In the matter of Ulan Quarry Products Pty Limited

1. [1]

   These reasons concern a dispute about the validity of the appointment of Mr Joshua-Lee Robb and Mr Jason Porter as administrators of Ulan Quarry Products Pty Limited (Ulan Quarry). For convenience, I will refer to them as the administrators. The administrators are the first plaintiffs. Ulan Quarry is the second plaintiff.

2. [2]

   The administrators were purportedly appointed at a meeting of the directors of Ulan Quarry on 23 March 2026 at 9.30am. The meeting that took place on that date was attended by 2 of the 3 directors of the company, Mr Graham Holley and Mr Jackson Johnston (who are the second and third defendants). They purported to resolve “that in the opinion of the Director(s) the Company is insolvent or is likely to become insolvent at some future time, and Administrators of the Company should be appointed”. The third director, Mr Matthew Hardy, was not present at the meeting. Mr Hardy is the first defendant.

3. [3]

   On 26 March 2026, solicitors acting for Mr Hardy wrote to the solicitors for the administrators, asserting that there were serious concerns about the validity of the administrators’ appointment and that Ulan Quarry “is demonstrably solvent”. Later on the same day, the solicitors for the administrators asked for the reasons for Mr Hardy’s concerns about the validity of the appointment. The letter also asserted that the administrators had been obstructed from obtaining the books and records of the company.

4. [4]

   On 1 April 2026, Mr Hardy’s solicitors asserted in correspondence with the administrators’ solicitors that the meeting held on 23 March 2026 had not been convened in accordance with Ulan Quarry’s constitution. They referred to clause 22 of the constitution, which provided that each director “must be given at least one Business Day notice of the meetings of directors”. They asserted that Mr Hardy had not been given that notice, because notice of the meeting was given on Friday 20 March 2026 at 3.43pm and the meeting took place at 9.30am on Monday 23 March 2026.

5. [5]

   The administrators commenced these proceedings on the same day. By these proceedings, they seek:

   1. (1)

      a declaration pursuant to s 447C(2) of the Corporations Act 2001 (Cth) that the appointment of the administrators as voluntary administrators of Ulan Quarry on 23 March 2026 was valid; and

   2. (2)

      alternatively, an order pursuant to s 447A(1) of the Corporations Act that Part 5.3A of the Corporations Act is to operate in relation to Ulan Quarry to the effect that notwithstanding non-compliance with the terms of the constitution of Ulan Quarry in respect of the giving notice of and convening of meetings of Ulan Quarry’s board of directors, the administrators were validly appointed as the joint and several voluntary administrators of Ulan Quarry on 23 March 2026.

6. [6]

   As has been noted, the first to third defendants are (or at least were) the directors of Ulan Quarry. The fourth defendant is a company called Pig Bomb Pty Ltd (Pig Bomb). Pig Bomb is the sole shareholder of Ulan Quarry. Mr Hardy is the sole director and shareholder of Pig Bomb. That is, Mr Hardy indirectly holds all the shares in Ulan Quarry.

7. [7]

   Mr Holley and Mr Johnston (who is Mr Holley’s grandson) became directors of Ulan Quarry pursuant to a document styled as a Heads of Agreement, dated 19 October 2023. By that agreement, a company called B61 Pty Ltd (B61) agreed to provide an “additional amount” of $2,047,835 to Ulan Quarry “to be repaid … within the term of 48 Months from the drawdown date”. Mr Holley executed the agreement on behalf of B61 as sole director. The agreement also provided that Mr Bradley Hardy (who is Mr Matthew Hardy’s brother) would be appointed as a director of Ulan Quarry. The appointments were made on 11 March 2024.

8. [8]

   There is evidence that at a meeting held on 1 April 2026, Pig Bomb as sole shareholder of Ulan Quarry resolved to remove Mr Holley and Mr Johnston as directors of Ulan Quarry. There is a dispute (which I do not need to resolve) about whether that resolution is effective.

9. [9]

   At the hearing, the administrators took a neutral position. They made some short submissions to assist the Court. Mr Holley and Mr Johnston took an active role, urging the Court to grant relief in accordance with the administrators’ originating process. They also filed in Court and pressed their own interlocutory process. By that process, they sought relief in the form of an order pursuant to s 1322(4)(a) of the Corporations Act declaring that the appointment of the administrators is not invalid by reason of any contravention of Ulan Quarry’s constitution. Mr Hardy and Pig Bomb actively resisted both applications.

