FEDERAL COURT OF AUSTRALIA

In the matter of Ansett Australia Limited; Rappas v Ansett Australia Limited

[2001] FCA 1348

CORPORATIONS LAW – application for orders under ss 447A, 448C and 449C of the Corporations Act 2001 (Cth) – appointment of union representatives as attorneys of employees at creditors meeting – appointment of substitute administrators upon resignation of current administrators.

Corporations Act 2001 (Cth):  Pt 5.3A, s 435C, s 436E, s 447A, s 449C(1) & (6)

Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 applied

IN THE MATTER OF ANSETT AUSTRALIA LIMITED (ACN 004 209 410) & ORS (ALL ADMINISTRATORS APPOINTED)

FAYE RAPPAS & ORS v ANSETT AUSTRALIA LIMITED (ACN 004 209 410) & ORS (ALL ADMINISTRATORS APPOINTED)

V 3027 of 2001

GOLDBERG J

17 SEPTEMBER 2001

MELBOURNE

IN THE MATTER OF ANSETT AUSTRALIA LIMITED (ACN 004 209 410) & ORS (ALL ADMINISTRATORS APPOINTED)

THE COURT ORDERS THAT:

1.         Pursuant to r (3)(1) of the Federal Court Rules service of this originating process on the respondents in accordance with r 2.7 of the Federal Court (Corporations) Rules 2000 be abridged to 2.15pm today.

2.         Pursuant to s 447A of the Corporations Act 2001 (Cth) (“the Act”) Pt 5.3A of the Act is to operate in relation to each of the first to forty‑third respondents (“the Ansett Group”) as if it provided that at the meeting or meetings held pursuant to s 436E of the Act, each employee of the said respondents who is a member of any of the following unions:

2.1       Ansett Pilots Association (“APA”);

2.2       Association of Professional Engineers, Scientists & Managers, Australia (“APESMA”);

2.3       Australian Liquor, Hospitality & Miscellaneous Workers Union (“LHMU”)

2.4       Australian Federation of Airline Pilots (“AFAP”)

2.5       Australian Licensed Aircraft Engineers Association (“ALAEA”)

2.6       Australian Services Union (“ASU”)

2.7       Australian Workers Union (“AWU”)

2.8       Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“AMWU”)

2.9       Communication, Electrical and Plumbing Union (“CEPU”)

2.10     Flight Attendants’ Association of Australia (“FAAA”)

2.11     National Union of Workers (“NUW”)

2.12     Transport Workers Union of Australia (“TWU”)

had duly appointed the person whose name appears in column 2 of Appendix 1 to be their attorney pursuant to reg 5.6.31A for the purpose of that meeting or those meetings save for:

(a)        any employee who attends any meeting in person; or

(b)        any employee who signs a proxy appointing some other person to attend any meeting on his or her behalf.

3.         Pursuant to s 448C and s 447A(1) of the Act leave is granted to Mark Francis Xavier Mentha and Mark Anthony Korda of Arthur Andersen, 360 Elizabeth Street, Melbourne, Victoria, 3000 to seek to be, to consent to be appointed as, and to act as, joint and several administrators of the Ansett Group other than Hazelton Airlines Limited (ACN 061 965 624); Hazelton Air Services Pty Ltd (ACN 000 242 928), Hazelton Air Charter Pty Ltd (ACN 065 221 356).

4.         Pursuant to s 449C(6) and s 447A of the Act:

4.1       Mark Francis Xavier Mentha and Mark Anthony Korda of Arthur Andersen, 360 Elizabeth Street, Melbourne, Victoria 3000 be appointed joint and several administrators of the Ansett Group other than Hazelton Airlines Limited (ACN 061 965 624), Hazelton Air Services Pty Ltd (ACN 000 242 928) and Hazelton Air Charter Pty Ltd (ACN 065 221 356).

4.2       Michael James Humphris of Sims Lockwood, 461 Bourke Street, Melbourne, Victoria 3000 be appointed administrator of Hazelton Airlines Limited (ACN 061 965 624), Hazelton Air Services Pty Ltd (ACN 000 242 928) and Hazelton Air Charter Pty Ltd (ACN 065 221 356)

with effect as and from the date and time that the forty‑fourth to forty‑sixth named respondents give notice in writing of their resignation as administrators of the Ansett Group pursuant to s 449C(1)(c) of the Act.

