Sandy v Yindjibarndi Aboriginal Corporation RNTBC [No 2]
[2016] WASC 75 (S)
•23 MARCH 2016
SANDY -v- YINDJIBARNDI ABORIGINAL CORPORATION RNTBC [No 2] [2016] WASC 75 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 75 (S) | |
| Case No: | CIV:3048/2015 | 9, 16 & 17 MARCH 2016 | |
| Coram: | LE MIERE J | 23/03/16 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Receiver appointed | ||
| B | |||
| PDF Version |
| Parties: | JOHN SANDY YINDJIBARNDI ABORIGINAL CORPORATION RNTBC ANGUS MACK JILL TUCKER LYN CHEEDY LYNETTE PHILLIPS MIDDLETON CHEEDY PANSY CHEEDY (also known as SAMBO) ROSEMARY WOODLEY RUSSEL SANDY SONIA WILSON STANLEY WARRIE TOOTSIE DANIELS |
Catchwords: | Aboriginal Corporation Appointment of receiver Just and convenient Turns on own facts |
Legislation: | Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), s 69-35, s 274-10, s 439-10, s 439-20, s 516-1 Corporations Act 2001 (Cth), pt 5.2 |
Case References: | Sandy v Yindjibarndi Aboriginal Corporation RNTBC [No 2] [2016] WASC 75 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
YINDJIBARNDI ABORIGINAL CORPORATION RNTBC
First Defendant
ANGUS MACK
First-named Second Defendant
JILL TUCKER
Second-named Second Defendant
LYN CHEEDY
Third-named Second Defendant
LYNETTE PHILLIPS
Fourth-named Second Defendant
MIDDLETON CHEEDY
Fifth-named Second Defendant
PANSY CHEEDY (also known as SAMBO)
Sixth-named Second Defendant
ROSEMARY WOODLEY
Seventh-named Second Defendant
RUSSEL SANDY
Eighth-named Second Defendant
SONIA WILSON
Ninth-named Second Defendant
STANLEY WARRIE
Tenth-named Second Defendant
TOOTSIE DANIELS
Eleventh-named Second Defendant
Catchwords:
Aboriginal Corporation - Appointment of receiver - Just and convenient - Turns on own facts
Legislation:
Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), s 69-35, s 274-10, s 439-10, s 439-20, s 516-1
Corporations Act 2001 (Cth), pt 5.2
Result:
Receiver appointed
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Bennett & Ms T J C Elder
First Defendant : Mr J R Ludlow
First-named Second Defendant : Mr J R Ludlow
Second-named Second Defendant : No appearance
Third-named Second Defendant : Mr J R Ludlow
Fourth-named Second Defendant : Mr J R Ludlow
Fifth-named Second Defendant : Mr J R Ludlow
Sixth-named Second Defendant : Mr J R Ludlow
Seventh-named Second Defendant : Mr J R Ludlow
Eighth-named Second Defendant : Mr J R Ludlow
Ninth-named Second Defendant : Mr J R Ludlow
Tenth-named Second Defendant : Mr J R Ludlow
Eleventh-named Second Defendant : Mr J R Ludlow
Solicitors:
Plaintiff : Bennett + Co
First Defendant : HWL Ebsworth Lawyers
First-named Second Defendant : HWL Ebsworth Lawyers
Second-named Second Defendant : No appearance
Third-named Second Defendant : HWL Ebsworth Lawyers
Fourth-named Second Defendant : HWL Ebsworth Lawyers
Fifth-named Second Defendant : HWL Ebsworth Lawyers
Sixth-named Second Defendant : HWL Ebsworth Lawyers
Seventh-named Second Defendant : HWL Ebsworth Lawyers
Eighth-named Second Defendant : HWL Ebsworth Lawyers
Ninth-named Second Defendant : HWL Ebsworth Lawyers
Tenth-named Second Defendant : HWL Ebsworth Lawyers
Eleventh-named Second Defendant : HWL Ebsworth Lawyers
Case(s) referred to in judgment(s):
Sandy v Yindjibarndi Aboriginal Corporation RNTBC [No 2] [2016] WASC 75
1 LE MIERE J: On 9 March 2016 I delivered judgment in this matter: Sandy v Yindjibarndi Aboriginal Corporation RNTBC [No 2] [2016] WASC 75. I found that the second defendants had ceased to be directors of the first defendant, YAC, and I made a declaration to that effect. The result is that YAC currently has no directors.