Should relief be granted pursuant to s 447C of the Corporations Act?

1. [10]

   Section 447C of the Corporations Act provides as follows:

2. [11]

   Relief under s 447C is declaratory and not curative: In the matter of Absolute Vision Technologies Pty Ltd [2026] NSWSC 251 at [20] (Brereton J), citing HPI Australia Pty Ltd [2008] NSWSC 1106 at [8] (Barrett J) and In the matter of Cyprus Community of NSW Ltd [2024] NSWSC 1629 at [115] (Black J). It rests on a finding of fact. The Court must be satisfied on the evidence that the appointment of the administrators was valid. Here, that means that the Court needs to conclude that the resolution passed by the directors complied with the requirements of s 436A of the Corporations Act.

3. [12]

   In Cyprus, Black J noted (at [53]):

4. [13]

   Both Mr Holley and Mr Johnston gave evidence. Neither of them was challenged. Mr Johnston gave detailed evidence about why he (and Mr Holley) held the opinion on 23 March 2026 that Ulan Quarry was insolvent or faced a real and immediate risk of insolvency. Mr Holley’s evidence was less comprehensive, but he also gave evidence that it was plain to him, for reasons he outlined, that Ulan Quarry was at a real risk of insolvency, if it was not already insolvent. The issue of Ulan Quarry’s solvency is important and I will come back to the subject later in these reasons.

5. [14]

   Mr McNab, who appeared for Mr Hardy and Pig Bomb, made some submissions to the effect that Mr Holley and Mr Johnston had in mind taking steps to place Ulan Quarry into administration earlier than they suggested in their affidavits. He was critical of them. However, without any challenge to their evidence in cross-examination, I am not prepared to conclude that their evidence should be rejected or that they lacked bona fides.

6. [15]

   Mr McNab did not submit that the resolution was invalid because Mr Johnston and Mr Holley did not hold the opinion that the company is insolvent, or is likely to become insolvent at some future time. Nor did he submit that the resolution was invalid because the opinion was not held genuinely or in good faith, or because the opinion was based on inadequate steps being taken by them to satisfy themselves of the statutory requirements.

7. [16]

   It was submitted for Mr Hardy that the resolution made on 23 March 2026 was not valid because the notice requirements in Ulan Quarry’s constitution were not satisfied.

8. [17]

   Section 447C(1) of the Corporations Act gives administrators the right to apply for relief where there is doubt, on a specific ground, whether their purported appointment is valid. The specific ground that gives rise to doubt in this case is whether the resolution of directors purportedly made on 23 March 2026 was not a valid resolution because the meeting of directors was not called in conformity with the notice provisions in the constitution of Ulan Quarry.

9. [18]

   As I have already noted, the constitution of Ulan Quarry provides (at clause 22.2) that “Each Director must be given at least one Business Day notice of meetings of Directors”. Notice was given on the afternoon of Friday, 20 March 2026 and the meeting was conducted on the morning of Monday, 23 March 2026. Ulan Quarry’s constitution defines Business Day to mean “a day on which banks are open for general banking in the capital city of the state where the contract or act is being performed”.

10. [19]

    It was submitted for Mr Holley and Mr Johnston that the relevant capital city is Sydney and that banks are open for general banking in Sydney on Saturdays, with the consequence that Saturday is relevantly a Business Day. There was evidence that some branches of some banks are open on Saturdays. That evidence did not establish that banks were open for general banking on Saturday 21 March 2026. I reject the submission that Saturday 21 March 2026 was a Business Day.

11. [20]

    The issue that arises is whether, in order to give Mr Hardy “at least one Business Day notice” and with notice having been given on the afternoon of Friday 20 March 2026, the meeting could validly be called for the morning of Monday 23 March 2026. This raises a question about the proper construction of clause 22 of Ulan Quarry’s constitution.

