(1) The enforceability of the mortgage and the Deed of Charge
33 Section 48 of the ACA Act provides:
'(1) A person who is or has been a member of an Incorporated Aboriginal Association in respect of which the application for incorporation stated that the members of the Association were not to be liable to contribute towards the payment of the debts and liabilities of the Association is not liable so to contribute.'
(2) A person who is or has been a member of an Incorporated Aboriginal Association in respect of which the application for incorporation stated that the members of the Association were to be liable, to the extent specified in the application, to contribute towards the payment of the debts and liabilities of the Association is liable so to contribute in respect of debts and liabilities incurred after the incorporation of the Association and before the person ceases or ceased to be a member.'
34 The contention is that s 48 confers a general prohibition on any person or entity contracting with another person who is a member of an Incorporated Aboriginal Association under the ACA Act, so that other person may be liable to contribute to the payment of the debts or liabilities of the Association. It is said to immunise Mrs Collins from any liability she incurred under the mortgage granted to secure Jarraman's borrowing from ATSIC under the loan agreement of 30 August 1999, and subsequently under the Deed of Charge of 6 February 2004. Consequently, it is said also to result either in the IBA Agreement itself being unlawful or to demonstrate that IBA is acting unconscionably by seeking to enforce the IBA Agreement when IBA was not entitled to assert that Mrs Collins was in fact indebted to it under the mortgage and then under the Deed of Charge.
35 Counsel for the parties agreed that there are no decisions addressing the purpose and operation of s 48 of the ACA. Reference was made on behalf of Jarraman and Mrs Collins to the remarks of Mason J in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 423. His Honour there said that it is a matter of construing the statute, by reference to its language and its scope and purpose, to discern the legislative intention as to the nature and effect of its particular terms.
36 The ACA Act provided for the establishment of two distinct forms of corporate entity. The first is an Aboriginal Council, based on a particular geographic area and intended to undertake a variety of functions on behalf of the Aboriginal community of that area. The second is an Aboriginal Association (such as Jarraman), formed by a group of Aboriginals for any social or economic purpose, including the conduct of a business enterprise. As is clear from the general provisions of the ACA Act, the forms of incorporation provided for are intended to be less complex than the normal forms of incorporation, principally under the Corporations Act 2001 (Cth) (the Corporations Act) or its antecedents. They also provide a structure which is capable of being more responsive to, or accommodating of, the nature and structure of Aboriginal traditions and customs. The parties were agreed on those matters, so it is not necessary to refer in detail to the provisions of the ACA Act to indicate why that is so. What is in issue is what s 48 effects in that context.
37 Part IV (ss 43-67) of the ACA Act deals with Incorporated Aboriginal associations. Section 43 specifies the requirements for incorporation. They include that the proposed association identify its objects, its proposed committee, and its proposed rules. The proposed rules must provide for particular matters of internal governance. Upon incorporation, the rules operate as a contract between the association and its members and as between its members: s 47. The members of the governing committee of an Incorporated Aboriginal Association must act honestly and diligently in performing their powers and functions (s 49C); they must disclose pecuniary interests in certain circumstances (s 49D); and they must vacate office upon bankruptcy (s 49E). The provisions also address the record keeping of Incorporated Aboriginal Associations. Changes to the objects, the name, or the rules must be notified to the Registrar of Aboriginal Corporations (ss 52-54), who must maintain a public register of Incorporated Aboriginal Associations (s 5(1)(a)). The association must appoint a public officer (s 56), who must keep a register of members available for public inspection (s 58). It must convene an annual general meeting and such special general meetings as s 58B provides for. It must keep proper accounts and prepare annual financial statements, available to its members (s 59).
38 The provisions also provide for the winding up of an Incorporated Aboriginal Association upon grounds similar to those applicable to a corporation under the Corporations Act, including insolvency: (ss 63 and 64). The more sophisticated rules under the Corporations Act relating to compositions with creditors and relating to the winding up of registered companies are adopted by ss 62 and 67.
39 As can be seen, the topics addressed by Pt IV of the ACA Act reflect similar matters addressed in a much more detailed way in the Corporations Act concerning registered companies under that Act. Whilst the ACA Act is intended to provide a simpler and more flexible model for an Incorporated Aboriginal Association, its structure and content does not indicate any radically different conceptual approach from those concepts underlying the Corporations Act and which have evolved through successive generations of companies legislation since the Joint Stock Companies Act 1844 (UK).
40 One such concept is the separate legal entity of the company from that of its members. The rights and obligations of members of an Incorporated Aboriginal Association are also addressed in Pt IV of the ACA Act. The rules must state whether the members are to be liable to contribute towards the payments of the debts and liabilities of the association, and if so, the extent of that liability: s 43(2)(c). If the association is to operate to secure pecuniary profit to its members, the rules must address the rights of members to share in those profits and in the distribution of surplus assets on winding up: s 44. If the rules specify that members have no, or limited, liability to contribute to the debts or liabilities of the association, s 48 then applies to give statutory effect to those rules. There is a clear legislative intention to adapt and adopt members' limited liability in certain companies registered under the Corporations Act.
41 Under the Corporations Act, s 515 exposes members to contribute to the debts and liabilities of a registered company except in the case of companies limited by shares, by a guarantee or both by shares and guarantee (ss 516-518). In my judgment, seen in its statutory context, s 48 of the ACA Act operates in the same way, where the rules of an association limit either fully or partly the liability of its members. As Jarraman's rules (and in particular rule 5) provide that its members shall not be liable to contribute to its debts and liabilities, s 48 then operates to provide statutory recognition to that position. It therefore recognises, and gives effect to, the long established doctrines that a company is a legal entity separate from its members, and that its members' liability for its debts may be limited. The statutory recognition of limited liability of the members of a company first appeared in the Companies Act 1855 (UK), although it existed in the case of the corporations under Royal Charter as early as the 15th century (W Holdsworth, History of English Law, 2nd edn, London 1925). The concept was first emphatically recognised by the Court in Saloman v A Saloman & Co Ltd [1897] AC 22. There is therefore no reason to conclude, as Jarraman and Mrs Collins contended, that s 48 of the ACA Act was intended to have a much more radical operation to immunise a member of an Incorporated Aboriginal Association from liability for the debts and liabilities of the association where the member had separately undertaken the same liability: cf Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215; Australia Meat Holdings Pty Ltd v Kazi [2004] QCA 147.
42 For those reasons, I reject the first contention put forward on behalf of Jarraman and Mrs Collins. Mrs Collins undertook the liability to be liable for, and to secure, the repayment of the loan by ATSIC to Jarraman on 30 August 1999 by reason of the mortgage. Her liability arises not by reason of her membership of Jarraman, but by reason of the mortgage. The Deed of Charge then came into effect in lieu of the mortgage in the circumstances referred to above. Again her liability arises not by reason of her membership of Jarraman, but by reason of the Deed of Charge. The liability exists independently of her membership, and would exist whether or not she were a member of Jarraman.
43 Consequently, the IBA Agreement was reached in respect of a lawful liability of Mrs Collins to ATSIC, so the attack upon its own lawfulness must fail. Similarly, as s 48 of the ACA Act does not have the effect contended for, no question can arise that IBA should have explained to Jarraman and Mrs Collins some other operation of s 48.