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Mantziaris, Christos --- "Beyond the Aboriginal Councils and Associations Act? Part 2" [1997] IndigLawB 87; (1997) 4(6) Indigenous Law Bulletin 7

Beyond the Aboriginal Councils and Associations Act - Part 2

By Christos Mantziaris

Overview

In Part 1 of this article,[1] I provided a broad description of the Aboriginal Councils and Associations Act 1976 (Cth) (‘the ACA Act’) and outlined the recommendations of a Report which emerged from the 1996 Review of the Act.[2] Here, I engage those recommendations critically. In my view, the Report[3] has not adequately addressed the corporate law doctrines and structures upon which the Act is based. This undermines the Report’s law reform recommendations. In the final section of this paper, and in the spirit of constructive debate on the future of the Act, I speculate on an alternative, ‘tiered model’ of corporate regulation which might allow indigenous corporations to be regulated in proportion to the functions they fulfil.

The absence of a corporate law perspective

The Review as a whole has produced primary material of great public policy value and has brought many important issues into focus. Volume 2 contains some invaluable case studies and specialist papers analysing the relationship between the ACA Act, the Native Title Act 1993 (Cth) and federal administrative law.[4] But, the Report has not utilised this material successfully. It has also ignored the most obvious source of primary material—the Registrar’s files[5] and, with one exception, has not discussed previous reviews of the ACA Act.[6]

The most problematic omission from the Report, however, is the omission of the corporate law perspective, given that the legal institution under discussion is the corporation. Some of the questions the Report ought to have addressed include the following:

A number of these issues are identified in the case studies, but appear to be unaccounted for in the Report. This suggests the absence of a common analytical framework for the case studies. But I also suspect that it might be attributed to the Report’s apparent inability to conceive of the indigenous corporation as anything more than an externally–imposed conduit for publicly funded service provision. As I argue below, many indigenous corporations do not fit into this model.

Culture and accountability: corporate governance or contractual performance?

The ACA Act relies on the two pillars of the Anglo–Australian legal model of corporate governance: the directors’ duties to the corporation (fiduciary duties and duties of care) and the members’ ultimate control of the corporation through the general meeting.[23] The most powerful argument for the rejection of this model is that it is based on legal relationships which reflect behavioural norms and cultural understandings which may be foreign to Australian indigenous cultures.

The Report’s discussion of meeting procedures and the election of Governing Committees confirms previous observations of the divergences between European decision–making processes and structures and those operative within ‘the Aboriginal domain’.[24] Building on the strengths of the case studies, the Report observes legitimacy deficits in Governing Committees that do not comprise influential members of the community and in misplaced European ideas of democratic process reflected in the ‘frequent’ (triennial!) elections for Governing Committees, ‘meaningless’ annual general meetings and the ‘aggrieved’ member’s right to call a special general meeting.[25]

Nevertheless, the Report ignores the second pillar of the corporate governance model—the duties of officers and directors. It is this feature of the corporate governance model which is rendered most problematic by the cultural interface and yet the feature most relevant to claims of financial mismanagement and corruption. The fiduciary character of the director’s duty to the corporation is a product of the English law’s recognition and enforcement of behavioural expectations within culturally specific relationships of trust and confidence.[26] These relationships, whether they be reducible to conceptions of the fiduciary’s loyalty to the beneficiary, or to relationships exhibiting disadvantage or unequal bargaining power,[27] were fashioned within the socio–economic context of sixteenth to nineteenth century Britain and reinforced by the Judaeo–Christian moral tradition. They were further refined by the law’s endeavour to regulate commercial practices under the conditions of advanced capitalism.

Consider the standard statement of the fiduciary principle:[28]

‘A fiduciary:

a) cannot misuse his [or her] position, or knowledge or opportunity resulting from it, to his [or her] own or to a third party’s possible advantage; or

b) cannot, in any matter falling within the scope of his [or her] service, have a personal interest or an inconsistent engagement with a third party ‘–

unless this is freely and informedly consented to by the beneficiary or is authorised by law’.

The principle thus presupposes a number of cultural artefacts which are inappropriate to a culture in which social roles and interests may be differently conceived. These include: (i) the existence of excludable interests in the categories of ‘knowledge’ or ‘opportunity’; (ii) a differentiation between the interests of the beneficiary and the fiduciary; and (iii) a notion of a ‘position’ or ‘office’, the ‘scope’ of which may be delimited from the broader social relationship between fiduciary and beneficiary.[29] Similar arguments may be mounted as to the cultural specificity of the tortious duty of care—now central to the corporate governance model—but a relative latecomer to company law and the Anglo–Australian legal system.[30]

The Report claims that the cross–cultural problems of the indigenous corporation may be side–stepped by distinguishing between the ‘internal’ accountability of the corporation to its membership and its ‘external’ accountability ‘to the wider constituency intended to benefit from the service, and to the funding agency’. It suggests that internal accountability might be best addressed by allowing the corporation to define its own rules regarding membership, leadership and decision–making. External accountability, it suggests, is best addressed through the service agreement between the corporation and the funding agency which might specify matters such as the representation of members on the Governing Committee, performance objectives and so on.[31] The Report recommends that regulation should focus on external accountability measured by the performance of outcomes rather than by compliance to the processes established by the ACA Act’s corporate governance model. I label this the ‘contractual performance model’.