5.         Liberty is reserved to the directors of the first to forty‑third respondents to apply to amend, vary or revoke the orders made in par 4 hereof on twelve hours written notice to the applicants, but such application must be made no later than 4.00pm on 19 September 2001.

6.         The costs of this application are costs in the administration of the Ansett Group.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

APPENDIX 1

IN THE MATTER OF ANSETT AUSTRALIA LIMITED (ACN 004 209 410) & ORS (ALL ADMINISTRATORS APPOINTED)

REASONS FOR JUDGMENT

His Honour:

1                     I am disposed to grant the relief which is sought by the applicants today in the form of the application filed by the applicants as proposed to be amended.  The first order sought provides, in effect, that employees of the various companies which are in administration have the opportunity to make their views known at a creditors’ meeting to be held tomorrow morning, through the various unions (which are applicants) of which most of them are members and whose interests have been represented by the unions in negotiating various industrial instruments or agreements which regulate their employment.  I consider that I have the power to make the order sought under s 447A of the Corporations Act 2001 (Cth) (“the Corporations Act”), having regard to the interpretation which has been placed on that section by the High Court in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279‑280.

2                     The scheme of Pt 5.3A of the Corporations Act is such that the direction and outcome of the administration under which companies are placed pursuant to that Part is committed substantially to creditors of the company.  In the ordinary course it would be necessary for the creditors to submit proxies in accordance with the Corporations Regulations 2001 to the administrators.  The difficulty which confronts the applicants, and indeed the administrators, in this case is that there is a group of companies which have employees dispersed throughout the country and, having regard to the very, very tight timetable which is imposed, in particular by s 436E of the Corporations Act for the holding of the first meeting, to appoint a committee of creditors and to have the ability to remove an administrator from office and appoint another administrator, it is obviously not feasible to implement the procedure which would enable the Regulations, in the ordinary course, to be complied with.

3                     Evidence has been placed before me of the communications to the creditors of the company and to the employees by circular.  I am satisfied that it is appropriate to make the orders sought in relation to the proxy issue in order to carry into effect the spirit and intendment of Pt 5.3A of the Corporations Act and to ensure that the body of creditors have the opportunity to make their views known, and participate in the proceedings of the first meeting to be held tomorrow. 

4                     One matter that initially concerned me was that I might be putting some employees in the position of having the unions, who are in effect to be their proxy, cast votes on behalf of the employees without the employees having the opportunity to instruct the unions as to what they may wish to say or do at the meeting.  However, I am satisfied that the issues which are going to arise tomorrow are such that it is appropriate that the proxies be deemed to be given to the various unions, as those unions represented the various employees in the negotiation of their employment agreements or the agreements which regulate the terms of their employment.

5                     A solicitor acting for the Australian Securities and Investments Commission informed the Court from the bar table that the Commission did not oppose the applications which were made either in relation to the proxy issue or the proposed appointment of the substitute administrators.

6                     I am also satisfied that it is appropriate to make the order sought in relation to the substitution of further administrators.  I have been informed by counsel who appear for the administrators that it is the intention of the present administrators to tender or give notice of the resignation of their office as administrators very shortly.  I consider it important in an administration of this nature, an administration of a very, very substantial commercial enterprise and a commercial enterprise which employs many thousands of employees, that there be no gap in the continuation of the administration which is currently in existence and which is operative.

7                     A solicitor, representing the directors of the companies under administration, has not had the opportunity to obtain instructions as to the attitude of the directors in relation to the orders proposed in relation to the appointment of the substitute administrators.  That is a relevant consideration because where an administrator resigns, the primary person who may appoint someone else as administrator is the appointor of the original administrator (see s 449C(1) of the Corporations Act).

8                     Under s 435C of the Corporations Act, the administration of a company begins when the administrator is appointed and ends on the happening of whichever event of a kind referred to in subss (2) and (3) happens first after the administration begins.  It is important in those circumstances that there be no period of time at which the administration is continuing, but nevertheless there is not an administrator or administrators administering that administration. 

9                     The Court has the power under s 449C(6), where a company is under administration and for some reason no administrator is acting, to appoint a person as administrator on the application of a creditor of the company.  It seems to me that it is an appropriate order to make in those circumstances that the proposed substitute administrators be appointed with effect from the date and time that the administrators give notice in writing of their resignation as administrators of the companies.

