In the matter of Keybridge Capital Limited - [2025] NSWSC 240

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Keybridge Capital Limited [2025] NSWSC 240
Hearing dates: 5 – 7 March 2025
Date of orders: 21 March 2025
Decision date: 21 March 2025
Jurisdiction: Equity - Corporations List
Before: Nixon J
Decision:
(1)   Declare that:
(a) on 10 February 2025 at 4:30pm, Keybridge validly held a meeting of its members convened in accordance with s 249F of the Act;
(b) at the Section 249F Meeting, the members of Keybridge resolved that Mr Bolton, Mr Patton and Mr Dukes be removed as directors of Keybridge and that Mr Wilson, Mr Hamilton, Mr McCathie and Mr Ravell be appointed as directors of Keybridge; and
(c)   following the Meeting on 10 February 2025, the directors of Keybridge were:
(i) Mr Catalano;
(ii)   Mr Wilson;
(iii) Mr Hamilton;
(iv)   Mr McCathie; and
(v)   Mr Ravell
(2)   Stand over the proceedings for directions to 1 April 2025 at 9.15am before Nixon J.

Catchwords:
CORPORATIONS – general meetings – meeting convened by notice given to members – business of meeting was to consider resolutions to remove and replace directors – directors knew that sufficient proxies cast for resolutions to be carried – directors resolved to appoint a voluntary administrator on the evening before the meeting – chairperson, who was a director, opened the meeting and purported to adjourn the meeting sine die without putting any resolutions to shareholders – following purported adjournment, shareholders present at meeting purported to elect new chairperson who put resolutions to a vote – whether purported adjournment sine die was within power – whether purported adjournment was for a proper purpose – whether meeting continued following purported adjournment – whether resolutions were passed
CORPORATIONS - voluntary administration – whether there was a proper basis for directors to form the opinion that the company was insolvent or likely to become insolvent – whether the administrator was appointed for an improper purpose – whether, if the appointment was valid, the Court should order that the administration is to end

Legislation Cited:
Corporations Act 2001 (Cth) ss 140, 173, 203D, 249F, 250V, 250W, 436A, 447A, 447C, 448C, 606, 1305, 1322.

Cases Cited:
Australian Karting Association Ltd v Karting (New South Wales) Incorporated [2022] NSWCA 188
Australian Money Exchange Pty Ltd (in liq) v Llewellyn [2024] VSC 511
Australian Securities and Investments Commission v Planet Platinum Ltd [2016] VSC 120
Byng v London Life Association Ltd [1990] Ch 170
Cadwallader v Bajco Pty Ltd [2001] NSWSC 1193
Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607
Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546
Commonwealth Bank of Australia v Fernandez [2010] FCA 1487
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
HNA Irish Nominee Ltd v Kinghorn [2010] FCAFC 57
Howard Smith Ltd v Ampol Petroleum Ltd [1974] UKPC 4; [1974] AC 821
In the matter of Condor Blanco Mines Ltd [2016] NSWSC 1196
In the matter of Condor Blanco Mines Ltd (No. 2) [2016] NSWSC 1304
Intergen Energy Holdings (Australia) Pty Ltd, Re Intergen Energy Holdings (Australia) Pty Ltd [2017] FCA 445
Investa Listed Funds Management Ltd [2018] NSWSC 1391
Kazar v Duus (1998) 88 FCR 218
Lancedale Holdings Pty Ltd v Health Group Australia Pty Ltd [1999] NSWSC 609
McKerlie v Drillsearch Energy Ltd [2009] NSWSC 488
National Dwelling Society v Sykes [1894] 3 Ch 159
Onefone Australia v One.Tel [2010] NSWSC 401
Re Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244
Re Re1 and Re2 (No 3) [2014] NSWSC 762
Smith v Paringa Mines Ltd [1906] 2 Ch 193
St George Bank Ltd v Rangers Club of NSW Inc (1995) 18 ACSR 370
VRM Global Holdings Pty Ltd v Savannah AG Research Pty Ltd (admins apptd), in the matter of Savannah AG Research Pty Ltd [2023] FCA 131
Whitehouse v Carlton Hotel Pty Ltd(1987) 162 CLR 285; [1987] HCA 11.
Wishart v Henneberry (1962) 3 FLR 171
Young v Cotter [1996] NSWCA 573

Category: Principal judgment
Parties:
WAM Active Limited (First Plaintiff)
Geoffrey James Wilson (Second Plaintiff)
Jesse Michael Hamilton (Third Plaintiff)
Martyn McCathie (Fourth Plaintiff)
Keybridge Capital Limited (Administrator Appointed) (First Defendant)
Gideon Isaac Rathner (Second Defendant)
Nicholas Francis John Bolton (Third Defendant)
John Dean Patton (Fourth Defendant)
Frank Antony Catalano (Fifth Defendant)
Richard Michael Dukes (Sixth Defendant)
Sulieman Ahmad Sulieman Ravell (Seventh Defendant)
Representation:
Counsel:
J S Emmett SC / D Krochmalik / D J Monteith (Plaintiffs)
G Gee (First and Second Defendants)
A T Broadfoot KC / A Byrne / A Osborn Brodie (Third, Fourth and Sixth Defendants)
Solicitors:
Mills Oakley (Plaintiffs)
Tisher Liner FC Law (First and Second Defendants)
Cornwalls (Third, Fourth and Sixth Defendants)

File Number(s): 2025/00054507

JUDGMENT

This proceeding involves a challenge to the appointment of a voluntary administrator to the First Defendant, Keybridge Capital Limited, which occurred on the evening before a meeting of Keybridge’s members to consider resolutions to remove and replace its directors, and a challenge to the purported adjournment of that meeting on the following day, prior to any business being conducted.
The First Plaintiff, WAM Active Limited, is a public company listed on the Australian Stock Exchange (ASX). WAM, together with its associated entities, currently holds approximately 43.5% of the total shares on issue in Keybridge.
Keybridge is also a public company listed on the ASX, although its shares are currently suspended from trading (and, with the exception of two days in August 2024, have been so suspended since 1 March 2024).
On 19 December 2024, WAM issued a notice of general meeting of shareholders of Keybridge pursuant to s 249F of the Corporations Act 2001 (Cth) (the Act) to be held at 10.00am on Monday, 10 February 2025 (the Section 249F Meeting). This notice stated that the business of the meeting was to consider and, if thought fit, to pass resolutions:

to remove Mr Nicholas Bolton (the Third Defendant), Mr John Patton (the Fourth Defendant), Mr Frank Antony Catalano (the Fifth Defendant) and Mr Richard Dukes (the Sixth Defendant) as directors of Keybridge (the Incumbent Directors); and

to appoint Mr Geoffrey Wilson (the Second Plaintiff), Mr Jesse Hamilton (the Third Plaintiff), Mr Martyn McCathie (the Fourth Plaintiff) and Mr Sulieman Ravell (the Seventh Defendant) as directors of Keybridge (the Proposed Directors).

On Sunday, 9 February 2025, the Incumbent Directors unanimously passed a resolution to appoint the Second Defendant, Mr Gideon Rathner, as voluntary administrator of Keybridge. This step was taken on the evening before the Section 249F Meeting was to be held, and after the time for shareholders to submit proxy votes on the resolutions proposed for that meeting had closed. At that time, proxies in respect of more than 50% of the total shares on issue in Keybridge had been received in favour of the resolutions to remove the Incumbent Directors (other than Mr Catalano) and to appoint the Proposed Directors.
On Monday, 10 February 2025 at 9.16am, Keybridge announced to the ASX that Mr Rathner had been appointed as voluntary administrator.
On the same day at around 4.30pm, the Section 249F Meeting opened as scheduled, with Mr Patton as chairperson. He then purported to adjourn the meeting “to a later date” with details of the new time to be provided “in due course”, without putting any of the resolutions to a vote. Shareholders who were present objected to the adjournment and purported to elect a new chairperson, Mr Hamilton. He proceeded to read out the resolutions and put them to a vote. Mr Hamiton declared that all of the resolutions were passed, with the exception of the resolution to remove Mr Catalano.
On 12 February 2025, WAM sent a letter addressed to the directors of Keybridge which was headed “Comfort letter with respect to the debts and liabilities of the Company” (Letter of Comfort). In the Letter of Comfort, WAM gave undertakings that, subject to the conditions set out in that letter, if Keybridge requested an amount of equity or shareholder loans from WAM because it was unable or likely to be unable to pay a debt or liability from its own moneys, WAM would provide the requested amount in cash within 15 business days of the request. The conditions, which are discussed further below, included that the Incumbent Directors (other than Mr Catalano) had been removed as directors, and the Proposed Directors had been appointed as directors.
This proceeding was commenced by WAM on 11 February 2025, the day following the Section 249F Meeting. WAM seeks declarations that, as a result of the resolutions passed at the Section 249F Meeting, the Incumbent Directors (other than Mr Catalano) were removed and the Proposed Directors were appointed. WAM also seeks an order, pursuant to s 447A or s 447C of the Act, that the purported appointment of Mr Rathner as voluntary administrator of Keybridge was void, invalid and of no effect, or alternatively an order that, pursuant to s 447A, the administration of Keybridge is to end with immediate effect. In addition, WAM seeks an order that each of Mr Patton, Mr Bolton and Mr Dukes indemnify Keybridge for the costs, expenses and remuneration of Mr Rathner in his role or purported role as administrator of Keybridge.
Each of Mr Catalano and Mr Ravell filed a submitting appearance.
The Plaintiffs served a document headed “Plaintiffs’ issues or contentions”, which identified the propositions which they sought to establish on this application, and which provides a useful framework for determining the dispute. Those propositions fall into two categories, namely, propositions relating to the “purported adjournment” of the Section 249 Meeting and propositions relating to the “purported appointment” of Mr Rathner as voluntary administrator, as follows:

Purported adjournment of Section 249F Meeting

Mr Patton, as the initial chair of the meeting, had no power to adjourn the Section 249F Meeting sine die.
Mr Patton’s purported adjournment was not in good faith for a proper purpose.
By reason of (1) or (2) above, the purported adjournment was invalid, the meeting proceeded and the Court should declare that the results are as have been declared by Mr Hamilton.

Purported appointment of Mr Rathner as Administrator

The board of Keybridge did not properly and genuinely form the opinion that Keybridge was insolvent or was likely to become insolvent at some future time.
The board of Keybridge purportedly appointed the voluntary administrator, Mr Rathner, for an improper purpose.
Even if the appointment of the voluntary administrator was valid, the Court should order that the administration is to end under s 447A of the Act.

As regards Issue 4 above, the Plaintiffs acknowledged, in opening written submissions in reply, that the material before the board of directors of Keybridge (Board) on 9 February 2025, which was exhibited to the Defendants’ affidavits, “provided a basis for believing that Keybridge may have been insolvent”. As regards Issue 6, WAM also accepted that “the Court should proceed on the basis that, but for WAM’s letter of comfort, Keybridge may presently be insolvent from a cash flow perspective (even though, on a balance sheet basis, its assets exceed its liabilities)”.
Before addressing each of the remaining propositions advanced by WAM, I will make some brief comments about the witnesses and then set out the events leading up to the appointment of Mr Rathner as voluntary administrator and the holding of the Section 249F Meeting, based primarily upon the documentary evidence.

Witnesses

WAM read a number of affidavits in support of its application, including affidavits of Mr Hamilton and of WAM’s solicitor, Ms Reid.
Each of Mr Hamilton and Ms Reid was cross-examined. There was no substantial challenge to the reliability of any aspect of their evidence.
Each of Mr Rathner, Mr Patton, Mr Bolton and Mr Dukes was also cross-examined. There was no challenge to the credit of Mr Dukes.
In respect of Mr Rathner, there were various aspects of his evidence which were said to be unreliable or improbable. I address these issues where they arise below, insofar as they are material.
In respect of Mr Patton and Mr Bolton, Senior Counsel for the Plaintiffs made the following submission in his closing address in reply:

“…for the avoidance of doubt we say very squarely the Court would place no weight on the evidence of Mr Patton or Mr Bolton unless adverse to their interests or supported by independent written evidence, not a document created by themselves. …
As I said, there were a number of matters that you would not accept and we do say to the extent that the defendants' case relies on asking your Honour to accept unsupported oral evidence given yesterday from one of those two witnesses, your Honour would not do so.”

