Hunter v Gagudju Association Inc - [2021] NTSC 34

CITATION:Hunter & Ors v Gagudju Association Inc [2021] NTSC 34
PARTIES:HUNTER, Frederick William

AND
LEE, Maria
AND
WHITTAKER, Charles Nicholson
AND
KATONA, Mai
AND
HUNTER, Jennifer Ann

v

GAGUDJU ASSOCIATION INCORPORATED

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT exercising Territory jurisdiction
FILE NO:2021-00755-SC
DELIVERED:  9 April 2021
HEARING DATE:  9 April 2021
JUDGMENT OF:  Grant CJ
REPRESENTATION:
Counsel:
Plaintiffs:D Ryan QC, T Greenway
Defendant:K Anderson
Solicitors:
Plaintiffs:Shayne Daley and Associates
Defendant:Bowden McCormack, Lawyers +
Advisers
Judgment category classification:    C
Judgment ID Number:  GRA2105
Number of pages:  14

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Hunter & Ors v Gagudju Association Inc [2021] NTSC 34
No. 2021-00755-SC
BETWEEN:

FREDRICK WILLIAM HUNTER
First Plaintiff

and

MARIA LEE
Second Plaintiff

and

CHARLES NICHOLSON WHITTAKER
Third Plaintiff

and

MAI KATONA
Fourth Plaintiff

and

JENNIFER ANN HUNTER
Fifth Plaintiff

v

GAGUDJU ASSOCIATION INCORPORATED
Defendant

CORAM: GRANT CJ
EDITED REASONS FOR JUDGMENT
(Delivered ex tempore on 9 April 2021)

