Federal Court of Australia

Transport Workers’ Union of Australia, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 1284

ORDERS

THE COURT ORDERS THAT:

1.    The time for service of the plaintiffs’ interlocutory process is abridged and the originating process is made returnable at 2.15pm on 3 September 2020.

2.    Pursuant to section 447A(1) of the Corporations Act 2001 (Cth) (Act) and section 90-15 of the Insolvency Practice Schedule (Corporations) (Cth), the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) be modified to operate such that, as to those persons who are taken to have appointed an attorney in accordance with Order 2 of the Orders made on 21 August 2020 (Orders):

(a)    the requirement that a record be prepared pursuant to s 75-145(4) and (5) of the IPR in relation to the concurrent meetings of creditors of the second to forty-second defendants (Virgin Companies) convened pursuant to section 439A(2) of the Act (Second Meetings), as to persons present by attorney at the Second Meetings, is dispensed with; and

(b)    for the purpose of s 75-145(4) and (5) of the IPR, the first defendants are to record each applicable representative of the plaintiffs as having attended and voted at the Second Meetings on behalf of the specified number and value of those creditors by whom the applicable representative of the plaintiffs are deemed to have been appointed pursuant to Order 2 of the Orders.

3.    The Plaintiffs’ reasonable costs of and incidental to this application and the Defendants’ costs of and incidental to this application, be costs in the administration of the Virgin Companies.

4.    Each plaintiff take all reasonable steps to cause notice of these orders to be given, within two (2) business days of the making of these orders, to its members who are employees of any of the Virgin Companies, in the following manner:

(a)    where the plaintiff has an email address for a member, by notifying such member, via email, of the making of the orders and providing a link to a website where the member may download the orders and the originating process;

(b)    where the plaintiff does not have an email address for a member but does a postal address for that member (or has received notification of non-delivery of an email sent in accordance with paragraph 4(a) above), by notifying each such member, via post, of the making of the orders and the website link where the member may download the orders and the originating process; and

(c)    by placing scanned, sealed copies of the originating process and the orders on the website maintained by the plaintiff.

5.    Any person who can demonstrate a sufficient interest has liberty to apply to vary or discharge order 2 above, on 3 business days’ written notice to the plaintiffs, the defendants and the Associate to Justice Middleton.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MIDDLETON J:

INTRODUCTION

1    On 3 September 2020, I made orders on the application of the Plaintiffs in this proceeding. These are the reasons for those orders.

2    On 21 August 2020, the Court made orders allowing the plaintiffs (the ‘unions’) to represent their members – who are employees of the second to forty-second defendants (the ‘Virgin companies’) – at forthcoming creditors’ meetings.

3    The relevant background is set out in the Court’s reasons for making the orders on 21 August 2020: see Transport Workers’ Union of Australia, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 1218.

4    The unions now apply for further orders to allow the administrators of the Virgin companies, when preparing the minutes of the forthcoming creditors’ meetings, not to include the names of the employees who are represented at the meetings.

5    The orders seek to ensure that the identity of those employees – and specifically the fact that they are union members – does not become publicly available by their inclusion in the minutes, which have to be lodged with the Australian Securities and Investments Commission (ASIC) (where they will be available to the public), and also made available for inspection by contributories and creditors of the Virgin companies.

6    The application is brought by an interlocutory process filed on 2 September 2020, supported by an affidavit made the same day by the plaintiffs’ solicitor, Mr James Higgins.

7    I accept that lists of union members may need to be kept confidential. Notwithstanding that Australian industrial law protects freedom of association and prohibits adverse action (including discrimination) on the basis of union membership, the prospect of adverse action remains prevalent.

8    Each of the unions is concerned to prevent publication of the identity of their members who are employees of the Virgin companies. The maintenance of privacy about union membership is particularly important during an uncertain economic environment such as the present and where there is a prospect of change of ownership of the Virgin companies and their businesses.

9    Accordingly, the unions seek orders relieving the administrators from the requirement to include, in the minutes of the creditors meetings, the identity of employees who are represented by the unions under the orders that the Court made on 21 August 2020 in Transport Workers’ Union of Australia, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 1218.

10    The administrators of the Virgin companies are the First Defendant. The administrators have been served with the application, as has ASIC. The administrators consent to the orders sought, and ASIC has not sought to appear to either oppose or consent to the orders sought.

11    The administrators’ position in consenting to the orders is as follows, as expressed in their outline of submissions dated 2 September 2020:

(1)    The effect of the orders sought by the unions is that those employee creditors of the Virgin Companies – who are members of one or more of the unions and who are deemed to have appointed a representative of their respective union as their attorney for the second meetings of creditors of the Virgin Companies (Second Meetings) in accordance with the orders made by the Court on 21 August 2020 – will be anonymised in the list of attendees at the Second Meetings to be recorded in the minutes of the meetings prepared in accordance with section 75-145(4) of the Insolvency Practice Rules (Corporations).

