In the matter of Cyprus Community of N.S.W. Limited (Administrators Appointed)

By Amended Interlocutory Process dated 23 July 2025, the Applicants, Messrs Kelly and Kennedy in their capacity as joint and several voluntary administrators (“Administrators”) of Cyprus Community of N.S.W. Ltd (admins apptd) (“Company”) seek a declaration that a disposal of the Company’s core property by them under s 437A(1)(c) of the Corporations Act 2001 (Cth) (“Act”) is not subject to the conditional prohibition in s 41E(3) of the Registered Clubs Act 1976 (NSW) (“RCA”). Alternatively, they seek a declaration that, by reason of s 109 of the Commonwealth Constitution, s 437A(1)(c) of the Act prevails over s 41E of the RCA in respect of a sale of the Company’s core property undertaken by the Administrators.

Orders were made, by consent, that Ms Anastasiou be joined as the First Respondent to the application and she was appointed, pursuant to r 7.6(2)(c) of the Uniform Civil Procedure Rules 2005 (NSW), to represent that class of the Company’s ordinary members who oppose, or may at any future time oppose, the relief sought by the Administrators.

There is no substantive factual dispute in the application. It is common ground that the Company is a registered club and has among its objects the promotion of cultural interests and the health and welfare of Cypriots and their descendants to assist in their assimilation in the Australian community. The Company owns property in inner Western Sydney which has a substantial value. On 24 September 2024, the Administrators were appointed to the Company and a secured lender then appointed receivers and managers to the Company’s assets . On 21 October 2024, the Court made orders extending the convening period for the second meeting of creditors, in an application that was supported by the receivers and managers appointed by that secured lender. By my judgment in Re Cyprus Community of NSW Ltd [2024] NSWSC 1629, delivered on 18 December 2024, I also made orders validating the appointment of the Administrators under s 447A of the Act.

The Administrators read the affidavit dated 12 July 2025 of Mr Kelly, who is one of the Administrators. Mr Kelly there identified the properties owned by the Company and attempts that had been made, without success, to bring about a sale of the Company’s real property prior to the Administrators’ appointment. Mr Kelly also referred to subsequent proceedings during the course of the administration, to which I have referred above; the repayment of the secured loan owed by the Company and the retirement of receivers appointed by that secured lender in February 2025; steps which have been taken by the Administrators to investigate and pursue the sale or redevelopment of the Company’s properties; the Administrators’ execution of a heads of agreement with a preferred bidder on 25 June 2025; and the Administrators’ then proposal to execute and exchange a contract for sale of the Company’s real properties by 15 July 2025. Mr Kelly there expresses the view that a sale of those properties is necessary to remedy the Company’s cash flow difficulties and provide it with a sustainable financial basis to continue its operations, presumably in alternative premises. Mr Kelly also refers to the Company’s receipt of a remediation fire order issued by the Inner West Council; the potential difficulty in obtaining member approval for the sale of the Company’s core property; the costs that would likely be incurred in holding a meeting of the Company’s members; difficulties which arise from the fact that many active members are life members rather than ordinary members and would not be permitted to vote at such a meeting; and ongoing disputes as to the membership status of persons who have been expelled or suspended from membership prior to the Administrators’ appointment. It appears that Ms Anastasiou disputes aspects of Mr Kelly’s evidence, although it is not necessary to determine that dispute where she brought no cross-claim seeking to challenge the sale of the Company’s core property on a factual basis.

By an affidavit dated 18 July 2025, Mr Mattock, a solicitor acting for Mr Pericleous, referred to his attitude to the application and to aspects of the factual background to the application. Mr Pericleous did not appear at the hearing, where Ms Anastasiou now appears, and also brought no cross-claim seeking to challenge the sale of the Company’s core property on a factual basis.

By his affidavit dated 29 July 2025, Mr Gardner, a solicitor acting for the Administrators in the application, referred to the Administrators’ exercise of their power of sale under s 437A(1)(c) of the Act, in their capacity as the voluntary administrators of the Company, to enter into a conditional contract for the sale of the Company’s properties on 29 July 2025. It is a condition to completion of that contract that the Court makes one or both of the declarations sought by the Administrators in this application, and the parties have the right to rescind that contract if the condition is not satisfied by 30 September 2025.

