Aboriginal Co-operative Limited (in liq); an application by Wallace-Smith
[2002] VSC 9
•12 February 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
No. 5637 of 1996
In the Matter of the Aboriginal Co-operative Limited (In Liquidation)
| SIMON ALEXANDER WALLACE-SMITH AS LIQUIDATOR OF THE ABORIGINAL CO-OPERATIVE LIMITED (IN LIQUIDATION) | Applicant |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 19 OCTOBER 2001 | |
DATE OF JUDGMENT: | 12 FEBRUARY 2002 | |
CASE MAY BE CITED AS: | ABORIGINAL CO-OPERATIVE LIMITED (IN LIQUIDATION), Application by WALLACE-SMITH | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 9 | |
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Voluntary winding up of Co-operative – Upon a certificate of the Registrar – Seeking of directions by liquidator - Co-operatives Act 1996 – Co-operation Act 1981 - Companies (Victoria) Code – Corporations (Victoria) Act 1990 – Corporations (Ancillary Provisions) Act 2001 - Sections 479(3), 501 and 511 of the Corporations Act 2001 – Transfer of real properties to another body – Purchased with grants on conditions – Co-operative a charitable body - Assets held on Trust – Surviving members consenting – Whether just and beneficial.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A.D. Lang | Anderson Rice |
HIS HONOUR:
This proceeding was commenced by Notice of Motion dated 24 May 1996 by the applicant, Mr Simon Alexander Wallace-Smith, who is the liquidator of the Aboriginal Co-operative Limited ("the Co-operative"). The applicant initially sought directions from the Court pursuant to s479(3) of the Corporations Law, including directions as to the joinder of any persons as parties to this proceeding and the giving of notice of this proceeding to any persons. Subsequently, the applicant by interlocutory process dated 2 October 2001 sought, pursuant to s479(3) of the Corporations Act 2001, a direction that nine specified real properties owned by the Co-operative be transferred to the Aboriginal Housing Board of Victoria ("the AHB"). Further, the applicant sought other orders and directions including a declaration that the AHB "assume all liabilities debts and obligations of an [sic] arising out of the ownership, leasing, management and transfer of the properties, including but not limited to the tenants and occupiers, stamp duty, transfer fees and other costs associated with the transfer of the properties".
The History of the Co-operative
The Co-operative was incorporated on 31 October 1973 under the Co-operation Act 1958. The objects of the Co-operative were stated to be:
"To provide housing and accommodation for the people of the Aboriginal Community and in particular:-
a. to erect houses and other buildings;
b. to purchase houses and other buildings;
c. …
d. …
e.to rent or let houses and other accommodation to members of the Aboriginal Community on terms to be determined by the Society in consultation with the Department of Aboriginal Affairs;
f.to sell houses to members of the Aboriginal Community at not less than their depreciated value on terms to be determined by the Society in consultation with the Department of Aboriginal Affairs;
g.to lease houses or buildings for the purpose of providing accommodation for people of the Aboriginal Community;
…"
There were ten founding members and their signatures appeared in the proposed Rules of the Co-operative dated 23 October 1973. The first of the fourteen properties eventually owned by the Co-operative was purchased on 19 August 1976 and the last on 15 October 1992. These properties were purchased from grants received from the Aboriginal and Torres Strait Islander Commission ("ATSIC") and its predecessors, the Department of Aboriginal Affairs ("the DAA") and the Aboriginal Development Commission ("the ADC").
Mr Wallace-Smith was appointed liquidator of the Co-operative on 7 March 1994 by the Deputy Registrar of Co-operative Societies, Mr Daniel Francis. The winding up was "upon a certificate of the registrar" pursuant to s192(1) of the Co-operation Act 1981. That certificate stated that it had been proved to the Deputy Registrar’s satisfaction that the Coperative had:
"after notice by the Registrar of a breach of or non-compliance with the Act failed to remedy that breach within the time specified in the notice".
(See s192(3)(g) of the Co-operation Act 1981).
Ms Rebekah or Rebecca Ellis, a tenant of one of the Co-operative’s properties and an elected Director of the Co-operative in 1985-1986 and later an "interim" Director at some time in 1993, deposed in an affidavit sworn on 4 November 1994 in other proceedings and exhibited in this proceeding that:
"The Co-operative started to become dysfunctional from 1988. They [sic] ceased to hold meetings, arrangements in relation to properties became erratic, decision-making was confused and collection of rents also became disorganised. In particular, they [sic] ceased to maintain my property in any adequate way."