While the Plaintiffs challenged numerous aspects of the evidence of Mr Bolton and Mr Patton regarding the terms of conversations or regarding their state of mind at the time of the critical events, the Plaintiffs did not articulate any basis for the Court to make a global credit finding that the evidence of either of them should be disregarded. I have not made any such finding.
Instead, where the Plaintiffs in the course of cross-examination and submissions challenged specific aspects of the evidence of Mr Bolton and Mr Patton (in particular, concerning their state of mind at the time of the key events), I have assessed such evidence on the basis of contemporary materials, objectively established facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] per Gleeson CJ, Gummow and Kirby JJ.

Events leading up to Section 249F Meeting

Winding up application is rejected

On 27 November 2024, I delivered reasons for judgment in respect of WAM’s application for Keybridge to be wound up, or alternatively for leave to pursue a derivative action against the Incumbent Directors (other than Mr Dukes) alleging breaches of director’s duties (the Winding Up Proceeding): WAM Active Limited v Keybridge Capital Limited (No 2) [2024] NSWSC 1496.
I granted leave to bring the derivative action, but dismissed the winding up application.
In respect of the application to wind up Keybridge in insolvency, I found that Keybridge was solvent as at the date of the hearing (at [184]). Relevant matters included that Keybridge had demonstrated an ability to raise equity capital, with WAM having indicated in October 2024 that it was willing to participate to the full extent of its pro rata entitlement in a proposed capital raising; and that Keybridge had demonstrated an ability to obtain bridging finance pending any such capital raising, as shown by an indicative term sheet from Roadnight Capital Pty Ltd (at [183], referring to [125] and [130]). Further, Keybridge had borrowed funds from Yowie Group Ltd, which led to it having significant cash at bank at the time of the hearing (at [176]). Keybridge has a relevant interest of 78.359% in Yowie, and Mr Patton and Mr Bolton were two of the three directors of Yowie, being, respectively, the Chairman and the Chief Executive Officer. The funds loaned by Yowie were repayable on demand. However, WAM’s solvency expert, Mr Olde, acknowledged that, on the basis that Yowie is majority owned by Keybridge, there may be an opportunity to seek forbearance from Yowie in respect of this loan (at [154]). Further, Mr Patton gave evidence at the hearing regarding the financial health of Yowie (at [178]).
In respect of the application to wind up Keybridge on the just and equitable ground, I found (at [288]) that insofar as there has been mismanagement of Keybridge’s affairs by Mr Bolton, Mr Patton and Mr Catalano regarding the matters at issue in that proceeding (being an issue which I did not determine), this was a matter which could be addressed by the derivative suit; and that, in those circumstances, the grant of leave to bring that suit was a sufficient remedy for any oppression in the management of Keybridge’s affairs by those directors. In reaching this conclusion, I noted (at [287]) that WAM did not advance a submission that, as the largest shareholder, it was shut out of any say in the management of Keybridge.
In this regard, I referred to the fact that WAM had previously nominated Mr Wilson, Mr Hamilton and Mr McCathie for appointment as directors of Keybridge, but had withdrawn those nominations before the 2022 Annual General Meeting, and added that:

“On 31 October 2024, Keybridge issued a Notice of AGM, which is to be held on Friday, 29 November 2024. The resolutions to be put to shareholders at the AGM include a resolution to elect Mr Dukes as a director (which is required under Keybridge’s constitution, as he was appointed by the board); a resolution to re-elect Mr Catalano as a director; and an advisory non-binding resolution to adopt the remuneration report (being a resolution in respect of which each director and any closely related party of a director is excluded from voting their shares). In addition, the Notice of AGM includes a contingent resolution to hold a board re-election meeting. That is because, at the 2023 AGM, the remuneration report was not passed by shareholders. This constituted a ‘first strike’. If at least 25% of the votes cast at the 2024 AGM are against adopting the remuneration report, this will constitute a ‘second strike’, and the resolution to hold a board re-election meeting (a ‘spill resolution’) will be put to shareholders as an ordinary resolution pursuant to s 250V of the Act. The consequences of a ‘spill resolution’ being passed are set out in s 250W of the Act. It is uncertain how these matters will play out at the 2024 AGM.”

There was evidence at the present hearing that WAM and its associated entities had a relevant interest of around 43.5% in Keybridge; and that Mr Catalano and his associated entities had a relevant interest of around 10.36% in Keybridge. Mr Patton gave evidence in cross-examination that Mr Catalano had been indicating, since around the middle of 2024, that he might vote with WAM to change the composition of Keybridge’s board. Mr Patton acknowledged that he was aware at all relevant times that, if Mr Catalano agreed with WAM that the directors of Keybridge should be removed and replaced, then they had, between them, the votes to do so.

Steps by WAM to change directors of Keybridge

On 27 November 2024, being the day that judgment was delivered in the Winding Up Proceeding, WAM served on Keybridge a notice of its intention to nominate each of the Proposed Directors for election to the office of a director of Keybridge and requested a copy of the members’ register of Keybridge.
On 29 November 2024, Keybridge’s 2024 Annual General Meeting (2024 AGM) was held. On that day, Keybridge announced to the ASX that at the 2024 AGM:

the resolution to adopting the remuneration report had not been passed (thereby triggering the requirement to put the spill resolution); and

the spill resolution had not been passed, with 48.83% voting in favour, 51.13% against and 0.04% abstaining.

On 9 December 2024, Mr Bolton refused WAM’s request for a copy of Keybridge’s members’ register.
On the same day, WAM served a notice on Keybridge pursuant to s 203D(2) of the Act of its intention to move resolutions at the next general meeting of Keybridge to remove each of the Incumbent Directors.
On 12 December 2024, WAM commenced a proceeding against Keybridge in this Court numbered 2024/462647 (Capital Raising Restraint Proceeding). The relief sought in the Capital Raising Restraint Proceeding included an order that Keybridge provide its members’ register to WAM; a declaration that the spill resolution had been passed at the 2024 AGM; and an injunction restraining Keybridge, until seven days after a meeting of its shareholders is held pursuant to s 249F of the Act, from issuing any equity securities other than by a pro rata issue in accordance with ASX Listing Rule 10.12 Exception 1.

On 16 December 2024, Keybridge gave undertakings in the Capital Raising Restraint Proceeding, without admission, that it would provide its members’ register to WAM and would hold a spill meeting within 90 days of 27 November 2024; and the Court made orders listing the balance of the relief sought in the Originating Process for hearing before me on 10 February 2025.
On 17 December 2024, Keybridge announced to the ASX amended results for the resolutions put at the 2024 AGM, including announcing that the spill resolution had passed, with 48.83% in favour, 34.81% against, and 16.37% abstaining. Having regard to the minutes of a Board meeting on 16 December 2024, the change in the outcome of the poll appears to have been explained by Keybridge having initially counted votes cast on the spill resolution which were cast by Mr Bolton, Mr Catalano and their associates, when such votes “ought to have been removed”.
Although the undertakings in the Capital Raising Restraint Proceeding which are referred to in paragraph [32] above were given without admission, Black J noted, in his judgment on costs in the Capital Raising Restraint Proceeding, that if Keybridge had not given the relevant undertakings:

the Court would likely have found that Keybridge had failed to comply with s 173 of the Act as to providing a copy of its members' register, in circumstances where Mr Bolton did not have a basis for refusing or delaying compliance with that section; and

the Court would also likely have found, and Keybridge would likely have been obliged to concede, that Keybridge was required to call a spill meeting (having regard to the amended voting result announced to the ASX): In the matter of Keybridge Capital Limited [2025] NSWSC 8 at [8].

On 19 December 2024, WAM issued a notice of general meeting of Keybridge shareholders under s 249F of the Act, to be held at 10.00am on 10 February 2025 (Section 249F Notice). The notice stated that the business of the Section 249F Meeting was to consider and, if thought fit, to pass resolutions to remove each of the Incumbent Directors and to appoint each of the Proposed Directors.
The Section 249F Notice specified that proxies must be received by no later than 5.00pm on Thursday, 6 February 2025. The Explanatory Memorandum accompanying the Section 249F Notice identified the reasons why WAM had called the Section 249F Meeting, including WAM’s concerns regarding the transactions which are the subject of the derivative suit.
On 24 December 2024, Keybridge issued an announcement to the ASX, which referred to the Section 249F Notice and stated that: “Keybridge continues to be disappointed in WAM Active’s ongoing conduct to frustrate the operation of the Company for what appear to be uncommercial purposes.”

Spill Meeting and Resolution 7

On 3 January 2025, Keybridge issued a notice of a general meeting of shareholders to be held on Monday, 3 February 2025 at 10.00am (that is, one week before the Section 249F Meeting). The resolutions to be put at this meeting (the Spill Meeting) included resolutions for the re-election of each of the Incumbent Directors (other than Mr Bolton) as a director of Keybridge. The Explanatory Statement stated as follows:

“Each of the Company’s current directors (excluding the Managing Director), who were in the office when the directors resolved to approve the Company’s Remuneration Report (being Mr John Patton, Mr Antony Catalano and Mr Richard Dukes), will cease to hold office immediately before the end of the meeting and will stand for re-election. Those directors re-elected at the meeting will continue holding office at the end of the meeting.
If a director is re-elected in these circumstances, the Corporations Act provides that the term of office of the director will not be affected, and directors will be subject to retirement and re-election at an AGM of the Company as if the cessation and appointment at the meeting had not occurred.”

Mr Bolton’s position as Managing Director was not affected by the passing of the spill resolution, by reason of s 250V(1)(b)(ii) of the Act.
The notice for the Spill Meeting also including the following resolution, described as “Resolution 7 – Approval to issue New Shares” (Resolution 7):

“That pursuant to and in accordance with Listing Rule 10.11, Shareholders approve the issue of an aggregate of up to 28,327,275 New Shares at an issue price of 5.5 cents per share to certain Directors (or their nominees) and Wilson Asset Management (and its associated entities), subject to the Corporations Act, as follows:
(i)    4,004,479 New Shares to Wilson Asset Management (and its associated entities)
(ii)    up to 3,404,612 New Shares to Mr Antony Catalano (and/or his nominees); and
(iii)    up to 20,918,184 New Shares to Mr Nicholas Bolton (and/or his nominees);
on the terms and conditions in the Explanatory Statement”.

The Explanatory Statement referred to the number of shares to be issued pursuant to Resolution 7, and indicated that the effect of the proposed placement would be, relevantly, to decrease the voting interest of WAM and its associated entities from 43.52% to 40.11%, and to increase the voting interest of Mr Bolton and his associated entities from 4.29% to 12.38%. The Explanatory Statement said that WAM and its associated entities “were offered 13,615,227 (44.05%) of the total shares proposed for issue and only opted to take up 4,004,479, subject to shareholder approval”.
The Explanatory Statement further stated that:

“The proceeds from the issue of the New Shares are intended to be used towards meeting the extraordinary legal costs associated with the WAM legal action against the Company, debt reduction and general working capital purposes.
…
If Resolution 7 is not passed, … the Company may need to seek an alternative means of raising the additional capital.”

The notice for the Spill Meeting stated that proxies must be received by 10.00am on Saturday, 1 February 2025.
By an announcement to the ASX dated 10 January 2025, Keybridge stated that the meeting time for the Section 249F Meeting was changed from 10.00am to 4.30pm on 10 February 2025, by reason that there was scheduled to be a hearing in the Capital Raising Restraint Proceeding on that day. The ASX announcement set out the Incumbent Directors’ recommendation that shareholders vote against all of the resolutions at the Section 249F Meeting. In addition, the ASX announcement stated that Keybridge considered that WAM and its associated entities and its nominated director Mr Ravell have “breached s. 606 of the Corporations Act by going from a voting interest in Benjamin Hornigold Limited below 20% to a voting interest above 20% by virtue of the association”.
Keybridge subsequently issued a replacement notice for the Section 249F Meeting with the changed meeting time. This notice stated that proxies had to be received by 4.30pm on Saturday, 8 February 2025.
On 14 January 2025, the solicitors for WAM wrote to Keybridge’s solicitors, Gadens, stating (among other things) that WAM wanted a third party scrutineer to be appointed for each of the Section 249F Meeting and the Spill Meeting.
On 17 January 2025, Mr Bolton provided a copy of Keybridge’s members’ register to WAM.