(2)    In particular, the need to preserve the privacy of those employees who are members of the various unions is an important consideration, particularly in circumstances where the assets and business of the Virgin Companies are the subject of a restructuring which will involve a new owner acquiring control.

(3)    In the absence of the relief sought, those employees of the Virgin Companies who are members of the unions will be readily identifiable. That is by reason of the operation of the orders made on 21 August 2010, whereby (other than where they opt-out) unionised employees are deemed to have appointed a representative of their respective union as their attorney at the Second Meetings.

(4)    In the administrators’ submissions, the orders sought are appropriate as they protect the confidentiality of the fact that an employee is a member of one or other of the unions.

12    The following procedure has been proposed (which is subject to further discussions that may involve some minor alterations) for the purpose of protecting the identity of Relevant Members (being members of the respective unions who are deemed to have appointed an attorney pursuant to section 75-155 by virtue of order 2 of the orders made on 21 August 2020) in the course of the forthcoming meetings:

(1)    a Deloitte employee will be engaged, on a strictly confidential basis, to assist with the appointment of proxies for Relevant Members;

(2)    by 3pm on Wednesday, 2 September 2020, the unions will provide password protected lists of their members to the relevant Deloitte employee, together with a declaration from each union secretary that its respective list is correct;

(3)    only the relevant Deloitte employee will have access to the lists;

(4)    the Deloitte employee will undertake an immediate cross-checking exercise against the “Halo” platform to be used for the forthcoming meetings and the lists, to ensure the members exist. The “Halo” platform is defined in order 2 of the orders made on 11 August 2020 in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 6) [2020] FCA 1172. It is essentially a software tool with a number of functions utilised for the purposes of the administration of the Virgin companies;

(5)    by 10am on Thursday, 3 September 2020, each plaintiff is to provide instructions on how their votes are to be recorded for the Relevant Members;

(6)    at 12 pm on Thursday, 3 September 2020, the Deloitte employee will conduct a final cross-check of the Relevant Members identified on the lists and allocate the voting as directed and nominate the identified union representative as the proxy holder; and

(7)    by 5pm on Thursday, 3 September 2020, the union representatives will have access to the Halo platform and see all proxies held by them for Relevant Members.

Legislative provisions and relevant principles

13    In reviewing the relevant statutory provisions and principles, it is convenient to begin with those concerning minutes of creditors meetings.

Minutes of creditors’ meetings

14    Division 75 of the Insolvency Practice Rules (Corporations) 2016 (Cth) is concerned with meetings. Subdivision C is concerned with procedures at meetings. Rule 75-145 is concerned with the preparation, content and lodgement with ASIC, and availability to creditors or contributories of, minutes of creditors’ meetings.

15    It relevantly provides:

75-145 Minutes of meetings of creditors

(1)    The person presiding at the meeting must, within the period specified in subsection (2):

(a)    cause minutes of the proceedings to be drawn up and entered in a record kept for the purpose; and

(b)    sign the minutes after they have been entered in the record; and

(c)    lodge with ASIC in the approved form a copy of the minutes, certified by him or her to be a true copy.

…

(4)    A record of the persons present in person, by proxy or by attorney at a meeting must be prepared and kept as part of the minutes of proceedings prepared under subsection (1).

(5)    The external administrator, after a meeting of creditors, must cause the minutes and the record of persons present at the meeting to be made available for inspection by creditors or contributories at the principal place at which the external administrator practises.

…

Union membership and protection of information about union membership

16    The application is based on concerns about freedom of association and the protection of personal information, specifically, the relevant employees’ membership of the unions.

17    The Fair Work Act 2009 (Cth) seeks to protect freedom of association. Section 3(e) of the Act, for instance, sets out the objects of the Act, and identifies that it seeks to “enable[e] fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination …”.

18    Part 3-1 of the Fair Work Act 2009 (Cth) contains protections for employees, including freedom of association and involvement in industrial activities. Section 346 prohibits “adverse action” (including discrimination against an employee) against a person because the person is (or is not) “an officer or member of an industrial association” or “engages, or has at any time engaged or proposed to engage, in industrial activity”. A person “engages in industrial activity” if (amongst other things) the person “becomes or does not become, or remains or ceases to be, an officer or member of an industrial association”: Fair Work Act 2009 (Cth), s 347(a).

Section 447A of the Corporations Act and Section 90–15 of the Insolvency Practice Schedule

19    Section 447A of the Corporations Act 2001 (Cth) provides that this Court may “may make such order as it thinks appropriate about how [Part 5.3A (titled “Administration of a company’s affairs with a view to executing a deed of company arrangement”)] is to operate in relation to a particular company”. The section has been interpreted broadly, and can be used to alter not only procedural requirements under Part 5.3A but also to change the substantial operation of the Part: see Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270. The words of s 447A(1) are “are wide enough to confer power to make orders which will have effect in the future but which are occasioned by something that has been done (or not done) under the other provisions of Pt 5.3A before application is made under s 447A(l)”: Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270, 279 (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ).