The Background to the Proceeding
In an affidavit sworn on 17 May 1996, Mr Wallace-Smith stated that at the commencement of the liquidation the Co-operative was the registered proprietor of fourteen properties located in various suburbs in and around Melbourne. Those properties were the only assets of the Co-operative. Mr Wallace-Smith ascertained that all of the properties required repairs and that three of the properties were in a serious state of disrepair. Also, there were outstanding municipal rates and water rates to be paid. The only potential source of income for the Co-operative was rental from the properties. However, none of the tenants had paid rent for some considerable time. Mr Wallace-Smith also stated that, although requested, no report as to the affairs of the Co-operative had been received from the directors of the Co-operative.
In order to be able to repair some of the properties and pay outstanding moneys owing to the local councils, Mr Wallace-Smith caused two of the properties to be sold in or around late May 1994. In December 1994, a further property was sold at auction after possession was obtained by way of Court order. Another proceeding was instituted to obtain possession of an additional property.
On 22 December 1994, Mr Wallace-Smith sent a letter to all of the remaining tenants containing draft tenancy agreements which required that a bond of $100 and a weekly rent of $75 be paid. The tenants were not prepared to enter into the tenancy agreements as they believed that the rent should be based on a percentage of the occupants’ income rather than a flat rate, that the tenants should have security of tenure and that repairs to the properties had been inadequate. Mr Wallace-Smith formed the view that this arrangement would not result in a viable operation and would not enable him to conclude the liquidation.
In his affidavit Mr Wallace-Smith deposed that:
"By March 1995 all essential repairs and payment of the remaining creditors had been effected. However there were still other repairs outstanding on the remaining properties but as I was unable to reach any agreement with the tenants as to payment of rent I did not undertake any further repairs as this would simply have resulted in more properties having to be sold to pay for them. My aim was to complete the liquidation in the most economical and beneficial way for the Co-operative."
In Mr Wallace-Smith’s opinion, there were only two realistic options available in the liquidation of the Co-operative. These options were either:
(a) to sell all the properties and make a distribution to members of the Co-operative; or
(b) to transfer the properties to a body with objectives similar to the Co-operative, namely providing housing and accommodation for aboriginal people.
One such body was a new organisation called the Melbourne Aboriginal Housing Association ("MAHA"), which intended to take over the conduct and running of the properties. However, a transfer of the properties to another organisation was dependent on that body receiving the necessary funding from ATSIC and ATSIC declined to approve funding for MAHA.
Another possible transferee was the AHB, which is a company limited by guarantee. The AHB is an organisation concerned with providing housing and accommodation for aboriginal people. In March 1995, Mr Wallace-Smith met with representatives of the AHB to discuss the possible transfer of the properties. The AHB indicated that it would investigate whether ATSIC would provide the necessary funding to allow the transfer of the properties to the AHB.
On 5 August 1995, a further property was sold at auction to fund the ongoing costs of administration, rates and insurance .
By letter dated 15 August 1995, ATSIC advised Mr Wallace-Smith that it approved of the transfer of the properties of the Co-operative to AHB subject to "the orders of the court" and agreement between Mr Wallace-Smith and the AHB.
The Proceeding
On 31 May 1996, the application to the Court for directions was heard by the Honourable Justice Mandie. The applicant was ordered to serve a copy of the Notice of Motion, a copy of the Affidavit of Simon Alexander Wallace-Smith sworn 17 May 1996 and his explanatory letter dated 31 May 1996 on: ATSIC; the AHB; the Registrar of Co-operative Societies; the occupiers of the remaining properties; Ms Georgina Williams, the former Public Officer of the Co-operative; and each of the applicants for membership whose signatures appeared in the proposed Rules of the Co-operative dated 23 October 1973. Further, the applicant was ordered to place an advertisement in The Australian newspaper advising of his application to the Court.
