2379/97 - CHALLENGE FOUNDATION OF NEW SOUTH WALES LTD v. WINDGAP FOUNDATION LTD; 2416/97 - CHALLENGE FOUNDATION OF NEW SOUTH WALES LTD v. CROWLE FOUNDATION LTD; 2417/97 - CHALLENGE FOUNDATION OF NEW SOUTH WALES LTD v. HORNSBY CHALLENGE FOUNDATION LTD [2002] NSWSC 313

New South Wales Supreme Court

CITATION : 2379/97 - CHALLENGE FOUNDATION OF NEW SOUTH WALES LTD v. WINDGAP FOUNDATION LTD; 2416/97 - CHALLENGE FOUNDATION OF NEW SOUTH WALES LTD v. CROWLE FOUNDATION LTD; 2417/97 - CHALLENGE FOUNDATION OF NEW SOUTH WALES LTD v. HORNSBY CHALLENGE FOUNDATION LTD [2002] NSWSC 313 CURRENT JURISDICTION: EQUITY FILE NUMBER(S) : SC 2379/97, 2416/97, 2417/97 HEARING DATE(S) : 20/06/01-22/06/01, 25/06/01-29/06/01 & 05/11/01, 06/11/01 JUDGMENT DATE : 9 May 2002

Challenge Foundation of New South Wales Limited - Plaintiff PARTIES : The Windgap Foundation Limited - 2nd Defendant in 2379 of 1997 The Crowle Foundation Limited - 2nd Defendant in 2416 of 1997 The Hornsby Foundation Limited - 2nd Defendant in 2417 of 1997 JUDGMENT OF : Bryson J at 1

A. Murr SC & G.K. Burton - Plaintiff COUNSEL : G.K. Downes QC & G. Blake - 2nd Defendants in 2416 and 2417 of 1997 G. Blake - 2nd Defendant in 2379 of 1997 SOLICITORS : Holman Webb - Plaintiff Toomey Pegg Drevikovsky - 2nd Defendants in 2416 of 1997, 2417 of 1997 and 2379 of 1997 CATCHWORDS : CORPORATIONS - Directors - exercise of powers in good faith - alleged breach of Directors' duties - Plaintiff was company with charitable objects - directors distributed property to incorporated successors of branches - powers in memorandum included power to do so - after change in control, plaintiff sought to recover property on basis of knowledge of recipients that exercises of directors' powers were not in good faith for purposes of the company - alleged divergence between course taken by directors and course approved by members at Extraordinary General Meeting - on the facts, the directors did not abuse their powers - distribution of money to Windgap was challenged as in breach of clause in memorandum prohibiting distribution of profits - on examination of the mechanism adopted, found that there was no distribution of property of the plaintiff. Companies Act 1936 Real Property Act 1900 LEGISLATION CITED : Associations Incorporation Act 1984 Company Law Review Act (1998) (Commonwealth) Corporations (New South Wales ) Act 1998 (NSW) Northside Developments Pty Ltd v. Registrar General (1990) 170 CLR 146 Rolled Steel Products (Holdings) Ltd v. British Steel Corporation and Others [1986] Ch 246 Equiticorp Finance Ltd (in Liq) v. Bank of New Zealand (1993) 32 NSWLR 50 CASES CITED : Linton v. Telnet Pty Ltd (1999) 30 ACSR 465 Council of the City of Newcastle v. Royal Newcastle Hospital (1956) 96 CLR 493 Ryde Municipal Council v. Macquarie University (1978) 139 CLR 633 Australasian Conference Association Limited v. Mainline Constructions Pty Ltd (in Liq) (1978) 141 CLR 335 DECISION : 2379/97 - give judgment for the second defendant with costs.; 2416/97 - give judgment for the second defendant with costs.; 2417/97 - give judgment for the second defendant with costs.