FEDERAL COURT OF AUSTRALIA

In the matter of Ansett Australia Limited & Ors (All Administrators Appointed) and Mentha & Korda (As Administrators)

V 3045 of 2001

In the matter of Hazelton Air Charter Pty Ltd & Ors (All Administrator Appointed) and Humphris (As Administrator)

V 3046 of 2001

GOLDBERG J

12 OCTOBER 2001

MELBOURNE

SUMMARY

1.                  In accordance with the practice of the Federal Court in some cases of public interest, the following summary has been prepared to accompany the reasons for judgment delivered today.  This summary is intended to assist in understanding the outcome of these proceedings and is not a complete statement of the conclusions reached by the Court.  The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment which will be available on the internet at www.fedcourt.gov.au, together with this summary.

2.                  On 12 and 14 September 2001, administrators were appointed to companies in the Ansett group.  The airline operations of the Ansett group ceased at 2.00am on 14 September 2001.  The administrators resigned on 17 September 2001 and were replaced by the current administrators, Mark Mentha and Mark Korda.  On the same day Mr Humphris became the administrator of Hazelton Air Charter Pty Limited, Hazelton Airlines Limited and Hazelton Air Services Pty Ltd (“the Hazelton companies”).

3.                  Late in the night on 4 October 2001, the Ansett group, the Hazelton companies, Air New Zealand Limited and its subsidiaries (“the Air New Zealand group”) and the persons who had been directors and secretaries of the Ansett group and the Air New Zealand group since Air New Zealand acquired full ownership of the Ansett group (“the directors”) entered into a agreement called a Memorandum of Understanding (“the Memorandum”).  Under the Memorandum, the New Zealand Government will pay the administrators $150 million, and the Air New Zealand group will waive certain potential legal claims against the Ansett group.  The Memorandum also provides that the administrators and the Ansett group will release the Air New Zealand group and the directors from certain claims against them.  The Memorandum is conditional upon the Court approving the terms of the Memorandum on or before 12 October 2001.

4.                  The administrators applied to the Court under the provisions of the Corporations Act 2001 (Cth) for approval of the Memorandum.  Representatives on behalf of the Australian Securities and Investments Commission, the Commonwealth of Australia, the Australian Council of Trade Unions and twelve unions and their members who were employees of the Ansett group, the Air New Zealand group and ten of their directors appeared at the hearing of the applications and did not oppose the applications.  The only person who appeared and made submissions against the Court making the orders sought was a creditor, E/Wise Solutions Pty Ltd.

5.                  I have reached the conclusion that the Court should direct that it approves the Memorandum and that the administrators may properly perform and give effect to it.

6.                  I publish my reasons for reaching this conclusion.

7.                  The administrators have made a considered commercial judgment that it is in the interests, and for the benefit, of the Ansett group and its creditors that they enter into Memorandum of Understanding.

8.                  I repeat par 78 of my reasons for judgment:

“As it is apparent that the administrators and the Hazelton administrator have demonstrated that they have taken into account, and considered, the interests of the Ansett group and the Hazelton companies and the interests of their creditors, and that they have not taken into account, or been influenced by, matters irrelevant in relation to, or antithetical to, the administration of the Ansett group in the manner described in s 435A of the Act (par 69 above), I am satisfied that it is appropriate to order that they may properly perform and give effect to the Memorandum of Understanding.

9.                  The manner in which the administrators use the $150 million is a matter for the administrators to determine and it is no part of the function of the Court to give any indication or direction as to how that amount might, or should be applied.

10.              Paragraph 2 of the order of the Court is:

“Pursuant to s 447D(1) of the Act, as it operates in accordance with para 1 of this order, the Court directs that:

(a)        The Court approves the Memorandum of Understanding which is Schedule B to the judgment;

(b)        The plaintiffs may properly perform and give effect to the Memorandum of Understanding.”