To the extent possible, the applicant complied with these directions. One difficulty was identifying the full names and ascertaining the whereabouts of each of the original signatories for application for membership of the Co-operative. Mr Wallace-Smith deposed in an affidavit sworn on 11 July 1997, that investigations had revealed that only seven of the ten original members of the Co-operative were still alive. All seven living members had been contacted by letter from Mr Wallace-Smith outlining the current situation and confirming that the AHB was prepared to accept the remaining properties of the Co-operative. Enclosed with that letter was a document entitled Minutes of Consent which each founding member was asked to sign. It contained a statement that he or she agreed that "it is appropriate to transfer the remaining properties of the Co-operative to the Aboriginal Housing Board so that it can provide housing and accommodation for the Koori people in the same manner that the Co-operative has before." Between 31 July 1996 and 3 February 1997, all seven executed minutes of consent were received by Mr Wallace-Smith.
On 12 October 1996, a fifth property was sold by the liquidator, leaving the Co-operative with the remaining nine properties.
The proceeding came back before the Court on 15 August 1997. Mr Lang of Counsel, who appeared for the applicant before me, informed me that on that occasion Justice Mandie had indicated that he doubted whether the properties should be transferred to the AHB rather than being sold and the proceeds distributed amongst the members of the Co-operative. The proceeding was accordingly adjourned sine die to enable the applicant to put more material before the Court.
On 2 October 2001, the applicant filed the interlocutory process referred to in paragraph 1 above. Again, all of the relevant parties have been served with the fresh application and the supporting material.
The Relevant Legislation
Before examining the further material, it is necessary to consider what legislation applies to this application. As previously stated, Mr Wallace-Smith was appointed liquidator under Part X of the Co-operation Act 1981. The Co-operation Act 1981 was repealed by, and transitional provisions were provided in, the Co-operatives Act 1996. Item 15 of Schedule 5 to the Co-operatives Act 1996 states:
"If, before the commencement of this clause, a transferred co-operative had commenced to be wound up under Part X of the Co-operation Act 1981, that Part and sections 237, 238 and 239 of that Act continue to apply to that winding up."
This matter, therefore, continues to be governed by the Co-operation Act 1981. Sub-sections 192(8) and (9) of that Act provide:
"(8)The provisions of Part XII of the Companies (Victoria) Code shall, subject to this Part, apply to the winding up or dissolution of a society or to a defunct or dissolved society.
(9)In the application of the provisions of Part XII of the Companies (Victoria) Code to the winding up of a society unless a contrary intention appears any reference in those provisions –
(a)to a special resolution – shall be construed as a special resolution within the meaning of this Act;
(b)to the Commission – shall be construed as a reference to the registrar of the co-operative societies;
(c)to a voluntary winding up – shall be construed as including a reference to a winding-up of a society upon a certificate of the registrar."
The Companies (Victoria) Code has long since been repealed, however Part 13 of the Corporations (Victoria) Act 1990 contains relevant transitional provisions. Division 2 of that Part deals with "Co-operative scheme laws". Pursuant to s90(2) of the Corporations (Victoria) Act 1990, reference to the Companies (Victoria) Code is taken to include a reference to the Corporations Law of Victoria. Further, the transitional provisions contained in section 11 of the Corporations (Ancillary Provisions) Act 2001 translates a reference to the Corporations Law of Victoria as one to the corresponding provision of the Corporations Act 2001.
Thus, the effect of both s90(2) of the Corporations (Victoria) Act 1990 and s11 of Corporations (Ancillary Provisions) Act 2001 is that the references in s192(8) and (9) of the Co-operation Act 1981 to the Companies (Victoria) Code are to be read as references to the corresponding provisions in the Corporations Act 2001. Therefore, as this winding up involves a certificate of the registrar under s192(9)(c) of the Co-operation Act 1981, this application must be treated as if it were a voluntary winding up under the Corporations Act 2001.
Amendment of the Application
The original Notice of Motion filed 24 May 1996 and the Interlocutory Process filed 2 October 2001 involve an application by the liquidator for directions under s479(3) of the Corporations Law and the Corporations Act 2001 respectively. This sub-section provides for the exercise and control of the liquidator’s powers:
"(3)The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up."
However, s479(3) is contained in Part 5.4B of the Corporations Act 2001 which only applies to winding up in insolvency or by the Court. Mr Lang brought to my attention that the application should have been made under s511, in Part 5.5 of the Corporations Act 2001, which applies to voluntary winding up. That section relevantly provides as follows:
"(1)The liquidator, or any contributory or creditor, may apply to the Court:
(a)to determine any question arising in the winding up of a company; or
(b)to exercise all or any of the powers that the Court might exercise if the company were being wound up by the Court.