Turning now to the applicable statutory provisions, ss 437A – 437B of the Act relevantly provide:

Section 41E(1) of the RCA in turn provides:

I approach the question of construction raised by these sections by reference to well-established principles of statutory construction. Counsel did not address those principles and I adopt my summary of them in Re Munja Bakehouse Pty Ltd [2024] NSWSC 6 at [35]ff as follows:

As I noted above, it is common ground that the Company is a registered Club for the purposes of s 41E of the RCA and that some of the properties that are to be sold by the Administrators are “core property” within the meaning of s 41E(6) of the RCA. That section does not apply to the disposal of core property in circumstances set out in reg 29B(1) of the Registered Clubs Regulation 2015 (NSW), which include the position where the Secretary of the Department has, on application by the registered club, approved of the property being disposed of otherwise than in accordance with RCA s 41E(1). There is no suggestion that those circumstances are applicable here.

As I also noted above, the Administrators, first, seek a declaration that a disposal of the Company’s core property by them under s 437A(1)(c) of the Act is not subject to the conditional prohibition in s 41E(3) of the RCA. Mr Hutton, with whom Ms Woodforde appears for the Administrators, submits, in outline, that:

Mr Hutton accepts that s 41E(1) would here apply and prevent disposal of core property of the Company unless the relevant requirements in that section were satisfied, if that disposal was to be effected by the Company rather than by the Administrators acting under the statutory power conferred by s 437A(1)(c) of the Act. However, Mr Hutton submits that the Company is not, and a registered club generally is not, subject to the conditional prohibition under s 41E(1) of the RCA where an administrator exercises the statutory power of sale under s 437(1)(c) of the Act.

Mr Hutton submits, first, and I accept, that the reference to “registered club” in s 41E of the RCA does not apply directly to the Administrators, who are, obviously enough, neither a club nor a registered club. It seems to me that that section also does not extend, by any available implication, to the Administrators or a liquidator or other insolvency practitioner appointed to a Club. Mr Hutton submits, and I accept, although it is not necessary to the findings that I reach below, that that construction of the section is consistent with the Second Reading Speech in the Legislative Assembly of the Registered Clubs Amendment Act 2003 (NSW), which introduced former ss 41J and 41Q into the RCA and directed attention to the risk that members of a club’s governing body, senior club management or a minority of club members might dispose of the club’s major assets at less than market value, rather than to any question of disposal of those assets by an insolvency practitioner acting in accordance with the Act. On that basis, the sale of the Company’s property is only subject to s 41E of the RCA if the exercise of the powers conferred on the Administrators under s 437A(1)(c) of the Act is properly characterised as the Company (as registered club) disposing of its core property.

Importantly, Mr Hutton submits, by reference to authority, that an administrator’s exercise of statutory power of sale under s 437A(1)(c) of the Act does not amount to the Company disposing of its core property for the purposes of s 41E of the RCA and submits that that section does not apply to a sale undertaken by the administrator on that basis. Mr Hutton points out s 437A of the Act confers powers on a voluntary administrator that are independent of the relevant company and, I would add, are not exercised by a decision-making organ of that company . Mr Hutton notes a possible exception under s 437A(1)(d) which imports the powers of the company, but that paragraph is not in issue here. Mr Hutton submits that, relevantly, a voluntary administrator (with powers independently conferred by statute) has the power to “dispose of” all or part of a company’s business and property under s 437A(1)(c) of the Act. Mr Hutton also submits that s 437B of the Act and the authorities make it clear that an administrator, in exercising powers under s 437A(1)(c) of the Act, does not act as an agent for a company, but rather “is taken to be acting as the company’s agent” for the purposes of ensuring the effectiveness of the transaction and its bindingness upon the company.

Mr Hutton here refers to Re Smith at [10], where Barrett J explained that:

Barrett J also there observed (at [11]–[14]) that:

For these reasons, the voluntary administrator in Re Smith was held not to be bound by requirements to maintain specified facilities under article 28 of a club’s articles of association when exercising the administrator’s power of sale, because the sale was undertaken by the voluntary administrator and not by the club.

