In the matter of Parkesbourne/Mummel Landscape Guardians Incorporated (INC 9884970) [2017] NSWSC 164

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Parkesbourne/Mummel Landscape Guardians Incorporated (INC 9884970) [2017] NSWSC 164 Hearing dates: 27 February 2017 Decision date: 27 February 2017 Before: Barrett AJA Decision: Order that Parkesbourne/Mummel Landscape Guardians Incorporated (INC 9884970) be wound up and order that named liquidators be appointed. Catchwords: ASSOCIATIONS AND CLUBS – incorporated association – application by association itself for a winding up order – reliance on several grounds – particular efficacy of ground based on special resolution for winding up by the court. Legislation Cited: Associations Incorporation Act 1984 (NSW) Associations Incorporation Act 2009 (NSW) Corporations Act 2001 (Cth). Cases Cited: Aspirion Group Pty Ltd [2014] NSWSC 39 QBE Workers Compensation (NSW) Ltd v Wandiyali ATSI Inc [2004] NSWSC 1022; (2004) 62 NSWLR 117 Category: Principal judgment Parties: Plaintiff – Parkesbourne/Mummel Landscape Guardians Incorporated (INC 9884970) Ex parte Representation: Solicitors: Plaintiff – Mr Hamza Alameddine from Birchgrove Legal File Number(s): 2017/19275

Judgment 1. BARRETT AJA: I today made an order that Parkesbourne/Mummel Landscape Guardians Incorporated ("the Association") be wound up and an order that liquidators be appointed. 2. The Association was registered under the Associations Incorporation Act 1984 (NSW) in 2006. By virtue of clause 3 of Schedule 4 to the Associations Incorporation Act 2009 (NSW), its existence as a body corporate is continued and it is taken to have been registered under the latter Act. 3. The winding up application was made by the Association itself. Mr Alameddine, solicitor, who appeared for the Association correctly submitted that, having regard to provisions of the Act of 2009 corresponding with those of the 1984 Act considered in the QBE Workers Compensation (NSW) Ltd v Wandiyali ATSI Inc [2004] NSWSC 1022; (2004) 62 NSWLR 117, the application fell to be dealt with under the Act of 2009 and without regard to provisions of the Corporations Act 2001 (Cth). 4. Section 63 of the Act of 2009 empowers this Court to order the winding up of an association registered under the Act on any of nine grounds, including that "the association has by special resolution resolved that it be wound up by the Court" (s 63(1)(a)), that "the association is insolvent" (s 63(1)(c)) and that "the Court is of the opinion that it is just and equitable that the association be wound up". In advancing its application, the Association relied on the three grounds I have mentioned. 5. The evidence showed that the Association was formed in 2006 for purposes related to protection of the environment in the Goulburn Mulwaree and Upper Lachlan local government areas; that it had, at the height of its activities, some 200 members; that involvement in certain Land and Environment Court litigation resulted in an adverse costs order against the Association; that funds available are significantly less than the amount of the costs liability; that the membership has fallen away to a mere handful; and that there has been no activity for several years, save for a recent annual general meeting at which a special resolution for winding up by the court was passed. 6. On the face of things, grounds for winding up exist under each of the three provisions mentioned. It may be noted, however, that where the members have resolved by special resolution that there should be a winding up by the court, it is very unlikely that a winding up order will not be made. It is apposite to repeat what was said by Black J in In the matter of Aspirion Group Pty Ltd [2014] NSWSC 39 at [3] on the corresponding ground for winding up under the Corporations Act: "The circumstances in which the court will order a winding up under s 461(1)(a) have been considered in several recent decisions: Hillig v Darkinjung Pty Ltd [2006] NSWSC 1371; (2006) 205 FLR 450 at [35]; Re Kala Capital Pty Ltd [2011] NSWSC 1253 at [6]-[7]; MFS Alternative Assets (in liq) v Angstrom Assets Pty Ltd [2012] NSWSC 447 at [4]. The authorities indicate that, although that section was rarely relied upon in earlier years, the Court will not generally exercise its discretion against making a winding up order under that section, where shareholders have by special resolution resolved that a company should be wound up by the Court, unless the shareholders' decision or surrounding circumstances involve an element of unconscionability, or are inequitable, or some other special consideration adversely affecting the creditors indicates that there should be no winding up. In particular, it is no reason to decline to make a winding up order under s 461(1)(a) of the Corporations Act that a voluntary winding up might have been available in the circumstances." 1. I mention this not to suggest that reliance should not be placed on such other grounds as may exist but to emphasise the particular efficacy of a special resolution for winding up by the court where the passing of such a resolution can be obtained. It is also worth recording that s 62 of the Act of 2009 provides for voluntary winding up by special resolution. In many cases where it is possible to obtain the passing of a special resolution, the need to approach the court at all may be avoided.