Macpherson v Warringah Bowling Club Ltd, in the matter of Warringah Bowling Club Ltd (No 2)

This was a costs judgment, not the main decision that ended the administration. Justice Stewart had already ordered that the voluntary administration of Warringah Bowling Club Ltd end immediately. The question in this later judgment was who should pay the legal costs of the court proceeding that achieved that result.

The dispute arose because the club's board, led by chairman Leo Macpherson, said there was a practical way to end the administration quickly and safely. The board told the administrators that FOWB Pty Ltd would provide funding to pay the club's debts and provide working capital going forward. The board's position was that the club could return to solvent trading, that creditors could be paid, and that continuing the administration, entering a deed of company arrangement, or moving to liquidation would not produce a better outcome.

The administrators did not promptly move to the second creditors' meeting. Instead, they continued broader investigations and insisted on meeting with the directors as part of their usual process. The court accepted that administrators can investigate relevant matters, but the problem was that the administration was continuing even though the administrators had long understood that the club's assets vastly exceeded its liabilities and had been told that funding was available to pay creditors.

The court's criticism was not that administrators asked questions. It was that they did not focus quickly enough on the question that mattered most at that point, namely whether the club was or could be solvent so that the administration should end. They also did not clearly and early identify the specific information about the FOWB funding that they later said they needed.

The chronology mattered. Earlier in September 2025, one of the administrators had sworn that a historical valuation of one club property indicated that property alone was worth many multiples of the total secured and unsecured debts, and that updated valuations were expected to show significant value greatly exceeding liabilities. In this costs judgment, the court said nothing later identified gave any reason to change that assessment.

On 4 November 2025, Mr Macpherson wrote to the administrators setting out the arrangements with FOWB Pty Ltd for payment of debts and provision of working capital. He formally requested that the administrators convene the second meeting of creditors under s 439A and recommend that the administration end. He said the board had resolved to resume control of the club's affairs and continue trading on a solvent basis.

The administrators replied within hours. They said they needed a meeting with the directors to assist with ongoing investigations relevant to the quantum of creditors and ongoing trading. The court noted an important omission. They did not ask for further details of the terms of the FOWB loan at that point.

Over the following days, the board and its solicitor kept pressing the point. FOWB's ability to immediately loan funds to pay debts and the administrators' properly incurred remuneration and expenses was confirmed in writing. The board complained about delay and escalating administration costs. The administrators still did not identify any particular concern about the funding terms.

Instead, they pursued what they described as normal investigations. They raised possible issues under the Registered Clubs Act about the childcare centre and possible tax issues connected with a private tax ruling. The directors responded that those matters did not justify prolonging the administration and that ending the administration would not affect responsibility for them. Only on 19 November 2025 was there a recorded request for FOWB's draft term sheet.

The legal issue in this judgment was about costs and indemnity. Ordinarily, if a plaintiff succeeds in a proceeding like this, the plaintiff's costs may be paid from the company and the administrators may be indemnified from company assets for their own costs reasonably incurred in the administration. The court had to decide whether this was an unusual case where that ordinary position should be displaced.

More specifically, the court asked whether the administrators had acted unreasonably in the face of repeated requests from the board to convene the second meeting of creditors, and whether that unreasonable conduct made the court proceeding necessary. The court also considered whether the administrators had departed from the essential neutrality expected of them in a matter of this kind.

The administrators argued that they had acted reasonably because they needed the FOWB term sheet before they could report to creditors as required by the Insolvency Practice Rules. They said they could not form an opinion on whether it was in creditors' interests for the administration to end until they had formed an opinion on solvency, and they could not do that without knowing the relevant terms of the FOWB facility.

The court accepted the general principle that administrators should maintain essential neutrality and may assist the court with facts and legal principles. But the court's task was practical rather than abstract. Did their conduct before the final hearing show unreasonable delay and partisanship, and was that what forced the plaintiff to come to court?

