The Registrar of Aboriginal Corporations v Bibelmen Mia Aboriginal Corporation

introduction 1 The Court has before it a notice of motion by the liquidator of the respondent corporation ("the Corporation") for an order pursuant to s 477(2B) of the Corporations Law [as applied by s 67 of the Aboriginal Councils and Associations Act 1976 (Cth) - "the Act"] approving the entry by the liquidator into a management agreement and a lease (more particularly referred to below) and, pursuant to s 482(1) of the Corporations Law (as also so applied), an order terminating the winding up of the Corporation.

factual and procedural background 2 The Corporation was incorporated on 25 September 1991 as an Incorporated Aboriginal Association (a defined term) under the Act. Its main activities between 25 September 1992 and 17 December 1997 were to construct what is known as the Wardan Cultural Centre on land owned by the Corporation near Yallingup in the south-west of Western Australia, and to train Aboriginal people in various projects such as woodwork. The Wardan Cultural Centre includes a building which has been virtually completed, at a cost of approximately $350,000, but still requires some fitting out and landscaping. The land on which the building is constructed comprises approximately 37 acres which form the subject of a Crown grant from the State of Western Australia to the Corporation. Those who brought the Corporation into existence hoped to include in the Centre, or as part of its activities, the display and sale of Aboriginal art and craft, bush cooking, a museum area, story telling, walk trails and other eco-tourism-related attractions. Construction work was primarily funded by the Aboriginal and Torres Strait Islander Commission ("ATSIC"). However other parties, including the Lotteries Commission of Western Australia (through the Department of Commerce and Trade) and the Commonwealth of Australia (through the Department of Tourism) also provided funding. 3 The Corporation failed to comply with various requirements of the Act, with the result that on 17 December 1997 Sundberg J ordered that it be wound up and that Mr A J Halse be appointed as the liquidator. 4 By approximately July 2000, negotiations had taken place between various interested parties concerning a proposed reconstruction of the Corporation. Those parties were the liquidator, Needac Ltd (a company established under the Corporations Law with one of its activities being the creation and administration of Aboriginal enterprises), ATSIC and the Commonwealth, through the Department of Commerce and Trade: Office of Aboriginal Economic Development ("DCT"). 5 The proposed reconstruction involved the following: 1. The liquidator obtaining leave from this Court to appoint himself as administrator of the Corporation, then appointing himself as such administrator and proceeding under Part 5.3A of the Corporations Law with a view to the execution of a Deed of Company Arrangement. 2. That a Deed of Company Arrangement be entered into between the Corporation and its creditors whereby: · ATSIC would provide $39,000 towards the remuneration and expenses of the liquidator as administrator, deed administrator, and as liquidator of the Corporation; · ATSIC would also provide $20,000 to pay a dividend to creditors in respect of debts due by the Corporation. This would result in priority creditors receiving 100 cents in the dollar and unsecured creditors receiving 54.6 cents in the dollar. The priority creditors were the applicant in respect of his taxed costs in the winding up petition and the Deputy Commissioner of Taxation for $224.27 unremitted superannuation. There were nine unsecured creditors owed approximately $26,000. The liquidator's uncontradicted evidence was that in the absence of the proposed reconstruction the return to the Corporation's creditors would be negligible. 3. Arrangements be put in place for the appropriate management of the Corporation upon termination of the Deed of Company Arrangement involving at least: (a) registration of a minimum of 25 members of the Corporation; and (b) a new Governing Committee being appointed to the Corporation. 4. The ongoing operations of the Wardan Cultural Centre be dealt with as follows: (a) Needac Ltd to operate the Centre under a management agreement ("the Management Agreement") with the Corporation having an advisory role. (b) The Corporation to lease the land on which the Wardan Cultural Centre is situated to Needac for a period of at least five years. 5. Upon payment of all claims under the then proposed Deed of Company Arrangement and satisfaction of all conditions precedent to the coming into effect of the Management Agreement and the Lease (other than orders from this Court) an application would be made to the Court for termination of the winding up of the corporation. 6 In accordance with the above proposals, on 18 July 2000 the liquidator applied for and (on 18 September 2000) obtained leave, under s 436B(2) of the Corporations Law to appoint himself as administrator of the Corporation. 7 The Management Agreement was executed on 9 December 1999. The coming into effect of the Management Agreement is subject to and conditional upon various matters, one of which is either the Court or the Corporation's creditors approving its terms. Strictly speaking, I do not think that it is entirely accurate to describe the approval of the Court under s 477(2B) as an approval of the terms of the relevant agreement. But the motion has proceeded upon the basis that the approval sought, and referred to in the relevant condition precedent in the Management Agreement, is pursuant to that subsection. 8 A lease agreement ("the Lease") has been prepared and executed (also on 9 December 1999), but its operation is subject to and conditional upon various matters, one of which is the coming into effect of the Management Agreement. 9 The affidavit evidence before me shows that on 21 September 2000 the liquidator duly appointed himself as administrator of the Corporation pursuant to Part 5.30 of the Corporations Law and that two meetings of the Corporation's creditors were held, on 28 September 2000 and 18 October 2000 respectively. The first meeting was pursuant to s 436E of the Corporations Law, at which the creditors considered, but decided against, appointing a Committee of Creditors. The second meeting was convened pursuant to s 439A of the Corporations Law. At that meeting the liquidator provided the creditors with his report, again pursuant to s 439A, as to the Corporation's business, property affairs, financial circumstances and the proposal that the Corporation execute a Deed of Company Arrangement. The creditors resolved that the Corporation execute a Deed of Company Arrangement ("the Deed"). The Corporation and the liquidator (in his capacity as administrator) executed the Deed on 24 October 2000. The Deed is essentially in the same terms as set out in the liquidator's report to the creditors and as described earlier in these reasons. 10 There is evidence that ATSIC has paid the sum of $59,000 provided for in the Deed for the purposes referred to above, that the Corporation, by its governing committee, has ratified the Corporation's entry into the Management Agreement and the Lease, although this was not within one month of the date of execution of the Deed. In accordance with the terms of that Deed the liquidator permitted an extended period for such ratification. 11 I have been informed by counsel, and of course accept this, that on 27 November 2000 the liquidator, as Deed Administrator distributed the sum of $20,000 (referred to above) to the creditors of the Corporation. I infer that the balance of $39,000 has been applied in accordance with Clause 8 of the Deed. Accordingly, the Deed came to an end on 27 December 2000 pursuant to clause 10.1(1) of that document. Clause 11.1 of the Deed provides, in those circumstances, that all creditors' claims against the Corporation have been released. 12 The Corporation has arranged for at least 25 persons to become registered as members of it and has appointed the governing committee referred to above. There is evidence before the Court that ATSIC and DCT have agreed to provide funding of $120,000 and $18,500 respectively for the completion and operation of the Wardan Cultural Centre. 13 The liquidator has sworn, and I accept his evidence, that he believes that the proposed reconstruction of the Corporation will be beneficial to its creditors, members and other interested parties in that, amongst other things, the Wardan Cultural Centre will be put to its intended purpose i.e. to benefit its members and the surrounding Aboriginal community, and that effective arrangements can be made for the proper management of the Corporation upon termination of the Corporation's winding up. Mr P M Rundell, the chartered accountant having the carriage of this matter on behalf of the liquidator, has sworn to his belief that upon termination of the Corporation's winding up and termination of the Deed, the Corporation will be solvent. This is on the basis that the Corporation has, through the Deed of Company Arrangement process, arranged for the release of all its debts and that the Corporation will be left with an asset in the form of its interest in the Wardan Cultural Centre. 14 In those circumstances I turn to the motion before the Court.