Knox v Nile & Ors [2022] NSWSC 229

Supreme Court New South Wales

Medium Neutral Citation: Knox v Nile & Ors [2022] NSWSC 229 Hearing dates: 22 and 23 February 2022 Date of orders: 8 March 2022 Decision date: 08 March 2022 Jurisdiction: Equity - Corporations List Before: Black J Decision: Winding up orders made and stayed for period and associated orders made. Catchwords: INCORPORATED ASSOCIATION — Members' rights and remedies — Whether winding up on just and equitable grounds should be ordered — Whether winding up order should be stayed for period. Category: Consequential orders Parties: Charles Robert Bray Knox (Plaintiff) Fred Nile (First Defendant) Silvana Nile (Second Defendant) Annie Wright (Third Defendant) Christian Democratic Party (Fred Nile Group) Incorporated (Fifth Defendant) Representation: Counsel: T Hall (Solicitor – Plaintiff) P King/J Loxton (First – Third Defendants) M Heath (Receivers) J Ferguson (Solicitor – Interested Party)

Solicitors: Hall Partners (Plaintiff) Robert Balzola & Associates (First – Third Defendants) Matthews Folbigg (Receiver) Gibson Howlin Lawyers (Interested Party) File Number(s): 2020/270818

Judgment 1. On 22 and 23 February 2022, I heard evidence and submissions as to the question whether the Fifth Defendant ("Association") should be wound up in insolvency or on the just and equitable ground, inter alia, by reason of the ongoing disputes and the costs incurred in these proceedings. By my judgment delivered on 1 March 2022 ([2022] NSWSC 195) ("Primary Judgment), I found (at [89]) that, inter alia: "The ongoing hostilities between the parties and persons associated with the Association in various capacities have continued since the Receiver's appointment and it seems to me that the costs which have been incurred and will continue to be incurred in the receivership and the actual and potential claims for costs of these proceedings will likely dissipate the Association's assets, in substantial part, before the proceedings are resolved so that its political purposes could not then be achieved. I am satisfied that these matters, combined with the lack of any apparent hope of resolution of the internal disputes within the Association in the foreseeable future and the inconsistency between the use of the Association's resources for those costs and its specified purposes supports a winding up order. This is, of course, a question of degree and the proceedings are unusual because of the scale of the costs incurred; the fact that several attempts to narrow them (including the mediation and the May Consent Orders) have failed; the multiplication of interlocutory applications, the determination of which will likely not return the Association to functionality; and the fact that, as will emerge below, the differences between the parties and interested parties appear to be widening rather than narrowing." 1. I concluded (at [103]) that a winding up order of the Association should be made, but stayed for a relatively short time to allow the parties a further opportunity to resolve their differences as to what could be achieved by any meeting of delegates of branches of the Association or members generally and how it could be conducted, and observed that: "The Court can set aside that order before it takes effect if the parties agree the basis for the conduct of meeting that would result in the appointment of officers to the Association and the making of any necessary amendments to the Association's constitution to regularise the branch system and allow future meetings of the Annual State Council to occur." 1. I also indicated that I would vary previous consent orders made by Henry J ("May Consent Orders") to continue the appointment of a receiver appointed to the Association only for the narrow purpose of preserving its assets while the stay of the winding up order was in place. I set out proposed orders at paragraph 107 of the Primary Judgment and allowed the parties until 4pm on 7 March 2022 to make submissions as to the form of those orders. 2. The Plaintiff, Mr Knox, expressed the view that the only remaining issues in the proceedings were as to costs and otherwise made no substantive submissions as to the orders. The First – Third Defendants, the Reverend Nile, Mrs Nile and Ms Wright, neither made submissions nor sought an extension of time to do so, and I do not consider that orders should be further delayed to allow any further time for submissions as to orders, beyond the time already given. The Receiver did not seek to make submissions, indicated that he was not aware of any agreement reached between the parties to resolve the issues and that he was content with the orders proposed in the Primary Judgment. 