Although the contractual performance model would appear to avoid some of the cross–cultural pitfalls of the corporate governance model, a number of factors suggest caution. Firstly, the contractual performance model only addresses the circumstances of service providing corporations. But the Report acknowledges that only 67% of ACA Act corporations fulfil service functions; other functions are broadly described as landholding (10%), arts, sport and cultural associations (18%) and business or media enterprises (5%).[32] The distribution of functions performed by non–ACA Act indigenous corporations is unknown. Even if the superiority of the contractual performance model were proven, its application to these non–service corporations requires further consideration.

Secondly, while the contractual performance model avoids the intensity of current ACA Act regulation, it delivers the indigenous corporation into the hands of the finance provider, in which case, the Registrar’s practice of prescribing Model Rules of Association[33] might be simply replaced by ATSIC or a State government’s funding conditions. Present ATSIC funding rules are applied uniformly to large resource agencies and small associations.[34] It is unlikely that ATSIC would have the political latitude or human resources to consider specific ‘traditional’ understandings in the Rules of all funding recipients. Furthermore, who would determine the Rules of multifunded corporations such as the Napranum Aboriginal Corporation which is funded by Comalco (28%), government grants and subsidies (21%) and through its own sales and contract revenue (23%)?[35]

Thirdly, to say that ‘internal accountability’ is best achieved through the recognition of the incorporators’ traditions within the Rules of Association appears to assume that the ‘Aboriginal domain’ in which these traditions or customs inhere is a non–contested site. But, as the Review’s case studies and previous work indicates, ‘tradition’ is a fundamentally contested concept in many contemporary indigenous communities where different loyalties, traditions and kinship–based social units intersect and conflict.[36] Indigenous corporations ‘are often the focal points for an ongoing struggle over authority, legitimacy and influence between different groups and factions’.[37] Tendencies towards ‘fission’, ‘disaggregation’ and ‘localism’ mean that consensus over rights is more likely to be found at the level of ‘the extended family’ than in the artificial socio–political units formed by the membership of indigenous corporations.[38] This creates difficulties, particularly in large regional service providing corporations, or corporations serving ‘communities’ which are no more than aggregations of several displaced populations and which may be in conflict with traditional land–owners upon whose land the community is situated. The necessities of native title claims or the need for a common negotiating front to meet a mining company have also led to associations of persons who do not necessarily share traditions.

Fourthly, the contractual performance model assumes that ‘tradition’ is adopted into a corporation’s Rules, without addressing the level of rule specificity that this would require. The Report leaves this issue for the incorporators or the service agreement. This opens up a spectrum of possibilities. At one end, the wholesale adoption of ‘customary laws’ into the corporate constitution raises the spectre of the complete ‘juridification’[39] of social relationships between the members of the corporation. At the other end, low rule specificity runs the risk of unchecked power within organisational structures. Between these poles lies the possibility of individual actors using the juridical character of intra–corporate relations selectively and strategically to advance individual ends or minority conceptions of the collective good. The phenomena of rival incorporations for the purposes of native title claims or cases of expulsion from membership[40] confirm these strategic possibilities. The problem is similar to that faced in family corporations: once the social bonds between members of the corporation are broken, their juridical relations may be exploited to advance the ends of individual members or external interests.[41]

Although the case studies are alert to the possibility of members’ kinship loyalties subverting the pursuit of proper corporate purposes and the rights of less powerful members, the Report is critical of the Registrar’s ability to intervene on behalf of ‘aggrieved members’.[42] Service agreements—insofar as they extend to the diversity of ACA Act corporations—cannot provide culturally specific machinery for the governance of such disputes. However, leaving the resolution of these disputes to internal resolution might result in conduct which could be experienced by the members themselves as ‘oppressive’.

Fifthly, the wholesale application of the contractual performance model would entrench the ACA Act corporation in the role of a client of the welfare state, a result contrary to the Woodward Report’s philosophy of empowerment.[43] Whilst the abeyance of Anglo–Australian corporate governance norms might be appropriate for groups that have limited interactions with mainstream private or State government interests, what of those corporations that are actors in the broader non–Aboriginal political and economic system? For these corporations, the external party’s uncertainty over the corporation’s corporate governance arrangements may be detrimental to its capacity to trade, raise finance or enter into joint ventures. The contractual performance model removes the possibility of an intermediate category of regulation which is based on indigenous self–determination and which might also—if desired—provide a springboard for entry into mainstream commerce.

These factors indicate the complex character of the indigenous corporation’s socio–political locus and the need for a policy that can respond to situational diversity and complexity.

Membership[44]

I have already noted certain problems of corporate membership which stem from the artificiality of many indigenous ‘communities’ and tendencies towards ‘localism’ and ‘disaggregation’. The Report addresses these difficulties by recommending (i) that membership be determined according to criteria which reflect kinship and land affiliation rather than fixed lists; and (ii) that the definition of membership be expanded to allow artificial legal persons (corporations) to become members of an ACA Act corporation.

