Judgment Delivery - Transcript of Video

In the matter of Ansett Australia Limited and Mentha [2001] FCA 1439

12 OCTOBER 2001

[Justice Goldberg at bench]

Justice Goldberg: 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 the Court’s website together with this summary.

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. The administrators resigned on 17 September 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 Proprietary Limited, Hazelton Airlines Limited and Hazelton Air Services Proprietary Limited.

Late in the night on 4 October 2001, the Ansett group, the Hazelton companies, Air New Zealand Limited and its subsidiaries 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 entered into an agreement called a Memorandum of Understanding. 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.

The administrators applied to the Court under the provisions of the Corporations Act 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 Proprietary Limited.

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.

I publish my reasons for reaching this conclusion.

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 the Memorandum of Understanding.

I repeat paragraph 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 section 435A of the Act, I am satisfied that it is appropriate to order that they may properly perform and give effect to the Memorandum of Understanding.

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.

I will shortly pronounce the orders of the Court, but paragraph 2 of the order of the Court is:

“Pursuant to section 447D(1) of the Act, as it operates in accordance with paragraph 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.”

[Justice Goldberg speaks briefly to Associate – inaudible (10 seconds).]

Justice Goldberg: I’ll hand out copies of the summaries to the parties. Before I formally pronounce the orders, Mr Whelan, is there anything further that needs to be addressed?

Mr Whelan: On the question of costs, Your Honour, it seems to us that the various parties who appeared and made submissions, including Mr Vadarlis, ought to have an order that their costs be costs in the administrations, other than Air New Zealand.

Justice Goldberg: Other than Air New Zealand.

Mr Whelan: Other than Air New Zealand. They were here to advance their own commercial interests and it doesn’t seem to us that the unsecured creditors ought to bear their costs. But I’m not sure whether they even seek it, Your Honour.

Justice Goldberg: Mr Crutchfield?

Mr Crutchfield: I am not instructed to seek costs.

[Justice Goldberg speaks briefly to Associate – inaudible (4 seconds).]

Justice Goldberg: Yes, Mr Peters.

Mr Peters: On the issue of costs, Your Honour, I was going to submit to Your Honour there should be a variation on Mr Whelan’s proposal. Not all parties appeared in the Hazleton application, only Mr Beach did, and it really shouldn’t be borne across both administrations which have differing creditors and differing assets. I was going to propose that the costs be costs in the Ansett administration and the Hazleton administrators have their costs in their administration only.

Unidentified counsel: Yes, that’s satisfactory to our …

Justice Goldberg: I’m sorry, say that again Mr Peters.

Mr Peters: The costs of the parties to which Your Honour’s order relates should be costs in the Ansett application no. 3045 in the Ansett administration, and in no. 3046 the costs should simply be costs of the administrators of that application, the costs in the Hazleton administration.

[Justice Goldberg looking down, writing]

Justice Goldberg: So the costs of all the parties appearing be in 3045, and only the costs of the Hazleton administrators be costs in the …

Mr Peters: Hazleton administration

Justice Goldberg: Yes

Mr Peters: And Your Honour there is another matter I was going to raise with you after the matter of costs is dealt with.

Justice Goldberg: Well, it seems there’s basically heated agreement in relation to the costs order, Mr Crutchfield I think you told me you don’t pursue your costs, is that right?

Mr Crutchfield: Yes, Your Honour.

Unidentified counsel: Your Honour, technically I’d also seek an order for my client’s costs in the Hazleton administration because we were creditors that did appear separately in the Hazleton administration. Now commercially it may or may not make a difference, I can’t say at the moment, but strictly we would seek an order that our costs be costs in the administration of both the Ansett group and also the Hazleton group.

Justice Goldberg: Then it’s a matter for the taxing officer to determine your portion, is it not?

Unidentified counsel: Certainly, Your Honour.

[Justice Goldberg turns to his side, speaks to his Associate who has approached – inaudible (5 seconds).]

Justice Goldberg: Yes, well I will formally pronounce the orders in relation to the costs in a few, the formal orders, including the orders in relation to costs.

Mr Peters, there’s a further matter.

Mr Peters: One matter, Your Honour, we wouldn’t have imagined it would be necessary for an order of the Court at this stage that the fund to be received by the administrators of the Ansett group be held intact pending agreement with the administrators of the Hazleton group, but we’ve had some correspondence, or, we’ve sent some correspondence and haven’t had a reply that assures us that that would be the case. Perhaps Mr Whelan can clarify the position that the funds won’t be distributed, pending agreement with my clients, or determination of the Court as the Court was informed last Friday.

Justice Goldberg: The evidence that was before me and what I was told, and indeed what I have recorded in my reasons for judgment, was that Mr Humphris and Mr Korda and Mr Mentha had reached an agreement that they would, being the sensible commercial gentlemen they are, seek to resolve the matter themselves, and if they couldn’t they’d come back to the Court to seek directions and orders.

Mr Peters: Precisely, Your Honour.

Justice Goldberg: Well, why does the matter need to be taken any further than that?

Mr Peters: Well we only raised it, Your Honour, because, whilst there’s an agreement to be worked out as to apportionment, there’s no agreement at the moment as far as we can, no assurance at the moment, but we say there is an obligation to keep the money intact, no assurance that the money won’t be kept intact. I raise it now Your Honour, if it’s necessary to bring an application next week we will, but.

Justice Goldberg: Have you raised this matter with Mr Whelan earlier?

Mr Peters: I have, Your Honour, and we were unable to clarify the position.

Justice Goldberg: Mr Whelan

Mr Whelan: When Mr Peters says ‘earlier,’ he literally means, ‘five minutes ago,’ Your Honour. Your Honour, I don’t have anything to add. If Mr Peters wants to make an application he can and we’ll respond to it when he does. We would have thought that the matter can be resolved and as far as we’re concerned it’s under consideration of both the administrators and will be resolved and we’re not quite sure what these observations are directed to, frankly.

Justice Goldberg: I think, Mr Peters, in the circumstances it’s a matter which is discrete from the applications in respect of which I’m about to pronounce my final orders in respect of which I’ve published my reasons this afternoon. If you feel that you have the need to make a further application in relation to the administration of either the Hazleton group and the Ansett group, it’s open for you to do so on any issue.

I propose to adjourn for a few moments before I pronounce the orders.

[Justice Goldberg stands and walks from the bench]

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