(1A)…
(2)The Court, if satisfied that the determination of the question or the exercise of power will be just and beneficial, may accede wholly or partially to any such application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just".
Leave is granted to the applicant to amend its interlocutory process dated 2 October 2001 to include reference to s511 of the Corporations Act 2001 as the statutory basis on which the application is made. No prejudice will be suffered by any person if such leave is granted.
Section 501 of the Corporations Act 2001
When Justice Mandie expressed his concern in 1997 about the course proposed by the applicant, no doubt his Honour had in mind the requirements of s501 of the Corporations Law (now s501 of the Corporations Act 2001). That section provides:
"Subject to the provisions of this Act as to preferential payments, the property of a company must, on its winding up, be applied in satisfaction of its liabilities equally and, subject to that application, must, unless the company's constitution otherwise provides, be distributed among the members according to their rights and interests in the company."
It appears that the Co-operative's Rules did not "otherwise provide".
On behalf of the applicant, Mr Lang submitted, for a number of reasons, the outcome of this application was not governed by s501 or the Rules of the Co-operative.
The Conditions of the Grants to the Co-operative
As part of his first submission, Mr Lang referred me to the conditions of the grants to the Co-operative which enabled it to purchase the properties in question. Mr John Foers, a Project Officer with the ADC between 1985 and 1990 and since then a Senior Field Officer employed by ATSIC and the specific project officer for the properties held by the Co-operative, set out in his affidavit sworn on 6 July 2001 the conditions on which grants were made to the Co-operative by the DAA, the ADC and ATSIC. Whilst the records now held by ATSIC are incomplete, due in part, according to Mr Foers, to a fire destroying many old DAA files and to inadequate archiving systems, I have been able to see that they followed a clear pattern. Generally they required that properties not be sold without the grantor’s consent in writing and, that if properties were no longer required, either they were to be transferred to another similar organisation or, if sold, the funds were to be used for the same purpose as that for which they were originally granted. The grants provided to the Co-operative were generally the subject of formal letters of offer and acceptance which constituted legally binding contracts.
A few examples from Mr Foers’ affidavit will illustrate the terms on which the Co-operative received its grants. The DAA’s rules governing the provision and use of grants to communities and organisations dated June 1977 included the following:
"2.4 Disposal of Assets
2.4.1Disposal of an asset which cost more than $1,000 and which was acquired with Commonwealth Government grant money requires the prior approval, in writing, of the Minister or his delegate.
2.4.2Any asset purchased with Commonwealth Government grant money which is no longer used for the purpose for which it was acquired may be declared by the Minister or his delegate as surplus to the needs of the organisation and be dealt with according to 2.4.4.
2.4.3In the event of the voluntary winding up of an organisation, the disposal of any or all of its assets requires the prior approval in writing of the Minister or his delegate and may be at his direction, subject to the provisions of the Act under which the organisation was incorporated.
2.4.4The Minister or his delegate may direct that any asset be declared surplus under any of the above Rules and be transferred to another organisation with or without cost or be disposed of in any manner as the Minister or his delegate may determine.
2.4.5…
2.4.6If the proceeds of sale are not to be used for another approved purpose the Department may require the money to be repaid."
In an ADC form headed "Acceptance of Offer of Grant-in-Aid for Housing – 1981/82 Supply Funds", dated 15 July 1981 and signed by the Chairman and a member of the Executive on behalf of the Co-operative, it was provided that the funding was "on the terms and conditions stated" and that "the offer and this acceptance will form a contractual agreement between the Aboriginal Development Commission and the Victorian Aboriginal Co-op Ltd". The "terms and conditions" referred to would appear to be those contained in the ADC’s Administrative Arrangements relating to Grants dated June 1981, the relevant parts of which provided:
"2.4 Disposal of Assets
2.4.1Disposal of an asset purchased or built with grant moneys the purchase or construction cost of which was more than $1,000, and the use of any proceeds from such disposal, requires prior approval, in writing, of the Commission.
2.4.2If an asset purchased or built with grant moneys is no longer used for the purpose for which it was acquired the Commission may declare the asset surplus and it may be transferred to another Aboriginal body or be disposed of in a manner the Commission may determine.
2.4.3…
2.4.4In the event of the voluntary winding up of an Aboriginal body the disposal of assets purchased or built with grant moneys requires prior approval, in writing, of the Commission and may be at the Commission’s direction subject to the provision of the Act under which the body is incorporated."