Justice Stewart held that, until counsel appeared for the administrators at the final hearing, their conduct in relation to the potential termination of the administration was unreasonable and demonstrated a partisanship contrary to their responsibility to maintain essential neutrality.

The court emphasised several points. First, the administrators had known from early in the administration that the club's assets vastly exceeded its liabilities. Second, from 4 November 2025 they knew the directors contended that FOWB funding was available to immediately pay all known secured and unsecured creditors and support future trading. Third, they did not challenge that contention and did not seek further information about the funding until 19 November 2025.

The court was particularly critical that, despite lengthy correspondence and affidavits, the administrators never clearly said to the directors that they needed specific identified information about the FOWB facility in order to report to creditors and convene the meeting. Instead, they persisted with their usual or normal investigations, including what they themselves described as legacy issues.

The court also criticised the administrators' attempt at the first court date to obtain a two-week adjournment to continue investigating matters that were not material to the question at hand, namely whether the club was solvent. Justice Stewart described the continued investigation of legacy issues as an unnecessary distraction that caused prejudicial delay.

At the final hearing, counsel for the administrators raised a focused and relevant point about whether the FOWB loan could be called in immediately or in the near future. The plaintiff answered that point immediately by procuring an undertaking from FOWB that the loan would not be called in for at least 12 months after the administration ended, unless the secured property was sold. The court said that if there had been any doubt about solvency before then, that undertaking dispelled it. The judge added that he had no reason to doubt that, had that point been raised at the outset, it would have been answered just as quickly.

The court concluded that once the FOWB funding was available, it was in the club's and creditors' best interests for the administration to be brought to an end as swiftly as possible. The administrators could and should have sought any relevant funding details immediately, reported to creditors on those details, advised creditors to vote in favour of ending the administration, and convened a meeting under s 439A within five days for that purpose.

The court found it was at least more likely than not that creditors would have voted in favour of ending the administration if the meeting had been convened. Because the FOWB funding would have resulted in all creditors being immediately paid, the court said there would have been no downside to creditors in bringing the administration to an end, and it would be fanciful to suggest otherwise.

Justice Stewart therefore concluded that the court proceeding was made necessary only because of the administrators' unreasonable conduct. The result was a significant personal costs consequence. The administrators were ordered to pay the plaintiff's costs of the proceeding without recourse to the assets of the club. They were also ordered to bear their own costs of the proceeding without recourse to the club's assets.

That is a serious outcome for external administrators. It means the court not only required them to pay the other side's costs personally, but also denied them the usual ability to look to company assets for reimbursement of their own costs in the proceeding.

For directors and boards, this case shows the importance of presenting a solvency solution in a way that answers the obvious questions early. If a third party is willing to fund payment of debts and support ongoing trading, document that proposal carefully. Make clear whether funds are immediately available, what the repayment terms are, whether the loan can be called in quickly, and how the arrangement supports ongoing solvency rather than a short-term patch.

The paper trail was central here. The board repeatedly made written requests, explained the funding, and complained about delay and mounting costs. That gave the court a clear record against which to assess whether the administrators had acted reasonably.

For administrators and advisers, the judgment is a reminder that neutrality is not just a courtroom label. Conduct before the hearing matters. If there is a real proposal that could allow creditors to be paid and the administration to end, requests for information should be specific, prompt and tied to the decision that has to be made. Continuing broad investigations into side issues may be appropriate in some cases, but not if they become an unnecessary distraction from the immediate solvency question.

For creditors, the case underlines that the administration process is meant to serve creditor interests, not simply continue by inertia. Where all creditors can be paid and there is no downside to ending the administration, delay may be hard to justify.

The judgment was delivered by Stewart J in the Federal Court of Australia on 9 December 2025. It followed the earlier substantive decision made on 5 December 2025 ending the administration of Warringah Bowling Club Ltd. The reasons expressly state that they assume familiarity with that earlier decision.

This page focuses on the costs ruling and the conduct that led to it. It does not treat the case as an intellectual property or trade mark dispute because the judgment does not concern those issues.