Sydney University Settlement Incorporation Amendment Bill
Page: 16559
Second Reading
Debate resumed from 26 May 2005.
The Hon. TONY KELLY (Minister for Rural Affairs, Minister for Local Government, Minister for Emergency Services, and Minister for Lands) [2.32 p.m.]: The Government supports the Sydney University Settlement Incorporation Amendment Bill, subject to a number of amendments that I will move in Committee and to which I shall refer shortly. The settlement is a non-profitable charitable organisation that was established by the Women's College at the University of Sydney to assist with the needs of the disadvantaged. The settlement grew out of nineteenth century tradition. This honourable tradition includes direct service, education and social reform and is based on people from different backgrounds or cultures working together in reciprocal relationships, learning from each other and working together to improve social conditions.
Since the 1970s the settlement has catered primarily to the indigenous community, particularly young people. In 1959 the Sydney University Settlement Incorporation Act established the executive committee of the settlement as a body corporate and imposed certain powers, authorities, duties and functions on the body corporate. It also vested the property of the settlement in the body corporate. The settlement owns a hall, six houses and six units in Edward Street, Darlington. Two of the houses are let commercially and the rest of the houses and units provide low-cost housing for indigenous people.
It has been reported that at least 7 of the 12 elected members of the executive committee own property in Edward Street. I understand that the executive committee made a decision to sell a number of the properties, including the hall, and to purchase another hall located in Redfern. This has generated considerable opposition from some members of the indigenous community and some members of the settlement. The bill will improve the accountability of the settlement's executive committee to its members, establish proper processes to be followed and improve the governance of the organisation.
The settlement's constitution sets out its aims and objectives and this bill incorporates them into the Act. It also requires that the constitution be read subject to those aims and objectives and that the settlement's property be used exclusively to carry out the aims and objectives. It is common for aims and objectives of organisations that are incorporated by legislation to be set out in legislation. Given their importance, this is entirely appropriate. Incorporating them into the Act affords them proper weight and a proper legislative basis. It is a simple matter of accountability and good governance to require the settlement's constitution to be read subject to the aims and objectives and that the settlement's property be used in accordance with those aims and objectives.
The fact that the settlement owns substantial real estate assets is a strong reason for establishing proper accountability mechanisms in legislation. The bill also prevents the settlement's real property from being disposed of, unless the disposal has the approval of at least 75 per cent of members attending, and entitled to vote at, a special general meeting called to approve that disposal.
Legislation incorporating organisations often requires the approval of two-thirds of its members for the disposal of real property. The Government believes that is an appropriate requirement. It ensures that a reasonable proportion of members support the disposal while, at the same time, it does not impose an unnecessarily high requirement that might prevent the settlement from disposing of real property when there is a pressing need to do so. Therefore, the Government will move amendments in Committee to reduce the requirement to two-thirds of the members. The bill also prevents a member voting at a special general meeting to consider the disposal of real property if the member or a close relative or associate of the member may gain a financial or other benefit from the disposal.
Clearly, it is inappropriate for persons who may receive a personal benefit from the disposal of the settlement's real property to take part in such a decision. It is a common provision in legislation, and the settlement's own constitution already contains a similar provision for members of the executive committee. The bill also prevents the Registrar-General from registering a transfer of land unless the settlement lodges a sealed certificate certifying that the members have approved the transfer, as required by the Act. The Government believes that the amendments should not operate retrospectively, as this could adversely affect the interests of third parties, and lead to legal disputes and expensive and lengthy litigation. The Government will move to provide that the amendments not apply where a binding contract for the disposal of land was entered into prior to the date of assent of the bill.
The settlement's constitution allows that 75 per cent of members must approve a voluntary winding up of the settlement and disposal of any surplus property to a body with similar aims and objectives. However, the Government is concerned that it does not make provision for an amendment to be made for the winding up of the settlement, should this prove necessary. It may be necessary if the settlement becomes unable to properly carry out its functions or meet its liabilities. Therefore, the Government will move amendments to allow the responsible Minister to make an application to the court to wind up the settlement in these circumstances. The winding-up provisions in the Corporations Act 2001 will apply, with necessary modifications and any surplus property to be distributed to a body nominated by the responsible Minister.
The Government will also move amendments to include a sunset clause, which will provide that the provisions of the bill lapse 12 months after the date of assent unless a later date is specified by proclamation published in the Government Gazette. This will ensure that the statutory framework for the settlement will remain in place, should it remain necessary after 12 months. The bill establishes stronger accountability mechanisms and ensures that proper processes are followed. The Government supports the bill.