12. [21]

    I conclude that the requirement that “Each Director must be given at least one Business Day notice of meetings of Directors” means that each director must have the benefit of at least one clear Business Day between the notice and the meeting. Although it is a question of construction of a particular private document, and not a statute, this construction is consistent with long established authority; see, for example: In re Railway Sleepers Supply Company (1885) 29 ChD 204 at 208 (Chitty J); Mount Oxide Mines Ltd v Gould (1915) 15 SR (NSW) 290 (Harvey J); Associated Dominions Assurance Society Pty Ltd v Balmford (1950) 81 CLR 161; [1950] HCA 30 at 183 (Fullagar J); Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; [1972] HCA 61 at 444 (Gibbs J).

13. [22]

    Mr Hardy did not waive the notice period or consent to the meeting taking place at the appointed time. He had indicated on Sunday 22 March 2026 that he would be available to meet on Monday 23 March 2026, but said that would “likely be in the afternoon”. That communication cannot be read as Mr Hardy consenting to a meeting being held at 9.30am on the Monday.

14. [23]

    It follows that the meeting held on 23 March 2026 was not conducted in accordance with the notice provisions of the constitution and was not a valid meeting of directors. This means that relief cannot be granted under s 447C(2) because the appointment of the administrators was not valid.

Should relief be granted pursuant to s 447A of the Corporations Act?

1. [24]

   Section 447A(1) provides that the Court “may make such order as it thinks appropriate about how this Part [5.3A of the Act] is to operate in relation to a particular company”. Unlike s 447C, s 447A(1) is curative. In In the matter of Topknotz Pty Ltd [2025] NSWSC 522, Nixon J observed at [39]:

2. [25]

   In Shirlaw v Graham [2001] NSWSC 612 at [14], Young CJ observed as follows:

3. [26]

   The relevant principles in relation to the exercise of power conferred by s 447A to cure defects in the appointment of an administrator were considered in Hayes v Doran (No 2) [2012] WASC 486 (at [406]) (Kenneth Martin J). Relevant principles include (citations omitted):

4. [27]

   In Dolores Correa and The Spanish Club Limited (subject to Deed of Company Arrangement) v Kenneth Michael Whittingham (No 3) [2012] NSWSC 526; 267 FLR 120, Black J observed that it is relevant to the exercise of the discretion to validate an appointment under s 447A that the company was insolvent or was very likely to become insolvent when the appointment was made (at [83]). His Honour also noted that before making an order under s 447A, the Court must be satisfied that no substantial injustice has been or is likely to be caused to any person (at [97]). See also In the matter of Gulf Energy Ltd [2019] NSWSC 1637 at [18]ff and Topknotz at [40]ff.

5. [28]

   In order to consider the application under s 447A in this case, it is necessary to consider more closely the factual context in the period leading up to the purported appointment of the administrators.

6. [29]

   Ulan Quarry operates a quarry mine on Crown land in Ulan, New South Wales pursuant to a mining lease with the Department of Planning and Industry. The quarry business involves excavating stone under the mining lease rights, crushing stone to make road base and sand, and selling that road base and sand to local councils and landscapers. Customers bring their own trucks to the quarry, where they are loaded with road base or sand using front end loaders operated by Ulan Quarry.

7. [30]

   Prior to 2021, the quarry mine was operated, and the relevant mining lease was held, by Ulan Stone Pty Ltd. In late 2021 to early 2022, it came to the attention of B61 that Ulan Stone had entered into liquidation and arrangements were made for Ulan Quarry to purchase Ulan Stone’s assets and mining lease.

8. [31]

   The evidence indicates that on 31 January 2022, B61 and Ulan Quarry entered into a loan agreement by which B61 was to lend $750,000 to Ulan Quarry. There is evidence that other amounts were lent on an ad hoc basis over the course of 2022 and 2023 as follows:

9. [32]

   As I have already noted, a heads of agreement was executed on 19 October 2023, pursuant to which Mr Holley, Mr Johnston and Mr Bradley Hardy were to be appointed as directors of Ulan Quarry. The heads of agreement also provided for repayment of the additional principal that had been advanced by B61 (supplementary to the $750,000 lent pursuant to the first loan agreement) and for monthly interest repayments to be made.