3. Mr Collins, who had intervened in the proceedings, submitted that the parties should be given liberty to apply in respect of order 2, the proposed stay of the winding up, if there is a consent position on alternative orders to be presented to the Court and no outstanding substantive matters remain in dispute. I recognise that there would plainly be room for further dispute between the parties as to whether such a qualifying condition is satisfied. However, I should reserve that liberty, in case any party or interested person seeks to extend the stay of the winding up order on that basis, and extend that liberty to any application in respect of the winding up order in that situation. However, I note that neither the Primary Judgment nor that liberty contemplates that such an application would or could be brought where the parties and interested persons had not reached agreement as to the substantive matters in dispute between them, and there is no reason to think that the stay of the winding up order would be extended where there is no consensus as to how to address the issues in respect of the Association's affairs that are noted in the Primary Judgment. 4. Mr Collins also raised a question as to the Receiver's powers with respect to the Association's staff if the May Consent Orders are vacated. I do not consider that I should further expand the Receiver's powers unless he seeks such an extension, and I have reserved liberty to him to apply in paragraph 4 of the orders that I make below. 5. Mr Collins submits, with substantial force, that it would be unreasonable for the Association to accept payments for renewal of membership fees and donations from members where there is a prospect of the Association not continuing as a corporate entity. That submission may understate the position, where I now make an order that the Association be wound up, although I stay that order to 4pm on 29 March 2022. Mr Collins submits that the Receiver should be directed to sequester payments made for membership renewals or alternatively defer any requirement for payment. It does not seem to me that it is necessary to make a specific direction to that effect, where the Receiver would not, in my view, have power to receive such payments where his powers will now be limited to taking such steps as are necessary to preserve the Association's assets pending its winding up or further order of the Court. It may therefore be necessary for the Receiver to return any payments which are received from members, at least from the time these orders are made. Obviously enough, no officers or employees or former officers or employees formers of the Association has the authority to receive such payments on its behalf, where a court-appointed receiver is in place. 6. In relation to the reservation of costs in proposed order 8, Mr Collins submits that written submissions should be ordered if any party seeks an order for costs, and it is appropriate that the Court decide that matter on the papers. While there is force in that submission, I will defer the question of the manner in which any application for costs will be dealt with, to be dealt with if such an application is made. 7. For these reasons, I now make the orders set out in paragraph 107 of the Primary Judgment, the additional order noted in paragraph 5 above and an order that these orders be entered forthwith, as follows: 1. The Fifth Defendant be wound up and Mr Condon be appointed as its liquidator, with such leave as may be required under s 532 of the Corporations Act 2001 (Cth). 2. Stay order 1 to 4pm on 29 March 2022. 2a. Reserve liberty to the parties and interested persons to apply in respect of order 1 and the period of the stay specified in order 2, on two business days' notice specifying the relief sought, if they have agreed alternative orders to be presented to the Court and no outstanding substantive matters remain in dispute. 3. Vacate orders 5-9 made by Henry J on 12 May 2021 with effect from 4pm on 8 March 2022 and, from that time, the Receiver have power only to take such further steps as are necessary to preserve the assets of the Association pending the winding up of the Fifth Defendant or further order of the Court. 4. Liberty to the Receiver to apply, on 2 business days' notice to all parties, in respect of any further specific powers that may be necessary to give effect to order 3 and in respect of any issues which arise in giving effect to that order. 5. The parties and interested persons advise all parties and the Associate to Black J which remaining applications are pressed by them and file and serve all further evidence and their submissions in respect of all remaining issues in the proceedings by 4pm on 16 March 2022, no further evidence to be relied on if filed and served after that date without leave. 6. The parties and interested persons file and serve all further evidence and their submissions in reply by 4pm on 6 April 2022, no further evidence in reply to be relied on if filed and served after that date without leave. 7. All remaining issues in the proceedings be listed for hearing before Black J on 13 May 2022. 8. The costs of and incidental to the hearing on 22-23 February 2022 be reserved for further submissions. 9. These orders be entered forthwith.