The new Rules relating to Grants for Assistance to or for Aboriginals and Torres Strait Islanders introduced by the DAA in October 1985 included the following provisions:
"13. (vi) Disposal of Assets
(a)Disposal of a real property asset acquired with grant moneys, and the use of any proceeds from such disposal requires prior approval, in writing, of the Minister or his delegate.
(b)…
(c)If an asset purchased with grant moneys is no longer used for the purpose for which it was acquired the Minister or his delegate may declare the asset surplus and it may be transferred to another organisation or be disposed of in a manner the Minister or his delegate may determine.
(d)In the event of the voluntary winding up of an organisation, the disposal of assets acquired from grant moneys requires prior approval, in writing, of the Minister or his delegate and may be disposed of at his discretion, subject to the provisions of the Act under which the organisation is incorporated."
In February 1989, the ADC published a booklet containing its policy guidelines for its Rental Accommodation Program. The conditions of a grant were similar to those set out above and included:
"2.4 Disposal of Assets
2.4.1The ownership of an asset acquired with grant moneys by an Aboriginal body shall be regarded as vested in the Aboriginal body (unless otherwise stipulated by the Commission), but subject to the provisions hereunder relating to its disposal or its use as security.
2.4.2Disposal of land acquired with grant moneys, with or without buildings, and the use of any proceeds from such disposal by an Aboriginal body, requires the prior approval, in writing, of the Commission.
2.4.3 …
2.4.4If an asset purchased or built with grant moneys is no longer used for the purpose for which it was acquired, the Commission may declare the asset surplus and it may be transferred to another Aboriginal body or be disposed of in a manner the Commission may determine.
2.4.5 …
2.4.6In the event of the voluntary winding up of an Aboriginal body, the disposal of assets acquired with grant moneys requires prior approval, in writing, of the Commission and may be at the Commission’s discretion subject to the provisions of the Act under which the body is incorporated."
In correspondence dated 26 January 1990 the ADC stated that:
"1.The Commission advise the Cooperative that ADC cannot continue to provide funds to cover the deficit incurred by the Cooperative due to administrative costs and inability to raise and collect economic housing rents.
2.The Commission will not grant permission to sell grant funded housing assets for the purpose of providing subsidized rental or administrative costs.
3.That the Cooperative negotiate with the Aboriginal Housing Board for the transfer of all housing assets, to be administered by that Board for the use of Aboriginal people.
4.The Commission may consider granting permission to sell uneconomic houses to finance the renovation and upgrading of the remaining housing stock prior to transfer of the housing stock to another authority."
Mr Foer’s evidence concerning the conditions of the grants to the Co-operative was supported by an Affidavit of Ms Norma Gleeson, sworn on 6 July 2001. Ms Gleeson was an Executive Field Officer employed by ATSIC or its predecessors since 1972. She stated that she fully concurred:
"… with the view that the grants for the purchase of Aboriginal housing were made upon the basis that the Minister or his delegate would have to consent to the sale and that the proceeds of such sale should be used for the purchase of housing to benefit Aboriginal people. The grants for the purchase were also made upon the basis that in the event of the winding up of any Aboriginal organisation which received grants for the purchase of property, that property should be transferred to a like organisation."
Mr Foers exhibited to his affidavit a letter dated 30 April 1999 from Mr Geoff Clark, a Commissioner of ATSIC, endorsing the transfer of the houses and land owned by the Co-operative to the AHB. His endorsement was conditional on the AHB:
"… ensuring that an opportunity is given to the current tenants to purchase their homes under the ATSIC Home Purchase Incentive Scheme/Home Loan Scheme with special consideration for personal circumstances where there is an expression of interest from the family/tennant [sic]."
Mr Foers’ affidavit also established that on 3 August 1999, the Tumbukka Regional Council and, on the 5 August 1999, the Binjirru Regional Council had passed resolutions endorsing the transfer of the properties of the Co-operative to the AHB. The resolution of the Tumbukka Regional Council was expressed to be subject to ATSIC:
"… ensuring that no houses transferred are sold without the consent of the Commission and tenants are permitted to remain in the houses provided they pay the applicable rent and meet other conditions of tenancy".