10. [33]

    Pursuant to the loan arrangements between B61 and Ulan Quarry, interest payments were made regularly by Ulan Quarry up to 31 January 2024. After this date, no further payments were made, apart from one payment on 14 October 2024 (which did not satisfy the outstanding interest at the time). The cessation of regular interest payments coincided with the retirement of the long-term site manager of the Ulan Quarry, Mr Chris Rose, on 6 February 2024. Until his retirement, Mr Rose had managed these payments.

11. [34]

    Once regular interest payments stopped, Mr Johnston began requesting to see Ulan Quarry’s financial records. These requests went unanswered until 5 December 2024, when Mr Johnston and Mr Holley were given copies of the profit and loss statement and balance sheet for Ulan Quarry as at 30 June 2024. Up until the day of the hearing, these were the only financial statements provided to either Mr Johnston or Mr Holley.

12. [35]

    Mr Johnston and Mr Holley had significant concerns with the financial position of Ulan Quarry that was disclosed in the 30 June 2024 financial statements. For example, the statements recorded significant accounts receivable and accounts payable but showed de minimis cash on hand. They had concerns about the integrity and accuracy of the information. They were also concerned that the statements showed a payment of approximately $707,000 to entities associated with Mr Hardy.

13. [36]

    Mr Johnston and Mr Holley visited the Ulan quarry site on 8 January 2025. During that visit, they expressed their concerns in person to Mr Bradley Hardy and to Mr Hardy by telephone. They were given reassurances that further funds would be coming soon, which would allow Ulan Quarry to satisfy its debts to B61.

14. [37]

    Apart from Ulan Quarry, Mr Hardy is also the director of other companies including Makekadi Equipment Pty Ltd, Makekadi Mining Services (NT) Pty Ltd and Makekadi Holdings Co Pty Ltd. In around mid-late June 2025, Mr Johnston became aware of a winding up application for Makekadi Equipment. This application was raised by Mr Johnston with Mr Hardy and, in response, Mr Hardy provided further reassurances that he had a plan to source funds and repay B61. There were further reassurances given in the second half of 2025.

15. [38]

    On 4 December 2025, Mr Johnston returned to inspect the Ulan quarry site in order to check on its activities and to ensure that the assets funded by B61 were still there. During this visit, Mr Johnston noticed that the diesel tank was empty. He called the regional manager of Ulan Quarry’s fuel supplier, who confirmed that it had not been paid for its last delivery of fuel and so supply of diesel fuel had been suspended. Mr Johnston pressed Mr Hardy and Mr Bradley Hardy again for completed financial statements for 2024 and for the 2025 statements. He was given further reassurances, but no further material was provided to him.

16. [39]

    Mr Bradley Hardy resigned as a director of Ulan Quarry with immediate effect on 2 February 2026. On the same day, Mr Johnston, Mr Holley and Mr Hardy were copied to an email from Mr Bradley Hardy sent to Mr Craig Slater at Makekadi Mining Services. In the email, Mr Bradley Hardy addressed various grievances, including in respect of Ulan Quarry. He stated that employees had not been paid their wages or leave entitlements, including the new quarry manager at Ulan Quarry. He also stated that he was frustrated from:

17. [40]

    Mr Johnston and Mr Holley were concerned about this email and the assertions in it. Mr Johnston pressed Mr Hardy for further information on Ulan Quarry’s financial position, but did not receive further information.

18. [41]

    On 4 February 2026, Mr Johnston was advised that Mr Matt Howarth, the logistics and planning manager at Makekadi Mining Services, had left and was owed almost $200,000.

19. [42]

    On 9 and 25 February 2026, Mr Johnston received further reassurances from Mr Hardy. Not satisfied with these reassurances, on 27 February 2026 Mr Johnston attended the site at the Ulan quarry. At that site visit, Mr Johnston spoke to employees directly and it was confirmed that all three employees on site were not being paid. Mr Johnston also learned that these employees had previously been getting paid by Makekadi Equipment (not Ulan Quarry), and had allegedly been transferred to agreements with Makekadi Mining Services, although no formal employment agreements had been provided to them. Mr Johnston came to the view that Makekadi Equipment was providing all labour to Ulan Quarry through informal labour hire arrangements, that Makekadi Equipment had been invoicing these charges to Ulan Quarry but Ulan Quarry had not been paying those invoices. Mr Johnston also concluded that there were problems concerning the security and maintenance of equipment on site and learned that the diesel tank remained empty.

