Re Bankstown Students Association Inc [2005] NSWSC 700

New South Wales Supreme Court

CITATION : Re Bankstown Students Association Inc [2005] NSWSC 700

HEARING DATE(S) : 12 July 2005

JUDGMENT DATE : 12 July 2005

JURISDICTION : Equity

JUDGMENT OF : Campbell J

DECISION : Association has standing to seek its own winding up. Grounds for winding up made out. Order for distribution of any surplus property made.

CATCHWORDS : ASSOCIATIONS AND CLUBS - incorporated associations - winding up - grounds for winding up - standing to make application for winding up - distribution of surplus property - CORPORATIONS - incorporated association - winding up - grounds for winding up - standing to make application for winding up - distribution of surplus property

LEGISLATION CITED : Associations Incorporation Act 1984

GIO Workers Compensation (NSW) Limited v Association of Aboriginal Tourism Operators of NSW Inc [2005] NSWSC 354 CASES CITED : QBE Workers Compensation v Wandiyali A.T.S.I. Incorporated (in Liq) [2004] NSWSC 1022; (2004) 51 ACSR 3330

PARTIES : Bankstown Students Association Inc - Applicant

FILE NUMBER(S) : SC 3221/05

COUNSEL : N J Kidd - Applicant

SOLICITORS : PriceWaterhouseCoopers Legal - Applicant

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

CAMPBELL J

TUESDAY 12 JULY 2005

3221/05 RE: BANKSTOWN STUDENT'S ASSOCIATION INC JUDGMENT – Ex Tempore (Revised 13 July 2005) 1 HIS HONOUR: This is an application made under section 51 of the Associations Incorporation Act 1984. The association to which it relates ("the Association") used to be the organisation which provided services of various kinds to students of the University of Western Sydney at its Bankstown campus. The University of Western Sydney has several campuses, and it once was the case that each of those campuses had its separate student organisation. 2 The Association has a constitution which makes provision for its aims and objectives being ones of a kind which are appropriate to an organisation which represents the students of the University, in the full diversity of activities which university students carry on in addition to their courses. There are two constitutions of the Association before me, one of which has been registered with the Department of Fair Trading, and a later one adopted in September 2002 which has escaped registration. There is evidence, however, that the later constitution was adopted by a special resolution of members in September 2003. The objects of the Association under the two constitutions are not materially different. 3 The constitution, in each of its versions, provides that all students shall be ordinary members of the Association upon payment of a membership fee. 4 The governing body of the University of Western Sydney has reached a decision that it is not desirable to have separate student associations at each of the campuses. On 8 December 2004 the Board of Trustees of the University resolved that from 1 January 2005 the University would recognise and operate only one unified student association, an organisation which provides certain particular services to students, and a postgraduate association. The unified student association is an entity called the UWS Students Association which is incorporated under the Associations Incorporation Act 1984. Various of the associations at campuses other than Bankstown either merged with the new association, or have been wound up and transferred their assets to the new association. 5 The Bankstown Association has found that there have been no fees paid to it this year, in consequence of the University's decision, and hence, there are no members. There is, however, a Student Representative Council. That Student Representative Council ("SRC") was elected prior to 2005. Each version of the constitution of the Association provides that the management and control of the Association is vested in the SRC. The SRC has recognised, at a meeting held on 3 February 2005, that the Association can no longer survive. It passed a resolution the effect of which is that that Association should go into liquidation and transfer its assets to the new student association. There is evidence from an officer of the new student association of its willingness to accept a transfer of any assets from the old Association. 6 Mr Kassem, a registered liquidator, has investigated the affairs of the Association, and reached the conclusion that it has a deficit of assets over liabilities of a little over $9,000. That figure is substantially influenced by a valuation of furniture, fitting and plant, which has been valued as on the basis of on an estimated auction realisation. 7 The winding up of an association incorporated under the Associations Incorporation Act 1984 can be initiated only on the grounds stated in section 51 Associations Incorporation Act 1984: QBE Workers Compensation v Wandiyali A.T.S.I. Incorporated (in Liq) [2004] NSWSC 1022; (2004) 51 ACSR 3330; GIO Workers Compensation (NSW) Limited v Association of Aboriginal Tourism Operators of NSW Inc [2005] NSWSC 354. 8 The present applicant is the Association itself. It has standing under section 51(2) to bring the application for winding up. 9 In the present case the provisions of section 51 relied upon are, section 51(1)(c) (that the incorporated association is unable to pay its debts), and section 51(1)(j) that "the Court is of the opinion that it is just and equitable that the incorporated association be wound up." 10 Both grounds are made out. The Association has debts, and it has no income from which to meet them, and a deficit of assets over liabilities. As well, in the circumstances where the fundamental purpose of the Association of providing the means whereby the students at the Blacktown council are represented can in practice no longer be carried out, the just and equitable ground applies. 11 It is not clear, at present, whether there will be any surplus property. It may be that the realisation of the furniture, fittings and plant will yield more than has been estimated by the valuer. Against that possibility, an order is sought approving the distribution of any surplus property of the Association. 12 Distribution of surplus property of an incorporated association is governed by section 53 of the Associations Incorporation Act 1984. Section 53(2) provides that the surplus property is to be distributed in accordance with a special resolution of the association. 13 This Association, because it no longer has any members, is incapable of passing a special resolution, and so cannot avail itself of that provision. 14 Section 53 (3) provides: "A person aggrieved by the operation of this section in relation to the surplus property of an incorporated association may apply to the Court which may make such orders as to the disposal of the surplus property as to the Court appears just." 15 The Association claims that it is a person aggrieved by the operation of section 53, and so has standing to make application for an order under section 53(3). Its state of aggrievement arises from the fact that section 53 provides no means by which any surplus assets it might turn out to have can be distributed. I accept that that is sufficient to bring it within section 53(3). 16 The old version of the Constitution of the Association said nothing about what was to happen to the assets upon a winding up. Clause 5.14 of the new constitution provides that in the event of the Association being wound up, "The amount remaining in accounts after the satisfaction of all debts and liabilities shall be transferred to a similar like-minded association with similar aims and objectives to that of the current association." 17 Because section 53 governs the distribution of surplus property, that provision in the constitution cannot act of its own force to effect a distribution of the property of the Association when it is wound up. However, in my view it is an appropriate matter to take into account, in the Court deciding how it should exercise its discretion under section 53(3). 18 The constitution of the new University-wide Students Association is before me. It shows that the objectives of the new association are quite similar to those of the Association. Further, the evidence shows that it is the organisation which, functionally, is the closest one in existence to the old Association. It is willing to receipt any surplus assets. It is appropriate to transfer any surplus assets of the Association to it. 19 I make the orders contained in paragraphs 1, 2, 3, and 4 of the amended summons. Those orders may be entered forthwith. The exhibits may be returned. **********