Leslie, in the matter of the Aboriginal Councils and Associations Act 1976 v Hennessy

1 By notices of motion, Mr Leslie, a member of the National Aboriginal and Islanders Legal Services Secretariat Aboriginal Corporation ("NAILSS") and Queensland Aboriginal and Torres Strait Islanders Corporation for Legal Services Secretariat Aboriginal Corporation ("QAILSS"), seeks a range of orders challenging the conduct of Mr Hennessy, the liquidator of both Corporations, including an inquiry by the Court into his conduct. The orders sought include orders for Mr Hennessy's examination and the examination of Mr Bouhafs. The latter was, at all relevant times, Registrar of Aboriginal Corporations under the Aboriginal Councils and Associations Act 1976 (Cth) ("the ACA Act") under which both NAILSS and QAILSS were incorporated. It was on Mr Bouhafs' applications that the corporations were wound-up and Mr Hennessy appointed their liquidator. 2 It would be wrong to assume that Mr Hennessy's administrations were concerned with straightforward windings up of the two Corporations. It is not possible to understand the issues raised for determination by the motions without looking in a little detail at the background out of which the present applications arise. A company with a similar name to NAILSS called the National Aboriginal and Islanders Legal Services Secretariat Limited was formed by a Mr Paul Coe in 1982 under the New South Wales Corporations Law. It ceased to exist as a result of Mr Coe's failure to lodge returns and was deregistered some time prior to 17 April 1993. Each of the two Corporations of which Mr Hennessy is now liquidator were incorporated on 4 October 1994 under the ACA Act to provide a limited range of legal and associated services to advance the claims of various Aboriginal interests. The applicant is a member of both NAILSS and QAILSS. Mr R Robinson and Mr S Watson were involved in arranging for their incorporation and became members of their governing committees. They also had an involvement with Mr Coe's company. 3 The genesis of the dispute out of which the motions before me arise is the requirement of s 49 of the ACA Act that only certain natural persons, viz, Aboriginals or their spouses, are entitled to become members of an association incorporated under the ACA Act. The governing committees of NAILSS and QAILSS proposed changes to the membership requirements of the rules that may have conflicted with s 49. They discussed their intentions with a subordinate member of the Registrar's staff in the Sydney office in early 1998. The Registrar who is based in Canberra only became aware of the proposed changes relatively late in the piece. He sought legal advice, which confirmed his concerns. He told the governing committees that he would not approve the rule changes because he considered, inter alia, that they would disenfranchise current members and permit control of NAILSS and QAILSS by "an outside organisation". The committees alleged that, in making this decision, the Registrar lacked objectivity because he changed his mind about the acceptability of the proposed rule changes only after receiving approaches from a legal service hostile to Mr Robinson, then also ATSIC Deputy Chairman. Conflicts developed because of the fact that the Registrar himself is an officer of ATSIC and his operations are funded by ATSIC, yet the Act vests in the Registrar important statutory powers to be exercised at his discretion and without any requirement for consultation with ATSIC. 4 The response of the committees of NAILSS and QAILSS to what they believed to be the Registrar's improper refusal to approve the rule changes was to set in train processes that led to the establishment of two new companies incorporated under the Corporations Law, ie, not subject to the Registrar's supervision, so that they could achieve the corporate structures that NAILSS and QAILSS sought but were denied, by the Registrar's refusal to approve the rule changes. Part of this process involved the appointment on 3 July 1998 of Mr Kazar as provisional liquidator of each of NAILSS and QAILSS, on application by each's governing committee. The Registrar's response was to appoint a Mr Dennis to be administrator of each company pursuant to s 71 the ACA Act on 10 July 1998 and to apply to the Supreme Court for the winding up of both corporations and the setting aside of Mr Kazar's appointment. Mr Dennis' appointment, if valid, operated to vacate the offices of all members of the governing committee of both Corporations (s 73(c) the ACA Act) and to confer on him as administrator responsibility for the conduct of the affairs of each Corporation in place of its governing committee (s 71 the ACA Act). When the Registrar appointed Mr Dennis administrator, he expected the administrator to be able to maintain both Corporations as properly representative bodies with continued funding from ATSIC. As Mr Blick noted, with the benefit of hindsight, that was an unrealistic expectation given the course of action that the two Corporations had then already set upon. ATSIC refused to continue grants payments to NAILSS and QAILSS and to Mr Dennis and he could not carry on their operations. 