In Re Bacchus Distillery Pty Ltd (2014) 98 ACSR 539; [2014] VSC 111, Judd J approved Barrett J’s analysis of the nature of a voluntary administrator’s power under s 437A(1)(c) of the Act, in considering whether s 437A(1)(c) was sufficient to override a beneficial co-owner’s objection to the use of an asset in the voluntary administration. His Honour there observed (at [65]–[66]) that:

That analysis in Re Smith was also approved and applied by Henry J in Scott v Port Hinchinbrook Services Ltd [2018] 1 Qd R 319; (2017) 121 ACSR 355; [2017] QSC 092 at [75] and by Ward P (with whom Leeming and Stern JJA agreed) in McMillan v Coolah Home Base Pty Ltd [2024] NSWCA 138 at [297] and [369]. The proposition (noted in Brash Holdings Ltd v Shafir (1994) 14 ACSR 192 at 196 and again in Re Smith at [11]) that the interests of a company’s members are properly subordinated to the interests of preserving the relevant business and the interests of creditors in a voluntary administration was also endorsed in Freeman, Re Regional Express Holdings Ltd (admins apptd) [2024] FCA 929 at [106], where Yates J observed that:

Mr Hutton here submits that:

Mr Cook, with whom Mr Santucci appears for Ms Anastasiou, responds that s 41E of the RCA applies to a sale in these circumstances, as a matter of principle, and seeks to distinguish Re Smith in order to reach that conclusion. Mr Cook submits that that case was directed to the company’s internal management rules. I accept that Barrett J addressed that matter, but his Honour’s analysis was directed to the wider question of the nature of the statutory powers of sale that are exercised by a voluntary administrator in respect of the property of a company, in a manner that binds the company without being a decision or act of the company. Mr Cook also submits that the question in this case is whether the Administrators’ power of sale can be exercised “to cause the Company” to dispose of its property contrary to s 41E of the RCA. That question does not properly arise in that form, applying the reasoning in Re Smith, since a voluntary administrator’s exercise of the power of sale under s 437A(1)(c) of the Act does not cause a company to dispose of property, but instead amounts to the disposal of property by that voluntary administrator in a manner that binds the company to the result of an act that it did not undertake. That distinction may be a subtle one, but that does not make it a less significant one.

If I were wrong in that view, I would also accept Mr Hutton’s submission in reply that:

In oral submissions, Mr Cook also submits (T27) that:

I also do not accept that submission, on the basis that the reference to “not” in the third last line should be disregarded. It seems to me that, in its terms and in its context, s 41E of the RCA is directed to the conduct of the registered club, which could only be authorised by an appropriate internal decision-making organ of the club, and not to the conduct of third parties which binds the club by statute. Subject to s 109 of the Constitution, which I address below, the state legislature could have extended the application of that section to insolvency practitioners who exercised statutory powers in a manner that did not involve any decision or conduct of the club itself, but did not do so. While Mr Cook points to the purpose of s 41E of the RCA, that purpose does not require that it extend beyond an act of the club’s board or members undertaken while a club is solvent, to an act of an insolvency practitioner undertaken while a club is insolvent or likely to be insolvent, and at a time that its creditors’ interests will ordinarily prevail over its members’ interests.

In oral submissions, Mr Cook also sought (T28-29) to distinguish the duties and functions of a voluntary administrator under Pt 5.3A of the Act from those of a liquidator and submitted that the voluntary administration regime contemplated an investigation by a voluntary administrator over a relatively short period and then a second meeting of creditors. It was not apparent that submission had any impact on whether the relief sought by the Administrators should be granted, where Ms Anastasiou did not contend, by cross-claim or otherwise, that the Administrators lacked power to, or had breached any statutory or general law duty by contracting to, dispose of the Club’s properties in the exercise of their powers under s 437A of the Act. In any event, I do not accept that submission, if it is intended to suggest that voluntary administrators cannot or do not regularly dispose of a company’s a company’s business or its major assets during a voluntary administration. It is apparent that they regularly do so, not least because of the number of occasions on which Courts have extended the convening period in a voluntary administration for the express purpose of permitting a voluntary administrator to undertake a sale process for all or a significant part of a company’s assets: for several recent examples from a very large number of cases, see Re Kijurina [2014] FCA 1421; Re Livingstone, Vertical 4 Pty Ltd [2025] FCA 382; Re Mableson (Admin), Bibere Australian Beverages Pty Ltd t/as Fox Creek Wines (Admins Apptd) [2025] FCA 533; Re Resnick, Toplace Pty Ltd [2023] FCA 1086. I recognise that cases that address the position of a registered club that is incorporated under the Act and placed under voluntary administration are rare, likely because that situation is itself rare; however, such a club is governed by the same statutory regime, and I address the decision in Correa v Whittingham (2013) 278 FLR 310; [2013] NSWCA 263 (“Spanish Club”) below.