10                  If that event occurs, then the order will come into effect.  If that event does not occur, then the current administrators will maintain their position as administrators.  What is important is that there be no point of time where there are no administrators undertaking the administration of the company.  I propose to reserve liberty to the directors of the companies under administration to apply to amend, vary or revoke the orders which I propose to make appointing the substitute administrators.  They may make such an application on twelve hours written notice to the applicants, but any such application must be made to the Court no later than 4.00pm on Wednesday, 19 September 2001 so that there be no further uncertainty in relation to the administration.

11                  I hasten to say I have some concern about the effect or consequence of that liberty which has been reserved, because if any application was to be made, it may in the circumstances result, if there was any merit in the application, in recourse being made again to s 447A of the Corporations Act.  But I think it is necessary in the circumstances that that opportunity be given to the directors of the respondent companies, having regard to the speed with which this matter has come to the Court.

Associate:

Dated:              19 September 2001

SCHEDULE OF PARTIES

Faye Rappas

Australian Council of Trade Unions (“ACTU”)

Ansett Pilots Association (“APA”)

Association of Professional Engineers, Scientists & Managers Australia (“APESMA”)

Australian Liquor, Hospitality & Miscellaneous Workers Union (“LHMU”)

Australian Federation of Airline Pilots (“AFAP”)

Australian Licensed Aircraft Engineers Association (“ALAEA”)

Australian Services Union (“ASU”)

Australian Workers Union (“AWU”)

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“AMWU”)

Communication, Electrical and Plumbing Union (“CEPU”)

Flight Attendants’ Association of Australia (“FAAA”)

National Union of Workers (“NUW”)

Transport Workers Union of Australia (“TWU”)

            Applicants

and

Ansett Australia Limited (ACN 004 209 410)

501 Swanston Street Pty Ltd (ACN 005 477 618)

Aeropelican Air Services Pty Ltd (ACN 000 653 083)

Airport Terminals Pty Ltd (ACN 053 976 444)

Aldong Services Pty Limited (ACN 000 258 113)

Ansett Aircraft Finance Limited (ACN 008 643 276)

Ansett Australia Holdings Limited (ACN 004 216 291)

Ansett Aviation Equipment Pty Ltd (ACN 008 559 733)

Ansett Carts Pty Limited (ACN 055 181 215)

Ansett Equipment Finance Limited (ACN 006 827 989)

Ansett Finance Limited (ACN 006 555 166)

Ansett Holdings Limited (ACN 065 117 535)

Ansett International Limited (ACN 060 622 460)

Bodas Pty Ltd (ACN 002 158 741)

Brazson Pty Limited (ACN 055 259 008)

Eastwest Airlines (Operations) Ltd (ACN 000 259 469)

Eastwest Airlines Limited (ACN 000 063 972)

Hazelton Air Charter Pty Limited (ACN 065 221 356)

Hazelton Air Services Pty Limited (ACN 000 242 928)

Hazelton Airlines Limited (ACN 061 965 642)

Kendell Airlines (Aust) Pty Ltd (ACN 000 579 680)

Morael Pty Ltd (ACN 003 286 440)

Northern Airlines Limited (ACN 009 607 069)

Northern Territory Aerial Work Pty Limited (ACN 009 611 321)

Rock-it-Cargo (Aust) Pty Ltd (ACN 003 004 126)

Show Group Pty Ltd (ACN 002 968 989)

Skywest Airlines Pty Ltd (ACN 008 997 662)

Skywest Aviation Limited (ACN 004 444 866)

Skywest Holdings Pty Ltd (ACN 008 905 646)

Skywest Jet Charter Pty Ltd (ACN 008 800 155)

South Centre Maintenance Pty Ltd (ACN 007 286 660)

Spaca Pty Ltd (ACN 006 773 593)

Traveland International (Aust) Pty Limited (ACN 000 275 936)

Traveland International Pty Limited (ACN 002 275 936)

Traveland New Staff Pty Ltd (ACN 080 739 037)

Traveland Pty Limited (ACN 000 240 746)

Walgali Pty Ltd (ACN 005 258 921)

Westintech Limited (ACN 009 084 039)

Westintech Nominees Pty Ltd (ACN 009 302 158)

Whitsunday Affairs Pty Ltd (ACN 009 694 553)

Whitsunday Harbour Pty Limited (ACN 010 375 470)

Wridgway Holdings Limited (ACN 004 449 085)

Wridgways (Vic) Pty Ltd (ACN 004 153 413)

(All Administrators Appointed)

Peter Hedge

Greg Hall

Allan Watson

(Voluntary Administrators)

            Respondents