Injunction in respect of Resolution 7

On 20 January 2025, WAM filed an application in the Capital Raising Restraint Proceeding, seeking an injunction to restrain Keybridge from holding a general meeting to vote on Resolution 7. In the supporting affidavit, WAM’s solicitor, Ms Reid, deposed that WAM was never invited to, and had not agreed to, participate in “the capital raising in the dilutory form described in resolution 7”; and that WAM was concerned that:

Keybridge had, with notice of the Section 249F Meeting, called the Spill Meeting for the week prior to the Section 249F Meeting; and

Keybridge was proposing to issue 9.97% of its total issued capital to Mr Bolton (or his nominees), who was the subject of a resolution seeking his removal as a director which was to be put at the Section 249F Meeting.

On 21 January 2025, WAM’s solicitors repeated the request that Keybridge appoint an independent observer for each of the Spill Meeting and the Section 249F Meeting. (On 28 January 2025, WAM’s solicitors followed up on this request, having not received any response.)
On 22 January 2025, Keybridge announced to the ASX that the Spill Meeting (including Resolution 7) which had been scheduled for 3 February 2025 at 10.00am would now be held on 4 February 2025 at 4.30pm.
On 30 January 2025, WAM’s application for an interlocutory injunction restraining Keybridge from putting Resolution 7 to a meeting of its shareholders was heard by Faulkner J (January Court Hearing).
The evidence at the January Court Hearing included an affidavit sworn by Mr Patton on 24 January 2025, in which he deposed that the Roadnight bridging facility was no longer available to Keybridge; that Keybridge owed $4,483,345 plus interest to Yowie; and that Yowie had informed Keybridge that it would “shortly require [its] loans to be repaid, at least in part, so that it can fund its operations”.
Mr Patton also gave evidence, by way of an affidavit sworn on 16 January 2025, that restricting Keybridge’s raising of capital “could materially affect its solvency, especially given the loans which have been advanced by Yowie to Keybridge, which are on an at-call basis”.
In respect of the balance of convenience, Keybridge submitted at the January Court Hearing that it had “urgent needs for capital” to pay discharge liabilities, including to its solicitors, Gadens. However, Keybridge did not, in terms, submit that it was likely to, or might, become insolvent if the Court granted an injunction restraining Keybridge from putting Resolution 7 to a meeting of its shareholders.
Further, Senior Counsel for Keybridge did not dispute that one option that had been available to Keybridge was to raise capital on a pro rata basis, instead stating that Keybridge was not obliged to do so, and was unwilling to do so, having regard to the “very antagonistic relationship” between Keybridge and WAM “over a very lengthy period”:

“HIS HONOUR: But if the objective of Keybridge is to raise money because it’s in desperate need, why does it not simply, … why haven’t they sought to have a capital raising which is pro rata in the sense at the end of it, the voting power of [WAM] will not be diluted?
[SENIOR COUNSEL FOR KEYBRIDGE]: Your Honour, perhaps there are a few points to make. One is that the urgency of the capital climate has increased over time.
HIS HONOUR: Yes.
[SENIOR COUNSEL FOR KEYBRIDGE]: What has become urgent is the requirement to pay Gadens by 5 February. … and … there was no requirement for any capital raising to be pro rata.
HIS HONOUR: There’s no legal requirement but you’re in desperate need of money. There is a strong commercial requirement to raise the money on terms acceptable to WAM. Why not simply go down that path?
[SENIOR COUNSEL FOR KEYBRIDGE]: Because the misconception perhaps which may arise in this context is that [Keybridge]is under no obligation to come to an agreement with one of its shareholders as to how to raise capital.
HIS HONOUR: There’s no legal obligation. I’m asking about the commercialities. You’re in desperate need of money. If it’s raised on a pro rata basis in the sense that I’ve described, it’s harmless from Mr Bolton’s point of view, and the problem which you are contending will constitute weighty prejudice if the meeting is constrained wouldn’t exist.
[SENIOR COUNSEL FOR KEYBRIDGE]: The company and the board’s obligation is to act in the best interests of the company, not to cater for the desires of one shareholder.
HIS HONOUR: No.
[SENIOR COUNSEL FOR KEYBRIDGE]: And of course, the Court does not have before it all of the commercial circumstances that may be relevant to the board’s consideration about whether to pursue one particular funding model or another.
HIS HONOUR: Yes.
[SENIOR COUNSEL FOR KEYBRIDGE]: But the starting point we say is that there should not be an assumption that the only commercially satisfactory result would be one that [WAM]agrees with.
HIS HONOUR: No.
[SENIOR COUNSEL FOR KEYBRIDGE]: And indeed, your Honour knows that the parties have had a very antagonistic relationship over a very lengthy period.
HIS HONOUR: Yes, but I’m trying to assess the degree of urgency.
[SENIOR COUNSEL FOR KEYBRIDGE]: Yes.
HIS HONOUR: And I’m considering, I mean, it’s urgent but not urgent enough to do a deal with WAM to raise the capital. …”

On the day of the January Court Hearing, Mr Bolton sent a number of text messages to Keybridge’s solicitors, Gadens, including the following:

“We actually have no cash to pay for anything until this raise completes
Let alone staff and lawyers
The court runs the real risk of a voluntary administrator being appointed
If we can’t raise capital”

On 31 January 2025, Faulkner J delivered ex tempore reasons for judgment and made orders restraining Keybridge, until further order, from putting Resolution 7 to any general meeting of its shareholders. His Honour observed as follows (at [100]-[101]):

“… there doesn’t seem to be any reason I can see in the evidence about why Keybridge could not pursue a capital raising in terms wholly acceptable to WAM and thereby raise the funds Keybridge says it needs urgently. I certainly accept that Keybridge is not obliged to pursue that course legally, but commercially it may be in Keybridge’s interests to do so.
Obviously I do not know all the commercial implications, but it is a matter which may inform the purpose for which resolution 7 is being put.”

His Honour added (at [103]), in relation to Mr Patton’s evidence, that “nowhere does he say that Keybridge does not have other options to raise the necessary funds”.

Takeovers Panel applications

On 21 January 2025, Keybridge lodged two applications with the Takeovers Panel, one in relation to the affairs of Benjamin Hornigold and the other in relation to its own affairs. Keybridge submitted, among other things, that WAM, Mr Ravell, Mr Wilson of WAM, and Mr Glennon of Benjamin Hornigold:

were acting in concert to gain control of assets in Keybridge;

were associates holding collective voting power of 51% in Benjamin Hornigold; and

“have obtained that interest in contravention of s606 of the Act and have orchestrated a s249F meeting to further their agenda”.

On 3 February 2025, the Takeovers Panel declined to conduct proceedings in relation to Keybridge’s applications. The Panel considered “that Keybridge did not demonstrate a sufficient body of evidence of association between all or any” of the persons in question, adding that:

“The Panel also considered that even if an association exists between any or all of the alleged associates (including WAM and Ravell) in relation to the affairs of Keybridge or BHD, it was unlikely to conclude that such an association gives rise to an acquisition of shares through a transaction leading to a contravention of section 606 on the bases submitted in the Applications.”

Further, the Panel considered that even if a contravention of s 606 had occurred, it was unlikely to be in the public interest to make a declaration of unacceptable circumstances, in circumstances where the applications substantially overlapped with matters raised in pending proceedings in this Court and formed part of a broader dispute between WAM and Keybridge.
For those reasons, the Panel “concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances”.

Mr Catalano and WAM indicate voting intentions – Postponement of Spill Meeting

On 31 January 2025, WAM’s solicitors informed Keybridge’s solicitors that WAM had lodged its proxy for the resolutions regarding the re-election of directors to be put at the Spill Meeting, and that it had voted “to remove Mr Patton, only” and had voted “in favour of Mr Dukes and Mr Catalano remaining on the board prior to the 249F Meeting”.
Also on 31 January 2025, Mr Catalano sent Mr Bolton a text message saying that he was going to vote against Mr Patton at the Spill Meeting, and Mr Bolton passed this information on to Mr Patton. Mr Patton was aware of the significance of this development:

“Q. You knew that Mr Catalano's votes together with WAM's votes would be enough to remove you?
A. Absolutely.”

Mr Bolton confirmed in cross-examination that he, too, was aware that “Mr Catalano’s votes and WAMs votes if counted would be enough to remove Mr Patton”.
On 2 February 2025, Mr Bolton and Mr Patton exchanged text messages regarding circumstances in which, according to “ChatGPT”, “a director can’t us[e] their shares to vote to change a board”. It is evident, having regard to Mr Catalano’s recent indication of his voting intentions, that Mr Bolton and Mr Patton were considering whether there was some basis to exclude Mr Catalano’s votes.
At this stage, the Spill Meeting was still scheduled to be held on 4 February 2025. On Saturday, 1 February 2025, Mr Bolton sent an email to the other members of the Board, proposing that the Spill Meeting be postponed. In this email, Mr Bolton stated that the Takeovers Panel had “effectively said whilst we’re in court with WAM on chapter 6 issues we should be raising our [Benjamin Hornigold] chapter 6 issues in that same proceeding”.
On Monday, 3 February 2025, the Board met via GoogleMeet and approved an ASX announcement postponing the Spill Meeting to 18 February 2025 at 10.30am. The minutes of this meeting record that Mr Bolton noted that, whether or not Resolution 7 was passed, in order “to win a shareholder meeting, WAM need to get the support of any one large shareholder (Catalano, Bolton, ASG or Aurora)”.

Consideration regarding power to postpone Section 249F Meeting

On 4 February 2025 at 8.14pm, WAM’s solicitors sent a letter to Keybridge’s solicitors, referring to the ASX announcement postponing the Spill Meeting. WAM’s solicitors noted that rule 7.1(b) of Keybridge’s constitution (Constitution) contained a power to postpone a meeting, but provided that a meeting which is called in accordance with a member’s requisition under the Act “may not be postponed or cancelled without the prior written consent of the persons who called or requisitioned the meeting”. WAM’s solicitors sought confirmation, by 6.00pm on 6 February 2025, that each of Keybridge’s directors undertakes not to:

• “postpone or cancel the 249F Meeting without the prior written consent of WAM Active;
• adjourn the 249F Meeting or any business, motion, question or resolution being considered or remaining to be considered by the 249F Meeting; or
• suspend the proceedings of the 249F Meeting other than a short suspension for the purposes of allowing a poll to be taken or determined.”

On the same evening at 9.26pm, Mr Patton sent the following text message to Mr Bolton:

“looks like any postponement of the 249F meeting requires WAM consent. I’ve double checked and that looks to be the case. [WAM’s solicitors] also state this in their letter received a short time ago”

Later that evening at 10.56pm, Mr Patton and Mr Bolton exchanged further text messages, as follows:

Mr Patton: “The more I think about it, the more I believe you need to talk or meet with Ant [Mr Catalano] to sort things out. You just need to find a way to make it happen”
Mr Bolton: “7.6(d) allows a chairman to postpone before the meeting begins”

Rule 7.6(d) of the Constitution provided as follows:

“The chairperson may postpone the meeting before it has started, whether or not a quorum is present, if, at the time and place appointed for the meeting, he or she considers that:
(1) there is not enough room for the number of members who wish to attend the meeting; or
(2) a postponement is necessary in light of the behaviour of persons present or for any other reason so that the business of the meeting can be properly carried out.”