The first recommendation stems from the aggravation caused by the statutory requirement for up–to–date membership lists showing ‘the name and address of every member of the Association’.[45] Criterion–based membership could certainly be introduced to the Act, but it would have to be restricted to natural persons. There are also complications with criterion–based membership which the Report does not recognise. If membership is not fixed through lists, but through criteria, the class of potential members might be incapable of ascertainment at any given time. Questions will then arise regarding the mode and date of creation of a member’s entitlement, the entitlements of dormant members, non–consensual membership and so on. Instructive parallels might be found in the difficulties surrounding ‘criterion certainty’ for the identification and consideration of beneficiaries under a discretionary trust.[46]

With respect to the second proposal, it is clear that the ACA Act’s requirement that incorporators be natural persons[47] eliminates the possibility of corporate group structures. This model of incorporation gives primacy to the sociological fact of association rather than to the legal fact of the corporation’s separate personality. It also imposes arbitrary minimum boundaries on membership which have been removed by other incorporation statutes; a Corporations Law proprietary company need now only have one member.[48] If the definition of membership is expanded to allow artificial persons (ie corporations) to become members of other corporations, corporate group structure might emerge that would (i) allow a more coherent representation of local interests within larger regional organisations; and (ii) enable unwieldy multi–purpose corporations to differentiate themselves along functional lines as separate entities within a corporate group.

This is an attractive proposal, but one which harbours difficulties. Firstly, a movement towards corporate groups might increase administrative and regulatory costs through the need to produce consolidated group accounts (in accordance with the obligations of the most heavily regulated member of the group) and through the need to regulate ‘related party transactions’ within the group.[49]

Secondly, given the cultural specificity of the fiduciary duty principle, the proposal increases the structural possibilities of breaches of fiduciary obligations for (natural) persons involved in management of corporations as conflicts of interest and duty arise from participation in several incorporations. This is a particular problem for regional umbrella corporations.[50]

Thirdly, the blanket extension of membership to artificial legal personalities opens up unforeseen possibilities for corporate structures. The standard problems of corporate groups might simply re–emerge in novel settings: the access of tort or contract creditors of the subsidiary to the parent’s assets, the subsidiary’s reporting of confidential third party information to the parent, the parent’s deliberate undercapitalisation of the subsidiary and so on.[51] There is no reason why indigenous incorporators ought not be able to create such structures, but careful thought needs to be given to the policy objectives advanced in situations where this would be permitted. Below, I suggest that the ability to create corporate groups is best restricted to certain types of ACA Act corporations.

The Registrar’s Office[52]

One of the Report’s major findings is that the Registrar has administered the ACA Act in such an unsympathetic and bureaucratic manner that the legislative objective of culturally appropriate incorporation has been compromised. The major problem appears to be the Registrar’s prescription of a set of Model Rules and the rejection of non–conforming proposals which seek to accommodate the incorporators’ traditions.

However, the current ACA Act does not mandate a set of Model Rules; it grants the Registrar a discretionary power to approve Rules (or variations to the Rules) submitted to the Office by persons seeking to incorporate.[53] To the extent that the Report criticises the existence of the Registrar’s Model Rules, it is misguided. Model Rules will emerge under any incorporation statute, because—as the Report itself recognises[54]—few corporations will have the time and human resources to engage in constitutional debates to define every aspect of their Rules. Lawyers interpreting the incorporators’ wishes will also tend towards ‘safe’ precedents. Mainstream incorporation statutes have long recognised these conditions and have aided prospective incorporators by appending a model set of articles to the statute which the entity may use at its election.[55]

The real issue, and one which the Report also pursues, is the insufficient exercise of administrative discretion, indeed the Registrar’s ‘fettering’ of his own discretion by insisting on the conformity of the corporation’s Rules with the Office’s Model Rules as a precondition for the approval of the application for incorporation. If the regulatory system is to accommodate corporate governance structures that deviate from the standard Anglo–Australian legal model, this discretion must be genuinely exercised in the case of every incorporation application. The issue ultimately runs deeper than law—it goes to cross–cultural awareness in the exercise of administrative office.

An incorporation statute with a distinct function

The Report’s recommendation that the ACA Act become ‘a Federal version of an Associations Incorporation Act’[56] is both ill–defined and ultimately destructive of the ACA Act’s function as a simple, flexible and culturally sensitive incorporation statute which provides an alternative to mainstream incorporation statutes.

There are eight statutes within Australia which answer to the description of ‘an Associations Incorporation Act’ and there is little consistency between them.[57] Regulation of these associations is predicated on the fact that they do not make pecuniary gains or profits which are passed on to members. [58]Many indigenous corporations—whether currently incorporated under the ACA Act or not—exercise functions which contradict this premise. Indeed the current ACA Act mandates that the corporation make provision for the distribution of pecuniary profits to its members![59]

Moreover, most incorporated associations legislation imposes exactly the type of reporting regime which the Report opposes. After the spectacular corporate collapse of the National Safety Council,[60] there has been a push to intensify the financial oversight of the Australian non–profit sector.[61] The increased devolution of governmental services to the community sector will only compound this pressure.[62] This legislation, like the Corporations Law, is already available to indigenous incorporators. An indigenous peoples’ version of either of these statutes would encourage a form of apartheid.

The issues identified in the Report do not have easy solutions. The reform of the ACA Act must take into account two major principles. It must cater for needs that are different whilst delivering external accountability. Too narrow a specification of needs revisits the historical problems encountered by incorporation statutes which have attempted to impose one legal form on a variety of social or commercial phenomena. But too wide a discretion in the selection of corporate governance systems delivers no legal form recognised and trusted by external parties.