At the hearing, Mr Lang tendered a letter dated 19 October 2001 from Mr Peter Taylor, the Manager of the National Housing and Infrastructure Centre of ATSIC, to the Co-operative’s liquidator, which confirmed that ATSIC was agreeable to all of the real property of the Co-operative being transferred to the AHB. Mr. Taylor also stated in the letter that ATSIC was agreeable to meeting "all reasonable costs associated with the transfer of the [Co-operative's] properties" and all of "the Liquidator's reasonable costs associated with and incidental to the Application."
Thus, it is clear to me that if the liquidator were to be permitted or required to sell the nine remaining properties and distribute the net proceeds among the surviving members of the Co-operative, this would be quite contrary to the conditions of the grants to the Co-operative which provided the funds for the purchase of these properties. The Co-operative is contractually bound to comply with those conditions. A condition consistently imposed on the Co-operative was that in the event of a voluntary winding up of the Co-operative, the disposal of an asset acquired from grant moneys required the prior approval of the Minister or his delegate, later the ADC and now ATSIC, and that the disposal was at his or its discretion. The conditions also consistently recognised the transfer of the asset to another organisation as a possible outcome for a "surplus" asset which had been purchased with grant moneys. As stated above, ATSIC is agreeable to these real properties of the Co-operative being transferred to the AHB. Accordingly, an order to this effect will be consistent with the conditions of the grants to the Co-operative.
The Co-operative as Trustee
Next, Mr Lang submitted that the objects of the Co-operative, namely, "to provide housing and accommodation for the people of the Aboriginal Community", were charitable and that accordingly, the Co-operative was an incorporated body formed for charitable purposes and, as such, the trustee of its assets for its objects. Mr Lang therefore submitted that, on a voluntary winding up, the assets of the Co-operative must be applied cy-près. He relied on the decision of Nader J. in Aboriginal Hostels Ltd v Darwin City Council[1]. Mr Lang further submitted that, because the assets of the Co-operative were impressed with the trust, the distribution provisions in the Rules of the Co-operative and s501 of the Corporations Act 2001 were irrelevant.
[1](1985) 75 FLR 197
With some hesitation I am prepared to accept that the objects of the Co-operative are charitable: see Re Mathew[2]; Re Bryning[3]; Aboriginal Hostels Ltd. v. Darwin City Council[4] and Ford and Lee: Principles of the Law of Trusts at paragraph 19120. In the circumstances, it is the case that the Co-operative is the trustee of its assets for its objects: see Sydney Homeopathic Hospital v. Turner[5]; Aboriginal Hostels Ltd. v. Darwin City Council[6] and Ford and Lee: Principles of the Law of Trusts at paragraphs 20450 and 20460.
[2][1951] VLR 226
[3][1976] VR 100
[4](1985) 75 FLR 197 at 209-213
[5](1959) 102 CLR 188 at 221 per Kitto J.
[6](1985) 75 FLR 197 at 207-208
Further, the transferring the properties to the AHB is one way of applying cy-près the assets of the Co-operative. As Nader J. said in Aboriginal Hostels Ltd. v. Darwin City Council[7]:
"As I see it, winding up the company would not relieve the Minister from the obligation of applying any surplus assets for the purposes of the trust (if charitable) or of a cy pres purpose by some other means. The company is merely a device by which the Minister’s purposes are expressed and through which the assets devoted to those purposes are administered. In the event of a winding up occurring, leaving a surplus of assets, the Minister would be required to administer the surplus either directly or by other means for the same purposes or for a cy pres purpose. One cannot look for a provision of the memorandum of association casting obligations in terms of a trust on the Minister because here there is no express or even implied trust which arises independently of intention. So long as the company exists, if I am correct, it is trustee of its assets for its objects. In the event of the company ceasing to exist, any surplus property impressed with the trust will be disposed of by the Minister in accordance with the trust."
[7](1985) 75 FLR 197 at 208
The Consent of the Members of the Co-operative
Finally, it was submitted that all of the surviving founding members had consented to the liquidator’s proposal that the properties of the Co-operative be transferred to the AHB. Despite strenuous efforts, the liquidator was unable to locate any formal register of members or even any membership information at all, other than the signatures of the ten original applicants for membership of the Co-operative. I am satisfied, therefore, that this was the only membership information available to the liquidator. Only seven of the ten founding members were still alive in July 1997. These seven men and women stood to gain a considerable amount if orders were made under s501 of the Corporations Act 2001. Nevertheless, each of them had signed a consent agreeing with the liquidator's proposal to transfer the Co-operative's remaining properties to the AHB. This is a further justification for granting the liquidator's application.