It appears, from Mr Bolton’s reference to rule 7.6(d) of the Constitution, that he and Mr Patton were considering, on 4 February 2025, whether Mr Patton as chairperson could (notwithstanding the terms of rule 7.1(b)) unilaterally postpone the Section 249F Meeting, without WAM’s consent, before it commenced.
No steps were subsequently taken to postpone the Section 249F Meeting prior to its commencement, whether pursuant to rule 7.6(d) or otherwise.

Concerns regarding solvency – steps towards appointment of voluntary administrator

Mr Dukes gave unchallenged evidence that, on 4 February 2025, he had a lengthy discussion with Mr Patton and Mr Bolton concerning the level of Keybridge’s debt and whether there was any basis for forming the view that Keybridge would be able to pay its debts which were then currently due. Mr Dukes deposed that, during this discussion, he was informed that Keybridge’s debts had risen mainly due to legal cases which were ongoing; that the equity issue proposed by Resolution 7 would not be able to proceed because of the injunction granted on 31 January 2025; and that the Roadnight proposal for bridging finance pending the capital raising could therefore not proceed. Mr Dukes stated that:

“In these discussions it was clear that the company had little cash available, and I had formed the view that the company was simply unable to pay the debts that were due to be paid by it.”

Late on the evening of 4 February 2025, Mr Bolton and Mr Rathner exchanged text messages, arranging to meet on the afternoon of the following day at around 3.00pm.
On 5 February 2025, WAM’s solicitors sent an email to the Court, foreshadowing an expansion of the issues which would need to be considered in the Capital Raising Restraint Proceeding which had been listed for hearing on 10 February 2025, and requesting that the matter be listed for directions on 7 February 2025. The Court responded shortly afterwards that the Capital Raising Restraint Proceeding would be listed for directions before me at 3.00pm on 7 February 2025 and that the hearing on 10 February 2025 would be vacated. The parties were notified that the next available hearing dates were 19-21 February 2025 or 5-7 March 2025.
On 5 February 2025 at 2.35pm, Mr Catalano sent an email to Mr Bolton, Mr Patton and Mr Dukes, which was headed “Financial position”. Mr Catalano stated that it appeared from updates which he had “received over the last few days” that Keybridge “may be in an uncertain financial position”. He referred, among other things, to the injunction restraining Resolution 7 from being put to members and the amount of around $750,000-$800,000 which was owed to Keybridge’s solicitors, who had “put down their pens”. Mr Catalano stated that he was “concerned as a director to ensure that we manage and avoid any risks of trading whilst insolvent in the interests of [Keybridge’s] shareholders and creditors as appropriate”. He outlined various financial information which he required for the purposes of considering Keybridge’s position, and proposed that the provision of this information be discussed at the Board meeting later that day “so that we can be fully up to date on the company’s actions to address its current liquidity issues”.
On the afternoon of 5 February 2025, Mr Bolton met Mr Rathner. Mr Bolton told him that Keybridge was “asset rich and cash poor”, and there was some discussion regarding the matters which had led to Keybridge’s current position including what had changed since the Winding Up Proceeding. Mr Rathner suggested that Mr Bolton obtain Senior Counsel’s advice in relation to solvency, and indicated that, if Keybridge intended to proceed to voluntary administration, Mr Rathner would obtain his own advice relating to solvency and his ability to take an appointment as voluntary administrator. I deal with WAM’s submissions regarding this meeting and regarding Mr Rathner’s prior dealings with Keybridge when considering below the issue of Mr Rathner’s independence.
Following this meeting, Mr Bolton took steps to brief Mr Broadfoot KC to provide an advice on the solvency of Keybridge.
On the evening of 5 February 2025, there was a meeting of the Board of Keybridge. There was an extended discussion regarding the financial position of Keybridge. In the course of this discussion, Mr Catalano “asked if the Company was solvent” and Mr Bolton responded:

“not unless we can raise capital, however the hearing scheduled for 10 February 2025 to resolve the capital raise restriction has now been moved back, with a decision unlikely before mid-March 2025.”

There was also discussion at the Board meeting regarding a claim by Mr Catalano for indemnity in respect of the costs of an investigation by the Australian Securities and Investments Commission (ASIC). In the course of this discussion, there was the following exchange:

“[Mr Bolton] asked [Mr Catalano] what he wants to do at the shareholder meeting. [Mr Catalano] said he doesn’t know and doesn’t want to be pressed on it.”

The meeting of the Board was adjourned at around 8.35pm, with a resumption planned to occur on the following day.

Yowie letter of demand

On 6 February 2025 at 1.12pm, Yowie sent a letter of demand to Keybridge in respect of its loan. Yowie demanded repayment of the outstanding principal of $4,483,345 by 5:00pm on 7 February 2025. I address below, when dealing with the challenge to the appointment of Mr Rathner as voluntary administrator, the circumstances which led to this demand being issued.

Mr Catalano confirms that he will be voting with WAM

On 6 February 2025 at 5.01pm, Mr Catalano sent a text message addressed to Mr Wilson and Mr Hamilton, stating as follows:

“I have been reflecting over some time about Keybridge and its challenges. I have lost confidence in Nick Bolton and the other directors. I know WAM and I haven’t seen eye to eye on some issues but I cannot in good conscience support Bolton on Monday and so I will be voting in favour of the WAM resolutions. I intend to do so immediately after sending this text. I have no desire to remain a director of Keybridge indefinitely but I do feel I have an obligation to shareholders (and also to preserve value in my own shareholding) to help get the company back on track. I think it will be difficult for the incoming directors to clean up the company without the benefit of all the corporate history. I would like you to consider supporting my re-election on this basis. Either way – I will be voting as described as I feel that is in the best interests of all shareholders.”

On the same day at 6.28pm, Mr Rathner sent an email to Mr Bolton, with the following query in relation to the Section 249F Meeting:

“Are you able to inform me of the status of proxies and whether the resolution/s are likely to pass as this may affect the validity of any directors’ resolution to appoint an administrator if the board is materially changed.”

Mr Bolton responded a few minutes later, providing the current proxy report, noting that proxies did not close until 4.30pm on 8 February 2025, and stating as follows:

“Historically WAM have not been able to succeed at a shareholders’ meeting and we have no evidence to suggest they will in this one.”

Around half an hour after this email, the Board meeting resumed at 7.12pm on 6 February 2025. The minutes record that, immediately upon the meeting’s resumption, Mr Catalano “stated that he had contacted Mr Wilson today at 6.00pm to advise that he is voting the same way as WAM and that he had asked [WAM] to support his re-election”.
There was further discussion regarding the solvency of Keybridge. Mr Patton informed the Board that advice was being sought from Mr Broadfoot. The minutes recorded that: “Directors AGREED to wait for the legal advice”. The meeting then closed at 8.30pm.
At around 8.44pm on 6 February 2025, WAM and its associated entities lodged their proxy votes for the Section 249F Meeting, voting in favour of all resolutions other than the resolution to remove Mr Catalano.
Mr Bolton became aware of WAM’s votes later that evening, texting Mr Patton at midnight that: “WAM voted for CAT”. Mr Bolton added the “face with tears of joy” emoji, indicating that he found this turn of events amusing.
On 7 February 2025 at 5.47am, Mr Rathner sent an email to Mr Bolton stating as follows:

“I have reviewed the proxy summary report and it appears to me that based upon the proxies received the vote to replace the directors will succeed. I suggest that you request Counsel to also advise you whether it would be appropriate for the directors to pass a resolution [appointing a voluntary administrator] knowing they may be removed.”

In the same email, Mr Rathner stated that:

“Prior to me providing my consent to act, I will require funding of $1,000,000 to be provided and paid into my trust account together with a trust account authority. The authority will include that I can draw on the funds to cover my time costs, expenses including legal fees at a solicitor/client rate and any costs incurred in the administration of Keybridge … whether or not my appointment is valid.”

In cross-examination, Mr Rathner indicated that he asked for this sum to be paid in trust because he was concerned that the administration “had the potential to be highly litigious”.

Broadfoot Advice regarding solvency

On 7 February 2025, Mr Broadfoot provided written advice to Keybridge on solvency and on the appointment of a voluntary administrator. Mr Broadfoot identified, based on his instructions, various matters which had changed since the Winding Up Proceeding. Mr Broadfoot expressed the opinion that:

“Based on these factors, it seems to me that the directors could form a bona fide opinion that Keybridge is insolvent or likely to become insolvent at some future time, in order to appoint an administrator in the manner contemplated by s 436A of the Corporations Act.”

Mr Broadfoot emphasised that the opinion as to solvency or likely future insolvency is an opinion for the directors to form and stated that, if the directors did form the opinion that Keybridge was insolvent or likely to become insolvent, “then my advice is that a proper and prudent course of action for them to follow, would be to appoint an administrator”.
However, Mr Broadfoot added that it would not be a proper exercise of the power under s 436A “if the directors of Keybridge were to appoint an administrator in order to thwart the passing of any resolutions at the [Section 249F Meeting]”.

Discussion regarding adjournment of Section 249F Meeting

Mr Broadfoot’s advice did not address the issue of the postponement or adjournment or the Section 249F Meeting. Mr Patton deposed that he raised this issue with Mr Broadfoot in a telephone conversation at around 3.15pm on 7 February 2025, following receipt of the written advice. Mr Patton informed Mr Broadfoot that he had “concerns that shareholders were not being properly informed regarding some material matters”, namely:

“a. The Company’s dispute with Mr Catalano regarding the ownership of ACM and the total value of the 16.67% in ACM being worth around $22.5 million which compares with the Company’s current carrying value of nil, as a direct consequence of the dispute with Mr Catalano
b. The Keybridge directors did not agree that ACM belonged to Mr Catalano and required a proper process to be undertaken to determine ownership, and on 6 February 2025, consistent with threats dating back to May 2024, Mr Catalano advised that he had changed his support to WAM and would be voting against the Keybridge directors.
c. WAM voted against their own stated voting preferences, as set out in their Notice of Meeting and Explanatory Memorandum, in support of Mr Catalano’s re-election.”

Mr Patton deposed as follows:

“I asked Mr Broadfoot for his thoughts if I were to raise these matters and concerns at the s 249F meeting on 10 February 2025 and then adjourn the meeting so that shareholders could be properly informed. Counsel advised that no identifiable prejudice flows from an adjournment so that shareholders can be properly informed. Based on this advice, I considered the lesser prejudice for members as a whole materially favoured an adjournment.”

In cross-examination, Mr Patton accepted that, by 7 February 2025, he had formed the view that if he chaired the Section 249F Meeting, he would adjourn it.
There is nothing in the brief provided to Mr Broadfoot, or in his advice, or in the Defendants’ affidavits, to indicate that Mr Broadfoot was told that as at 7 February 2025, Mr Patton and Mr Bolton were aware, as a matter of fact, that by reason of Mr Catalano supporting WAM’s resolutions to remove the Incumbent Directors (other than himself) and to appoint the Proposed Directors, those resolutions would succeed if they were put to the Section 249F Meeting.
Mr Patton set out in his affidavit the background to the dispute regarding “the ownership of ACM”, which had been referred to in his discussion with Mr Broadfoot regarding postponement of the meeting.
Mr Patton explained that, since March 2024, there had been a dispute regarding who owned a 16.67% interest in Australian Community Media (ACM), with Mr Catalano asserting that he owned this stake and Mr Bolton asserting that Keybridge was the owner. The interest was held by a corporate trustee which was wholly owned by Mr Catalano. In May 2024, Mr Catalano had asked Mr Patton, as Chairman of Keybridge, to take steps to resolve this issue and advice had been obtained which had indicated that Keybridge was the owner of the interest. Mr Patton gave evidence that this 16.67% interest in ACM was worth around $22.5m.
In each of its Monthly Net Asset Backing Reports since March 2024, Keybridge had made the following disclosure to the ASX:

“… Keybridge currently holds an investment at nil that could, alternatively, be carried at an equity accounted value of approximately $7.35 million, which equates to approximately 3.5 cents per Keybridge share. There is presently a dispute with the trustee in relation to this investment which Keybridge is working through with the trustee and further details will be provided in due course”.