Ms SYLVIA HALE [2.38 p.m.]: The Greens support the bill and commend the Hon. Dr Arthur Chesterfield-Evans for introducing it. By focusing on the need for good governance the bill seeks to amend the Sydney University Settlement Act to ensure that the affairs of the settlement are conducted in a manner that is consistent with community expectations and generally accepted norms for democratic behaviour. The bill does not seek to intervene directly in the affairs of the settlement by dictating whether the settlement properties in Edward Street, Chippendale, should be sold. Rather, it seeks to institute a regime whereby any decision in this matter must be made in a manner consistent with the settlement's aims and objectives.
Those objectives are present in the constitution of the settlement, adopted in 2001, and this bill embeds them in the Act. More important, the bill will specifically prevent a member of the settlement who has a pecuniary conflict of interest in the disposal of the settlement's real property from participating in, or voting at, a special general meeting called to approve the disposal of that property. It would also prohibit from participating in or voting at any such meeting any member who is a close relative or close associate of a person with a pecuniary interest in the disposal of the settlement's real property. The bill further requires that the settlement's real property cannot be disposed of unless agreed to by 75 per cent of members who attend and who are entitled to vote at a special general meeting of the settlement called for that purpose.
The Greens believe that it is critical that this bill be passed as expeditiously as possible in the hope that it will then pass through the Legislative Assembly and be gazetted at the earliest opportunity. Urgent action is needed. I understand that the management committee of the settlement, having advertised the hall for sale, intends to exchange contracts with the purchaser on Thursday 9 June, that is, tomorrow. One can only hope that the green ban currently in place on the property, plus the odium that would surround the sale, coupled with the publicity created by the passage of this bill, will persuade all concerned that the sale should not proceed unless and until the requirements outlined in this bill have been complied with.
After all, there can be no doubt that members of the current management committee of the settlement, who have to date supported the decision to sell the hall and adjoining terrace houses, had a direct conflict of interest when they so voted. Eight members of the committee own houses in Edward Street, Darlington. The value of those houses stands to appreciate considerably if only the black kids and all trace of the Koori community who use the settlement or rent the settlement's low-cost houses in Edward Street can be made to disappear. And they appear to be succeeding. All tenants have been issued with eviction notices, and two have already left. The chairperson of the management committee persists in claiming that the cost of repairing and refurbishing the settlement hall is prohibitive. Yet the committee has spurned those who offered to undertake the work on a pro bono basis.
The committee has entered into a contract of sale to purchase a hall in Cope Street, Redfern, despite knowing that the Department of Community Services will not continue to fund services at the new location. The committee is continuing to refuse to process new applications for membership of the settlement or to renew the memberships of those who inadvertently let their membership slip. It is determined that its hold on power will not be challenged. What will be the outcome of the management committee's actions? An email to me from Liz Crosby, a member of the settlement and of the group Friends of the Settlement, outlines what will happen if the management committee gets its way and the sale of the hall proceeds. The email of 7 June states:
The MC have been formally advised by DOCS that they will cease to fund Settlement programs if it moves to the new hall in Cope Street, as that area is over serviced and Darlington area is underserviced. This means that if it moves, the Settlement will not only cease to provide low cost housing, it will also cease to provide youth programs. Current programs running at the Settlement include:
After school and vacation care programs
Youth work
Maralappi Program for men on Probation and Parole
Links to Learning Program for young people
Community Development and Advocacy
All tenants have been served with eviction notices and two have left. Settlement staff face unemployment.
After the meeting with DOCS, an email forwarded to us by the MC stated that, "Naturally if the current Management Committee were re-elected we would be keen to forge ahead with the Cope Street property, regardless of DoCS concerns and the loss of low cost housing." That the MC plan to sell or the housing, buy a hall they can't afford, and lose DoCS funding, is based on a determination to remove the Settlement from our street at any cost; that they do not care if they destroy the Settlement, so long as it is removed.
The Greens contend that there is no motivation behind the moves of the management committee other than greed and racism. Already the indigenous community in Redfern feels under threat from the gazetting of the declaration of the Redfern area to be a State-significant site and handing control of the area to the Minister responsible for the Redfern-Waterloo Authority. When we couple that action with this action, which is obviously designed to remove the black community from the Darlington area, it is no wonder that the indigenous community feels under threat. It is no wonder that it feels that the entire intention of the white community, the non-indigenous community, is to dispossess and remove them on the basis that out of sight will be out of mind.
I cannot see how any right-minded person could remotely support what is happening at the settlement. I believe it is urgent that this bill be passed, and the Greens certainly believe that it should be passed as quickly as possible in order that at least the feelings of the Parliament on this matter are made well and truly known not only to the members of the management committee of the settlement but also to the community at large.