By Originating Motion filed on 6 April 2021, the plaintiffs commenced proceedings against the defendant seeking a declaration that the purported resolution of the Special General Meeting of the defendant held on 22 March 2021 is null and void and of no effect; and an injunction restraining the defendant from taking any steps towards winding up the defendant, otherwise giving effect to the purported resolution of the Special General Meeting, or distributing or disposing of any monies or assets of the defendant.
The factual background is set out in the affidavit material, which I need not repeat at any great length for these purposes. It suffices to say that the defendant is an association which was incorporated in 1980 for the benefit of Aboriginal people living in and around Kakadu National Park. The association presently has 178 members from 14 clan groups, and has cash reserves of approximately $9 million. The principal operations and income streams of the association involve the Crocodile Motel and Puma service station in Jabiru Township, and the nearby Cooinda Lodge.
The motel and service station properties are held under subleases granted by the Jabiru Town Development Authority, which in turn holds a lease over the township granted by the Director of National Parks. The lease over the Jabiru township will expire on 30 June 2021. Upon expiry, the land and the fixtures on that land will revert to the Director of National Parks. At that point in time, the Jabiru town land will be granted as Aboriginal land pursuant to the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth). A township lease will then be granted to an entity established by the traditional owners of the land for that purpose. The Mirrar people, who are the traditional owners of the township area, have established a corporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) to hold the township lease when it is granted to them. It should be noted in that respect that the traditional owners of the land on which the township of Jabiru is situated are only one of the clan groups currently represented in the association’s membership, which, as already stated, extends more broadly to Aboriginal people living in and around the National Park.
Turning then to the Lodge property, on 30 June 2024 the land on which the Lodge is situated will be granted as Aboriginal Land under the Aboriginal Land Rights (Northern Territory) Act as a consequence of the settlement of a land claim over that area. After that time it will be a matter for the traditional owners of that land whether any further interest in the Lodge is granted, and, if so, to whom. Again, the traditional owners of the land on which the Lodge is situated are only one of the clan groups represented in the association’s membership, but a different group to the traditional owners of the township of Jabiru.
In short, on expiry of the leases and subleases, the land and fixtures will revert to the respective traditional owners of each of those areas, and the defendant association will lose its interest in the land and fixtures, and the income streams they provide. In anticipation of the expiry of those leases, a Special General Meeting of the association was conducted on 14 December 2020. One of the items of business involved a special resolution to amend cl 58(2) of the association’s Constitution to provide that on winding up, the surplus assets of the association must be given or transferred to another non-profit “body” with similar objects or purposes, rather than transfer being limited to “another association incorporated under the Act” with similar objects or purposes.
It is necessary at this point to draw attention to the relevant statutory regime. Section 76 of the Associations Act 2003 (NT) deals with the distribution of assets on the winding up of an association. It contains a number of material provisions in that respect. First, it is not lawful to distribute surplus assets to members or former members of the association at the completion of the winding up. Secondly, surplus assets may be distributed to a member of the association if the member is also an incorporated association that has identical or similar aims or objects. The term “incorporated association” is defined to mean an association incorporated under the Northern Territory statute. Thirdly, subject to any order made by this Court, the surplus assets of an incorporated association following winding up are to be distributed in accordance with the Constitution of the association. The supervisory jurisdiction of the Supreme Court inheres by operation of statute, and it is unnecessary for the constitution of an association to provide expressly for that matter.
It should be noted at this point that those provisions do not preclude the distribution of surplus assets to a body other than an association incorporated under the Northern Territory statute. They only preclude the distribution of surplus assets to members or former members unless they satisfy that description and have identical or similar aims or objects. Those provisions say nothing about the distribution of surplus assets to other incorporated bodies which have identical or similar aims or objects. I also note in that respect that s 54 of the Associations Act, to which I will come back shortly, provides for the transfer of association property to another body, whether incorporated or unincorporated, formed for promoting objects similar to its own or charitable objects. That provision is not limited to an association incorporated under the Northern Territory statute, but, as I will come to, it is not concerned with winding up as such.
Having regard to the legislative structure and the evidence which has been filed in support of this application, it would seem plain that the proposed amendment to the Constitution was to enable the transfer of surplus assets on winding up to another non-profit body with similar objects or purposes, rather than having the transfer limited by the Constitution to an association incorporated under the Territory legislation. Of immediate relevance in the present context, that would enable the transfer of surplus assets, including cash reserves, to, for example, Aboriginal organisations incorporated under Commonwealth legislation, and particularly the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). That legislation was not in place at the time the association was incorporated and the Constitution drafted. Most Aboriginal associations are now incorporated under the Commonwealth legislation, for the simple reason that such incorporation is a condition of the receipt of Commonwealth grants and funding.
A number of members of the association opposed the proposed amendment. That opposition was based principally upon a concern that the resolution formed part of an attempt by those in control of the association to wind it up and distribute its assets. In very broad terms, the ultimate concern seems to be that the committee was not representative of the broader membership of the association and that any distribution of assets would be made in favour of sectional interests rather than the interests of the broader membership. There is also a suggestion in some of the affidavit material filed on the behalf of the plaintiffs to the effect that over the years the membership of the association has been skewed in favour of the two dominant clans, and that membership applications from otherwise eligible people have been ignored.
The proposal to amend the relevant clause of the Constitution was not passed at the Special General Meeting which was conducted on 14 December 2020. A further Special General Meeting was called for 22 March 2021. Again, that meeting considered the proposal to amend the Constitution. The resolution to amend the Constitution was passed at that meeting.
It is against that background that the plaintiffs have commenced the substantive proceedings, and have sought an interim and interlocutory injunction restraining the defendant association from taking any steps towards winding up, otherwise giving effect to the purported resolution of the Special General Meeting, or distributing or disposing of any monies or assets of the defendant.
As the substantive action is commenced by way of Originating Motion, that document does not plead or particularise the cause(s) of action upon which the plaintiffs rely. In correspondence and submissions, the plaintiffs describe a number of grounds of challenge, including something in the nature of oppression of the minority, that the notice of the meeting at which the resolution was passed was defective, and that the amendment is inconsistent with the Associations Act and therefore void.