Directions hearing on 7 February 2025

On the afternoon of 7 February 2025, WAM served an interlocutory process in the Capital Raising Restraint Proceeding, seeking orders for the appointment of an observer for the Section 249F Meeting and an injunction restraining Keybridge from postponing, cancelling or adjourning the meeting.
On the same day at 3.00pm, there was a directions hearing before me in the Capital Raising Restraint Proceeding. Keybridge’s counsel indicated that there would be agreement to the appointment of an observer at the Section 249F Meeting. The application for an injunction to restrain Keybridge from postponing, cancelling or adjourning the meeting was listed on Monday, 10 February 2025 at 9:15am.

Appointment of Administrator

On Sunday, 9 February 2025 at 11.02am, Yowie issued a letter of default to Keybridge in respect of Keybridge’s failure to repay the outstanding principal of the Yowie loan by 5.00pm on 7 February 2025, as required by its letter of demand dated 6 February 2025.
Mr Bolton replied by email shortly afterwards, describing the issue of the letter as “unfortunate”, indicating that Keybridge was “currently working through its liquidity”, and discouraging Yowie “from taking further steps until we have a reasonable opportunity to respond”.
At 11.30am, Mr Patton convened a meeting of the Board for 5.00pm that day and circulated a bundle of documents including the brief to Mr Broadfoot, Mr Broadfoot’s advice on solvency, the correspondence from Yowie, a summary of aged payables and aged receivables, information on Keybridge’s assets and investments, and a cash flow forecast.
On the afternoon of 9 February 2025, Mr Bolton and Mr Rathner exchanged text messages regarding Mr Rathner’s potential appointment as voluntary administrator of Keybridge. Mr Bolton asked if Mr Rathner was “okay on conflicts etc” and Mr Rathner responded as follows: “I just need the funding confirmation and I can send my consent”.
Yowie resolved later that day to provide $150,000 in funding to the administrator of Keybridge.
At the Board meeting on 9 February 2025, the directors of Keybridge considered the financial position of Keybridge. The minutes record that the Board considered Keybridge to be “Insolvent and wealthy”, with “insufficient cash or liquid resources to pay its debts”, and concluded that Keybridge failed the solvency test in s 95A of the Act. The injunction restraining Keybridge from putting Resolution 7 (which was described as having the effect of “preventing the Company from raising capital”) was said to have “result[ed] in the flow on effect of the offer of a debt facility being withdrawn” (namely the Roadnight bridging facility), and these were identified as “significant events impacting the solvency of the Company”. The directors unanimously resolved that Keybridge was insolvent or was likely to become insolvent. The minutes of the meeting record that:

“The Board also considered the upcoming s.249F meeting, however noted that the Company’s solvency and the directors’ duties takes precedence over external events, so this was not a consideration by the Board.”

The minutes record that Mr Patton identified nine “parties considered for the role of Voluntary Administrator”. The first six names on the list were described by Mr Patton as being “too big and too expensive (by a factor of 3-4 times)”. Two other names on the list were “not independent” as they were, respectively, the current auditor and the proposed auditor. That left one candidate (Mr Rathner).
The directors unanimously resolved to appoint Mr Rathner as voluntary administrator, effective immediately.
The minutes recorded that: “The Administrator will likely deal with the s.249F meeting scheduled tomorrow.”
Later on the evening of 9 February 2025, Mr Rathner received $118,000 in his trust account from Yowie to fund the administration, and provided his consent to act as voluntary administrator.

Events of 10 February 2025 prior to Section 249F Meeting

At 12.34am on 10 February 2025, Mr Bolton sent an email to Mr Patton, stating as follows:

“I think you’ll still need to chair the meeting. The administrator can advise you what they want to occur, but the function of the meeting is still run by the company’s Chair.”

On the morning of 10 February 2025, Keybridge sought to make an announcement to the ASX in respect of its dispute with Mr Catalano regarding ACM. The announcement was not released because, as the Head of Listings Compliance at ASX explained in an email to Mr Patton, ASX had concerns regarding various allegations made in the announcement regarding Mr Catalano, adding:

“If you consider that the market needs to be informed about these matters, before release of an announcement, we will also need to be provided with a factual basis for [Keybridge’s] views and an understanding of the respect in which shareholders are not ‘properly informed’.”

Shortly after 9.00am on 10 February 2025, Keybridge announced to the ASX that it had received the letter of default from Yowie and that it had entered into administration.
At 9:15am, the Capital Raising Restraint Proceeding was before Black J. His Honour was informed that Mr Rathner had been appointed as voluntary administrator. The matter was adjourned to 11 February 2025 before me.
At 11.38am, Mr Patton sent Mr Bolton a photograph of a document entitled “Chairman’s Running Sheet” which had been prepared for the Section 249F Meeting. This was, in effect, a draft script for Mr Patton to use at the Section 249F Meeting. There was another version of this script which includes Mr Patton’s handwritten amendments. The statements made by Mr Patton at the Section 249F Meeting, as recorded in the minutes which he prepared, closely followed his amended script. The script included statements by Mr Patton that the meeting was opened and that he “had a number of concerns about this meeting” (which were set out), and concluded with a statement that Mr Patton was exercising his powers as Chairman to adjourn the meeting “until a later date, with details of the new date to be provided in due course”.

Mr Rathner provided a written consent for Mr Patton to chair the Section 249F Meeting. Around an hour before the Section 249F Meeting, Mr Patton informed Mr Rathner that he planned to adjourn the meeting. Mr Rathner did not request any such adjournment or express the view that any such adjournment was necessary or endorse the proposed course, stating in cross-examination that: “I had no view in relation to what he was going to do at the meeting other than to ensure any reference to me was properly presented.”
Mr Rathner confirmed that, although he attended the Section 249F Meeting, he took no active part in it and did not express any views in relation to the business before the meeting or its adjournment:

“Q. You attended the meeting but you took no part in it or made no contribution to it, is that right?
A. That is correct.
Q. May we take it from that you didn't tell the meeting that you would be assisted, as administrator, by the meeting being adjourned?
A. I did not.
Q. You didn't tell anyone at the meeting that you might not implement the will of the shareholders as to the appointment of directors, is that correct?
A. I didn't, I did not.”

Events at the Section 249F Meeting up to “adjournment”

WAM’s solicitor, Ms Reid, attended the Section 249F Meeting and took detailed minutes of that meeting. Mr Patton also produced minutes of the meeting.
There were two main differences between these sets of minutes.
First, Mr Patton’s record of events concludes at the time that he announced that the meeting had been adjourned, whereas Ms Reid’s note records the events which followed that announcement, including Mr Hamilton nominating himself as chairperson and putting to a vote the resolutions to remove the Incumbent Directors and to appoint the Proposed Directors.
Secondly, Mr Patton’s minutes included, at the end, a section headed “Chairman’s Statement”. Mr Patton acknowledged that this section did not represent matters said at the meeting, but instead his comments on various issues which he recorded after the meeting.
Otherwise, insofar as both sets of minutes covered the events leading up to Mr Patton’s statement that the meeting was adjourned, there was only one substantive point of difference which was highlighted in cross-examination of those present, and in submissions, namely, whether Mr Patton indicated that the date of the adjourned meeting would be announced via the ASX (this issue is addressed below).
At the commencement of the Section 249F Meeting, Mr Patton stated that he had received authority from Mr Rathner to chair the meeting, confirmed that a quorum was present, and declared the meeting to be open.
Mr Patton then gave an address to the meeting. According to Mr Patton’s minutes of the meeting, he referred to the fact that Keybridge had been placed into voluntary administration on the previous day, and made the following statement:

“I have raised my concerns with the Administrator, Mr Gideon Rathner, about this meeting including, but not limited to, the following:
• The Company has been trying to raise capital since October 2024, with the proceeds to have been applied to meet (i) the extraordinary unbudgeted legal costs associated with the Court actions brought against the Company by WAM Active Limited (WAM), (ii) debt reduction, and (iii) working capital. The Company also had an offer of debt finance, dependent on a capital raise occurring.
• Keybridge notes the significant impact on its business following WAM’s persistent attempts to thwart the Company from raising capital. The most recent injunctive relief obtained by WAM on 31 January 2025 prevents shareholders from approving a capital raising (which includes share applications and subscription monies received [from] WAM), until the matter can be finally heard. The final hearing date had been set down for today, being 10 February 2025, however on 5 February 2025 this date was vacated by the Court, so the matter is now not likely to be determined until mid-March 2025.
• Consequently, the Company has been prevented from raising capital and the conditional offer of debt finance was withdrawn.
• On 6 February 2025, Yowie Group Ltd (via an independent sub-committee) formally demanded the repayment of (i) interest outstanding, under the Reciprocal Loan Facility (Loan) executed on 23 May 2024, of $80,035.12 and (ii) the Loan principal of A$4,483,345, pursuant to clause 4.1 of the Loan, with repayment to be made by 5pm on 7 February 2025. This has not been paid.
• In each of its Monthly NTA Statements issued since March 2024, the Company has made mention of a dispute with the trustee in relation to an investment held by the Company which is currently carried at nil value. It is material. The Administrator has been made aware of the dispute and it will form part of his investigation.
• On 6 February 2025, WAM voted against their own resolution, and voting recommendation, in support of Mr Catalano.
• Keybridge has concerns that Shareholders are not currently properly informed about the matters pertaining to the Company that are relevant for this meeting.
• Mr Rathner was appointed as the Administrator yesterday and will be considering the Administration process.
• Similarly, director nominees may need time to consider whether to withdraw their consents to act as a director, now that the Company is in Administration.
Consequently, consistent with my powers as Chairman under the Company’s Constitution (rule 7.6), it is my decision (on prior notice to the Administrator) that this meeting be adjourned until a later date, with details of the new date and time to be provided in due course (by announcement to ASX).”

As regards the final paragraph set out above, Ms Reid’s minutes record Mr Patton as having made the following statements:

“Consistent with my powers as chairman under rule 7.6 of the Constitution, it is my decision that the meeting now be adjourned.
…
I adjourn it to a later date that will be notified in due course.”

The main substantive difference between this statement in the two versions of the minutes is that Ms Reid’s minutes do not include the material set out in the parentheses in Mr Patton’s minutes. Each of Mr Reid and Mr Hamilton confirmed in cross-examination that they could not recall Mr Patton adding the words “by announcement to ASX”.
It is unlikely that those additional words were said. The words “by announcement to ASX” do not appear in the script which Mr Patton prepared for use at the Section 249F Meeting, either in the version sent to Mr Bolton or in the version with Mr Patton’s handwritten amendments. Each of those versions of the script instead contains a statement, consistent with Ms Reid’s minutes, that it was Mr Patton’s decision to adjourn the meeting “until a later date, with details of the new date to be provided in due course”. Further, Mr Patton appears to have used parentheses to record matters which he did not state at the time, but which he has later added by way of comment when preparing the minutes. An example is as follows:

“Mr Hamilton stated that JP couldn’t adjourn the meeting without nominating a time and date for the resumption of the meeting. JP replied that the Company constitution doesn’t require this and that the Company will inform shareholders of the date of the resumed meeting shortly (which was promptly done via an ASX Announcement).”

The material in parentheses, which refers to an event after the meeting, plainly does not refer to anything said at the meeting.

The minutes record that, in response to Mr Patton’s statement that the director nominees needed more time to consider their position, Mr Ravell pointed out that three of the four Proposed Directors were present at the Section 249F Meeting (namely, Mr Ravell, Mr Hamilton and Mr McCathie) and that none had withdrawn his consent to act.
Ms Reid’s note records that Mr Hamilton of WAM stated that:

“This is a meeting we called to replace the directors. It has nothing to do with the other things you just described. This is not a proper basis to adjourn the meeting.”