The Hon. CATHERINE CUSACK [2.45 p.m.]: The Opposition does not oppose this bill. The background to this matter is complex yet alarming. I do not propose to canvass it, except to say that it appears that the entire organisation will be destroyed by those who have been entrusted and empowered with the means to preserve it. I am a former resident of the Women's College, which was responsible for establishing the settlement, and I am extremely unhappy and worried about many aspects of what has happened. The key issue for the Coalition relates to governance and whether the settlement has been operated in the interests of the people it was established to serve and in a way that is consistent with its objectives. There is considerable doubt that this has happened. However, this is a legal question, and I understand that the matter will be resolved in the courts.
It is not the role of the Parliament to intervene directly in the operations of any association, and I do not believe that the Hon. Dr Arthur Chesterfield-Evans has suggested that. In addition, no matter how unhappy we feel about an issue we cannot support any form of retrospective legislation. However, we must take steps to ensure that a modern system of governance is in place, and that is why we support the bill and the Government's proposed amendments to the bill. As I said, I am concerned about what is taking place. I realise there is a long way to go on this issue. Sadly, a successful outcome for the settlement seems most unlikely at this stage.
Reverend the Hon. FRED NILE [2.46 p.m.]: The Christian Democratic Party supports the Sydney University Settlement Incorporation Amendment Bill, which amends the Sydney University Settlement Incorporation Act 1959. With all good intentions, the original Act had some omissions in terms of the operations of the settlement. We support the aims and objectives of the settlement as it was originally intended, but the actual functioning of the organisation seems to have broken down. This legislation is a simple way of ensuring that decisions made in the future are in line with the constitution and the objects as set out in the bill, which include:
(d) to prevent the Settlement's real property being disposed of unless the disposal has the approval of at least 75 per cent of members attending, and entitled to vote at, a special general meeting called to approve that disposal, and
(e) to prevent a member participating in, and voting at, any such meeting if the member, or a close relative or close associate of the member, may gain a financial or other benefit from the disposal, and
(f) to prevent the Registrar-General from registering a transfer of land held by or on behalf of the Settlement, unless a certificate under the common seal of the corporation is lodged with the Registrar-General certifying that the transfer has been approved in accordance with paragraph (d).
The bill's objects are important. Although we are running up against dates chosen by the body that runs the settlement, we hope that the management committee will respect the will of Parliament as expressed in this legislation and abide by these provisions, even if there is a technical reason that it could try to avoid doing so. We hope that it will show its good faith by respecting this legislation and the will of the House.
The Hon. Dr ARTHUR CHESTERFIELD-EVANS [2.49 p.m.], in reply: I thank all honourable members who contributed to the debate. I introduced this bill because I think this is an organisation in peril. There have been a lot of rumours, most of which I have heard and some of which I believe. It would seem that management put a deposit on a property in Cope Street, which it is purchasing for $2.8 million. It has an obligation in regard to at least part of that deposit—I am not sure whether it is 5 per cent or 10 per cent. The rumour is that the hall and the adjacent terrace in Edward Street have been sold for $815,000. That would leave a gap of almost $2 million to be made up from the sale of the other terraces, which are used for low-income housing and some flats which I understand have caveats with the Department of Housing.
It is hard to see how that can add up to enough money to purchase the Cope Street property. The Department of Community Services said it will not continue to fund programs if the settlement moves to that location because of a need to rationalise the number of service providers on the Waterloo side of Botany Road. There are not many service providers close to the block on the university side of Botany Road. There is a concern in regard to governance. This bill attempts to fix the governance but does not attempt to change what is happening. The Government has indicated that it will support the bill but that it will move four amendments. One of the Government's amendments is to insert a sunset clause to provide that the provisions of the bill will lapse one year after the date of assent unless the Governor specifies a later day by proclamation. That will overcome the acute problem that currently exists, and the decision as to whether the settlement should continue under its own Act or under other legislation such as the Associations Incorporation Act can be made in an environment that is less pressured. The Government would like the sale of real property to be approved by two-thirds of the membership rather than the 75 per cent provided for in the bill, and I understand that two-thirds is more common in cases such as this.
There are some winding-up provisions that I understand are standard in regard to organisations. One would like to think these will not be necessary. The final amendment will ensure that the bill is not retrospective. That may have implications. I believe there is a great reluctance to interfere with the security of title under the Real Property Act, and there are policy considerations with regard to that, and the Government does not want to disturb that security. As I said, the Government will support the bill with the amendments. It is not quite as I would wish, but it is certainly a step in the right direction. I thank the Government, the Opposition and others for their support for the bill. I have tried to make it a bill about governance and doing the right thing. As I said in my second reading speech, the bill is basically about good governance and it incorporates the aims and objectives of the constitution of the settlement itself. I thank honourable members for their contributions and commend the bill to the House.
