New South Wales Supreme Court CITATION : GIO Workers Compensation (NSW) Ltd V Association of Aboriginal Tourism Operators of NSW Inc [2005] NSWSC 354 HEARING DATE(S) : 11/04/05 JUDGMENT DATE : 11 April 2005 Equity Division JURISDICTION : Corporations List JUDGMENT OF : Barrett J DECISION : Winding up order made CATCHWORDS : ASSOCIATIONS AND CLUBS - incorporated association - winding up - whether evidence warrants finding of inability to pay debts and suspension of business for one year Associations Incorporation Act 1984, s.51(1)(b), (c) and (j) LEGISLATION CITED : Corporations Act 2001 (Cth), ss.459C, 585(a) QBE Workers Compensation (NSW) Limited v Wandiyali ATSI Inc (2004) 51 ACSR 330 CASES CITED : Sandell v Porter (1966) 115 CLR 666 GIO Workers Compensation (NSW) Limited - Plaintiff PARTIES : Association of Aboriginal Tourism Operators of New South Wales Incorporated - Defendant FILE NUMBER(S) : SC 5707/04 COUNSEL : Mr D.S. McCrostie, Solicitor - Plaintiff SOLICITORS : TurksLegal - Plaintiff LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J MONDAY 11 APRIL 2005 5707/04 - GIO WORKERS COMPENSATION (NSW) LIMITED v ASSOCIATION OF ABORIGINAL TOURISM OPERATORS OF NEW SOUTH WALES INCORPORATED JUDGMENT 1 By amended originating process filed on 28 February 2005, the plaintiff, GIO Workers Compensation (NSW) Limited, seeks an order for the winding-up of the defendant, Association of Aboriginal Tourism Operators of New South Wales Inc. The defendant is a body formed and incorporated under the Associations Incorporations Act 1984. 2 For reasons I gave in QBE Workers Compensation (NSW) Limited v Wandiyali ATSI Inc (2004) 51 ACSR 330, the jurisdiction to make a winding-up order in respect of an association of this kind derives wholly from the Associations Incorporation Act. Such an order may be made only on the grounds specified in s.51 of that Act. This is so even though provisions of the Corporation Act 2001 (Cth) are, by New South Wales legislative provisions, applied to such a winding-up. The applied provisions relate only to the process of winding up that commences upon the making of a winding-up order. 3 The grounds for the making of a winding up order under the Associations Incorporation Act are in many ways similar to those provided for the winding-up of companies under the Corporations Act. In the present application, the plaintiff relies on three such grounds being the grounds provided by ss.51(1)(b), (c) and (j), being respectively that the operations of the incorporated association have been suspended for a year; that the incorporated association is unable to pay its debts; and that it is just and equitable that the incorporated association be wound up. 4 There is something of an overlap in the evidence as between the three different grounds. The evidence shows that a worker's compensation premium for the year 2003-4 in the sum of $824.64 was charged by the plaintiff in May 2003 but was not paid. A default judgment for this debt, plus costs, was obtained in the Local Court in November 2003. Later in that month, execution was levied but the writ was returned by the Sheriff unsatisfied in January 2004. In May 2004 a premium of $1,009.40 became due but was not paid. On 19 July 2004 the plaintiff served what purported to be a statutory demand under s.459E of the Corporations Act 2001 (Cth) and there was no response. While there was no statutory basis for the service of that demand (see the Wandiyali case at [18] – [19]), the lack of response to it is of evidentiary value. 5 Ms Hall, a solicitor employed by the plaintiff's solicitors, deposes to a conversation she had on 26 November 2004 with Mr Khan, the Public Officer of the defendant. The conversation was as set out in paragraph 3 of her affidavit of 4 March 2005: "On 26 November 2004, I had a telephone conversation with a gentleman who identified himself as Phil Khan, the Public Officer of the defendant in which words to the following effect were said: AH: 'As you are aware I act for GIO. There is an application in the Supreme Court to wind up the Association of Aboriginal Tourism Operators of NSW.' PK: 'Yes I am aware of this.' AH: 'I understand that the association is no longer trading. Is this correct?' PK: 'Yes.' AH: If I send you a letter which states that you do not object to the winding up of the association will you sign a copy of it and send it back to me.' PK: 'Yes.'" 6 Subsequently, on 29 November 2004, Ms Hall wrote to Mr Khan saying, among other things, that he had told her on several occasions that the defendant was not operating and that he had no objection to its being wound up. She asked Mr Khan to sign and return a copy of the letter by way of acknowledgement which, in due course, he did. 7 Ms Hall, in her affidavit of 1 April 2004, deposes to the results of searches and enquiries she has made at the Registry of Co-operatives and Associations in the Office of Fair Trading. Those enquiries show that the annual statement required to be filed by an incorporated association on an annual basis pursuant to ss.26 and 27 of the Act has not been filed by the defendant since the year 2000. 8 Finally, I mention that Ms Watson, an officer of the plaintiff holding the position of Premium Collection Officer deposes to her belief that there is no genuine dispute about the existence or the amount of the debts for unpaid premiums and costs resulting from the Local Court proceedings. 9 This is not a case in which a presumption of insolvency can be made to arise by service of a demand which is not met. The applicable statutory framework contains no equivalent of s.459C or s.585(a) of the Corporations Act. But the evidence, in my view, enables the court to put to one side the possibility that the defendant has simply chosen not to pay the several debts, even though having the ability or capacity to do so. In Sandell v Porter (1966) 115 CLR 666, there is an injunction against assuming that non-payment of one debt is indicative of inability to pay debts generally, as distinct from unwillingness to pay the particular debt. Here, however, the evidence goes significantly beyond that. There are several debts, there is an unsatisfied execution and there is the acknowledgement by Mr Khan, the Public Officer, given to Ms Hall. 10 I am satisfied that the ground provided for in s.51(1)(c), that is, inability to pay debts, is made out. Having regard to the acknowledgement of Mr Khan and the results of the search, it is also my opinion that the defendant has suspended its operations for one year. On those two grounds, the winding-up order will be made. It is unnecessary to consider separately the just and equitable ground. 11 The consent of Mr Roufeil to act as liquidator has been filed. I make orders 1, 2 and 3 in the amended originating process filed on 28 February 2005. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.