FEDERAL COURT OF AUSTRALIA

Armstrong as delegate for the Registrar of Aboriginal and Torres Strait Islander Corporations v Aboriginal and Torres Strait Islander Corporation for Welfare Services (No 2) [2009] FCA 1548

CORPORATIONS – Winding up – Aboriginal and Torres Strait Islander Corporation – Application to wind up corporation on ground of insolvency – Application to extend period for the determination of the winding up application – Acquisition by corporation of finance to offset debts and payments due in arrears – Undertakings given by corporation to Registrar of Aboriginal and Torres Strait Islander Corporations in respect of governance and financial performance of the corporation – Public interest to undertake this course – Time for determination of application to wind up Respondent Corporation extended

Corporations Act 2001 (Cth) s 459R

PETER ARMSTRONG AS DELEGATE OF THE REGISTRAR OF ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATIONS v ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATION FOR WELFARE SERVICES

QUD 170 of 2009

LOGAN J

17 december 2009

BRISBANE

THE COURT ORDERS BY CONSENT THAT:

1.                  The Plaintiff’s application be adjourned to a date to be fixed.

2.                  Pursuant to s 459R(2) of the Corporations Act 2001 (Cth), the period within which the Plaintiff’s Application must be determined be extended until 9 July 2010.

3.                  The Defendant file and serve an affidavit evidencing that the Defendant has entered into a loan agreement with the National Australia Bank Limited ABN 12 004 044 937 on the terms contained in the letter of offer dated 14 December 2009, and exhibiting a receipt from the Mt Isa City Council confirming payment in full of outstanding rates arrears in the amount of $351,282.65, on or before 4.00pm on Friday 15 January 2010.

4.                  Subject to compliance with order 3 herein, the Plaintiff and Defendant file with the registry consent orders in the form attached to this order on or before 4.00pm on Friday 22 January 2010.

5.                  Liberty to apply on three days’ notice in writing.

6.                  Costs reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     This case was originally to proceed today for the contested hearing of an application made by a Delegate of the Registrar of Aboriginal and Torres Strait Islander Corporations (the Registrar), Mr Armstrong, for the winding up of Aboriginal and Torres Strait Islander Corporation for Welfare Services (the Corporation).  I came to fix today for the hearing of the winding up application as a result of earlier interlocutory proceedings which are the subject of an earlier interlocutory judgment which I delivered.  I shall not repeat what is there stated.  Since then, and as revealed by an affidavit of Justin David Ericson, filed and read today by leave, very considerable efforts indeed have been made to give order to the affairs, including the financial affairs, of the corporation.

2                     Mr Ericson is a principal of Millar Teitzel Accountants and also a director of the Corporation.  He came to hold that office as a result of deliberate decisions taken responsibly by the Corporation to put its affairs in order following what one might term the “wake-up call” administered properly by the Registrar in respect of its governance.  That affidavit reveals that, following the decision by the Mt Isa Council not to grant rates exemption, a successful application has been made to the National Australia Bank for the provision of sufficient finance to enable an outstanding rates bill to be settled.  The affidavit also discloses that corporate responsibilities for the payment of moneys to the Commissioner of Taxation on behalf of the Commonwealth and in respect of superannuation are to be met.

3                     There will, though, be some need for a short passage of time to put particular arrangements into effect to enable outstanding obligations to be met by the provision of funds which are arranged.  What the parties propose is a regime in terms of draft orders submitted, whereby the Corporation will be given time to file an affidavit which evidences the formal contractual relations having been entered into as between the Corporation and the National Australia Bank as presently apprehended.  The time proposed does not seem to me to be unreasonably long, particularly having regard to the present time of the year.  Subject to the filing of the affidavit by 15 January 2010, it is then proposed that orders in the form of an annexure to the order proposed be signed by each of the parties and then lodged with the Court for the making of a further order by consent about a week following the date proposed for the filing of the affidavit.

4                     Those orders provide for the Corporation to give an undertaking in respect of the notification to the Registrar of various key events in respect of the governance and financial performance of the Corporation for a period which will end on 31 December 2011.  Thereafter, of course, there will remain statutory reporting responsibilities for the Corporation. In effect, what is proposed is what one might describe as a probation period, or a period of close supervision.  It is significant that the Corporation volunteers the subjection of itself to that regime.  It is also significant that the Registrar, who has a responsibility in relation to the wider public interest, conceives that, as a matter of considered value judgment, the course proposed is in the public interest.

5                     I recall particularly that the affairs of this corporation involve the very worthy end of provision of low cost housing to members of the Aboriginal and Torres Strait Islander community in Mt Isa. 

6                     In terms of s 459R of the Corporations Act 2001 (Cth), I have a discretion to exercise.  That discretion is one which may only be exercised if I am satisfied that special circumstances justify the extension of the period ordinarily prescribed by that section for the determination of a winding up application and further if the order is made within that ordinary period or as last extended.  This particular application is made within the ordinary period. 

7                     I am satisfied, having regard to the matters to which I have averted and which are more particularly detailed in Mr Ericson’s affidavit, that special circumstances do indeed exist for the making of the orders proposed, which include, particularly, provision for the extension of the period within which the application for winding up must be determined until 9 July 2010.

8                     There will therefore be orders in terms of the draft as proposed.  I commend the Corporation and those advising it and particularly also the Registrar and those advising the Registrar for the very particular and responsible course which has been adopted in this case. 

Associate:

Dated:         18 December 2009

ANNEXURE TO ORDER

THE COURT ORDERS BY CONSENT THAT:

Upon the undertaking of the Defendant to report to the Plaintiff up until and including 31 December 2011, or until released in writing by the Plaintiff, as follows:

(i)                  within fourteen (14) days of the holding of any meeting required by law to be held, provide to the plaintiff minutes of such meeting;

(ii)                within fourteen (14) days of the change of any director of resignation of any director, report such change or resignation to the plaintiff; and

(iii)               within fourteen (14) days of the end of each month the defendant provide a report as to the financial performance of the defendant in the preceding month, and so long as Mr Ericson remains a director of the defendant, the defendant is to cause Mr Ericson to prepare and approve the report.

THE COURT ORDERS THAT:

1.                  The Plaintiff be granted leave to discontinue its application.

2.                  Each party is to bear its own costs, save for the costs order made in this proceeding on 20 October 3009 that the Defendant pay the Plaintiff’s costs thrown away by the adjournment, to be taxed.