Mr Patton’s minutes record that the meeting was “very disorderly and unruly” and that this provided a further reason to adjourn the meeting. However, at the hearing before me, no submissions were advanced to the effect that any such “unruliness” provided an independent basis for the adjournment (and, as noted above, the decision to adjourn was made in advance of the meeting).
Ms Reid’s minute of the meeting records that, after Mr Patton stated that the meeting was adjourned, he rose from the table at the front of the room, closed the telephone line and walked towards the door. Mr Hamilton then walked up and took a seat in front of the meeting.

Events at the Section 249F Meeting following the “adjournment”

Mr Hamilton stated that: “If Keybridge’s outgoing directors are unwilling or unable to continue the Meeting, the shareholders will elect one of their number to act as Chairman.” Mr Hamilton indicated that he was willing to act as chairperson and Mr Ravell seconded his appointment. Mr Ravell then called Mr Catalano’s phone number, with Mr Catalano participating in the events which followed by that means. Mr Hamilton then read out each of the resolutions in the Section 249F Notice to the meeting. Throughout these events, Mr Bolton and Mr Patton remaining in the meeting room.
A representative of Boardroom, the independent observer who had been appointed to the Section 249F Meeting, recorded the voting of shareholders. According to the poll report, each of the resolutions to remove the Incumbent Directors was passed (other than the resolution to remove Mr Catalano), and each of the resolutions to appoint the Proposed Directors was passed. Approximately 58.08% of shareholders voted in favour of the resolutions that passed, and 41.92% against, with none abstaining.

11 February 2025 – time and date announced for adjourned meeting

On 11 February 2025, Keybridge announced to the ASX that the Section 249F Meeting had, with the consent of Mr Rathner, been convened on the previous day. The announcement continued as follows:

“The Chair outlined a number of concerns to shareholders. In accordance with rule 7.6(f)(1) of the Company’s constitution and prior to any business of the meeting being conducted, the Chair adjourned the meeting at 4.55pm until a later date, with details of the new time and date to be provided to the exchange pursuant to Rule 7.6(i) of the Constitution.
To enable the orderly progression of the Administration, notice is given that the adjourned meeting will be reconvened on 22 April 2025 at 4.30pm at the same location, being the rooftop conference room on level 7, 370 St Kilda Road, Melbourne Vic 3004. This date is 31 days after the estimated conclusion of the Administration (subject to any extension) and pursuant to rule 7.6(k) of the Constitution, an additional Notice of Meeting will be issued in due course.”

On the same day, the Plaintiffs commenced this proceeding.

Issue 1: Power to adjourn meeting?

It is generally accepted that a chairperson has no inherent power to adjourn a meeting in the absence of the consent of the majority of those present: Commonwealth Bank of Australia v Fernandez [2010] FCA 1487 at [27] (Finkelstein J). That is subject to a limited number of exceptions, such as where the chair cannot maintain order or where the meeting place is not large enough to accommodate all those wishing to attend or where a poll has been demanded and it is necessary to adjourn the meeting to enable the poll to be taken: ibid. None of those exceptions was applicable here.
In the present case, Mr Patton did not seek, or obtain, the consent of the majority of those present to an adjournment.
The general power of directors, under a corporate constitution, to manage the company and to exercise its powers does not allow the directors to postpone a duly convened general meeting. For the directors to be able to do that, there must be some express power given to them by the constitution: McKerlie v Drillsearch Energy Ltd [2009] NSWSC 488 at [13] (Barrett J), referring to Smith v Paringa Mines Ltd [1906] 2 Ch 193.
The issue therefore arises as to whether Mr Patton as chairperson adjourned the Section 249F Meeting pursuant to some express power in the Constitution permitting him to do so.
Mr Patton told the Section 249F Meeting that he was adjourning the meeting using his “powers as chairman under rule 7.6 of the Constitution”. Keybridge’s announcement to the ASX on the following day stated that the meeting had been adjourned “[i]n accordance with rule 7.6(f)(1) of the Company’s constitution”. In written and oral submissions, Mr Patton, Mr Bolton and Mr Dukes (the Director Defendants) relied only on rule 7.6(f)(1) in contending that the adjournment was within power.
Rule 7.6(f)(1) of the Constitution provides as follows:

“(f) The chairperson may at any time during the course of the meeting:
(1) adjourn the meeting or any business, motion, question or resolution being considered or remaining to be considered by the meeting either to a later time at the same meeting or to an adjourned meeting; …”

Mr Patton did not adjourn the meeting “to a later time at the same meeting”. Instead, he stated that that he was exercising his power under rule 7.6 by “adjourning to a later date”, with the new date to be provided “in due course”. The issue is whether this amounts to a valid exercise of the power to “adjourn the meeting … to an adjourned meeting”.
WAM submitted that, in order for there to be a valid adjournment under rule 7.6(f)(1), there needed to be “an adjourned meeting” to which the Section 249F Meeting or the business at that meeting was being “adjourned”. WAM argued that an adjournment “to a later date” which was to be provided “in due course” did not involve the adjournment of the Section 249F Meeting “to an adjourned meeting”, but an adjournment sine die, which was not a valid exercise of the power under rule 7.6(f)(1) and was therefore of no effect.
In response, the Director Defendants contended that it was not necessary, in order for rule 7.6(f)(1) to be validly exercised, “to specify any particular date or time at the meeting that is adjourned”, and that it was sufficient to state, as here, to undertake to provide shareholders with details of the adjourned meeting in due course.
In St George Bank Ltd v Rangers Club of NSW Inc (1995) 18 ACSR 370 at 379-380 (affirmed on appeal in Young v Cotter [1996] NSWCA 573), Santow J concluded that a power to adjourn “from time to time” permitted “not only an adjournment for a specified time … but also allows an adjournment ‘at any time’ or, in other words, sine die”.
In contrast, in Onefone Australia v One.Tel [2010] NSWSC 401 at [24], Barrett J held that a power to adjourn “from time to time” required determination of the time and place at which the adjourned meeting would resume. His Honour observed that: “A valid decision to adjourn involves determination and communication of the time and place at which the adjourned meeting will resume, in the sense that the members of the body will come together again ‘to conclude such business as they had already begun’, to use the words of Le Blanc J in R v Mayor Burgesses and Commonalty of Carmarthen (1813) 1 M&S 697 ; 105 ER 260.” His Honour said that, in contrast, a “decision to adjourn sine die is a decision to terminate”.
In Investa Listed Funds Management Ltd [2018] NSWSC 1391 at [17] Black J held that a power to adjourn a meeting to “any time and place” included a power to adjourn sine die; and a similar conclusion was reached by Brereton J in Re Re1 and Re2 (No 3) [2014] NSWSC 762 at [8], [11], in respect of a power to adjourn to “such place and time as the chair thinks fit”.
It was common ground that such authorities were of limited assistance in determining the issue arising in the present case. Ultimately, the task for the Court is to interpret the wording of rule 7.6(f), which is distinct from the wording adopted in those other cases.
A corporate constitution has the effect of a contract between the company and each of its members, the company and each director and secretary, as well as the members amongst themselves: s 140(1) of the Act. In HNA Irish Nominee Ltd v Kinghorn [2010] FCAFC 57 at [42], Keane CJ, Jacobson and Rares JJ observed that:

“The range of surrounding circumstances available as aids to the construction of such a contract is perhaps more limited than in other cases. This is because constitutions, and replaceable rules, can be amended at different times and in different circumstances. In addition, the members who are the corporators at particular times may change. These factors suggest that ordinarily primacy must be given to the objective intention discernable from the language in which the constitution is expressed rather than to other features of the surrounding matrix of fact in which its provisions may have been made.”

The Director Defendants submitted that the language of rule 7.6(f), which dealt with the power to adjourn a meeting, was to be contrasted with the language of rule 7.6(e), which dealt with the power to postpone a meeting.
Rule 7.6(e) required that a “postponement … will be to another time … and may be to another place”, thereby requiring that a new time must be specified in order for a valid “postponement” to occur. In contrast, rule 7.6(f) gave the chair a power to adjourn the meeting “either to a later time at the same meeting or to an adjourned meeting”.
The Director Defendants submitted that this power needed to be read in conjunction with rules 7.6(i)-(k), which provide as follows:

“(i) Where a meeting is postponed or adjourned under this rule 7.6, notice of the postponed or adjourned meeting must be given to the Exchange, but except as provided by rule 7.6(k), need not be given to any other person.
(j) Where a meeting is postponed or adjourned, the directors may, by notice to the Exchange, postpone, cancel or change the place of the postponed or adjourned meeting.
(k) Where a meeting is postponed or adjourned for 30 days or more, notice of the postponed or adjourned meeting must be given as in the case of the original meeting.”

The Director Defendants submitted that rule 7.6(f) required only that there be an “adjourned meeting” and rules 7.6(i)-(k) provided for the details of the adjourned meeting to be notified by way of an ASX announcement (if adjourned for less than 30 days) or by way of both an ASX announcement and a notice to members (if adjourned for 30 days or more).
However, as WAM observed, rules 7.6(i) and (k), which require that notice of the adjourned meeting need not be given to anybody other than the ASX (unless the adjournment is for more than 30 days), operate more coherently in circumstances where rule 7.6(f) requires that, at the time of any adjournment pursuant to that rule, the time of the “adjourned meeting” be specified. If rule 7.6(f) permitted an adjournment sine die, shareholders might be put in a position where they were not told at the meeting when the meeting would resume and did not know either whether they would be sent notice of any adjourned meeting or when the date of any adjourned meeting would be announced to the ASX.
The Director Defendants sought to address those difficulties by contending that Mr Patton informed the meeting that a new date and time would be provided by way of ASX notice and thereby “in effect, committed to the announcement of details for the adjourned meeting (through the ASX) within 30 days”.
However, I have found that it is unlikely that Mr Patton made any statement to the meeting to the effect that the date for the adjourned meeting would be announced via the ASX. Accordingly, at the time of the purported adjournment of the Section 249F Meeting, members were left uninformed about when the meeting would resume, when such a decision on the date for any such resumption would be made, and when or how such a decision would be announced.

In the course of this teleconference, there had been discussion that in respect of the issue “Did Co appt valid” (that is, whether the appointment of Mr Rathner by Keybridge was valid), it would be necessary to obtain “Aff[idavits] from directors at meeting”. On the following day, Mr Abraham sent an email to Mr Catalano’s solicitor, which was copied to Mr Broadfoot. Mr Abraham stated that he acted for Keybridge and Mr Rathner, and “attach[ed] for [Mr Catalano’s] consideration a draft affidavit settled by Andrew Broadfoot KC”. The email continued: “Our client is concerned that, in circumstances where WAM has alleged that the Administrator was appointed for an improper purpose, any failure by directors to file affidavit material could lead his Honour drawing adverse inferences”. Mr Rathner said in cross-examination that this email was not sent on his instructions and was sent without his knowledge. I consider it unlikely that solicitors and counsel would take a step of preparing a draft affidavit, and incurring the costs involved in doing so, without instructions. It is likely that Mr Rathner agreed to this work being undertaken in the teleconference on the previous day (involving Mr Rathner, Mr Abrahams and Mr Broadfoot) where those present had discussed the need to prepare affidavits for the directors who were present at the board meeting, including Mr Catalano.

Mr Bolton also gave evidence that he was assisted in settling his affidavit by Mr Broadfoot, at a time when Mr Broadfoot was retained by Keybridge. Mr Rathner gave evidence that this work was also undertaken without his instructions. For the reasons given above, it is likely that such instructions were in fact given.

When Mr Rathner and Keybridge filed opening written submissions, they did not adopt a position of neutrality, such as an administrator should normally adopt on this type of application (see In the matter of Condor Blanco Mines Ltd (No. 2) [2016] NSWSC 1304 at [8]-[11] (Barrett AJA)). Instead, the submissions addressed the issues raised by the Plaintiffs concerning whether there was a proper purpose for the appointment of Mr Rathner and for the adjournment of the Section 249F Meeting. Counsel for Mr Rathner said that those written submissions “went no further” than advancing contentions to the effect that “on the issue of construction [the relevant rule of the Constitution] could be construed this way” and “[o]n the issue of improper purpose, there are documents that support the purpose”. In my view, the opening submissions did in fact go further than this. For example, on the issue of construction, Mr Rathner did not simply advance submissions as to how the rule could be construed, but as to how it should be construed, submitting that this “aspect of the Plaintiffs’ case should be dismissed”; and flagging an intention to bring an application under s 1322 of the Act “against the possibility that the Court finds in favour of the plaintiffs on the first issue [regarding construction]”.