In oral submissions, Mr Cook also submits (T30) that s 41E of the RCA is not directed to confining the Administrators’ power to dispose of the Company’s property, but to requiring that certain steps be taken in respect of a disposition of that property. It does not seem to me that submission advances Ms Anastasiou’s position where, for the reasons noted above, s 41E of the RCA is directed to a disposal by the Company and has no application, in its terms, to conduct of the Administrators which, properly characterised, is not a disposal by the Company, although the Administrators’ conduct binds the Company by force of statute.

In written and oral submissions, Mr Cook also submits (T32) that the memorandum of transfer of the Club’s properties will be executed in the name of the Company as registered proprietor. Again, it does not seem to me that that advances matters, where that is the consequence of the fact that the Company is bound by the Administrators’ exercise of their statutory power to dispose of the Company’s property and the transfer implements the transaction by which the Company is bound in that manner. By parity of reasoning with Re Smith and the decisions which have followed it, the Company here does not itself dispose of that property (by a memorandum of transfer or otherwise) when it is bound by the consequence of the Administrators’ disposal of that property.

Both parties also referred to the Court of Appeal’s decision in Correa v Whittingham (2013) 278 FLR 310; [2013] NSWCA 263 (“Spanish Club”). Mr Cook submits that the Administrators’ position here is contrary to carefully considered dicta of the Court of Appeal in that case, concerning former 41J of the RCA, and should not be accepted for that reason. That decision concerned a challenge to a deed administrator’s exercise of a power of sale under cl 5.1 of the relevant deed of company arrangement (“DOCA”) which provided that:

At the relevant time, former s 41J(3) of the RCA was in broadly similar form to the present s 41E(1) of the RCA and provided that a registered club must not dispose of core property of the club unless certain requirements were satisfied. That prohibition was subject to an exception in reg 19 of the Registered Clubs Regulation 2009 (NSW), which provided that former s 41J(3) did not apply in relation to the disposal of core property of a registered club where “the Director-General [of Communities NSW] has, on application by the registered club, approved of the property being disposed of otherwise than in accordance with section 41J(3) of the [RCA]”. A delegate of the Director-General had there expressed the view that former s 41J of the RCA did not apply to the sale of the Spanish Club’s property but had not expressly granted such approval.

Gleeson JA (with whom Barrett JA and Tobias AJA agreed) there observed (at [268]) that:

His Honour also observed (at [286]–[290]) that:

These observations commence with express assumptions as to whether there was a breach of cl 5.1 of the DOCA or former s 41J of the RCA and, in the third paragraph, focus on the question whether former s 41J (assuming its application) was displaced by the position taken by the Director General by his delegate. Notably, Gleeson JA did not there consider whether former s 41J applied to a sale by a deed administrator pursuant to a DOCA, still less a sale by a voluntary administrator prior to the entry into a DOCA, or record any submissions by the parties as to that question.

Mr Hutton submits, and I accept, that no argument was there directed to the question whether former s 41J(3) of the RCA applied to a voluntary administrator’s exercise of the statutory power of sale in s 437A(1)(c) of the Act, where Gleeson JA neither referred to nor addressed such an argument. Mr Cook also recognises that former s 41J of the RCA was not determinative of the outcome in Spanish Club, where the appellants had there not challenged the finding at first instance that there was no evidence that the position would have been improved if the deed administrator had not proceeded with the sale without member approval. However, he submits that it appears from the Court of Appeal’s reasons that argument was directed to the effect of former s 41J of the RCA. I do not accept that submission, where there is no reference to any such argument on appeal and no reason to think that Gleeson JA would not have noted or dealt with such an argument had it been put. It seems to me that the parties in Spanish Club assumed the application of cl 5.1 of the DOCA and former s 41J of the RCA in respect of the power of sale arising under the DOCA and focussed their attention on the impact of the Director General’s position in either displacing that requirement or providing a reasonable basis for the deed administrator’s approach.