20    Section 90–15 of the Insolvency Practice Schedule (Corporations) is also very broad. It allows the Court to “make such orders as it thinks fit in relation to the external administration of a company”.

21    It is not necessary to rehearse further the principles attendant on the exercise of the powers under sections 447A and 90-15. The administration of the Virgin companies provides illustration of the exercise of the powers, eg: Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571 and Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (administrators appointed) [2020] FCA 1269. Already, the Court has made several orders relating to the operation of Part 5.3 A, including the requirements of the Insolvency Practice Rules, in relation to the Virgin companies.

Background

22    The Second Meetings of creditors of the Virgin companies are scheduled to be held on 4 September 2020.

23    As I have indicated, the present application is brought to protect the identity of the union members who will, by reason of orders in this proceeding dated 21 August 2020, be represented at the meetings by their respective unions.

24    As part of the process for conducting in the meetings, the administrators need to know which employees are members of the respective unions. Therefore, the unions will provide the administrators with confidential lists of their members. The administrators will use that information to identify which employees will be represented at the meetings by the union representatives (which will be important, for instance, in determining the outcome of resolutions put to the meeting). That information will be included on the “Halo” system.

25    The difficulty arises from the requirement under rule 75-145 of the Insolvency Practice Rules concerning the content of the minutes of the meetings. Under that rule, the person presiding at the meeting (usually, one of the administrators), must cause minutes of the proceedings of the meeting to be drawn up and entered in a record: rule 75–145(1)(a). The minutes must be lodged with ASIC: rule 75–145(1)(c). As part of the minutes, a record must be prepared and kept of “the persons present in person, by proxy or by attorney” at the meeting: rule 75–145(4). The administrators must cause the minutes and the record of persons present to be made available for inspection by creditors or contributories: rule 75–145(5).

26    The orders made on 21 August 2020 have the effect of appointing the union representatives (identified in Appendix A to those orders) as the attorneys of the employees who come within the scope of those orders. Accordingly, each of those employees will be “present … by attorney” for the purposes of rule 70-145(4). That rule requires those employees to be recorded in a record. Because the record will also record the relevant attorneys, where those attorneys are the persons identified in Appendix A to the 21 August 2020 orders, it would be a relatively simple task to identify employees who are union members.

27    As Mr Higgins explains in his affidavit affirmed on 2 September 2020 and filed in support of this application, in Mr Higgins’ experience of industrial law (in which Mr Higgins has practised for more than ten years), adverse action, including discrimination, against union members remains prevalent within the Australian industrial landscape. As he explains, lists of union members are kept confidential. Further, unions have obligations to their members, including under the Privacy Act 1998 (Cth) and unions’ own privacy policies, to maintain the privacy of members. Mr Higgins explains that, in the limited time since the orders of 21 August 2020 were made, it has not been possible for each union to seek permission from each individual union member to identify them as a union member under the process contemplated by those orders.

28    Each of the unions is concerned to prevent the publication of lists of its members in any public forum and, because union membership is inherently personal information, to protect it. Further, as Mr Higgins explains, the unions and the Australian Council of Trade Unions are concerned that the maintenance of privacy about union membership is particularly important during an uncertain economic environment such as the present.

CONSIDERATION

29    It is important that accurate minutes of the creditors’ meetings be prepared and kept. Such minutes constitute not only a record of the proceedings but may also be important evidence in any legal proceedings concerning the meetings or their outcome: see eg Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [138] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) and Weeden v Rambaldi [2013] FCAFC 12; 92 ACSR 661 (Gray, Middleton and Dodds-Streeton JJ).

30    I do not regard it as essential that the minutes of the forthcoming creditors’ meetings need include the names of all those employee creditors who are represented by their unions. Insofar as those employees are concerned, it is their attorneys under the orders – that is, the union representatives – who will participate in the Second Meetings of creditors. The minutes will record the outcome of any resolution, including the votes for and against any resolution (by number and value).

31    However, it is important that the identity of individual employees, and the amount of their claims (and therefore the value of their votes), be recorded in the “Halo” system, as will be the case. If the question of the specific identity of creditors on whose behalf votes were cast on a particular resolution becomes important (for instance, in a proceeding challenging the resolution), the information can be extracted from that system.

32    I accept that there is a prospect that employee creditors who are members of unions may face discrimination if that fact becomes known. Concerns in that regard are heightened in the present circumstances, where there is not only an uncertain economic environment but also a prospect that ownership of the Virgin companies and their businesses will change as a result of votes cast at the Second Meetings of creditors. Then, unless the orders are made, the employees will have the fact of their union membership exposed without their express consent and without the opportunity of taking steps to prevent that from occurring.

DISPOSITION

33    I will make the orders sought by the unions by way of their interlocutory process dated 2 September 2020.

Associate:

Dated:    4 September 2020

SCHEDULE OF PARTIES