20. [43]

    The evidence also indicates that by 6 March 2026, Mr Holley and Mr Johnston had engaged lawyers and steps were being contemplated with a view to seek to have administrators appointed to Ulan Quarry.

21. [44]

    On 19 March 2026, Mr Johnston received a letter confirming that a liquidator had been appointed to Makekadi Mining Services. The letter, and the attached report, showed significant amounts owed by Makekadi Mining Services that had been secured by interests granted over various pieces of plant and equipment, some of which was likely to be used by Ulan Quarry in its quarrying operations. The report also showed that Makekadi Mining Services owed over $2.5m to the Australian Taxation Office, as well as $651,000 in outstanding superannuation. It also disclosed a demand issued by Makekadi Mining Services to Ulan Quarry in the amount of $573,315 for funds allegedly owed by Ulan Quarry to Makekadi Mining Services.

22. [45]

    On Mr Johnston’s evidence, these matters suggested that:

    1. (1)

       Ulan Quarry may lose access to some of the equipment it needed to function;

    2. (2)

       some of the employees at the Ulan quarry site may have outstanding superannuation, and would be entitled to cease work until they were paid;

    3. (3)

       Makekadi Mining Services would no longer be able to provide services to Ulan Quarry, which would therefore likely end the labour hire arrangements and other support provided by Makekadi Mining Services; and

    4. (4)

       if the debt claimed by Makekadi Mining Services against Ulan Quarry was genuine, then Ulan Quarry would not be able to satisfy this debt.

23. [46]

    Mr Johnston and Mr Holley met on 20 March 2026 at 10am. At that meeting they purported to appoint the administrators. Mr Hardy did not attend the meeting and had no notice of it. Mr Johnston and Mr Holley came to appreciate during the same day that the appointment was not valid and gave Mr Hardy notice of the meeting called for 23 March 2026 at 9:30am. Mr Johnston and Mr Holley do not suggest that the appointment on 20 March 2026 was valid. At the time they gave notice on 20 March 2026, neither Mr Johnston nor Mr Holley had a copy of Ulan Quarry’s constitution.

24. [47]

    Mr Hardy gave evidence but was not cross-examined. His evidence was that Ulan Quarry has made regular payments to B61 and that B61 has never made any demand of payment from Ulan Quarry. He also gave evidence that B61 has lodged a proof of debt in the amount of $3,508,589.58 and he expressed the belief that this amount was well in excess of what is properly owing and that Ulan Quarry will be able to pay whatever is owing to B61. He gave no evidence about what he considered to be the amount that was properly owing. He also expressed the belief that the demand of $573,315.46 claimed by Makekadi Mining Services Pty Ltd (in liquidation) was made without a proper analysis of the books and records, and that whatever amount is owing will be paid. Again, there is no evidence from Mr Hardy about the amount he says is properly owing to Makekadi Mining Services. He gave no evidence of how Ulan Quarry would be in a position to meet its obligations to B61, Makekadi Mining Services, or other creditors.

25. [48]

    Mr Hardy and Pig Bomb also called evidence from Mr John Thomson. He is a chartered accountant. His firm prepared financial statements for Ulan Quarry for the year ending 30 June 2025. Mr Thomson’s affidavit and the financial statements were filed and served shortly after the hearing had commenced.

26. [49]

    It is not possible to place any weight on the 30 June 2025 financial statements. To begin with, the 30 June 2025 financial statements are not signed, either by Mr Hardy or by any accountant. They have not been audited or the subject of a formal review. The 30 June 2025 financial statements are strikingly lacking in detail.

27. [50]

    Nor can the 30 June 2025 financial statements be reconciled with the 30 June 2024 financial statements, including because they do not include a comparison with the 30 June 2024 position. Most notably, the 30 June 2024 financial statements included as a non-current liability a loan from B61 in the amount of $2,115,628.83. In the 30 June 2025 financial statements, the only non-current loan recorded is an amount of $684,105. No indication is given about the identity of the creditor. In addition, the 30 June 2024 financial statements expressly included a liability on account of the loan from Makekadi Mining Services in the amount of $385,899.62. It is unclear whether the 30 June 2025 financial statements include any amount payable to Makekadi Mining Services.

