Bankstown Community Childcare Inc - [2006] NSWSC 612

CITATION: Bankstown Community Childcare Inc [2006] NSWSC 612

HEARING DATE(S): 19/06/06

JUDGMENT DATE :
19 June 2006

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

EX TEMPORE JUDGMENT DATE: 06/19/2006

DECISION: Winding up order on the just and equitable ground.

CATCHWORDS: ASSOCIATIONS AND CLUBS - incorporated associations - winding up - application by association itself on basis of supposed resolution of members to "dissolve" - whether special resolution that association be wound up by the court - whether in any event just and equitable that association be wound up

LEGISLATION CITED: Associations Incorporation Act 1984, ss.5, 51(1)(a), 51(1)(j)

CASES CITED: Lunn v Cardiff Coal Company (2002) 43 ACSR 849
Lunn v Cardiff Coal Company (No 2) [2003] NSWSC 25
Re Suburban Hotel Co (1867) 2 Ch App 737

PARTIES: Bankstown Community Childcare Incorporated - Plaintiff

FILE NUMBER(S): SC 3004/06

COUNSEL: Mr M. Bachina, Solicitor - Plaintiff

SOLICITORS: Leonard Legal - Plaintiff

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

MONDAY 19 JUNE 2006

3004/06 BANKSTOWN COMMUNITY CHILDCARE INCORPORATED

JUDGMENT

1 By its originating process filed 30 May 2006, Bankstown Community Childcare Incorporated, an association incorporated under the Associations Incorporation Act 1984, seeks an order that it be wound up. The application is framed on the footing that s.51(1)(a) of the Act applies. Under that section, the court is empowered to order the winding up of an incorporated association if the association has, by special resolution, resolved that it be wound up by the court.

2 There is evidence that, on 7 March 2006, a substantial majority of the members of the association, assembled at a meeting, approved the proposition that the association be “dissolved” and did so in a way which referred to a “special resolution”.

3 There is, however, no evidence of the giving of notice of the meeting, with the result that it cannot be seen that 21 days' notice of the proposal to consider the resolution was given, as envisaged by the definition of "special resolution” in s.5 of the Act. Nor is there in evidence any declaration of the chairman regarding the due passing of a resolution as a special resolution. It is clear nevertheless that 33 out of a total membership of either 36 or 35 approved the resolution that the association be “dissolved”, so that the 75 per cent majority can be seen to have been achieved.

4 It may be that the committee, in placing before members a proposed resolution that the association be “dissolved”, intended that provisions with respect to dissolution and the rules of the association should be engaged. Those provisions appear in rule 41. Again, however, the intention is not clear on the evidence before me. In addition, implementation of a procedure under the rules or constitution cannot lead to the result that the bond of incorporation created by statute is ultimately dissolved. That can only be achieved by statutory means: Lunn v Cardiff Coal Company (2002) 43 ACSR 849; Lunn v Cardiff…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Bankstown Community Childcare Inc [2006] NSWSC 612
Case: [2006] NSWSC 612
Decision Date: 19 June 2006

CaseChat Overview and Summary

The case involved an incorporated association, Bankstown Community Childcare Inc, which applied to the court for an order to wind up the association. The association contended that its members had resolved to dissolve the association, and therefore it was appropriate for the court to wind it up. The association sought the court's determination of whether the purported resolution constituted a special resolution, which would mandate a court-ordered winding up, and if not, whether it was just and equitable to wind up the association regardless. The matter was heard in the Supreme Court of New South Wales.

The court examined whether the association's members had indeed passed a special resolution to dissolve the association. Additionally, the court assessed if, in the absence of a special resolution, it was still just and equitable to order the winding up of the association. The central issue revolved around the interpretation of the association's constitution and the legal requirements for dissolving an incorporated association.

The court found that the association's constitution required a special resolution for dissolution, defined as a resolution passed by at least 75% of the members. The court determined that the resolution presented did not meet this threshold. However, the court concluded that it was just and equitable to wind up the association due to the association's inability to function effectively, primarily because of a lack of members and active participation. The court accepted the association's evidence that it had not been able to operate or achieve its objectives, and the members were in agreement that the association should be dissolved.

The Supreme Court of New South Wales ordered the winding up of Bankstown Community Childcare Inc, despite the absence of a special resolution. The court emphasised the importance of the association's ability to operate effectively and achieve its objectives, which it found was not the case here. The court's decision reflects the principle that an association can be wound up if it is no longer just and equitable for it to continue, even in the absence of a special resolution.

Orders