Workers Compensation Nominal Insurer v Doonside Community Activites Group Inc

[2008] NSWSC 1062

CITATION:	Workers Compensation Nominal Insurer v Doonside Community Activites Group Inc [2008] NSWSC 1062
HEARING DATE(S):	22/09/08, 07/10/08
JUDGMENT DATE :	7 October 2008
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
EX TEMPORE JUDGMENT DATE:	7 October 2008
DECISION:	Winding up order.
CATCHWORDS:	ASSOCIATIONS AND CLUBS - incorporated associations - application for winding up order on grounds of insolvency - non-payment of one debt only proved - insufficient to establish insolvency - reliance also on just and equitable ground - substratum dissipated
LEGISLATION CITED:	Associations Incorporation Act 1984, s 51
CATEGORY:	Principal judgment
CASES CITED:	QBE Workers Compensation (NSW) Ltd v Wandiyali ATSI Inc [2004] NSWSC 1022; (2004) 62 NSWLR 117 Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666
PARTIES:	Workers Compensation Nominal Insurer - Plaintiff Doonside Community Activites Group Inc - Defendant
FILE NUMBER(S):	SC 4209/08
COUNSEL:	Mr D Bosman, Solicitor - Plaintiff
SOLICITORS:	Jones King Lawyers - Plaintiff

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY 7 OCTOBER 2008

4209/08 WORKERS COMPENSATION NOMINAL INSURER v DOONSIDE COMMUNITY ACTIVITIES GROUP INC

JUDGMENT

1 The plaintiff seeks an order for the winding up of Doonside Community Activities Group Inc under s 51 of the Associations Incorporation Act 1984.

2 The Association was, it appears, registered on 21 September 1989 and had as its purpose the purpose of establishing, carrying on or improving a community centre.

3 The plaintiff's application was initially advanced on the ground specified in s 51(1)(c) of the Act, that is, that the relevant association “is unable to pay its debts”. However, the only evidence tendered in support of the proposition that the Association is “unable to pay its debts” was evidence of non-payment of a debt of $8,392.72 due and payable by the Association to the plaintiff for workers compensation insurance.

4 In cases under the Associations Incorporation Act, there is no equivalent of the provisions of the Corporations Act concerning statutory demands and the creation of a presumption of insolvency upon failure to comply with a statutory demand in respect of a particular debt: see the discussion in QBE Workers Compensation (NSW) Ltd v Wandiyali ATSI Inc [2004] NSWSC 1022; (2004) 62 NSWLR 117.

5 Accordingly, if an application is brought on the ground stated in s 51(1)(c) it is necessary for the plaintiff actually to prove insolvency without the aid of any presumption. The fact of non-payment of a single debt cannot of itself, generally speaking, be proof of insolvency. That proposition was stated as follows by Barwick CJ (McTiernan J and Windeyer J concurring) in Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666 at CLR 672:

“But standing alone … the non-payment of the debt of £141 11s. 6d. does not establish an inability to pay that debt at the relevant times. However much it may lead to a suspicion that the debtor is not merely unwilling but in fact unable to pay it, the continuance of the unpaid debt of itself does not establish the fact of that inability.”

6 After an adjournment, the plaintiff has presented further evidence and has extended its application to encompass the just and equitable ground.

7 The further evidence shows that the Association has not made required lodgements with the Office of Fair Trading since 2004 and that, even at that time, the lodgements were substantially in arrears.

8 There appears to have been an attempt in late 2003 and early 2004 to bring the arrears up to date. The attempt was apparently made by a lady who had been appointed Public Officer in September 2003, however the evidence suggests that she remained in that position for only a short time before resigning, possibly finding that there were no adequate records kept.

9 It is also reported that according to the lady in question, the Association ceased trading in or about May or June of 2003 and was at that stage in a state where it had no assets.

10 In light of that evidence, I draw the inference that the substratum of the Association has dissipated and that, accordingly, it is just and equitable that it be wound up.

11 I order pursuant to s 51 of the Associations Incorporation Act 1984 that Doonside Community Activities Group Inc, incorporation number Y0853027, be wound up.

12 I order that Mark Julian Robinson of Level 5, 55 Hunter Street Sydney, an official liquidator, be appointed liquidator of Doonside Community Activities Group Inc.

13 I order that the plaintiff's costs of the proceedings be paid by the defendant.

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