The principles which govern the grant of an interlocutory injunction are not in dispute. The applicant must establish a serious issue to be tried or a prima facie case as to the interest claimed, and the balance of convenience must favour the grant of the injunction. It is unnecessary for the plaintiffs to establish a probability of ultimate success. Rather, the plaintiffs must show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial of the substantive issues. The strength of the likelihood required will depend on the nature of the rights the plaintiffs assert and the practical consequences likely to flow from a refusal to grant the injunction. However, even if the plaintiffs establish a serious issue to be tried or a prima facie case, the court must also be satisfied, first, that the grant of an injunction is necessary to preserve the status quo, and, secondly, that damages would not be an adequate remedy.
It is again necessary to go to the statutory regime, but this time with particular reference to the processes for the winding up of incorporated associations.
First, the amendment to the Constitution only has the effect which I have already described. That is, subject to the other restrictions in the legislation, it would permit the transfer of surplus assets on winding up to another non-profit body with similar objects or purposes, rather than having such a transfer limited to an association incorporated under the Territory legislation. That facility is potential only. It can have no operation or effect until such time as there is a winding up and a distribution.
Secondly, under the legislative regime in place in the Northern Territory, an incorporated association may only be wound up in one of three ways. There may be a voluntary winding up governed by the provisions of Part 5.5 of the Corporations Act 2001(Cth), as applied by s 72 of the Associations Act and Part 4 of the Corporations Reform (Northern Territory) Act 2001 (NT). That process requires a special resolution, prescribed notice, the appointment of a liquidator and, in some circumstances, supervision by the Court. The second way in which an incorporated association may be wound up is on the issue of a regulator’s certificate. However, that would ordinarily require the regulator to apply to this Court, and the regulator remains subject to the supervision of this Court. The third way in which an incorporated association may be wound up is by direct application to this Court under the applied provisions of Part 5.4A of the Corporations Act. That will involve an assessment of the justice and equity of the application.
To the extent that the letter from the defendant’s solicitors dated 29 March 2021 makes reference to winding up in pursuance of s 54 of the Associations Act, that provision creates an entirely different process to that of winding up. The process established by that provision is for the transfer of all property of the association and consequent dissolution, and was directed primarily to the local government reforms which were undertaken in or about 2008. That mischaracterisation is of no consequence for present purposes. Even if what is contemplated is a transfer and dissolution pursuant to that provision, rather than a winding up, there are a number of procedural steps which would need to be satisfied before that could occur, and there is an express avenue for application to the Supreme Court for an order prohibiting the association from transferring its property.
I am not at this point satisfied that the plaintiffs’ claim by Originating Motion gives rise to a serious question to be tried.
The validity of the notice of the meeting at which the resolution was passed is largely irrelevant, because the passage of that resolution and the consequential amendment have no immediate practical effect. Even if that issue did have some relevance, it would seem unlikely that there is any requirement that the notice contain information, or that a paucity of information gives rise to invalidity.
Nor is the amendment inconsistent with the provisions of the Associations Act, for the reasons I have attempted to describe. There is some suggestion in the correspondence of a complaint by the plaintiffs that the legislation only permits the transfer of property to a single entity rather than to multiple entities. In the course of submissions, that complaint was fleshed out to include the proposition that the members were misled to believe that the amendment would facilitate a transfer to multiple entities. Three observations may be made about that. First, the amendment to the Constitution only speaks of a single entity, and there is no inconsistency with the legislation. Secondly, it would seem plain that even if proceedings to wind up the association are instituted, there is no intention to transfer the property to a single entity. The defendant says it will propose a further amendment to the Constitution to put that issue beyond doubt. Thirdly, and even if that is not done, s 24 of the Interpretation Act 1978 (NT) provides that words in the singular include the plural. An interpretation of the statute (or the Constitution) which would preclude transfer to multiple bodies would seem highly unlikely. Accepting those matters to be so, the difficulty in negotiating or framing a resolution providing for the distribution of surplus assets to multiple entities in fixed proportions is not a matter which goes to validity.
There may or may not be something in the oppression ground, but the evidence presently before me does not establish a serious question to be tried or prima facie case in that respect. The complaint in this respect would seem rooted in an historical dispute as to whether royalty corporations such as the association are properly administered to favour traditional owner groups whose country has been directly subject to mining development, or whether they should be administered in the interests of all regional Aboriginal groups “affected” by the mining in question, as was the case when the association was originally incorporated. However, it is unnecessary to decide that question for present purposes. The application for interlocutory relief in the terms sought must be refused for the following reasons.
The relief sought is not restorative requiring the defendant to undo a wrongful act. As already stated, the amendment to the Constitution has no immediate or operative effect whatsoever. Much less is it a necessary precursor to winding up. That it may be a step taken in contemplation of a winding up at some future point is not a sufficient basis for the grant of an injunction.
When considering the balance of convenience, particular regard must be had to the imminence and likely extent of the consequences if relief is not granted forthwith. The only consequence if the relief is not granted is that the defendant may seek to put in place the machinery for winding up. As I have attempted to describe, that would require a number of steps to be taken. It is also the case that the winding up of the association is not the plaintiffs’ ultimate concern. That concern is the distribution of surplus assets in the event of a winding up, and perhaps the distribution of income in the past. Even if a special resolution is passed for the winding up of the association, a number of further steps would be required before there could be any distribution of surplus assets. Those steps are also subject to supervision by this Court. It is if and when that process is put in train that the question of injunctive relief is properly determined, and the application is premature at this point in time. In fact, an application for an injunction would be entirely unnecessary in the event that the transfer is attempted pursuant to s 54 of the Associations Act, because under that provision any member who did not vote in favour of the resolution for transfer may apply to the Supreme Court for a prohibition order, and such an application would operate to stay any transfer until the matter is decided by the Court.
Having regard to that conclusion, I make the following orders:
1.The application for interlocutory injunctive relief made by summons dated 6 April 2021 is dismissed.
2.The costs of that application will be costs in the cause.
3.The plaintiffs are to file Points of Claim in compliance with the ordinary rules of pleading by close of business on 23 April 2021.
4.The defendant is to file a Defence to the Points of Claim in compliance with the ordinary rules of pleading by close of business on 7 May 2021.
5.The substantive proceedings are adjourned for mention at 9:00am on 14 May 2021.
6.Counsel have leave to appear by audiovisual link at that time if necessary.

-------------------------------------