McCready v Whitireia Independent Students Association Incorporated HC Wellington CIV 2010-485-1576

[2010] NZHC 2051

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2010-485-1576

BETWEEN  GRAHAM EDWARD MCCREADY Plaintiff

ANDWHITIREIA INDEPENDENT STUDENTS ASSOCIATION INCORPORATED

Defendant

Hearing:         11 October 2010

Appearances: G E McCready (In Person) Plaintiff

B Bevan for Defendant
J Sumner for Whitireia Polytechnic

Judgment:      11 October 2010

ORAL JUDGMENT OF MILLER J

[1]      Mr McCready has applied for an order winding up the Whitireia Independent Students Association Incorporated.  The application is yet to be advertised.  It came before me as a matter of urgency this morning, to deal with various interlocutory applications.

[2]      On  Mr  McCready’s  side  there  are  several  applications.    The  first  is  an application to appoint the Official Assignee provisional liquidator, an application for an order extending time to advertise, and a direction that a settlement be negotiated. I record that until recently Mr McCready has represented himself as the liquidator and that the application for settlement is made on the basis that the Court ought to facilitate a settlement because that is in the interests of the students that he purports

to represent.

GRAHAM EDWARD MCCREADY V WHITIREIA INDEPENDENT STUDENTS ASSOCIATION INCORPORATED HC WN CIV 2010-485-1576  11 October 2010

[3]      The  second  is  an  application  for  an  order  that  the  deponents  for  the Association be cross-examined on the grounds that they have apparently perjured themselves.  I will say at the outset that there appears to be absolutely no foundation for that suggestion.

[4]      The third is an application for an order that an auditor’s report be disclosed.

[5]      On the Association’s side there is an application for stay of the liquidation proceedings and an application for an order restraining Mr McCready from representing himself as the liquidator or otherwise as a person authorised in respect of the Association’s management.

[6]      I record that the Association’s position is supported by Whitireia itself.

[7]      Mr McCready claims standing not as a creditor but as a member of the Association.   He says that he has set up a competing student body, the Whitireia Polytechnic Students Association 2010 Incorporated.   It is his intention that that body should take over the affairs of the current Association.  Some 15 students have supported him in setting up the new Association.  He is the President of it, although he maintains that he has no wish to remain in that office, and that he has taken it on only pending the appointment of another President.

[8]      Mr  McCready  has,  however,  taken  it  on  himself  to  represent  to  the Companies Office and the Commissioner of Inland Revenue that he represents the existing Association.  He has styled himself its liquidation president and purported to act as liquidator.  He has filed tax returns and had its bank account frozen.  He has somehow got access to its Post Office Box and taken some of its mail.

[9]      He has done all of this without the authority of the Executive or the student body.  The Rules of the Association provide for an extraordinary general meeting on the  request  of  30  students.    That  has  not  been  done.    In  short,  his  actions  in purporting to represent the Association are wholly unauthorised.

[10]     Mr McCready has sought to rationalise this by saying the Association is insolvent.  That is said to be so because it owes a great deal of tax.  As a charity it is exempt tax.  But Mr McCready maintains that because the previous executive stole the Association’s funds, those funds were used for charitable purposes and the Association must pay tax on the monies stolen.  The returns that he has filed with the Commissioner of Inland Revenue purport to accept a tax liability on that basis. Quite how this can be said to be in the interests of the students that he purports to represent is beyond me.

[11]     Fortunately I have the benefit of evidence from the Association’s accountant and its President.  They establish that the Association has creditors of a little more than $23,000 and funds of some $75,000.  It is not insolvent.  It also receives income from student levies.   I record at this point that the funds are under the control of Whitireia rather than the Association.   There is no suggestion that the present executive is able or likely to misappropriate the funds.

[12]     There can be no question but that Mr McCready has seriously overreached himself.  He is a member of the Association but purported to act as its liquidator and agent  when  he  is  neither.    And  the  evidence  before  me  establishes  that  the Association is not insolvent.

[13]     In the circumstances, the application for an order winding the Association up is a plain abuse of the Court’s processes and the proceeding must be dismissed with costs.  It goes without saying that neither the Official Assignee nor Mr McCready will be appointed provisional liquidator and that the application for winding up may not be advertised.   All other interlocutory applications by Mr McCready are dismissed.

[14]     There will be an order restraining Mr McCready from acting in any way as the agent of the Association unless and until he is so appointed by the executive or elected by a duly constituted meeting of the Association.   His battle for control should be determined by the students, not the Court.

[15]     There will further be an order that he return to the Association all its property in his possession.

[16]     The Association will have costs on a 2B basis, as will Whitireia itself, for which an appearance has been necessary because the application for cross- examination concerned its Chief Executive.

Miller J

Solicitors:

Kapimana Legal Services Limited, Porirua for Defendant