In my view, these principles are best implemented through a ‘tiered’ system of regulation which appears to have been favoured by some members of the Review Team, but was rejected in the Report.[63] Below, I venture some tentative thoughts on an alternative scheme of regulation. These are to be understood as explorations rather than as a blueprint for legislative action.

A tiered system of regulation

The ACA Act could be amended to provide for incorporation under three different categories, each with a different set of regulatory obligations layered onto the basic legal personality of the corporation. Tiered regulation exists under the Corporations Law, which treats companies according to whether they are ‘small’ or ‘large proprietary companies’ or ‘public companies’. Public companies are further subdivided into listed and unlisted companies, the former being subject to additional rules imposed by the Australian Stock Exchange. In the Commonwealth public sector, Parliament is currently considering legislation that would establish separate regulatory categories for bodies defined as ‘agencies’, ‘authorities’ and ‘Commonwealth corporations’. The draft legislation creates further subcategories of regulation for ‘government business enterprises’ and ‘statutory marketing authorities’ while still allowing scope for other impose sector–specific accountability requirements.[64] There appears to be a strong movement in this sector for differentiated incorporation according to a ‘calculus of instrumental choice’.[65]

By establishing tiers of regulation, the spectrum of incorporation needs would be subdivided into categories within which corporations would be subject to accountability mechanisms appropriate to their social, political and financial composition. The ACA Act categories would satisfy a substantial part of the spectrum of incorporation needs for entities wishing to exercise land–holding, service provision and mixed political and enterprise functions. Where incorporation needs extend into mainstream commercial activities, incorporation under the Corporations Law would present itself as a logical next step. An essential component of a three–tiered ACA Act would be a ‘migration’ regime which would enable corporations to move or be moved between the categories or to other statutory regimes when their operations become incompatible with the criteria for any given category.[66]

Tier 1—Land holding bodies

Minimal regulation could be applied to a first tier of incorporation reserved for the creation of artificial legal personalities for the purposes of land–related litigation or asset–holding. These entities require only the minimum incidents of separate legal personality, ie the right to sue and be sued, perpetual succession and the power to acquire and hold property.[67] There is no need to mandate a system of corporate governance for these corporations, as their legal capacity would be very restricted. For example, such corporations could be denied the capacity to alienate or grant securities or charges over corporate assets (the land) or to engage in service provision or activities for pecuniary gain. They might, however, need the capacity to create lesser interests (eg leases) in the land they hold.

Such entities could be left to their own internal governance devices so long as (i) a corporate organ vested with the authority of the corporation is clearly identifiable and (ii) there is a procedure whereby members who experience conduct within the corporation as ‘oppressive’[68] might have recourse to the regulator. An obligation for minimal record–keeping would be imposed, but annual financial statements would not be required. Audit reports would be produced only upon the regulator’s or the members’ request.[69] Given the unique nature of the major corporate asset—traditional land—the winding up of these corporations must be made practically—if not theoretically—impossible.

This category is the obvious point for integration of the ACA Act with the Native Title Act 1993 (Cth). It is beyond the purpose of this article to deal with the detailed interface of these two regimes.[70] However, two points might be noted. Firstly, if this category of corporation is adopted for land holding purposes, Rules of Association submitted to the Registrar would only need to satisfy a low threshold. Secondly, where such bodies are in receipt of Commonwealth funding for the purposes of native title claims, they could be subjected to external financial accountability mechanisms.

Tier 2—Service providers

A separate regime which comes closest to the Report’s contractual performance model of regulation might then be created for service providing corporations. The ACA Act could require the corporate governance structures for these bodies to be specified by the terms of the service agreements with the public financier.[71] The Registrar’s function would be limited to the scrutiny of the terms of the service agreement, and public sector auditing requirements of the service program could apply.

Service delivery is best dissociated from the identification of needs through an institution based on direct representation. To unify these functions within one corporation could locate the corporate officer in potential conflict with his fiduciary duties to the corporation.[72] Rather than adopting a model of direct representation of claimants on the boards of service providers, structures of formal consultation between the service provider, ATSIC Regional Offices, Tier 1 and Tier 3 bodies (ie bodies with mixed political and cultural functions) could be explored which employ structures such as advisory boards and liaison committees.[73] The functional differentiation of service providing bodies from bodies fulfilling political representation functions would preserve the cultural and political autonomy of the latter, but promote the centralised financial accountability required of the former by Commonwealth and State governments.

Tier 3—Mixed function bodies

Other corporations with a mixture of profit and non–profit functions would need to ‘show cause’ as to why they should not incorporate under the Corporations Law. The effect of this requirement would be to push enterprise–based corporations displaying a high level of integration with the non–Aboriginal economy into the Corporations Law regime. The criteria for determining whether incorporation should occur under the Corporations Law or Tier 3 of the ACA Act might be a combination of the following:

The regulatory features of this category will be much more difficult to define. The intention is to provide a half–way house between Tier 2 service–providing ACA Act corporations and the Corporations Law’s ‘small proprietary company’.[74] The regulator must be given power to investigate maladministration, the power to appoint an administrator, and the power to petition that the corporation be wound up if ACA Act corporations are to enjoy the confidence of external parties in political and commercial transactions. Financial statements would still need to be prepared on an annual basis, but need not be lodged with the regulator. The current annual auditing requirement could be restricted to very large Tier 3 corporations, though other corporations might be subject to the regulator’s power to conduct an audit and request financial statements whenever there is cause to suspect irregularity.[75]

