Registrar of Aboriginal Corporations v Koomaal Aboriginal Corporation

[2001] FCA 1303

FEDERAL COURT OF AUSTRALIA

Registrar of Aboriginal Corporations v Koomaal Aboriginal Corporation [2001] FCA 1303

ABORIGINES – aboriginal corporations – application to wind up – application by Registrar – whether public interest prerequisite met – whether winding up appropriate on just and equitable ground – whether winding up appropriate on ground of unfairness or unjustness to other members – whether winding up appropriate

Aboriginal Councils and Associations Act 1976 (Cth) ss 62A(b), 63(1)(e), 63(1)(h), 63(2)(e), 63(2)(h)

Re Lubin, Rosen & Associates Ltd [1975] 1 WLR 122 referred to
Re Walter L Jacob & Co Ltd (1989) 5 DCC 244 cited

Australian Securities Commission v AS Nominees Ltd & Ors (1995) 13 ACLC 1, 822 followed

Re Weedmand Ltd (1974) Qd R 377 referred to

THE REGISTRAR OF ABORIGINAL CORPORATIONS v KOOMAAL ABORIGINAL CORPORATION
W 202 of 2001

RD NICHOLSON J
11 SEPTEMBER 2001
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 202 of 2001

BETWEEN:	THE REGISTRAR OF ABORIGINAL CORPORATIONS APPLICANT
AND:	KOOMAAL ABORIGINAL CORPORATION RESPONDENT
JUDGE:	RD NICHOLSON J
DATE OF ORDER:	11 SEPTEMBER 2001
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.The respondent be wound up under s 63 of the Aboriginal Councils and Associations Act 1976 (Cth).

2.The Official Liquidator be appointed as the liquidator of the respondent.

3.The applicant’s costs of the application be taxed and paid out of the assets of the respondent.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 202 of 2001

BETWEEN:	THE REGISTRAR OF ABORIGINAL CORPORATIONS APPLICANT
AND:	KOOMAAL ABORIGINAL CORPORATION RESPONDENT

JUDGE:	RD NICHOLSON J
DATE:	11 SEPTEMBER 2001
PLACE:	PERTH

REASONS FOR JUDGMENT

1. By way of an amended application the applicant seeks the winding up of the respondent.  The order is sought in reliance upon provisions of the Aboriginal Councils and Associations Act 1976 (Cth) (“the Act”). The first such provision is s 62A(b) in which it is provided that the applicant may petition the Court that an Incorporated Aboriginal Association be wound up if “the Registrar is of the opinion that the winding up would be in the public interest or in the interests of the members of the Association”. It is the public interest aspect which is relied upon. Reliance is also placed on the provisions of s 63(2)(e). Section 63(1) provides that, subject to the section, an Incorporated Aboriginal Association may be wound up under an order of the Court on the petition of (among others) the applicant. Section 63(2)(e) provides that one of the grounds of such a petition may be that “the members of the Committee of the Association have acted in the affairs of the Association in their own interests rather than in the interests of the members as a whole or in any other manner whatsoever that appears to be unfair or unjust to other members”. Additionally, reliance is placed on s 63(2)(h) which provides that one of the grounds of the petition may be that it is “just and equitable” that the Association be wound up.

2. The evidence on which the application relies is contained in three affidavits.  The first is that of the acting applicant, sworn on 25 July 2001.  Additionally, there are affidavits of a law clerk employed by the Australian Government Solicitor, sworn on 3 July 2001 and 7 August 2001. 

3. There has also been filed with the Court a consent of the Official Liquidator to be appointed by the Court and to act as liquidator of the respondent.

4. There is no appearance in opposition to the application.  The reason for this becomes apparent from the admitted evidence.  The membership of the respondent is in two factions who are unable to settle the affairs of the respondent in a cooperative way but who do not oppose the appointment of a liquidator to do so. 

5. The respondent was incorporated pursuant to s 45(1)(a) of the Act on 26 June 1998. The objects for which the Association was established are:

   “1.      To support the social development of its members in all ways.

   2.To help bring about the self support of its members by the development of economic projects.

   3.To help and encourage its members to manage their affairs upon their own land.

   4.To hold any estate or interest of licence in land and the law affecting the same from time to time.

   5.To participate with other Aboriginal Corporations in projects for their mutual benefit.

   6.To receive and spend grants of money from the Commonwealth, State Governments and other sources.”

   Factionalisation of the membership is a fact which inhibits the achievement of such objects.

   Non-compliances with the Act

6. From the affidavit evidence it is apparent that the respondent has failed to comply with the provisions of the Act in the following matters:

   1.It has failed to keep an accurate register of members as required by s 58 of the Act.

