meeting for Matilda Bay and North Shore. At that meeting, the creditors resolved that the Companies execute a DOCA proposed by the plaintiffs.[3]
On 25 September 2025, the plaintiffs, the Administrators, and the Companies entered into a DOCA in respect of Matilda Bay and North Shore. On the same date:
[4]
(a) the plaintiffs, the first defendants, and the third defendant entered into the Matilda Bay Facility Agreement and an associated General Security Deed (Matilda Bay Security Agreements); and
(b) the plaintiffs, the second defendants, and the fourth defendant entered into the North Shore Facility Agreement and an associated General Security Deed (North Shore Security Agreements),
[5]
Under the DOCA and the Security Agreements, the plaintiffs are required to progressively advance and make funding of at least $2.8 million available to the Companies. This funding is secured by the associated General Security Deeds.[5]
Should the relief sought by the plaintiffs under s 588FM(2) be granted?
[7]
I accept that the plaintiffs have standing to seek relief under s 588FM of the Act as interested parties, on the basis that they are directors and admitted creditors of one or both Companies and are the proponents of the DOCA entered into by the Companies.[7]
The plaintiffs seek relief under s 588FM as there is uncertainty as to whether the security interests created by the Security Agreements, which were entered into after the appointment of the external administrators, have vested in the companies by way of the operation of s 588FL of the Act.
This issue arises because of the question as to whether, by operation of s 588FL of the Act, the security interest created by each of the Facility Agreements (namely, the General Security Deeds), which occurred after the appointment of the first and second defendants as external administrators and subsequently deed administrators of the Companies, has vested in the each of the Companies. Specifically, the issue arises because the Security Agreements have not been registered until after the 'critical time' referred to in s 588FL(7)(a) of the Act, being the appointment of external administrators.
It is uncontroversial that the Security Agreements are 'security interests' within the meaning of that phrase in s 12 of the PPSA and 'PPSA security interests' within the meaning of s 9 of the Act.
The 'registration time' of the security interests under s 588FL(2)(b)(ii) is 26 September 2025, which self-evidently is after the date the first and second plaintiffs were appointed as external administrators of the Companies. The plaintiffs deny the effect of s 588FL(4) is to vest the security interests in the Companies.
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.[8] This vesting is irreversible.[9]
A security interest is perfected if it has attached to collateral, is enforceable against third parties, and certain extra steps (such as registration on the PPSR) have been taken to protect the interest.[10]
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:
[8]
(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.
[9]
At the moment, there is a 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', but before the company is no longer the subject of an external administration. I relatively recently considered and summarised this divergence in Re Yeeda Pastoral Company (admins apptd); Ex parte Tucker.[11] Those reasons set out my views in relation to the matter. However, as I noted in that decision, at present, there still remains no intermediate appellant authority that finally determines the proper construction of s 588FL of the Act, nor has there been any further consideration of the issue by any first instance judge.
The orders sought by the plaintiffs are conditional on there being a requirement for an extension of time for registration under s 588FM of the Act. In my view, these orders are practical and are an appropriate resolution of the issue that is confronted by the plaintiffs in the absence of any binding authority on this court.
In my view, it would be just and equitable to make the orders sought as required by s 588FM(2)(b) of the Act. This is because the security interest forms part of the DOCA approved by the majority of creditors of the Companies, which will enable creditors to be paid in full (together with interest).
In these circumstances, it is my view that it would be just and equitable to make the orders sought.
[10]
Should confidentiality orders be made over the Confidential Affidavit?
[11]
The plaintiffs also seek confidentiality orders to be made over the Confidential Affidavit, pursuant to O 67B r 5(3) of the Rules of the Supreme Court 1971 (WA).
The plaintiffs submit the contents of the Confidential Affidavit are commercially sensitive and confidential.
Having considered the contents of the affidavit, particularly the annexures (which are the relevant agreements the subject of this application), I am satisfied that the confidential affidavit is confidential, and that it is appropriate to make the confidentiality orders sought.
While I note that reference to these documents has been made in the creditors' reports and the subject of the DOCA proposal, the details of these agreements has not been publicly disclosed. In those circumstances, I am satisfied that the agreements are appropriately considered to be confidential.
[12]
The plaintiffs sought orders for the costs of the application to be costs in the administration of North Shore and paid from the fund contemplated by the DOCA. In my view, this is the appropriate costs order.
I also accept that the form of the orders sought in terms of service of the court's orders on creditors of the Company, and the allowance for any aggrieved party to apply to this court to vacate or vary these orders, will protect the creditors of the Companies from any possible prejudice that could be caused by the application.
[13]
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
[14]
[1] Affidavit of Stephen James Kikiros filed 6 October 2025, 'SJK-22' - 'SJK-23'.
[15]
[2] Re Bayview Health - Matilda Bay Pharmacy Pty Ltd (admins apptd) and Bayview Health North Shore Pharmacy Pty Ltd (admins apptd); ex parte Smith & Jacobs [No 2] [2025] WASC 404.
[16]
[3] Affidavit of Stephen James Kikiros filed 3 October 2025 [10], 'SJK-14'.
[17]
[4] Affidavit of Stephen James Kikiros filed 3 October 2025 [11] - [12], 'SJK-15'.
[18]
[5] Affidavit of Stephen James Kikiros filed 3 October 2025, 'SJK-15'.
[19]
[6] Affidavit of Stephen James Kikiros filed 3 October 2025 [13] - [14], 'SJK-18' - 'SJK-19'.
[20]
[7] Affidavit of Stephen James Kikiros filed 3 October 2025, 'SJK-14'.