FEDERAL COURT OF AUSTRALIA

Acting Registrar Plowman, in the matter of Kooma Aboriginal Corporation

for Land v Kooma Aboriginal Corporation for Land [2001] FCA 272

IN THE MATTER OF KOOMA ABORIGINAL CORPORATION FOR LAND

COLIN PLOWMAN, THE ACTING REGISTRAR OF ABORIGINAL CORPORATIONS v KOOMA ABORIGINAL CORPORATION FOR LAND

Q 8 OF 2001

DRUMMOND J

BRISBANE

9 MARCH 2001

IN THE MATTER OF KOOMA ABORIGINAL CORPORATION FOR LAND

THE COURT ORDERS THAT:

1.                  Kooma Aboriginal Corporation for Land be wound up.

2.                  Mr Ian Richard Hall, Official Liquidator, be appointed liquidator of Kooma Aboriginal Corporation for Land.

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

IN THE MATTER OF KOOMA ABORIGINAL CORPORATION FOR LAND

REASONS FOR JUDGMENT

1                     I have before me an application under s 62A the Aboriginal Councils and Associations Act 1976 (Cth) (“the Act”) to wind up the Kooma Aboriginal Corporation for Land (“Kooma”) on the grounds that it is insolvent and that it is just and equitable that it should be wound up.  Kooma’s difficulties started in 1998 with Goolburri Regional Council (“Goolburri”) of the Aboriginal and Torres Strait Islander Commission (“ATSIC”) refusing to fund it.  Spender J, in a judgment given in February 1999, held that Goolburri’s decision to de-fund Kooma was unlawful.

2                     Kooma did not sue Goolburri following that decision in respect of its unlawful actions in de-funding it and has never sought to sue Goolburri.  Instead, understandably, it reopened discussions with ATSIC to obtain the funding necessary to conduct its operations.

3                     The evidence indicates that Kooma’s only effective source of income is grants from ATSIC.  But by November 1999, those discussions between Kooma and ATSIC for a resumption of funding had broken down and Kooma has not received any grants funding since prior to the Goolburri decision in September 1998, ie, the decision invalidated by Spender J.  It has, on the evidence, no prospect now of obtaining grants funding or other income of any significant amount.

4                     On the most favourable view of the evidence for Kooma, it owed as at 30 June 1998 a minimum of about $33,000 to the Australian Taxation Office (“ATO”) in respect of unremitted group tax.  That is the figure given by Mr Fraser of Fraser Hooker Aitken in his July 1998 review into Kooma’s operations.  Mr Wharton, the General Manager of Kooma, in late 2000 advised Mr Jepsen, who was appointed by the Registrar to conduct an examination into Kooma under s 60 of the Act, that Kooma’s liability to the ATO was of the order of $70,000 to $80,000.  Mr Wharton gave that information at a time when the ATO was claiming a debt due by Kooma in respect of notices of assessment issued and served on Kooma amounting to about $121,000.

5                     Mr Wharton in his affidavit explains his position as to what he had to say to Mr Jepsen about what he referred to as “the limited extent of Kooma’s indebtedness to the ATO $70,000 to $80,000” in this way:

“The estimate of tax liability does not take into account that KACL [ie, Kooma] has not had any paid employees since July 1998 and would not be liable for any estimated group tax since that date.”

6                     He thus confirms his acknowledgment to Mr Jepsen of Kooma’s long-standing indebtedness to the ATO in respect of unremitted group tax due in respect of wages paid to Kooma’s employees by Kooma before July 1998.  It is clear that Kooma has no present means of paying this debt and it has no future prospects, on the evidence, of doing that either.

7                     The submission was made on behalf of Kooma that if the ATO were to sue for outstanding tax, Kooma would cross-claim against Goolburri.  It was also said in this context that Kooma did not owe any tax, that it was Goolburri who was the debtor.  But Mr Wharton’s own evidence exposes that submission as lacking any foundation.  The debt to the ATO on Mr Wharton’s evidence admittedly includes a minimum of $70,000 of tax payable by Kooma prior to July 1998 in respect of Kooma’s own employees.

8                     I am satisfied that Kooma is insolvent and has been so for at least a year.  As to whether the discretion to wind up the company should be exercised against it, it is apparent that, no doubt due to lack of funding, Kooma’s administration is in disarray.  In November 1999 Mr Jepsen in his examination report said this:

“During the period covered by this examination, the Corporation has been virtually inactive due to a lack of major funding.  Some minor funding has been received from the University of New England for research consultancy, and advertising for the local Aboriginal radio station. 

The existing accounts and records of the Corporation are in a state of disarray.  An MYOB accounting software package has been installed however the present voluntary administrative staff have limited knowledge of its operation.  A search of the records revealed that no satisfactory systems were in place to ensure that financial transactions were being recorded properly on MYOB.  Records were not filed systematically, cheque books could not be located, mail was unopened, and documentation was strewn across the office floor.

During the course of the examination we experienced difficulty in obtaining documentation or answers relating to the financial affairs of the Corporation from the office manager Mr Wharton and the voluntary office assistant.”

9                     An earlier s 60 examination conducted by Ludgates in July/August 1999 presented much the same picture.

10                  Something was sought to be made by counsel for Kooma of the first point in Ludgates’ conclusions to the effect that it considered that Kooma was conducting its affairs in accordance with its objectives, the Act and its rules.  But it is apparent from everything that follows that Kooma was plainly insolvent at that stage and that, due no doubt to its longstanding state of insolvency, its administrative affairs were in great disorder.  Ludgates also refers to the fact that but for the anticipated emergence of Mr Fraser as a consultant to Kooma who was to oversee the administration of Kooma, Ludgates would then have recommended to the Registrar that an administrator be appointed to Kooma.  Mr Fraser, however, never came on the scene.

11                  Those considerations, added to the longstanding insolvency of Kooma, point to this being an appropriate case for the making of a winding-up order.

12                  As against making a winding-up order, it was pointed out that the ATO is not pressing for payment of the debt.  However, it is clear it is not resiling from its assertion that Kooma is indebted to it for unremitted group tax and it has taken action by way of statutory garnishee against Goolburri to divert to the ATO any moneys that might happen to come to Goolburri earmarked for Kooma in satisfaction of Kooma’s liability to the ATO.

13                  I am of the view that there are no sufficient grounds why a winding-up order should not be made on the ground of insolvency, and there will be an order to that effect.

Associate:

Dated:              15 March 2001