2 In his originating summons the plaintiff sought the appointment of a receiver. In my reasons for judgment I said that before the court exercises its discretionary power to appoint a receiver it should be persuaded that there is no reasonable or satisfactory alternative. I adjourned the plaintiff's application for the appointment of a receiver to give the Registrar of Indigenous Corporations an opportunity to consider whether to appoint a special administrator or take some other action in relation to YAC.
The Registrar
3 The Registrar of Indigenous Corporations is an independent statutory officeholder appointed by the Minister for Indigenous Affairs under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act). The Registrar is responsible for the administration of the CATSI Act. In recognition of the special nature of an Aboriginal and Torres Strait Islander Corporation the CATSI Act safeguards the interests of members and the proper functioning of the corporation by conferring on the Registrar special regulatory powers. The Registrar has a number of regulatory powers to intervene to solve problems within corporations.
4 On 9 March 2016 the solicitors for the plaintiff provided the Registrar with my reasons for judgment in this matter. On 15 March 2016 the Registrar forwarded to my Associate a copy of his letter of 15 March 2016 to YAC. In his letter the Registrar said, amongst other things:
I have taken into consideration Justice Le Miere's reasons for judgment, the circumstances of YAC and the matters in my policy statement, ps-20:special administrations and determined that while some grounds may exist for placing YAC under special administration, it is not appropriate to do so at this time.
Special administration removes control of a corporation from its members for a significant period of time (usually a minimum of six months) and I am satisfied that the circumstances that YAC has no directors can be addressed through the exercise by me of other powers under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
I have taken the following actions to address the circumstances identified by Justice Le Miere in his reasons for judgment. Those actions are of course subject to any further orders or declarations made by Justice Le Miere and I hope that they are sufficient to satisfy his Honour that the appointment of a receiver to YAC is not required.
5 The Registrar set out the actions he has taken to address the circumstances identified in my reasons for judgment. In summary, the Registrar has taken the following actions.
1. The Registrar has called a general meeting of YAC's members to appoint directors of YAC and issued an explanatory letter and notice of meeting to all members of YAC. The general meeting will be held on 19 April 2016. The Registrar will chair the meeting.
2. The Registrar has determined under s 439-10(5) of the CATSI Act that some of the rules of the Act did not apply to the Registrar initiated general meeting and other rules are appropriate. The Registrar has modified the rules regarding proxies for the general meeting. The Registrar has specified a rule to apply to the general meeting for the nomination and appointment of directors.
3. The Registrar has exercised his powers under s 69-35 of the Act and changed YAC's rule book because it is not meeting the requirements of the Act. The changes that have been made include that the three-quarters majority to pass resolutions has been replaced with a simple majority. The rule relating to directors' resolutions about non-native title matters to be passed by consensus have been changed so that a simple majority of directors is now only required if consensus cannot be reached.
4. The Registrar has proposed further changes to the rule book for the consideration of members of YAC.
5. Upon the election of directors at the meeting on 19 April 2016 the Registrar will write to the new directors and indicate that he proposes to issue a compliance notice under s 439-20 of the Act to YAC and each of the new directors. The proposed compliance notice will require the corporation to hold its AGM prior to the end of November 2016 and to consider and finalise all outstanding applications for membership by 30 June 2016. YAC and its directors will be required to provide applicants that are refused membership with reasons for the refusal by 30 June 2016.