Improper purpose in selecting Mr Rathner?

For the reasons given above, I accept the Plaintiffs’ submissions that Mr Rathner was in a position of conflict, having regard to his prior dealings with Keybridge as liquidator of the PR Group Companies; and that Mr Bolton and Mr Patton must have known that was the case at the time of his appointment. Further, I accept the Plaintiffs’ submission that Mr Rathner assisted Mr Bolton and Mr Patton in their defence of the proceedings, at least prior to the point in time when they obtained legal representation.
However, the critical question for present purposes is whether, having regard to those matters, the Court should infer that Mr Bolton and Mr Patton were actuated by an improper purpose in proposing Mr Rathner for appointment as administrator.
In opening written submissions in reply, the Plaintiffs submitted that Mr Rather’s “post-appointment conduct permits inferences to be drawn about what he told the [Incumbent] Directors as to how he intended to approach the administration”, which “in turn supports an inference that the appointment was not for a proper purpose”. However, the Plaintiffs did not identify what particular inferences should be drawn regarding the content of any such discussions.
Similarly, in closing address, Senior Counsel for the Plaintiffs submitted as follows:

“We advance a case that the three of them, that is Mr Rathner, Mr Bolton and Mr Patton, acted in concert in the conduct of the litigation and the administration. I put that clearly to Mr Rathner in cross-examination. From that you can infer an arrangement or understanding, all of which is relevant only because what it demonstrates is that Mr Bolton and Mr Patton were actuated by an improper purpose and the fact that is sought to be established is what you can infer about what Mr Bolton and Mr Patton expected from Mr Rathner, expected an administration by Mr Rathner, to involve. That is all squarely raised.”

However, there was no identification of the particular matters in respect of which an “understanding” was reached, or what Mr Bolton and Mr Patton, as a result of pre-appointment discussions, “expected an administration by Mr Rathner to involve”.
In cross-examination, Mr Rathner gave the following evidence of his discussions with Mr Bolton regarding the conduct of the administration:

“Q. Did he tell you he wanted to talk to you about how you would run the administration if you were appointed?
A. Only in very general terms.
Q: What were the very general terms?
A. The company was cash poor, but asset rich and therefore the administrator - and so the purpose of the administration would create a moratorium on those claims so that the company could sort out its affairs to raise the funds in the realisation of assets so the creditors could be paid. That was the broad view taken of how - of, of what the - of the reason for going into administration and any subsequent outcome.

The Plaintiffs did not, in the cross-examination of Mr Rathner, put to him any propositions regarding the terms of any “understanding” which he and Mr Bolton allegedly reached regarding the conduct of the administration prior to his appointment, although there were some questions regarding the extent to which there was discussion about the sale of assets:

“Q. Did Mr Patton or Mr Bolton tell you that one of the things they thought you should do or should consider is realising assets to pay pre-appointment creditors?
A. No.
Q. Did you have any discussion with Mr Bolton or Mr Patton prior to appointment, your appointment, about the prospect of you realising assets to pay pre-appointment creditors?
A. Yes.
Q. Did you discuss with Mr Bolton or Mr Patton prior to your appointment what assets might arise for sale as part of your administration?
A. Not in specific detail about each item of asset, no.
Q. Did they talk in particular about Keybridge's shares in Yowie?
A. No.
Q. Did they talk in particular about Keybridge's shares in Benjamin Hornigold Ltd?
A. No.”

The propositions put to Mr Bolton in cross-examination were along similar lines, focussing on the sale of assets. For example:

“Q. When you met with Mr Rathner on 5 February, did you have a conversation with him in which you said that you wanted him to set about - that if he was appointed administrator, you wanted him to set about realising assets?
A. No.

In addition, the following propositions were put to, and denied by, Mr Bolton:

“Q. Did you discuss with Mr Rathner whether putting the company into a friendly administration would provide a basis to maximise your control of the company or its assets?
A. No.
Q. Did you discuss with Mr Patton whether putting the company into a friendly administration would provide a basis to maximise your control of the company or its assets?
A. I did not.”

Mr Patton gave evidence that he did not meet Mr Rathner to discuss the administration prior to his appointment, and that he left it to Mr Bolton to deal with Mr Rathner in that period. The only proposition put to Mr Patton in cross-examination regarding any “understanding” or “expectation” in relation to the conduct of the administration was as follows:

“Q. Yes. Did you discuss with Mr Bolton on 4 or 5 February whether putting the company into a friendly administration would provide a basis to maximise your control of the company or its assets?
A. No.”

It is difficult to discern, from the propositions put to Mr Rathner, Mr Bolton and Mr Patton in cross-examination set out above, what is alleged to have been the content of any “understanding” between them regarding the conduct of the administration (and in particular, the sale of assets), or what “expectations” Mr Bolton and Mr Patton are alleged to have held about those matters, let alone why it is said that any such (unspecified) “understanding” or “expectations” support “an inference that the appointment [of Mr Rathner] was not for a proper purpose”. The highest that the allegation appears to go is that there was some understanding or expectation that “putting the company into a friendly administration would provide a basis to maximise [Mr Bolton’s and Mr Patton’s] control of the company or its assets”. However, that bare proposition was denied by each of Mr Bolton and Mr Patton (and was not put to Mr Rathner), and there was no articulation (or exploration in cross-examination) of the respects in which the administration would be “friendly” or the way or manner in which a “friendly” administration would allow Mr Bolton and Mr Patton to “maximise” their “control” of Keybridge or its assets.
I have found that there were issues with respect to Mr Rathner’s independence at the time of his appointment, arising from his previous dealings with Keybridge in respect of the liquidation of the PR Group Companies, and that Mr Rathner did not, following his appointment and during the period when the Director Defendants were self-represented, adopt a position of neutrality in respect of the issues arising in these proceedings which did not concern his own conduct. However, I do not consider that those matters provide a sufficient basis to conclude that Mr Rathner and Mr Bolton came, prior to his appointment, to some (unspecified) “understanding” regarding the sale of assets, with the result that Mr Bolton and Mr Patton held (unspecified) “expectations” about how an administration by Mr Rathner would proceed, such that it may be inferred that they were actuated by an improper purpose in proposing Mr Rathner for appointment and that, but for this improper purpose, Mr Rathner would not have been proposed, and therefore appointed, as administrator.

Conclusion

For those reasons, it has not been established that the Board of Keybridge appointed Mr Rathner as voluntary administrator on 9 February 2025 for an improper purpose.

Issue 6: Should administration be terminated?

By reason of the findings I have made above in respect of Issues 1 to5, the position is as follows:

on 9 February 2025, the Board validly appointed Mr Rathner as voluntary administrator; and

on 10 February 2025, the shareholders of Keybridge passed resolutions at a general meeting called pursuant to s 249F of the Act which removed the Incumbent Directors (other than Mr Catalano) and appointed the Proposed Directors.

In that context, it is necessary to consider the final issue which arises for determination, namely, whether the Court should make an order pursuant to s 447A of the Act that the administration of Keybridge is to end with immediate effect.
Section 447A of the Act relevantly provides as follows:

(1)   The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.
(2)   For example, if the Court is satisfied that the administration of a company should end:
(a)   because the company is solvent; or
(b)   because provisions of this Part are being abused; or
(c)   for some other reason;

the Court may order under subsection (1) that the administration is to end.

While s 447A itself confers “plenary powers” on the Court “to do whatever it thinks is just in all the circumstances” (Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 at 341), s 447A(2)(a) expressly provides that the Court has power to end the administration of a company if the Court is satisfied that the company is solvent: Intergen Energy Holdings (Australia) Pty Ltd, Re Intergen Energy Holdings (Australia) Pty Ltd [2017] FCA 445 at [28] (Gleeson J).
WAM submitted that the refinancing arrangement outlined in the Letter of Comfort is in the best interests of Keybridge, its creditors and its members, and is sufficient to restore Keybridge to solvency and end the administration under Part 5.3A of the Act.
In the Letter of Comfort, WAM referred to the Section 249F Meeting, and stated that it was giving the undertakings set out in the letter, subject to certain restrictions, “for the purpose of giving comfort to the Proposed Directors that [Keybridge] is not insolvent or likely to become insolvent”.
The undertakings in this letter were as follows:

“2.1   Subject to the restrictions in Section 3 of this Letter of Comfort, if at any time during the term of this Comfort Letter, the Company notifies WAM Active in writing (Request) that it requires an amount of equity or shareholder loans from WAM Active (Requested Amount) because it is unable or likely to be unable to pay a debt or liability of the Company from its own moneys, then WAM Active agrees to provide that Requested Amount in cash to the Company by way of, at WAM Active’s election, a secured or unsecured loan or equity amount within 15 Sydney business days of the Request.
2.2   The parties agree that the Company may Request WAM Active to provide a Requested Amount more than once during the term of this Comfort Letter.
2.3   This Letter of Comfort is binding on WAM Active upon delivery of this Letter of Comfort to the Company by email. It is not necessary for the Company to accept this Letter of Comfort in order for it to be binding on WAM Active, subject to the restrictions below.”

These undertakings were expressed to be subject to the following restrictions:

“3.1   The term of this Letter of Comfort is one month from the date hereof or such later date as WAM Active may notify the Company in writing.
3.2   This Letter of Comfort will only be binding on WAM Active if, and only if:
(a)   Mr John Patton, Mr Nicholas Bolton and Mr Richard Dukes have been removed as directors of the Company;
(b)   the Proposed Directors are directors of Keybridge (New Directors); and
(c)   the New Directors comprise a majority of the Board of the Company.

3.3   The Letter of Comfort:
(a)   will cease to be binding on WAM Active if the New Directors cease to comprise a majority of the Board of the Company; and
(b)   is not binding on WAM Active if:
(i) the Company is placed or remains under any insolvency administration, including a voluntary administration under Part 5.3 of the Corporations Act; and/or
(ii)   either or both of Mr Nicholas Bolton and Mr John Patton are directors of the Company at any time.

3.4   The Letter of Comfort is not binding on WAM Active if a Request is in relation to a request or demand from Mr John Patton, Mr Nicholas Bolton and/or Mr Richard Dukes in connection with costs incurred or expected to be incurred by any or all of them, including in any of them defending ‘Relevant Proceedings’ as contemplated under clause 3.3 or clause 3.5 of the Directors Deed between the Company and Mr Bolton signed on or around 28 December 2011, or any comparable document or agreement between the Company and any or all of Mr John Patton, Mr Nicholas Bolton and/or Mr Richard Dukes.
3.5   Any amount provided to the Company must only be used to pay the debt or liability the subject of the Request.
3.6   If, at any time, any provision of this agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision in any other respect or under the law of any other jurisdiction will be affected or impaired in any way.”

The Letter of Comfort was expressed to be governed by the laws of New South Wales and was executed as a deed by WAM.
The Director Defendants submitted that “it should be for the administrator to determine whether the letter of comfort is of any utility or not”.
For his part, Mr Rathner stated in opening written submissions that the Letter of Comfort “in fact provides no comfort of solvency”, in particular because the “terms of any advance are not provided”.
Subsequently, in the course of the hearing, WAM provided a document headed “Keybridge Bridge Funding – Term Sheet”, which was dated 6 March 2025. The Term Sheet was signed by Mr Hamilton as Company Secretary of WAM and was expressed to remain open for acceptance by Keybridge until 5.00pm on the fifth business day following the determination of these proceedings.
The Term Sheet states that the purpose of the facility is to “provide [Keybridge] with bridge funding pending finalisation of a capital raising”. The term of the facility is the earlier of 30 June 2025 and the close of any capital raising. The conditions precedent include:

Mr Bolton and Mr Patton ceasing to be directors of Keybridge and of any entity that is a subsidiary “including, for the avoidance of doubt, Yowie”;

the Proposed Directors comprising a majority of the directors of Keybridge; and

Keybridge, following the execution of the Term Sheet, issuing an ASX announcement proposing that it intends to undertake a pro-rata rights issue or such other capital raising reasonably acceptable to WAM.