Motion agreed to.
Bill read a second time.
In Committee
Clauses 1 to 3 agreed to.
The Hon. TONY KELLY (Minister for Rural Affairs, Minister for Local Government, Minister for Emergency Services, and Minister for Lands) [2.55 p.m.], by leave: I move Government amendments Nos 1 to 4 in globo:
No. 1 Page 2. Insert after line 10:
4 Repeal of amendments
(1) Sections 2A, 2B, 3A and 11-18 of, and schedule 1 to, the Sydney University Settlement Incorporation Act 1959 are repealed:
(a) one year after the date of assent to this Act, or
(b) on a day specified by the Governor by proclamation,
whichever is later.
(2) The Governor may make more than one proclamation under this section.
No. 2 Page 5, schedule 1 [2], proposed section 3A (3), line 6. Omit "75 per cent". Insert instead "two-thirds".
No. 3 Page 6, schedule 1 [3]. Insert after line 12:
11 Voluntary winding up
(1) The corporation may be voluntarily wound up under this section if:
(a) a notice of the proposed voluntary winding up is published in a newspaper circulating in the Sydney area, and
(b) at least one month after that notice is published at least 75 per cent of the members (within the meaning of section 3A) have passed a resolution in favour of voluntary winding up, and
(c) the Minister has issued a certificate:
(i) approving the voluntary winding up of the corporation, and
(ii) certifying that the requirements of this subsection have been satisfied.
(2) Except with the leave of the Supreme Court, the members of the corporation cannot resolve that it be wound up voluntarily if proceedings for the corporation to be wound up by the Court under section 12 have been commenced and have not been finally determined.
(3) The corporation is not authorised to acquire any assets or incur any liabilities after the passing of a resolution under subsection (1) (b) that it be wound up voluntarily. However, the corporate status and other corporate powers of the corporation continue until it is wound up under this section.
(4) If the Minister has certified that all of the requirements of subsection (1) have been satisfied, the corporation must be wound up.
(5) The Minister must ensure that notice of the winding up of the corporation under the Corporations Act 2001 of the Commonwealth is published in a newspaper circulating in the Sydney area.
(6) Subsection (3) ceases to apply if the Minister decides not to approve a voluntary winding up.
12 Winding up by the Court
(1) The Supreme Court may order the winding up of the corporation if:
(a) at least 75 per cent of the members (within the meaning of section 3A) have passed a resolution in favour of winding up by the Court, or
(b) the Minister has issued a certificate certifying that he or she is of the opinion that the corporation is unable to properly carry out its functions, or
(c) the corporation is unable to meet its liabilities, or
(d) the Court is otherwise of the opinion that it is just and equitable that the Corporation be wound up.
(2) An application to the Court for the winding up of the Corporation may be made by:
(a) the Corporation (but only if a resolution is passed by at least 75 per cent of the members in favour of making the application), or
(b) the Minister.
13 Procedure for winding up
(1) The winding up of the corporation is declared to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to the provisions of Chapter 5 of the Corporations Act 2001 of the Commonwealth (the applied provisions), subject to the following modifications:
(a) the applied provisions have effect subject to the provisions of sections 11 and 12 of this Act,
(b) a reference in the applied provisions to a company, Part 5.1 body or Part 5.7 body is taken to include a reference to the corporation,
(c) a past or present member of the executive committee or the Settlement is not liable to pay the corporation's liabilities on the winding up or the costs, charges or expenses of the winding up despite anything to the contrary in the applied provisions,
(d) the distribution of surplus property after the corporation is wound up is to be dealt with in accordance with section 14 despite anything to the contrary in the applied provisions,
(e) such other modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.
(2) The regulations may provide for the Australian Securities and Investments Commission to exercise a function under any provision of the Corporations Act 2001 of the Commonwealth that is the subject of the declaration under subsection (1), but only if:
(a) the Australian Securities and Investments Commission is to exercise that function pursuant to an agreement of the kind referred to in section 11 (8) or (9A) (b) of the Australian Securities and Investments Commission Act 2001 of the Commonwealth, and
(b) the Australian Securities and Investments Commission is authorised to exercise that function under section 11 of the Australian Securities and Investments Commission Act 2001 of the Commonwealth.