6 On 16 March 2016 in an email to the plaintiff's solicitors the Registrar said:
You have sought my views on the issue of the conduct of the executive officers of YAC pending the general meeting on 19 April 2016. I am unable to provide assistance to the court on this matter as it is outside the jurisdiction of my office.
The plaintiff presses for the appointment of a receiver
7 The plaintiff presses for the appointment of a receiver on the ground that the executives, or senior employees, of YAC, and in particular its CEO Mr Woodley have conducted the affairs of the corporation in a way that is unfairly prejudicial to and discriminatory against the plaintiff and other members of YAC who are also members of WMYAC, who I will refer to as the 'WMYAC group'.
YAC opposes the appointment of a receiver
8 Counsel for YAC, Mr Ludlow, informed the court that the solicitors and counsel for YAC are instructed by the senior executives of YAC in accordance with powers and functions delegated to, or conferred upon, them by the rules of the corporation and resolutions of the directors when they were properly appointed. YAC opposes the appointment of a receiver.
Conflict within YAC
9 There is and has been for at least four years conflict between the WMYAC group and the second defendants other than Ms Tucker and members of YAC who support them. I will refer to this group as the 'defendants group'. The defendants group contends that Fortescue Metals Group Ltd (FMG) funds, or has funded, the WMYAC group to oust the defendants group and free up access to land that FMG's mines sit on against the interests of the Yindjibarndi people.
Conduct of YAC executives
10 Mr Woodley, in his capacity as CEO of YAC, used his position and the resources of YAC to attack the plaintiff and the WMYAC group and support the appointment of the defendants group as directors of YAC. Members of the defendants group and members of the WMYAC group each stood for election as directors at the annual general meetings for 2014 and 2015 held on 30 November 2015. A number of documents were distributed to the members attending the 30 November 2015 meeting including documents entitled 'Yindjibarndi Aboriginal Corporation notes for the 30 November 2015 AGM' (Notes). The Notes included newspaper articles entitled: 'Pilbara Indigenous Community Split over Fortescue Mine Claim', 'Fortescue must stop funding native title splinter group - MP', 'Fortescue Metals Group behind move to oust native title leaders' and 'Andrew Forrest tells us what to do but is this welfare reform or a land grab'. The Notes also include a message from Mr Woodley entitled 'AGM Message from YAC CEO Michael Woodley'. The message contained a strong attack on 'the WYMAC leaders'. It includes:
WIRLU-MURRA BETRAYAL OF TRUST
Many have expressed their shock and disappointment at how they were deceived and manipulated at the meeting last June, into voting against Yindjibarndi getting the highest level of native title in the Yindjibarndi #1 Claim Area - by the Wirlu-Murra leaders and other people that are paid by FMG.
We are grateful to WMYAC members for taking this seriously, and welcome your support.
QUESTIONS ABOUT THE WIRLU-MURRA $18 MILLION DOLLARS
Concerns have also been raised about what happened to WMYAC's income of OVER $18 MILLION DOLLARS IN THE FINANCIAL YEAR ENDING June 2014. How is it that with such large money flows WMYAC has ended up with a massive debt? Where did the money go?
This is an especially important issue for YAC's AGM because the Wirlu-Murra leaders have made it clear that they want to take over YAC. WHAT WILL THEY DO TO YAC FINANCES WITH THIS SORT OF TRACK RECORD?
Members are upset because it seems some WMYAC members, along with the consultants and lawyers around WMYAC, are getting great benefits, while most of the people get nothing and are struggling.
And this is happening while FMG, with the support of the Wirlu-Murra leaders, operates one of the biggest iron ore mines in the world on our country, and is making an absolute fortune at the expense of native title rights that belong to all Yindjibarndi in common.
…
WHAT IS IN THE BEST INTERESTS OF YINDJIBARNDI
The question now is not reconciliation between YAC and WMYAC - YAC tried that and was knocked back. The hope now is that more and more people turn away from the deception of the WMYAC Leadership and their FMG advisors, and think for themselves - that people make their own reconciliation with the Yindjibarndi Nation. The only question important for all of us now is:
WHAT IS IN THE BEST INTERESTS OF YINDJIBARNDI?