After Mr Rathner had the opportunity to review this Term Sheet, Counsel for Mr Rathner put his client’s position as follows:

“… having seen this term sheet for the first time last night, Mr Rathner says on the assumption that WAM can satisfy your Honour that they can meet creditor's claims, that would address concerns as to the continuation of the administration.
…
Mr Rathner only says, having seen that letter, if WAM can satisfy your Honour as to their capacity to pay creditor's claims, then that is the sort of offer he could document with WAM…”

That is, Mr Rathner has formed the view that, subject to there being material to establish that WAM has the ability to meet creditors’ claims, the facility in the Term Sheet would, if documented, provide a basis for bringing the administration to an end.
Because this query regarding WAM’s capacity to pay creditor’s claims was raised only in closing address, it was not addressed in evidence.
One further issue which I raised with the parties concerned the condition precedent regarding the identity of the directors.
On the findings I have made, Mr Patton, Mr Bolton and Mr Dukes ceased to be directors of Keybridge on 10 February 2025, and each of the Proposed Directors was appointed a director at that time.
However, there is an unresolved issue as to the status or significance of the resolutions put to the Spill Meeting on 27 February 2025. (Significantly, there is no issue raised on the Originating Process concerning the Spill Meeting.)
At the Spill Meeting, resolutions were put for the “re-election” of, relevantly, Mr Patton and Mr Catalano, which were announced as having been passed. The reason that the resolutions referred to the “re-election” of Mr Patton and Mr Catalano was that, as a result of the spill resolution having been passed, each of them was to “cease to hold office immediately before the end of the spill meeting”: s 250V(1) and s 250W(9) of the Act.
The resolution which was put at the Spill Meeting in relation to Mr Patton was in the following terms:

“That Mr John Patton, who will cease to hold office as a director of the Company immediately before the end of this general meeting pursuant to section 250V(1) of the Corporations Act 2001 (Cth) (‘Corporations Act') being eligible, be re-elected as a director of the Company with effect from the end of the meeting.”

As set out above, this resolution was put forward on the premise (which I have found to be incorrect) that Mr Patton remained a director of Keybridge at the time of the commencement of the Spill Meeting, and only ceased to hold office “immediately before the end of this general meeting”.
I was not provided with any submissions regarding the significance of the resolution put to, and passed at, the Spill Meeting for the “re-election” of Mr Patton on the assumption that Mr Patton had previously been removed as a director at the Section 249F Meeting. WAM raised a number of issues regarding the conduct of the Spill Meeting by Mr Bolton (including his unilateral decision as chairperson to exclude votes cast by WAM “subject to WAM having a right or an interested member having a right to get an order of a Court that would cause those proxies to be counted”). However, as I have noted, there was no relief sought in respect of the Spill Meeting and those matters were not fully explored in evidence or submissions.
The Plaintiffs submitted that that the appropriate course was either for the Court to conclude that the Director Defendants have not established that Mr Patton is a director (and therefore have not established that the conditions precedent of the bridging facility are not satisfied), having regard to the issues raised with respect to the Spill Meeting; or alternatively, “if the Court would otherwise accept the letter of comfort, but has concerns about whether or not Mr Patton is being on the board, the Court should do no more than say that and give WAM an opportunity to address it”. In respect of this latter course, the Plaintiffs submitted that:

“Fundamentally, if that were the only concern with the letter of comfort, it would be undesirable for the company to remain in external administration if a letter of comfort can be given that preserves the solvency of the company”.

The difficulty with the first proposed course is that a finding that the Director Defendants had not established that the conditions precedent are not satisfied does not finally determine any controversy as to the current membership of the board (if there is one), and therefore does not determine any controversy as to whether the condition precedent in respect of the composition of the Board has been satisfied (or waived). As matters presently stand, it is unclear even whether Mr Patton advances any contention to the effect that, following his removal as a director at the Section 249F Meeting, he was re-elected as a director at the Spill Meeting, or the basis on which such a contention is advanced.
For those reasons, I consider that the better course is the alternative that has been proposed.
I am satisfied that, subject to the outstanding issues in respect of the bridging facility being resolved (namely, the issue identified by Mr Rathner regarding WAM’s ability to meet creditors’ claims and any issue regarding satisfaction of the condition precedent regarding the composition of the board), the facility outlined in the Term Sheet would provide a basis to conclude that Keybridge is solvent and therefore a basis to conclude that the administration should be brought to an end.
In those circumstances, I will stand over the proceedings for a short period. It is in the best interests of creditors and members that Mr Rathner and WAM have an opportunity to communicate regarding the outstanding issues concerning the Term Sheet, given that, if those issues are resolved, the bridging facility proposed in the Term Sheet would provide the means to restore the solvency of the Company.
If following this process there is an extant issue about WAM’s ability to meet creditors’ claims, or about the satisfaction of the conditions precedent of the facility, any such dispute can determined by the Court. The remaining relief sought in the Originating Process, including the application for orders ending the administration, can also be determined at that time.

Conclusion

For the reasons given above, I have determined that the purported adjournment of the Section 249F Meeting was invalid and of no effect, and that the meeting continued following the purported adjournment, with the resolutions being put to shareholders, and with shareholders voting in favour of each of the resolutions to remove the Incumbent Directors (other than the resolution to remove Mr Catalano) and to appoint the Proposed Directors. I will make declarations to this effect.
I have rejected WAM’s contentions that the appointment of Mr Rathner was for an improper purpose. However, I have concluded that, subject to the specific issues identified above, the bridging facility which is outlined in the Term Sheet would provide a basis to conclude that Keybridge is solvent and therefore a basis to conclude that the administration should be brought to an end. I will stand over the proceedings for a short period to enable discussions to occur in relation to those outstanding issues. When the matter is next in Court, I will make orders to deal with the balance of the relief sought or otherwise will make directions in respect of any remaining dispute, including in relation to costs.
For those reasons, I make the following orders:

Declare that:

on 10 February 2025 at 4:30pm, Keybridge validly held a meeting of its members convened in accordance with s 249F of the Act;

at the Section 249F Meeting, the members of Keybridge resolved that Mr Bolton, Mr Patton and Mr Dukes be removed as directors of Keybridge and that Mr Wilson, Mr Hamilton, Mr McCathie and Mr Ravell be appointed as directors of Keybridge; and

following the Meeting on 10 February 2025, the directors of Keybridge were:

Mr Catalano;

Mr Wilson;

Mr Hamilton;

Mr McCathie; and

Mr Ravell

Stand over the proceedings for directions to 1 April 2025 at 9.15am before Nixon J.

********

Decision last updated: 21 March 2025

Medium Neutral Citation:	In the matter of Keybridge Capital Limited [2025] NSWSC 240
Hearing dates:	5 – 7 March 2025
Date of orders:	21 March 2025
Decision date:	21 March 2025
Jurisdiction:	Equity - Corporations List
Before:	Nixon J
Decision:	(1) Declare that: (a) on 10 February 2025 at 4:30pm, Keybridge validly held a meeting of its members convened in accordance with s 249F of the Act; (b) at the Section 249F Meeting, the members of Keybridge resolved that Mr Bolton, Mr Patton and Mr Dukes be removed as directors of Keybridge and that Mr Wilson, Mr Hamilton, Mr McCathie and Mr Ravell be appointed as directors of Keybridge; and (c) following the Meeting on 10 February 2025, the directors of Keybridge were: (i) Mr Catalano; (ii) Mr Wilson; (iii) Mr Hamilton; (iv) Mr McCathie; and (v) Mr Ravell (2) Stand over the proceedings for directions to 1 April 2025 at 9.15am before Nixon J.
Catchwords:	CORPORATIONS – general meetings – meeting convened by notice given to members – business of meeting was to consider resolutions to remove and replace directors – directors knew that sufficient proxies cast for resolutions to be carried – directors resolved to appoint a voluntary administrator on the evening before the meeting – chairperson, who was a director, opened the meeting and purported to adjourn the meeting sine die without putting any resolutions to shareholders – following purported adjournment, shareholders present at meeting purported to elect new chairperson who put resolutions to a vote – whether purported adjournment sine die was within power – whether purported adjournment was for a proper purpose – whether meeting continued following purported adjournment – whether resolutions were passed CORPORATIONS - voluntary administration – whether there was a proper basis for directors to form the opinion that the company was insolvent or likely to become insolvent – whether the administrator was appointed for an improper purpose – whether, if the appointment was valid, the Court should order that the administration is to end
Legislation Cited:	Corporations Act 2001 (Cth) ss 140, 173, 203D, 249F, 250V, 250W, 436A, 447A, 447C, 448C, 606, 1305, 1322.
Cases Cited:	Australian Karting Association Ltd v Karting (New South Wales) Incorporated [2022] NSWCA 188 Australian Money Exchange Pty Ltd (in liq) v Llewellyn [2024] VSC 511 Australian Securities and Investments Commission v Planet Platinum Ltd [2016] VSC 120 Byng v London Life Association Ltd [1990] Ch 170 Cadwallader v Bajco Pty Ltd [2001] NSWSC 1193 Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546 Commonwealth Bank of Australia v Fernandez [2010] FCA 1487 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 HNA Irish Nominee Ltd v Kinghorn [2010] FCAFC 57 Howard Smith Ltd v Ampol Petroleum Ltd [1974] UKPC 4; [1974] AC 821 In the matter of Condor Blanco Mines Ltd [2016] NSWSC 1196 In the matter of Condor Blanco Mines Ltd (No. 2) [2016] NSWSC 1304 Intergen Energy Holdings (Australia) Pty Ltd, Re Intergen Energy Holdings (Australia) Pty Ltd [2017] FCA 445 Investa Listed Funds Management Ltd [2018] NSWSC 1391 Kazar v Duus (1998) 88 FCR 218 Lancedale Holdings Pty Ltd v Health Group Australia Pty Ltd [1999] NSWSC 609 McKerlie v Drillsearch Energy Ltd [2009] NSWSC 488 National Dwelling Society v Sykes [1894] 3 Ch 159 Onefone Australia v One.Tel [2010] NSWSC 401 Re Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244 Re Re1 and Re2 (No 3) [2014] NSWSC 762 Smith v Paringa Mines Ltd [1906] 2 Ch 193 St George Bank Ltd v Rangers Club of NSW Inc (1995) 18 ACSR 370 VRM Global Holdings Pty Ltd v Savannah AG Research Pty Ltd (admins apptd), in the matter of Savannah AG Research Pty Ltd [2023] FCA 131 Whitehouse v Carlton Hotel Pty Ltd(1987) 162 CLR 285; [1987] HCA 11. Wishart v Henneberry (1962) 3 FLR 171 Young v Cotter [1996] NSWCA 573
Category:	Principal judgment
Parties:	WAM Active Limited (First Plaintiff) Geoffrey James Wilson (Second Plaintiff) Jesse Michael Hamilton (Third Plaintiff) Martyn McCathie (Fourth Plaintiff) Keybridge Capital Limited (Administrator Appointed) (First Defendant) Gideon Isaac Rathner (Second Defendant) Nicholas Francis John Bolton (Third Defendant) John Dean Patton (Fourth Defendant) Frank Antony Catalano (Fifth Defendant) Richard Michael Dukes (Sixth Defendant) Sulieman Ahmad Sulieman Ravell (Seventh Defendant)
Representation:	Counsel: J S Emmett SC / D Krochmalik / D J Monteith (Plaintiffs) G Gee (First and Second Defendants) A T Broadfoot KC / A Byrne / A Osborn Brodie (Third, Fourth and Sixth Defendants) Solicitors: Mills Oakley (Plaintiffs) Tisher Liner FC Law (First and Second Defendants) Cornwalls (Third, Fourth and Sixth Defendants)
File Number(s):	2025/00054507