   2.It has failed to call and conduct annual general meetings in the manner provided by its Rules as required by s 58B of the Act.

   3.It has failed to keep proper accounts and records of its transactions and affairs and to do all things necessary to ensure that all payment of moneys are correctly made and properly authorised or meet any of the requirements of s 59(1) of the Act.

   Public interest prerequisite: s 62A(b)

7. For the applicant it is said that there is a distinct public interest in him securing compliance with the Act. Furthermore, it is submitted that it would be contrary to the public interest to allow the respondent to continue to exist as a mere shell of an organisation given its failure to actively pursue its objects and the factional stalemate between its members.

8. It is also submitted that in reaching this conclusion the Court should give special weight to the conclusion of the applicant as an officer of the government whom Parliament has entrusted with the function of acting in the public interest:  Re Lubin, Rosen & Associates Ltd [1975] 1 WLR 122 at 128 – 9 per Megarry J. Additionally, it is submitted that although the cogency of submissions made on behalf of a government entity fall to be considered in the same way as other submissions, it is significant that the applicant is an entity charged with wide ranging responsibilities in relation to the affairs of associations: Re Walter L Jacob & Co Ltd (1989) 5 DCC 244.

9. Without placing any particular weight on the two aforementioned considerations it seems to me that the catalogue of non-compliances understood in the context of the factionalisation of the respondent supports a finding that there is a proper foundation in fact for the Registrar’s opinion that the winding up of the respondent would be in the public interest. However, s 62A(b) provides only a right to the registrar to petition the Court in that event – it does not itself provide a power to the Court to effect the winding up.

   Just and equitable considerations: s 63(1)(h)

10. Considerations of public interest can properly inform the decision of a court entertaining an application on a just and equitable ground:  Australian Securities Commission v AS Nominees Ltd & Ors (1995) 13 ACLC 1, 822 at 1,844 per Finn J. This is consistent with the wide character of a “just and equitable” ground: Australian Securities Commission v AS Nominees Ltd & Ors (supra).  I accept that the following are relevant considerations under the just and equitable ground:

    1.the public interest in a regulatory governmental body securing compliance with the legislation it regulates: at 1845;

    2.whether there have been repeated breaches by a corporate body of the regulatory legislation:  ibid at 1845;

    3.whether there has been a lack of propriety and competence in the management and conduct of the affairs of the corporation:  ibid at 1845;

    4.the fact that a winding up order is an appropriate expression of a lack of confidence in the conduct and management of a corporation, and a proper message to similar corporations:  ibid at 1846;

    5.the need for investor protection:  ibid at 1844;

    6.whether there is a deficiency in a corporation’s accounting records:  Re: Walter L Jacob & Co Ltd (1989) 5 BCC 244 at 254.

11. In my opinion the failures of compliance with the provisions of the Act previously set out establish that it would be just and equitable that the respondent be wound up by an order of the Court made pursuant to the authority in s 63(1) read with s 63(2)(h) provided such an order was otherwise appropriate.

    Unfair or unjust conduct: s 63(1)(e)

12. It is submitted that parallel cases in a non-Aboriginal corporation context have held that whether or not a director of a corporation will be found to have acted unfairly or unjustly will largely depend upon whether the director has breached the requisite standard of commercial morality:  Re Weedmand Ltd (1974) Qd R 377. The cumulative failure of the respondent’s committee members to:

    1.actively pursue Koomaal’s objectives;

    2.maintain a register of members;

    3.hold general meetings; and

    4.hold committee meetings

    leads to the conclusion that the members of the committee have acted in a manner that is unfair or unjust to other members as a whole.

13. A further submission was made to the effect that a loan made by a member of the respondent to himself from the funds of the respondent without approval of the Committee also breached the requisite standard of commercial morality so that at least one of the members of the Committee acted in a manner which is unfair or unjust to other members.  The manner in which this submission is supported in the evidence has not been made apparent and nor is it readily apparent and I do not rely upon it.

    Whether winding up appropriate

14. It is clear that due to the factionalisation of the membership the respondent is not a viable Association.  Rectifying irregularities within the respondent’s operating and financial affairs by the appointment of an administrator or grant controller is not a viable alternative.

15. For these reasons I consider it is appropriate for the Court to exercise its discretion to wind up the respondent on the two grounds which have been established. 

    Conclusion

16. Accordingly, orders should be made that the respondent be wound up and that the Official Liquidator be appointed as its liquidator.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice
RD Nicholson.

Associate:

Dated:             11 September 2001

Counsel for the Applicant:	M/s R Vavakis
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	No appearance
Date of Hearing:	4 September 2001
Date of Judgment:	11 September 2001