11 In my judgment I found that at the 16 December 2015 meeting the directors passed the membership resolution and the special general meeting resolution for the purpose of convening a special general meeting early in the new year and adding new members who they believed would support the incumbent directors other than Ms Tucker in voting to appoint the incumbent directors other than Ms Tucker as directors at the special general meeting. I found that Ms Lyn Cheedy called the meeting after Mr Woodley telephoned her with a view to calling a directors' meeting. I accepted Ms Cheedy's evidence which included that Mr Woodley contacted her with a view to calling a directors' meeting and that Mr Woodley proposed that the directors call a special general meeting to be held in the early part of 2016 to vote again on the issue of the board, to break the deadlock that had been dividing the community. In effect, Mr Woodley instigated the holding of a meeting and proposed resolutions which were passed for the improper purpose I have identified.
12 On or about 27 January 2016 YAC published on its website an article entitled 'Yindjibarndi will fight FMG-sponsored litigation to stop elections', emailed a copy of the article to a number of people and put the first part of the article on its Facebook page with a hyperlink to the full article. On 2 February 2016 the plaintiff's solicitors wrote to YAC's solicitors requesting that the publications be removed. The article was removed from its website and in its place appeared the words: 'Article removed after threat of further litigation. The article titled "Yindjibarndi will fight FMG-sponsored litigation …" has been removed as a result of a threat of further litigation, which the Yindjibarndi Aboriginal Corporation (YAC) cannot afford to defend'. The webpage states that the contacts are Mr Woodley's email address and the email address for George Irving, YAC in-house counsel.
13 There is no evidence who posted those articles on the YAC website or Facebook page. However, the website and Facebook page are resources of, and means used by YAC to communicate to its members. Mr Woodley has sworn that YAC communicates with members and a wider readership by, amongst other things, its website, email and Facebook. Mr Woodley permitted the YAC website and Facebook page to be used to publish the publications to which I have referred in that he did not ensure that YAC's website and Facebook page were not used to publish the articles and took no steps to remove them until the letter from the plaintiff's solicitors. The articles, which were published shortly before the hearing of the originating summons in this matter, make a strong attack upon the plaintiff and the WMYAC group.
14 Counsel for YAC informed the court that Mr Irving, with the authority of and on behalf of Mr Woodley and Mr Davies, instructed him that Mr Irving, Mr Davies and Mr Woodley intend to act in a neutral fashion in relation to the two groups, not advocate on behalf of any candidate for election, not use corporate resources to advocate in favour of any candidate and will not use any personal resources to favour either group.
15 Notwithstanding the intentions of the executives conveyed to the court by Mr Ludlow I find there is a risk that if the property and resources of YAC remain under the control of its executives they will be used to unfairly discriminate against the WMYAC group in favour of the defendants' group. I make that finding for a number of reasons. First, the executives have given no undertakings to the court, they have merely stated their intention. The hearing was adjourned for the specific purpose of enabling counsel for YAC to take instructions from the executives, and confer with the plaintiff's solicitors. Notwithstanding that, the executives offered no undertakings to the court and counsel for YAC made no statement to the court of their intentions until the court expressly questioned counsel about the matter. The matter was then stood down for counsel to take instructions from the executives. On the resumed hearing counsel informed the court that Mr Irving, on behalf of and with the authority of Mr Woodley and Mr Davies, informed the court of their intentions. No undertakings were offered.
16 Secondly, Mr Ludlow, acting on the instructions of the executives, submitted at the hearing on 17 March 2016 that the executives would continue to follow the policy of the corporation expressed in the resolution of YAC directors on 10 March 2011. The resolution was:
That the Yindjibarndi Aboriginal Corporation (YAC) continues to oppose FMG and the Wirlu-Murra group with every legal avenue possible so that YAC protects all Yindjibarndi country, both in the Yindjibarndi native title determination and application areas because the agreement that FMG and the Wirlu-Murra group want YAC to sign is a bad agreement for YAC and all Yindjibarndi people. In addition to this the YAC directors fully agree with and support the work, newsletters and affidavits that Michael Woodley has put before the courts and community on behalf of the YAC. They also fully support Michael Woodley as CEO of YAC.