As service–providers and enterprise–based corporations will fall outside this third category of incorporation, most bodies falling within it will fulfil strong cultural and political functions. Cross–cultural differences will come to the fore and general solutions will be impossible. Incorporators in this third category must have a strong say in devising their own corporate governance mechanisms. Incorporation ought be permitted where the regulator is satisfied that the corporation’s Rules are capable of addressing certain minimum criteria. I offer the following as a starting point:

The regulator’s role might be recast as that of a ‘negotiation’ and ‘advisory’ partner. To ‘structure’ the administrative discretion by imposing a more specific legislated checklist would only revive the current problems with the Registrar’s Model Rules, producing rigidity and hardship.[76] A permissive approach would allow social cleavages such as seniority and gender to be accommodated by structures such as supervisory boards of senior community members,[77] parallel boards or alternative directorships for men and women, function–specific board subcommittees and so on. These are outcomes which the Report would support.[78]

Subject to the reservations expressed above,[79] there is no logical reason why Tier 3 corporations ought not be able to form a cluster of functionally differentiated corporate entities. Detailed consideration would have to be given to the complexities of structures where Tier 3 corporations maintain shareholdings in enterprises (eg tourist facilities, livestock firms) incorporated under the Corporations Law.

A tiered model of regulation comes closer to reflecting the varied needs of indigenous people rather than a ‘one size fits all’ model. By splitting the spectrum of functions fulfilled by indigenous corporations, the tiered model reduces the reliance on Anglo–Australian concepts of fiduciary law and narrows the most problematic area of cultural difference down to the (third) category of ‘mixed function bodies’. Within this category, primacy is given to the incorporators’ choice of Rules. I have made an attempt to define the minimal characteristics of each category of regulation. But this is clearly an area for future work and more localised cross–cultural negotiation.[80]

Christos Mantziaris is currently conducting research on the legal aspects of indigenous corporations and welcomes comments on this article:

Faculty of Law, Australian National University, ACT 0200. Email: <christos.mantziaris@anu.edu.au> Fax: (02) 6249 0103. Phone: (02) 6279 8443.


[1] (1997) (4) 5 Indigenous Law Bulletin, pp 10–14.

[2] The Final Report–Review of the Aboriginal Councils and Associations Act 1976 (Cth), Volume 1 (Main Report and Recommendations) and Volume 2 (Supporting Material), Australian Institute of Aboriginal and Torres Strait Islander Studies, Canberra, 1996.

[3] As indicated in Part 1, I distinguish between ‘the Report’ (Vol. 1) and ‘Review’ which refers to the entire published work, due to divergences between the views in the Report and those expressed by some of the case study rapporteurs (in Vol. 2).

[4] For example, P Sullivan, ‘The Needs of Prescribed Bodies Corporate under the Native Title Act 1993 and Regulations’ (21 pp) and John Ley, ‘Administrative Decision–Making and Review under the Aboriginal Councils and Associations Act 1976’ (19 pp) in Review, Vol. 2. Cf. Review Vol. 1, pp 140–1, 147 and pp 132–4 which recommends the harmonisation of the ACA Act, the Native Title Act 1993 (Cth) and federal administrative law statutes.

[5] Cf. Review, Vol. 1, pp 22–23.

[6] Only one such review, G Neate, Report to the Registrar of Aboriginal Corporations on Review of the Aboriginal Councils and Associations Act 1976, 1989 is discussed: Vol. 1, p 66, Vol. 2 within J Fingleton, ‘A Chronology of the Aboriginal Councils and Associations Act 1976’, pp 8–11. The reader is alerted to the existence of other reviews—the Australian National Audit Office (1990), Freehill, Hollingdale and Page (1989), Price Waterhouse (February 1991) and Walter and Turnbull (March 1993)—by P Daffen, ‘ATSIC and the Office of the Registrar of Aboriginal Corporations’ (5 pp), p 3 in Review, Vol. 2.

[7] Issues addressed in the case studies, but not in the Report: Sullivan, ‘CS WA’, p 17 (the Garnduwa Gooniyandi Corporation) and Crough and Cronin, ‘CS, Kimb’, pp 41–2, 46 in Review,Vol. 2.

[8] Issues addressed in the case studies, but not in the Report: Sullivan, ‘CS WA’, p 17 (the Garnduwa Gooniyandi Corporation) and Crough and Cronin, ‘CS, Kimb’, pp 41–2, 46 in Review,Vol. 2.

[9] See generally HAJ Ford et al, Ford’s Principles of Corporations Law, 8th ed, Sydney, Butterworths, pars [15.010]–[15.190].

[10] See eg Crough and Cronin ‘CS, Kimb’, Review Vol. 2, pp 49–50 (guarantee for the Mayaroong Construction enforced against the Warringarri corporation). Cf. ANZ Executors & Trustee Co Ltd v Qintex Australia Ltd (1990) 2 ACSR 676; R Grantham, ‘Ultra vires: Gone but not forgotten’ (1993) 10 Aust Bar Rev 233; and R Baxt, ‘Ultra Vires—Has it been revived?’ (1991) 9 CSLJ 101.

