New South Wales Supreme Court CITATION : Bankstown Community Childcare Inc [2006] NSWSC 612 HEARING DATE(S) : 19/06/06 JUDGMENT DATE : 19 June 2006 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 06/19/2006 DECISION : Winding up order on the just and equitable ground. CATCHWORDS : ASSOCIATIONS AND CLUBS - incorporated associations - winding up - application by association itself on basis of supposed resolution of members to "dissolve" - whether special resolution that association be wound up by the court - whether in any event just and equitable that association be wound up LEGISLATION CITED : Associations Incorporation Act 1984, ss.5, 51(1)(a), 51(1)(j) Lunn v Cardiff Coal Company (2002) 43 ACSR 849 CASES CITED : Lunn v Cardiff Coal Company (No 2) [2003] NSWSC 25 Re Suburban Hotel Co (1867) 2 Ch App 737 PARTIES : Bankstown Community Childcare Incorporated - Plaintiff FILE NUMBER(S) : SC 3004/06 COUNSEL : Mr M. Bachina, Solicitor - Plaintiff SOLICITORS : Leonard Legal - Plaintiff IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J MONDAY 19 JUNE 2006 3004/06 BANKSTOWN COMMUNITY CHILDCARE INCORPORATED JUDGMENT 1 By its originating process filed 30 May 2006, Bankstown Community Childcare Incorporated, an association incorporated under the Associations Incorporation Act 1984, seeks an order that it be wound up. The application is framed on the footing that s.51(1)(a) of the Act applies. Under that section, the court is empowered to order the winding up of an incorporated association if the association has, by special resolution, resolved that it be wound up by the court. 2 There is evidence that, on 7 March 2006, a substantial majority of the members of the association, assembled at a meeting, approved the proposition that the association be "dissolved" and did so in a way which referred to a "special resolution". 3 There is, however, no evidence of the giving of notice of the meeting, with the result that it cannot be seen that 21 days' notice of the proposal to consider the resolution was given, as envisaged by the definition of "special resolution" in s.5 of the Act. Nor is there in evidence any declaration of the chairman regarding the due passing of a resolution as a special resolution. It is clear nevertheless that 33 out of a total membership of either 36 or 35 approved the resolution that the association be "dissolved", so that the 75 per cent majority can be seen to have been achieved. 4 It may be that the committee, in placing before members a proposed resolution that the association be "dissolved", intended that provisions with respect to dissolution and the rules of the association should be engaged. Those provisions appear in rule 41. Again, however, the intention is not clear on the evidence before me. In addition, implementation of a procedure under the rules or constitution cannot lead to the result that the bond of incorporation created by statute is ultimately dissolved. That can only be achieved by statutory means: Lunn v Cardiff Coal Company (2002) 43 ACSR 849; Lunn v Cardiff Coal Company (No 2) [2003] NSWSC 25. 5 The membership has, by an overwhelming majority, approved the proposition that the association should no longer operate and should go out of existence. There is evidence about continuing practical difficulties the association has had in obtaining the services of suitable childcare staff and about the committee's conclusion that there is no real alternative but to cease operations and put an end to the association in an orderly way. 6 Within a few days after the meeting of 7 March 2006, Ms Hill, the vice-president, wrote to a number of relevant organisations informing them of the decision to close the childcare service as of 24 March. These included the Department of Community Services, the Department of Family & Community Services and Indigenous Affairs, the National Childcare Accreditation Council and the Family Assistance Office. 7 The final aspect of the evidence to which I refer is the minutes of the meeting of the association's committee of 28 March, at which it was resolved unanimously to appoint solicitors "to commence legal proceedings to have Worrells appointed as administrators". The minutes also recorded that the association was "pursuing voluntary administration forward to dispose of its assets and pay all expenses and liabilities". 8 The circumstances are such that the committee and the members have concluded that it is not practicable for activities to continue, that the vice-president has informed a number of interested parties of cessation of operations, that the committee has resolved to make an application to the court obviously directed towards the imposition of a form of external administration and that the members have professed themselves overwhelmingly in favour of "dissolution" of the association. 9 That being so, the court has ample grounds to conclude that even though, as a technical matter, there may not have been a special resolution that the association should be wound up by the court, it is nevertheless just and equitable that the association be wound up on the footing that, in the circumstances actually prevailing, the association's members no longer regard it as feasible for it to continue to pursue the purposes for which it was formed: see Re Suburban Hotel Co (1867) 2 Ch App 737 at p.750 per Lord Cairns LJ. 10 Grounds for making the winding up order sought therefore exist under s.51(1)(j) of the Act, even though the evidence does not establish the grounds in s.51(1)(a) upon which the originating process is predicated. 11 The consent of Mr Lane to act as liquidator has been filed. 12 I order, pursuant to s.51(1)(j) of the Associations Incorporation Act 1984 that Bankstown Community Childcare Incorporated, Registration No. Y01680-43, be wound up. 13 I order that Morgan Lane of level 3, 333 George Street Sydney, an official liquidator, be appointed liquidator of Bankstown Community Childcare Incorporated. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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