28. [51]

    Even taken at face value, the 30 June 2025 financial statements do not present a healthy picture. Total current assets ($710,469) do not exceed total current liabilities by much ($619,956). The current assets only include cash at bank of $1,920. Most of the current assets comprise inventory ($605,000). The quick ratio is thus 0.17 – which is a sign of a company in serious difficulty. Total equity is ($78,914).

29. [52]

    At the time the administrators were purportedly appointed, Mr Hardy, through his solicitors, asserted that Ulan Quarry was solvent. The solvency of the company was always going to be a critical issue at this hearing. Yet all Mr Hardy and Pig Bomb have produced by way of financial information to sustain a contention that Ulan Quarry is solvent are some manifestly inadequate draft financial statements for the year ending 30 June 2025. No current financial information has been provided that demonstrates solvency at the time of the hearing. There is no evidence, for example, of the company’s cash flow position in 2026. That kind of evidence, if it exists, would be significant to enable the Court to be satisfied as to the solvency of Ulan Quarry. There has been no attempt to rebut the evidence that employees and suppliers of Ulan Quarry have not been paid, at least in recent months. Nor has there been an attempt to rebut the powerful observations made by Mr Bradley Hardy at the time he resigned as a director.

30. [53]

    In short, the evidence at the hearing strongly supports the contention that Ulan Quarry was insolvent (or at least was likely to become so in the near future) as at 23 March 2026, and is very likely to be insolvent now.

31. [54]

    I accept that in failing to give Mr Hardy proper notice of the meeting of directors, Mr Holley and Mr Johnston deprived him of his right to attend the meeting of directors and to seek to persuade his fellow directors that the directors should not resolve to appoint administrators. This is a substantial right which was denied to him. I accept this is a serious matter. I also accept that the sole shareholder of Ulan Quarry, Pig Bomb, may be prejudiced by the appointment of the administrators. Mr Hardy is indirectly prejudiced as the sole shareholder of Pig Bomb. These matters weigh against orders under s 447A that would have the effect of validating the appointment of the administrators, when in fact the appointment was invalid.

32. [55]

    However, I am satisfied that relief under s 447A should be granted in this case. The matters that persuade me that relief should be granted under s 447A are:

33. [56]

    I am satisfied that the purpose of Part 5.3A of the Corporations Act is best served by orders that will validate the appointment of the administrators, with the validation to be taken to occur on and from the date of the purported appointment.

34. [57]

    There was some criticism of the administrators by Mr Hardy and Pig Bomb. It was suggested that they should have been alert to the invalidity of their appointment on and from 20 March 2026, when there was an aborted attempt to appoint them as administrators. No criticism is justified. As soon as Mr Hardy’s solicitors raised an issue with their appointment they moved swiftly to understand the basis of that concern. They commenced these proceedings on the same day that Mr Hardy identified the ground on which their appointment was challenged. There can be no proper suggestion on the evidence that they have not been conducting themselves diligently and appropriately. At least for the time being, the interests of the company and its creditors are best served by leaving Ulan Quarry in the administrators’ control.

The application for relief under s 1322 of the Corporations Act

1. [58]

   Given the conclusion I have come to on the application by the administrators under s 447A, it is unnecessary for me to consider the application by Mr Holley and Mr Johnston for relief under s 1322(4)(a).

Orders

1. [59]

   I will make the following orders:

   1. (1)

      An order pursuant to s 447A(1) of the Corporations Act 2001 (Cth) that Part 5.3A of the Corporations Act is to operate in relation to the second plaintiff to the effect that notwithstanding non-compliance with the terms of the second plaintiff’s constitution in respect of the giving notice of and convening of meetings of the second plaintiff’s board of directors, the first plaintiffs were validly appointed as the joint and several voluntary administrators of the second plaintiff on 23 March 2026.

   2. (2)

      The originating process is otherwise dismissed.

   3. (3)

      The interlocutory process filed by the second and third defendants on 14 April 2026 is dismissed.

   4. (4)

      If the parties cannot agree on appropriate orders as to costs, they should advise the Associate to Brereton J of that fact by 4pm on 27 April 2026 and a date will be fixed for a further short oral hearing to address the question of costs.