In oral submissions, Mr Cook also submitted that the scope of former s 41J of the RCA “would have” (or possibly should have) arisen in Spanish Club. However, Mr Cook fairly acknowledged (T23) that there is no reference in Spanish Club to any party putting a submission to the effect that former s 41J of the RCA did not apply in that case, at least as incorporated by cl 5.1 of the DOCA, unless the Director General’s advice had excluded it. It is not necessary to speculate why that may be so, although obvious possibilities are that the parties assumed that it did not matter, because of the terms of cl 5.1 of the DOCA, and more complex explanations postulated by Mr Hutton may also be available. Why the parties took that approach is not to the point, where the issue that there arose was not the scope of the prohibition under former s 41J of the Act, but rather whether an exception to an assumed requirement for member approval of the sale was available by reason of the attitude expressed by the Director General to the relevant transaction, and whether the deed administrator had acted unreasonably in that regard.

In oral submissions, Mr Cook also submitted (T27) that:

I do not accept the first step in that submission. It was not necessary for the Court of Appeal to determine whether there was a contravention of former s 41J of the RCA where the parties did not address submissions to that question; second, it was possible to determine the appeal absent determination of that question, where the proceedings had been conducted on the common basis that the sale required member approval, at least under cl 5.1 of the DOCA, subject to the impact of the Director General’s advice; and, third, in any event, it was sufficient to determine that aspect of the appeal, as Gleeson JA observed, that there was no challenge to the finding at first instance that there was no prejudice which enlivened the Court’s jurisdiction under s 447E of the Act.

Mr Hutton also submits, in reply, and I also accept, that Spanish Club is not binding as to the effect of former s 41J of the RCA or present s 41E of the RCA, because Gleeson JA’s reference to the section is obiter, and, more importantly, because his Honour there assumed that former s 41J of the RCA applied, absent a relevant exception, and that proposition was not the subject of argument. As Mr Hutton points out, where “a proposition of law is incorporated into the reasoning of a particular court, that proposition, even if it forms part of the ratio decidendi, is not binding on later courts if the particular court merely assumed its correctness without argument”: CSR Ltd v Eddy (2005) 226 CLR 1; [2005] HCA 64 at [13]. For all these reasons, the decision in Spanish Club did not determine, and is not authority for, the position for which Ms Anastasiou contends.

Finally, Mr Hutton points to suggested practical difficulties which would result with the power of sale under s 437A(1)(c) of the Act was constrained by s 41E of the RCA. I do not consider it necessary to address those matters given the conclusion that I have reached as a matter of statutory construction. I should nonetheless address Mr Cook’s response to that submission, to the effect that:

That response does not seem to me to address the difficulty that s 41E of the RCA has the capacity to prevent a voluntary administrator exercising his or her powers under s 437A(1)(c) of the Act so as to promote the objectives specified in s 435A of the Act and, by extension, a liquidator performing his or her statutory duties to realise the Company’s assets as required by the Act. By contrast, the situation addressed by Mr Cook would readily be addressed by reference to directors’, and indeed a voluntary administrator’s, statutory and general law duties. Ms Anastasiou did not contend that a breach of those duties had in fact occurred here.

In summary, I agree with the views expressed by Barrett J in Re Smith and with the approach taken in the several cases that have followed it, and I find that the Club (as distinct from the Administrators) does not here dispose of core property so as to fall within the requirements of s 41E of the RCA. I am reinforced in that view by the fact that the Company could only itself dispose of its core property in a manner permitted by its constitution or constituent rules, typically by a decision made by its board, subject to any requirement for member approval in general meeting. It is plain enough that the Company itself has not here determined to sell that core property, by its directors or by its members; to the contrary, s 437A(1)(c) has the result that the Company is bound, by statute, by a decision that it has not made and an act that it cannot take for itself and s 41E of the RCA has no application to that decision or that act.