The Position of the Tenants
The tenant of each of the properties had been served with the interlocutory application and the supporting material. Two long standing tenants did appear at the hearing on 19 October 2001 and, although Mr Lang submitted that they had no standing, I allowed them to make statements to the Court as to their attitude to the orders being sought. Mr Ron Johnson and Ms Rebecca Ellis both indicated that they understood the nature of the orders being sought by the liquidator. Whilst not supporting the liquidator’s application, they both agreed that selling the properties was not a desirable outcome.
Mr Johnson told the Court:
"I think of [the house] as my own, just as if you own your own property. I have lived there for that long, it’s part of my life, it’s part of my family life … I don’t want [the property] to be sold because I’d like to stay in the area where I am".
He agreed, however, that, as a lesser of the two evils, it was preferable for the properties to be transferred to the AHB rather than be sold and the proceeds distributed amongst the Co-operative’s members. Mr Johnson wanted the Court to know his position and expressed some hesitation about the properties being transferred to the AHB because of the ensuing uncertainty of being placed under AHB’s control.
Ms Ellis informed the Court that she also did not oppose the orders sought by the liquidator. She agreed with the transfer so that no further houses would be sold. Ms Ellis further explained that the tenants felt they were pushed into the current position because there had been no communication between the authorities such as ATSIC and the tenants. She believed other routes could have been explored once the Co-operative was placed in voluntary liquidation. She said that the tenants were seeking assurances, if the properties did go to the AHB, that they could stay in their properties.
Conclusion
The position is, therefore, that no one has appeared to oppose the orders sought by the applicant. Under s511(1) the Court has power:
(a) to determine any question arising in the winding up of a company; or
(b)to exercise all or any of the powers that the Court might exercise if the company were being wound up by the Court.
However, before making such an order, the Court must be "satisfied that the determination of the question or the exercise of power will be just and beneficial" (s511(2) of the Corporations Act 2001). It has been said that those words "plainly mean that the Court has a discretion as to whether making an order under the section will be of advantage in the liquidation".[8] In my opinion, for all of the above reasons, it would be "just and beneficial" to make the orders sought by the liquidator.
[8]Dean-Willocks v. Soluble Solution Hydroponics Pty. Ltd. (1997) 42 NSWLR 209 at 212 per Young J.
Orders
Subject to hearing from counsel, the orders I propose to make are as follows:
1.Leave granted to the applicant to amend its interlocutory process dated 2 October 2001 by deleting the reference to s479(3) of the Corporations Act 2001 and substituting therefor a reference to s511 of the Corporations Act 2001.
2. Direct that the real properties known as:
(a)80 Henty Street, Preston (Certificate of Title Volume 7867 Folio 166);
(b)40 Locksley Avenue, Reservoir (Certificate of Title Volume 6605 Folio 883);
(c)12 Coleman Crescent, Reservoir (Certificate of Title Volume 8581 Folio 587);
(d)107A Cheddar Road, Reservoir (Certificate of Title Volume 8223 Folio 407);
(e)54 King William Street, Reservoir (Certificate of Title Volume 4765 Folio 986);
(f)245 Wood Street, Preston (Certificate of Title Volume 6771 Folio 055);
(g)145 Tyler Street, Preston (Certificate of Title Volume 7048 Folio 526);
(h)25 Erskine Avenue, Reservoir (Certificate of Title Volume 7099 Folio 779); and
(i)20 Lancewood Avenue, West Heidelberg (Certificate of Title Volume 8534 Folio 370)
be transferred to the Aboriginal Housing Board of Victoria.
3.Declare that the Aboriginal Housing Board of Victoria assume all liabilities, debts and obligations of and arising out of the ownership, leasing management and transfer of the said properties.
4.Order that the applicant's reasonable costs associated with the transfer of the said properties be paid by the Aboriginal and Torres Strait Islander Commission.
5.Order that the applicant's costs of and incidental to this application be paid by the Aboriginal and Torres Strait Islander Commission.
6.Direct that all other property of the Aboriginal Co-operative Limited (In Liquidation) (if any) be transferred to the Aboriginal and Torres Strait Islander Commission.
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