- Mr Ludlow submitted that Mr Woodley wrote his message in the Notes in furtherance of that policy. Those instructions to counsel show a complete lack of understanding of the role and responsibility of the CEO of the corporation. The resolution in part ratified the action which had been taken by Mr Woodley in doing work and publishing newsletters that were put before the community on behalf of YAC. It is apparent that Mr Woodley undertook those actions and they were subsequently ratified by the directors. The resolution, and any policy of the corporation, does not and cannot require an employee to express an attack on one group of members and discriminate in support of the incumbent directors as his personal opinion. Mr Woodley's message in the Notes was not expressed as the opinion of YAC but rather as Mr Woodley's personal opinion. Mr Ludlow, on instructions from the executives, submitted that to act neutrally is to act in accordance with the status quo and the status quo is represented by the directors' resolution of 10 March 2011. That demonstrates a continuing lack of understanding of the duty of directors and executives not to use or allow to be used the corporation's property or resources to help a candidate against another candidate in an election for directors of the corporation. Executives must not act in a way that appears to be unfair or unjust to members of the corporation or conduct the affairs of the corporation in a way that is unfairly prejudicial to, or unfairly discriminatory against, a member or members of the corporation.
Receiver will be appointed
17 In the circumstances it is necessary to appoint a receiver to the property of YAC to ensure that its property and resources are not used, or allowed to be used, directly or indirectly to help a candidate against another candidate in the election for directors. The Registrar has informed the court that it is not appropriate to appoint a special administrator and 'the conduct of the executive officers of YAC pending the general meeting on 19 April 2016 … is outside the jurisdiction of my office'. I therefore determine that it is just and convenient to appoint a receiver pending the general meeting on 19 April 2016.
Person to be appointed receiver
18 The plaintiff moves that Ian Charles Francis be appointed receiver. Mr Francis consents to his appointment. Mr Francis is an official liquidator and registered trustee in bankruptcy with extensive experience. The defendants make no submissions to the effect that Mr Francis is not qualified or suitable to be appointed receiver. However, the defendants submit that the Registrar should be asked to nominate a receiver from a panel maintained by the Registrar. The Registrar maintains a panel of people with demonstrated skills, experience and qualifications to appoint as a special administrator. I do not consider it appropriate to ask the Registrar to nominate a person to be appointed as receiver. The Registrar has informed the court that it is not appropriate to appoint a special administrator. In those circumstances, it is neither necessary nor appropriate to appoint a person with skills appropriate for a special administrator. Furthermore, asking the Registrar to nominate a person for appointment as receiver would further delay the appointment. I will appoint Mr Francis as receiver.
Powers of receiver
19 The receiver should have the powers of a receiver provided for under pt 5.2 of the Corporations Act 2001 (Cth), as applicable to YAC by virtue of s 516-1 of the CATSI Act. The plaintiff submits that the receiver should not make a native title decision except with the prior approval of the court obtained upon application by the receiver. That is appropriate. The plaintiff submits that any delegation of authority pursuant to s 274-10 of the CATSI Act or r 5.14 of the YAC rule book to any person should be suspended until further order of the court. It is appropriate that any such delegation be suspended but the suspension should be until the conclusion of the general meeting to be held on 19 April 2016. There should be a further restriction on the powers of the receiver. The receiver should not dismiss any employee of the corporation without the approval of the court. The plaintiff has in a minute of proposed orders of 17 March 2016 proposed orders which are commonly made in relation to the remuneration of the receiver. It is appropriate that those orders be made. The plaintiff also moves that the receiver be appointed without security. In all the circumstances that is appropriate.
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