[11] During 1995–96, the Registrar received 54 complaints relating to allegations of fraud and misappropriation and referred 10 matters to law enforcement agencies: Registrar of Aboriginal Corporations, Annual Report 1995–96, p 53. See also Annual Report 1991–92, p 7; Annual Report 1993–94, p 30; Annual Report 1994–95, p 27.

[12] Independent Commission Against Corruption (NSW), Preventing Corruption in Aboriginal Land Councils: Discussion Paper Summary, ICAC, Sydney, February 1997.

[13] For an introduction to various liability models for corporate crime, see J Braithwaite and B Fisse, Corporations, Crime and Accountability, CUP, 1993.

[14] Administration involves the appointment of a manager, nominated by the Registrar, in circumstances of maladministration. Its automatic consequence is the dissolution of the Governing Committee of the corporation. The Woodward Report recommended that such a mechanism be available under the ACA Act, and functionally equivalent provisions exist under most incorporation statutes.

[15] Registrar of Aboriginal Corporations, Annual Report 1995–96, pp 32 and 32–51, 83–4 passim; Annual Report 1994–95, pp 31–2.

[16] See eg the discussion of these issues In the Matter of Deeral Aboriginal and Torres Strait Islander Corporation (unrep, Federal Court, Kiefel J, Brisbane, 3 September 1996). The Report’s failure to deal with these issues is glaring in the light of the statistical evidence (supra note 14), publicly available information on administration regimes and the case study of Tharpuntoo Legal Service Corporation: Martin, ‘CS, Qld’, Review, Vol. 2, pp 8–14.

[17] Registrar of Aboriginal Corporations, Annual Report 1995–96, pp 30 and 91; Annual Report 1994–95, p 26.

[18] . Associations Incorporation Act 1991 (ACT), s88; Associations Incorporation Act 1984 (NSW), s50; Associations Incorporation Act 1991 (Qld), s44; Associations Incorporation Act1985 (SA), s41; Associations Incorporation Act 1981 (Vic), s32; Associations Incorporation Act 1987 (WA), s30; cf. Tasmania and the Northern Territory where there is no statutory procedure for winding up. Cf. also Corporations Law, Pts 5.45.6.

[19] See eg allegations in The Registrar of Aboriginal Corporations v Murnkuni Women’s Aboriginal Corporation (unrep, Federal Court, Nicholson J, Perth, 23 June 1995).

[20] Eg Aboriginal Hostels v Darwin City Council (1995) 75 FLR 197; Tangentyere Council Inc v The Commissioner of Taxes [1990] NTSC 14; (1990) 99 FLR 363; Corporation of the Director of Aboriginal Islanders Advancement v Peinkinna (1978) 52 ALJR 286; Dareton Local Aboriginal Land Council v Wentworth Shire Council (1995) 89 LGRA 120; Nungera Co–operative Society Ltd v Maclean Shire Council (1991) 73 LGRA 178; Toomelah Co–operative Limited v Moree Plains Shire Council (1996) 1 AILR 407; Flynn & Others v Mamarika & Others 1 AILR 611; Gambangerrii Aboriginal Corporation v Nambucca Council (NSW Land & Env Court, Stein J, 29 March 1996). And within the Review Vol. 2 Crough and Cronin, ‘CS, Kimb’, pp 8, 43, 46. Cf. Vol. 1 at p 145.

[21] Corporate Law Simplification Act 1995 (Cth); Second Corporate Law Simplification Bill 1996 (Cth). See generally, I Govey, ‘The Simplification Process: Aims and Prospects’ (1995) 5 Aust Jnl of Corp Law 125.

[22] The issue is discussed by a case study rapporteur (Martin, ‘CS Qld’, Review Vol. 2, p 31), but is overlooked in the Report: cf. Vol. 1, p 145.

[23] See eg Ford et al, Ford’s Principles of Corporations Law, 8th ed, Butterworths, Sydney, 1997, Ch 7.

[24] See T Rowse, Remote Possibilities: The Aboriginal Domain and the Administrative Imagination, North Australia Research Unit, Australian National University, Darwin, 1992, Ch. 3.

[25] Review Vol. 1, pp 51–56. See also D Martin and J Finlayson in Martin, ‘CS, Qld’, Review Vol. 2 (32 pp) at pp 23–30.

[26] P Finn, Fiduciary Obligations, Sydney, LBC, 1977; L Sealy, ‘Fiduciary Relationships’ [1962] Camb LJ 69, [1963] Camb LJ 119; A Scott, ‘The Fiduciary Principle’ (1949) California Law Journal 539; P Parkinson, ‘The Fiduciary Obligation’ in The Principles of Equity by P Parkinson (ed), Sydney, LBC, 1996, at pp 325–78.

[27] Eg Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 68–9 cf. 96–7 and 142; Reading v The King [1949] 2 KB 232 at 236; Mabo v Queensland [No. 2] [1992] HCA 23; (1992) 175 CLR 1 at 200–201 per Toohey J; Frame v Smith (1987) 42 DLR (4th) 81 at 99 per Wilson J.

[28] P Finn, ‘Fiduciary Law and the Modern Commercial World’, in Commercial Aspects of Trusts and Fiduciary Obligations, E McKendrick (ed), Clarendon, Oxford, 1992, Ch 1 at 9; P Finn., ‘The Fiduciary Principle’, in Equity, Fiduciaries and Trusts, Youdan (ed), Carswell, Toronto, 1989, Ch 1 at 27; Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 at 198.

