New South Wales Supreme Court CITATION : Macquarie University & Anor v Macquarie University Students' Council Incorporated [2007] NSWSC 510 HEARING DATE(S) : 17/05/07 JURISDICTION : Equity Division JUDGMENT OF : Einstein J EX TEMPORE JUDGMENT DATE : 17 May 2007 DECISION : Orders made pursuant to section 51 (1) (c) and (j) of the Associations Incorporation Act 1984 that Macquarie University Students' Council Inc be wound up and appointing a liquidator with all the powers specified in section 477 of the Corporations Act 2001 (Commonwealth). CATCHWORDS : Corporations - Winding up of Macquarie University Students' Council Incorporated - Incorporated Association under the Associations Incorporation Act 1984 (NSW) - Students' Council no longer viable - Students' Council unable to pay its debts - Just and equitable grounds for Students' Council to be wound up Associations Incorporation Act 1984 (NSW) LEGISLATION CITED : Corporations Act 2001 (Cth) Higher Education Support Amendment (Abolition of Compulsory Up-front Student Union Fees) Act 2005 (Cth) Macquarie University (First Plaintiff) PARTIES : Brian John Spencer (Second Plaintiff) Venues At Macquarie Pty Ltd [provisional liquidator appointed] (Third Plaintiff) Macquarie University Students' Council Incorporated (Defendant) FILE NUMBER(S) : SC 2630/07 COUNSEL : Mr M R Aldridge SC, Ms Shepard (Plaintiffs) Mr S Brown (Defendant) Addisons (Plaintiffs) SOLICITORS : Etienne Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Einstein J Thursday 17 May 2007 ex tempore Revised 18 May 2007 2630/07 Macquarie University & Anor v Macquarie University Students' Council Incorporated JUDGMENT 1 There is before the Court an application brought by Macquarie University, the Vice Principal of the University and Venues At Macquarie Pty Limited [provisional liquidator appointed] ["Venues"] for the following relief: · An order that pursuant to section 51(1)(c) and (j) of the Associations Incorporation Act 1984 (NSW), Macquarie University Students' Council Incorporated ["MUSC"], be wound up. · An order pursuant to section 51(3) of the Associations Incorporation Act 1984 (NSW) Part 5.7 and section 471 of the Corporations Act 2001 (Cth) Mr Trevor Mark Pogroske be appointed as liquidator of MUSC with all the powers specified in section 477 of the Corporations Act 2001. · An order that the costs of the plaintiffs' and the defendant's reasonable legal costs of the application be costs in the winding up. [An order was made joining Venues At Macquarie Pty Limited (provisional liquidator appointed) as the third plaintiff.] 2 MUSC is an incorporated association under the Associations Incorporation Act 1984 (NSW). 3 The objects of the MUSC as identified in its constitution are as follows: · to serve and promote the interest and welfare of Undergraduate Students and SIBT Students; · to provide a recognised means of communication between Undergraduate Students and SIBT Students and the University authorities; · to represent Undergraduate Students and SIBT Students in University matters affecting their interests and to promote student participation in the consideration of such matters; · to represent or arrange for the representation of any Undergraduate Student or SIBT Students, or group of Undergraduate Students or SIBT Students before any formal University authority (provided that they agree to be so represented and that such action does not prejudice interests of students generally); · to encourage and co-ordinate the activities of student clubs and societies that are affiliated with the Association; · to provide services to postgraduate students as may be agreed from time to time between the Association and the organisation that the University recognises as representing the interests of postgraduate students; and · such other objects which directly advance the interests of the Association and the undergraduate students of the University and SIBT Students. 4 The plaintiffs have clearly made good the proposition that the orders sought should be made. The making of the orders is not opposed. In particular, an affidavit made by Mr Pogroske on 17 May 2007 deposes that he is provisional liquidator of Venues; that in the course of his investigations into the affairs of Venues he discovered two transfers totalling $95,000 which had been made from a bank account held by Venues with National Australia Bank to MUSC and that his investigations indicate no legitimate basis for those transfers. 5 Mr Pogroske has deposed that on 15 May 2007 he filed an interlocutory process in the Venues proceedings, and on behalf of Venues, against MUSC seeking the immediate return of $95,000. He has deposed that it is his view that the moneys are immediately repayable by MUSC to Venues and that no genuine dispute exists as to those funds being properly repayable to Venues. 6 Mr Pogroske has also drawn attention to a balance sheet and the income and expenditure statement for MUSC both at 31 December 2006. According to the income and expenditure statement, substantial losses in the sum of $299,620 were incurred by MUSC in 2006. Notably, income declined significantly from 2005 when MUSC earned $689,385, to 2006, when MUSC earned $218,762. The majority of income each year was earned from students' fees. 7 Prior to the passing of the Higher Education Support Amendment (Abolition of Compulsory Up-front Student Union Fees) Act 2005 ["the VSU legislation"] by the Commonwealth Government in December 2005, the material students organisations were funded by compulsory student activity fees determined annually by the University Council under its Fees Rules. Those fees were collected by the University as a condition of student enrolment and passed on by it to each student organisation. 8 After the passing of the VSU legislation, collection of these fees ceased. Compulsory student activity fees were imposed and collected for the last time in the first half of the 2006 calendar year. Since then Macquarie University Union Limited, Macquarie University Sports and Recreation Incorporated as well as the MUSC, have had to depend upon income raised from voluntary student subscriptions. 9 There is before the Court the balance sheet of the MUSC as of March 2007 recording a total fund of $75,812.50 and the January 2007 through March 2007 Profit and Loss statement recording a loss incurred of $78,992.50. 10 According to the balance sheet for April 2007, MUSC had a cash balance of $95,557.73 as at April 2007. However from that $95,000 requires to be deducted, as the evidence establishes that this sum is repayable to Venues. Hence MUSC is seen to have no cash available to discharge the liabilities due and payable, which, based on the balance sheet, are shown as $24,950.66. 11 It has been submitted that under its constitution anyone who has ever been a member of MUSC still remains a member (unless removed). Hence the membership would be vast. Nonetheless it is common ground that there are effectively very few fee-paying members. 12 The evidence clearly establishes that there is no real prospect of any further income and that there is no prospect of the provision of services in the future in accordance with MUSC's objects. 13 In all of those circumstances the plaintiffs have clearly established that the MUSC is no longer viable. Leading counsel for the plaintiffs has informed the Court that what is proposed at Macquarie University is that all the organisations which formerly provided student services are to come under the umbrella of a new organisation to be structured in a way such that it does not require to rely upon student fees. 14 It is appropriate to order the winding up of MUSC pursuant to both of the grounds entitling such winding up [s 51(1)(c)]: the MUSC is shown to be unable to pay its debts; and the Court is of the opinion that it is just and equitable that the MUSC be wound up [s 51(1)(j)]. 15 For all of those reasons, the Court makes orders in accordance with paragraphs 1 to 5 inclusive of the document entitled Order, which I initial and date 17 May 2007. 16 These orders are to be entered forthwith. 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.