FEDERAL COURT OF AUSTRALIA
In the matter of Ansett Australia Limited (ACN 004 209 410) & Ors (All Administrators Appointed) and Korda & Mentha (As Administrators)
V 3015 of 2002
GOLDBERG J
12 FEBRUARY 2002
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 orders made today. This summary is intended to assist in understanding the outcome of this proceeding 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. The administrators of the companies in the Ansett group have sought an order that the Court direct that the administrators may properly and justifiably continue to operate the Ansett mainline airline business for a further period of time ending no later than 28 February 2002.
3. The direction has been sought because the sale of the Ansett mainline airline business to Tesna Holdings Pty Ltd, which was intended to be completed by 31 January 2002, cannot yet be completed due to outstanding issues involving, inter alia, third parties.
4. The administrators have made a commercial decision to continue operating the Ansett mainline airline business for a period up to 28 February 2002, notwithstanding the fact that during that period the Ansett group will incur losses of the order of $6m per week comprising $2.5m in trading losses and $3.5m in respect of on‑going information technology and infrastructure costs. The administrators have made this decision because they believe that it is in the interests of the creditors of the Ansett group that this decision be made.
5. No issue as to the power of the administrators to make this decision has been raised. It is within their power to make the decision. No issue has been raised as to the propriety or reasonableness of the decision, nor has any issue been raised which requires the Court to make a judgment on a legal issue.
6. I have reached the conclusion that, in substance, the direction sought by the administrators is a direction that the Court approve of their commercial decision. As a matter of principle, it is not appropriate for a court to give a direction approving of a business decision made by administrators where no issue of power, or the propriety or reasonableness of the decision, or issue requiring the Court to make a judgment on a legal issue arises for consideration.
7. The Australian Securities and Investments Commission submitted that it would be appropriate for the Court to give a direction pursuant to Pt 5.3A of the Corporations Act 2001 (Cth) that the administrators have power to decide whether or not to continue trading the Ansett mainline airline business at a loss. I am not disposed to make such a direction as the administrators’ power to make the decision they have made is not in issue. Part 5.3A of the Corporations Act 2001 (Cth) gives the administrators the power to decide whether or not to continue trading the Ansett mainline airline business at a loss.
8. I am satisfied that I should not accede to the application made by the administrators because to do so would be doing no more than giving the Court’s imprimatur to a business decision made by the administrators in circumstances where no issue as to power, propriety, reasonableness, or requiring the exercise of judgment on a legal issue arises.
9. The application for directions by the administrators will be dismissed. I publish my reasons.