[29] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 99–100; Canadian Aero Services Ltd v O’Malley (1973) 40 DLR (3d) 371 at 382; J Glover, Commercial Equity–Fiduciary Relationships, Butterworths, Sydney, 1995, Ch 4.

[30] A director’s duty to act with care has both equitable and common law origins: Permanent Building Society v Wheeler (1994) 14 ACSR 109. The rediscovery of a separate common law director’s duty of care is very recent: Daniels v Anderson (1995) 16 ACSR 607. On the late reception of the tort of negligence: R Balkin and J Davis, The Law of Torts, 2nd ed, Butterworths, 1997, pp 197–208 and Winfield, ‘The History of Negligence in the Law of Torts’ (1926) 42 LQR 184.

[31] Review, Vol. 1, pp 16–18 and Ch 6 passim.

[32] Review, Vol. 1, p 26.

[33] See below under ‘The Registrar’s Office’.

[34] Crough and Cronin, ‘CS, Kimb’, Review, Vol. 2, p 59.

[35] Martin, ‘CS, Qld’, Review Vol. 2, p 16. ‘Other revenues’ amount to 29%.

[36] There is a formidable anthropological literature on this issue. On the interface between legal and anthropological perspectives on ‘law’ and ‘tradition’, see Australian Law Reform Commission, The Recognition of Aboriginal Customary Laws, 2 vols, AGPS, Canberra, 1986; and for critical perspectives: J Clarke, ‘Law and Race: The Position of Indigenous People’ in S Bottomley and S Parker, Law in Context, 2nd ed, Federation, Sydney, 1997, pp 231–75, esp pp 265ff and Greta Bird, The Process of Law in Australia: Intercultural Perspectives, Butterworths, Sydney, 1993, Chs 1, 2 and 5.

[37] DF Martin and JD Finalyson, Linking accountability and self–determination in Aboriginal organisations, Centre for Aboriginal Economic Policy Research, Australian National University, Canberra, DP 116/1996, p 7.

[38] Ibid, p 5; Sullivan ‘CS, WA’, Review Vol. 2, p 32 and pp 30–4 passim.

[39] On this phenomenon within the European legal tradition: Juridification of social spheres, G Teubner (ed), De Gruyter, Berlin, 1987; J Habermas, The Theory of Communicative Action Vol. 2: Lifeworld and System: A Critique of Functionalist Reason, Polity, 1987, pp 356–373 and Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy, Polity, 1996, pp 410–411.

[40] See eg the facts of Judith Klimm & Nanette Ahmat v Warringu Aboriginal and Torres Strait Islander Corporation (unrep, HREOC, WJ Carter [Inquiry Commissioner], Cairns, 11 August 1992).

[41] See eg the facts of Whitehouse v Carlton Hotel [1987] HCA 11; (1987) 162 CLR 285, Story v Advance Bank Ltd (1993) 10 ACSR 699, Coleman v Myers [1976] NZHC 5; [1977] 2 NZLR 225 and P Spender, ‘Family Companies and Women’s Proprietary Entitlements’, (1997) 11 Aust Jnl Fam Law 196.

[42] Review, Vol. 1, p 52.

[43] The model is also at odds with the Report’s suggestion that Pt III of the ACA Act be explored as an avenue for self–government: Review, Vol. 1, pp 118, 126, 145.

[44] Review Vol. 1, pp 45–50 and 144.

[45] ACA Act, s58(1).

[46] See generally HAJ Ford and WA Lee, Principles of the Law of Trusts, LBC, looseleaf, paras [5230]ff and G Dal Pont and D Chalmers, Equity and Trusts in Australia and New Zealand, LBC, Sydney, 1996, pp 369–73.

[47] ACA Act, s45A. See also Part 1 of this article.

[48] Corporations Law s114(1). This provision might be extended to all Corporations Law companies by the Second Corporate Law Simplification Bill (amending Corporations Law s114 and inserting s462(2A)).

[49] See eg Corporations Law, Pt 3.6 Div 4A and Pt 3.2A respectively.

[50] Consider the following hypothetical: A series of small family or traditional land–holding corporations such as Gammon Corp become members of a regional ‘umbrella organisation’, Wannem Regional Corp. Membership of Wannem allows Gammon to make an appointment to Wannem’s board. Gammon appoints John, an influential person in the community which underpins Gammon. John is a member, and possibly even a director of Gammon. Gammon’s members will expect John to look after their interests when he sits on the board of Wannem. But John will find himself in potential conflicts of interest and duty or conflicts of duty and duty each time the Wannem board makes decisions concerning service provision to Gammon or to any of its (traditional) rivals. The fiduciary principle requires John to place his loyalty to Wannem before his loyalty to Gammon.

[51] For an introduction, see The Law Relating to Corporate Groups, M Gilooly (ed), Federation, Sydney, 1993.

[52] Review, Vol. 1, pp 56–61 and 147–8.

[53] ACA Act, s45(3).

[54] Review, Vol. 1, p 58.

[55] Since 1865, predecessor statutes to the Corporations Law have provided incorporators with a model set of Articles: P Redmond, Companies and Securities Law: Commentary and Materials, 2nd ed, LBC, Sydney, 1992, p 137 and Corporations Law, Sch 1, Table A and s175.