(3) Section 17 of the Corporations (Ancillary Provisions) Act 2001 has effect in relation to a regulation under subsection (2) as if subsection (1) had expressly made provision for the Australian Securities and Investments Commission to exercise the functions concerned.
14 Distribution of surplus property
(1) Despite the provisions of any other Act or law, if there is property of the corporation after the corporation is wound up, the liquidator must transfer the property to another person or body that is approved in writing by the Minister.
(2) The transfer of property under this section does not affect any trust on which the assets were held immediately before the distribution, and any such trust continues.
(3) To the extent to which it is possible or expedient, a person or body to whom property was transferred under this section must, if the property concerned was transferred or given on trust for any purpose, hold that property as nearly as may be possible for that purpose.
15 Vesting of assets after winding up of corporation
(1) To the extent to which any assets:
(a) are given to the corporation, or to a person for the benefit of the corporation, or
(b) are payable to, or recoverable by, the corporation or any person on behalf of the corporation, by or under an instrument that takes effect on or after the date on which the corporation is wound up, a reference in the instrument to the corporation is to be treated as a reference to the Minister.
(2) Assets referred to in subsection (1) are to be transferred by the Minister to another person or body and section 14 (2) and (3) apply to the transfer as if it were a transfer of property under section 14.
(3) In this section:
instrument means an instrument (other than this Act) that creates, modifies, or extinguishes rights or liabilities (or would do so if lodged, filed or registered in accordance with any law), and includes any will or any judgment, order or process of a court or tribunal.
16 Application to Court
The Minister, or any other interested person who has leave of the Supreme Court, may apply to the Court:
(a) to determine any question arising in the winding up of the corporation under this Act, or in the application by section 13 of provisions of the Corporations Act 2001 of the Commonwealth to the winding up, or
(b) to exercise all or any of the powers that the Court might exercise if the corporation were being wound up by the Court.
17 Regulations
The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act.
No. 4 Page 7, schedule 1 [3], proposed clause 2 of schedule 1. Insert after line 4:
(2) Despite subclause (1), section 3A (5) does not apply to a registrable dealing for the transfer of land, if the contract for the sale of the land was entered into before the date of assent.
Amendment No. 1 will insert a sunset clause to provide that the provisions of the bill will lapse 12 months after the date of assent unless a later day is specified by proclamation published in the Government Gazette. The ensuing 12 months are expected to provide sufficient time for current issues to be resolved and for proper consideration to be given to bringing the settlement within the jurisdiction of the Associations Incorporation Act, as opposed to it remaining subject to its own legislation. However, the amendment will enable the Government to ensure that the statutory framework established by the amendments continues in place longer, should it remain necessary after 12 months.
The bill prevents the settlement's real property from being disposed of unless the disposal has the approval of at least 75 per cent of the members attending and entitled to vote at a special general meeting called to approve that disposal. Legislation incorporating organisations often requires two-thirds approval for the disposal of real property. The figure of 75 per cent may be unnecessarily high and may prevent the settlement from disposing of real property when there is a pressing need to do so. The Government believes that two-thirds is a more appropriate requirement, and still requires a reasonable proportion of members to support the disposal. Therefore, this amendment reduces the requirement for the approval of members from 75 per cent to two-thirds.
The constitution of the settlement provides for its winding up by a special resolution of members at a general meeting. This requires the approval of 75 per cent of members. Any property or funds remaining after the payment of all debts and liabilities are to be transferred to another body with similar objects, or sharing a similar community, which is also approved by a special resolution of the members. However, the Government is concerned that there is no provision to allow an application to be made for the winding up of the settlement should this prove necessary. These amendments set out the process for a voluntary winding up approved by 75 per cent of members. They also allow the responsible Minister to make application to the court for the winding up of the settlement where, for example, the settlement is unable to carry out its functions or is unable to meet its liabilities. The winding up provisions of the Corporations Act will apply with appropriate modifications, and any surplus property is to be distributed to a body nominated by the responsible Minister.
The Government believes amendments should not operate retrospectively as this could adversely affect the interests of third parties and lead to legal disputes and expensive and lengthy litigation. This amendment will ensure that the Registrar-General will be able to register a dealing with a certificate that the required proportion of members have approved the disposal, if a binding contract for the disposal of the property was entered into prior to the date of assent of the bill.
The Hon. Dr ARTHUR CHESTERFIELD-EVANS [2.59 p.m.]: I accept the amendments, as I stated in my speech in reply.
The Hon. CATHERINE CUSACK [3.00 p.m.]: The Coalition supports the amendments.
Amendments agreed to.
Schedule 1 as amended agreed to.
Bill reported from Committee with amendments and passed through remaining stages.