As I noted above, the Administrators alternatively seek a declaration that, by reason of s 109 of the Commonwealth Constitution, s 437A(1)(c) of the Act prevails over s 41E of the RCA in respect of a sale of the Company’s core property by administrators. Although this question does not arise, on the findings that I have reached, I will address it briefly against the contingency that an appellate court may take a different view.

Section 109 of the Constitution provides that:

Mr Hutton points out that inconsistency may at least be established by “direct inconsistency” where the State law would “alter, impair or detract from” the operation of the Commonwealth law: Work Health Authority v Outback Ballooning Pty Ltd (2019) 266 CLR 428; [2019] HCA 2 at [32]. It is not necessary to address any other bases for inconsistency here. Mr Hutton points out that s 5E of the Act applies where a State or Territory law can operate concurrently with the Act; and s 5G of the Act applies where a State or Territory law is directly inconsistent with the Act. The latter section has the effect that a State provision which commences after the commencement of the Act; is not capable of operating concurrently with the Act; and has not been declared by a law of the State to be a Corporations legislation displacement provision, will be displaced by the provision in the Act.

Mr Hutton submits that:

Mr Hutton further submits that s 41E(1) of the RCA is directly inconsistent with s 437A(1)(c) of the Act, where it would directly cut down an administrator’s broad powers under that section in respect of a registered club’s core property. He also submits that:

Mr Cook responds that:

In reply, Mr Hutton responds that:

It seems to me that the difficulty with Ms Anastasiou’s position in this respect is that the relevant inconsistency arises because Pt 5.3A of the Act, and at least ss 435 and 437A, authorise the sale of the Company’s property by the Administrators to promote the interests identified in s 435A of the Act, including the return to the Company’s creditors and the continuance of the Company’s business, and s 41E of the RCA prioritises a different interest, namely members’ interest in reaching their own decision as to whether the Club’s property should be sold or not. The priority given to members’ decision under s 41E of the Act would have the plain consequence that members are free to prefer that the Company retains its property at the risk of continuing insolvency or a lesser return to creditors and would plainly limit the scope of the Administrators’ power under s 437A(1)(c) of the Act and undermine the objectives specified in s 435A of the Act. That is sufficient to give rise to the relevant inconsistency for the purposes of s 109 of the Constitution if, contrary to my view, s 41E of the RCA had the operation for which Ms Anastasiou contends.

Mr Cook also relies on Banerjee v Commissioner of Police (2018) 98 NSWLR 730; [2018] NSWCA 283 (“Banerjee”) which dealt with the interaction between s 437A of the Act and a State licencing regime under the Security Industry Act 1997 (NSW). He submits that:

Mr Hutton responds, in reply, that:

I do not accept that Banerjee assists the position put by Ms Anastasiou. Here, s 437A(1)(c) of the Act authorises the Administrators’ sale of the Company’s property in order to advance the objectives set out in s 435A of the Act; and s 41E of the RCA seeks to constrain that sale, so that it cannot occur without member approval in respect of core property, or another exception, including potentially the approval of the Director-General. The possibility, to which Mr Cook points, that an inconsistency might be avoided in a particular case, because members approved the sale of the core property or because the Director-General granted a relevant exception, does not exclude the direct inconsistency which exists in the general case. In oral submissions, Mr Cook also submits (T34) that no inconsistency would arise, for the purposes of s 109 of the Constitution, if a statutory provision simply limited the circumstances in which the Club’s property was sold, for example, by requiring the removal of asbestos prior to a sale, and undertook a detailed review of Banerjee and further case law to support that submission. Mr Hutton did not contend to the contrary. Mr Cook also developed a further alternative submission that any conflict between s 437A of the Act and s41E of the RCA can be resolved by preferring the specific to the general. I do not accept that submission, where to do so would have the consequences to which I referred in paragraph 48 above.

For these reasons, if, contrary to the conclusion that I have reached, s 41E of the RCA had the effect for which Ms Anastasiou contends, I would have held that it was inconsistent with and displaced by s 437A(1)(c) of the Act in respect of the exercise of a voluntary administrator’s exercise of a power to sell the core property of a registered club that was incorporated under the Act.

I direct the parties to bring in agreed short minutes of order to give effect to this judgment within three business days.