[56] Review, Vol. 1, p 143.

[57] See generally, KL Fletcher, The Law Relating to Non–Profit Associations in Australia and New Zealand, LBC, Sydney, 1986 and S Sievers, Associations and Clubs Law in Australia and New Zealand, 2nd ed, Federation, Sydney, 1996.

[58] See, for example, Associations Incorporation Act 1984 (NSW) s14; Ex parte Western Australian National Football League Inc [1979] HCA 6; (1979) 143 CLR 190; Re Proprietary Article Trade Association of South Australia Inc [1949] SAStRp 5; [1949] SASR 88.

[59] ACA Act, s44.

[60] Commonwealth Bank of Australia v Friedrich (1991) 5 ACSR 115.

[61] M McGregor–Lowndes, ‘Nonprofit Corporations—Reflections of Australia’s Largest Nonprofit Insolvency’ (1995) 5 Aust Jnl Corp Law 417.

[62] Note recommendations 11, 13 and 14 of the Industry Commission, Community Social Welfare Organisations in Australia, Report No. 45, Canberra, 16 October 1995.

[63] Note recommendations 11, 13 and 14 of the Industry Commission, Community Social Welfare Organisations in Australia, Report No. 45, Canberra, 16 October 1995.

[64] Commonwealth Authorities and Companies Bill 1997 (Cth) and the Financial Management Bill 1997 (Cth). On sector–specific regulatory categories, see eg Primary Industries and Energy Research and Development Act 1989 (Cth).

[65] MJ Trebilcock and JRS Prichard, ‘Crown Instrumentalities: The Calculus of Instrument Choice’ in JRS Prichard (ed), Crown Corporations in Canada, Butterworths, Toronto, 1983, pp 1–97; or within the school of public choice theory, M Horn, The Political Economy of Public Administration: Institutional Choice in the Public Sector, CUP, 1995, Ch 2.

[66] Similar provisions exist under other incorporation statutes: Associations Incorporation Act 1984 (NSW), ss489; Associations Incorporation Act 1991 (Qld) ss 49A–49N; Associations Incorporation Act 1981 (Vic), s10–11; Associations Incorporation Act 1964 (Tas), ss25A25B; Corporations Law, Pt 2.3 Div 2.

[67] Cf. Corporations Law, s 123(2). Contrast, within the European legal tradition: SJ Stoljar: Groups and Entities, Canberra, ANU Press, 1973, Chs 1 & 2.

[68] The general law already displays some sensitivity to interpreting ‘oppression’ in non–commercial

decision–making contexts: Wayde v NSW Rugby League [1985] HCA 68; (1985) 180 CLR 459. See generally, Ford et al, Ford’s Principles of Corporations Law, 8th ed, Sydney, Butterworths, 1997,

para [11.450].

[69] Cf. Corporations Law, s315A and 317.

[70] For an excellent treatment of the main problems, which I hope might be removed by the tiered model, see P Sullivan, ‘The Needs of Prescribed bodies Corporate under the Native Title Act 1993, Review, Vol. 2, and Sullivan ‘CS, WA’ (Rubibi Land Heritage Development Council), Review, Vol. 2.

[71] The identity of these bodies might require some attention for public law purposes: The Queen v Harry Phillip Hall (1992) 106 FLR 458 (ACA Act corporation not ‘a public authority under the Commonwealth’ for purposes of Crimes Act 1914, s29D) and Commonwealth Authorities and Corporations Bill 1997, cl 7(2): ACA Act corporation not a Commonwealth authority.

[72] See Footnote 50. Problems arising from the confluence of political representation and fiduciary public office has troubled ATSIC’s regional council system: see T Rowse, ‘The Political Identity of Regional Councillors’ and J Finalyson and A Dale, ‘Negotiating Indigenous Self–determination at the Regional Level’ in Shooting the Banker: Essays on ATSIC and Self–Determination, P Sullivan (ed), North Australia Research Unit, ANU, 1996 at pp 42–69 and

70–88 respectively.

[73] See eg I Ayres and J Braithwaite, Responsive Regulation, New York, OUP, Ch 6 and T Carney, Law at the Margins: Towards Social Participation?, Melbourne, OUP, 1991, pp 128 ff.

[74] Defined Corporations Law s45A: See Part 1, note 20.

[75] Cf. Corporations Law, Pt 3.6

Div 1A.

[76] On the effect of structured discretion on decision–making under the current migration legislation: M Aronson and B Dyer, Judicial Review of Administrative Action, LBC, Sydney, 1996, pp 309–310.

[77] See eg DF Martin and JD Finlayson's discussion of the Aurukun Shire Law Council as ‘a super–ordinate group of senior people with recognised authority’ under the Local Government (Aboriginal Lands) Act 1978 (Qld) in Linking accountability and self–determination in Aboriginal organisations, Centre for Aboriginal Economic Policy Research, Australian National University, Canberra, DP 116/1996, p 7.

[78] See eg Review, Vol. 1, pp 53–6.

[79] Text accompanying notes 47–50.

[80] I thank Jennifer Clarke for discussing many of the issues in this paper. For comments on an earlier draft, thanks to Mark Aronson, Peter Bailey, David Martin, Peta Spender, Roger Wettenhall and several anonymous reviewers. Responsibility for errors and opinions expressed resides with the author.


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