5 Mr Dennis' appointments also provoked a challenge by those previously in control of NAILSS and QAILSS to their legality. On 6 August 1998, applications were brought in the name of each Corporation, no doubt on the instructions of their former governing committees, for judicial review of the Registrar's decisions to appoint Mr Dennis. Discussions then took place between the warring parties and, as an interim measure, Mr Kazar and Mr Hennessy were appointed by order of Merkel J on 14 September 1998 joint provisional liquidators of both Corporations. Mr Dennis' appointment as administrator was terminated the following day. 6 During all this, there was also litigation between the Goolburri Aboriginal Corporation Land Council, of which Mr Robinson was an officer, and the Registrar. On 30 October 1998, Merkel J gave judgment. See Kazar v Duus (1998) 88 FCR 218. His Honour held that the appointment of Mr Kazar to be administrator under s 436A the Corporations Law of the Goolburri Land Council by the governing committee of the Land Council was made for the improper purpose of preventing the Registrar implementing foreshadowed action to appoint an administrator under s 71 the ACA Act to the Land Council. I was told at the hearing that this judgment played a part in the governing committees of NAILSS and QAILSS withdrawing from the field of their dispute with the Registrar, with the result that on 30 October 1998, on the application of the Registrar, Merkel J appointed Mr Hennessy sole liquidator of both NAILSS and QAILSS. Mr Kazar's appointment as joint provisional liquidator thereupon terminated. On 11 November 1998, ATSIC indicated that it would meet Mr Hennessy's reasonable fees as liquidator of both NAILSS and QAILSS. 7 This is an outline only of highly contentious events and extensive legal manoeuvring by the Registrar and the governing committees of NAILSS and QAILSS, with ATSIC also being drawn into their disputation because of its funding role. I have taken much of it from the report by Mr Bill Blick to the Minister for Aboriginal and Torres Strait Islander Affairs about the relationship between ATSIC and the Registrar of Aboriginal Corporations. The Minister commissioned this report on 10 November 1998 and Mr Blick delivered it on 3 February 1999. It was the disputes between the Registrar and NAILSS and QAILSS and between him and Goolburri Land Council that caused the Minister to take this action, though he subsequently asked Mr Blick to report on a dispute between the Registrar and another Land Council. 8 Mr Blick exculpated the Registrar from the charge made by those associated with NAILSS and QAILSS, which was picked up by ATSIC, that he had refused to approve the rule changes proposed by NAILSS and QAILSS for an improper motive and Mr Blick criticised the response of the Corporations' governing committees to this refusal. As Mr Blick noted, the Registrar ultimately agreed with ATSIC's further complaint that his appointment of Mr Dennis involved a waste of resources ($130,000 in all) essentially because of the action that the governing committees of the two Corporations had set in train immediately following that appointment, which resulted in Mr Dennis' administration terminating after approximately two months, with the ultimate appointment of Mr Hennessy as liquidator on 30 October 1998. Of ATSIC's complaint that the litigation which the Registrar instigated and persisted with in respect of NAILSS and QAILSS was expensive and unnecessary, Mr Blick agreed that it had been unproductive and expensive and concluded that, while ATSIC was the innocent and injured party in relation to the litigation, "both the Registrar and NAILSS and QAILSS … failed to give adequate consideration to the probable consequences of their various actions and the litigation arose largely as a result of this". 9 After the appointment of Mr Hennessy as sole liquidator, his administrations proceeded without any apparent further disputation until he took action to have Mr Robinson and Mr Watson publicly examined under the Corporations Law. It was that action that led directly to Mr Leslie's motions. It was apparently instigated by Mr Hennessy in November 1999, and provoked allegations by Mr Robinson and Mr Watson that Mr Hennessy was using his powers as liquidator to seek their public examination for improper purposes. These allegations have been taken up by Mr Leslie in the present proceedings. 10 The first point to be dealt with is Mr Hennessy's challenge to Mr Leslie's standing to seek any of the relief sought. 11 I consider that, by force of s 536(1)(b) the Corporations Law and s 67 the ACA Act that I have jurisdiction to inquire into the conduct of Mr Hennessy which is the subject of Mr Leslie's complaints. Given that the liquidator performs public duties as well as duties affecting private rights only, a matter made clear, eg, by s 533 the Corporations Law, I see no reason to read down the expression "any person" in s 536(1)(b) to limit complainants to persons with an interest in the particular liquidation over and above that of any member of the public. See also Burns Philp Investments Pty Ltd v Dickens (No 2) (1993) 10 ACSR 626 at 630 - 631. The section confers a wide power of inquiry on the Court. In Dickens (No 2) it was treated as including power to inquire into complaints about the liquidator's remuneration and the propriety of the quantum of his costs and disbursements. The respondent accepted that s 536 had this reach and that, in effect, s 473(5) and (6) the Corporations Law did not provide the exclusive avenues for challenging the liquidator's remuneration, costs and disbursements. In Dickens (No 2), Young J said, of how the Court should exercise its power under s 536(1)(b), at 633: