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Re Ansett Australia Ltd (No 1)

Re Ansett Australia Ltd (No 1)

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FEDERAL COURT OF AUSTRALIA
In the matter of Ansett Australia Limited and Mentha [2001] FCA 1806
CORPORATIONS LAW – external administration – application under ss 447A and 447D of the Corporations Act 2001 (Cth) – deed between administrators and Commonwealth of Australia relating to priority of repayment of payments by Commonwealth in respect of employee entitlements – whether administrators may properly and justifiably execute deed – order sought that Pt 5.3A of the Corporations Act 2001 (Cth) operates such that payments by Commonwealth are debts incurred by administrators in the performance and exercise of their functions and powers – order sought that Pt 5.3A of the Corporations Act 2001 (Cth) operates such that repayments of those debts have priority equal to priority under ss 556 and 560 of the Corporations Act 2001 (Cth) in winding up – prejudice to unsecured creditors – Court’s power under s 447A of the Corporations Act 2001 (Cth).
Corporations Act 2001 (Cth): Pt 5.3A, ss 443A(1), 447A, 477D, 556(1), 560
Air Passenger Ticket Levy (Collection) Act 2001 (Cth): ss 22, 23(1)
Employers’ Mutual Indemnity Associated Ltd v Federal Commissioner of Taxation (1943) 68 CLR 165 considered
Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 applied
Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 considered
Deputy Commissioner of Taxation v Portinex Pty Ltd (2000) 156 FLR 453 referred to
IN THE MATTER OF ANSETT AUSTRALIA LIMITED (ACN 004 209 410) & ORS (All Administrators Appointed) and MARK FRANCIS XAVIER MENTHA and MARK ANTHONY KORDA (As Administrators)
V 3083 of 2001
GOLDBERG J
4 JANUARY 2002
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 3083 of 2001

IN THE MATTER OF:

  ANSETT AUSTRALIA LIMITED

  (ACN 004 209 410) & ORS
  (All Administrators Appointed)
  (see attached Schedule)

AND

  MARK FRANCIS XAVIER MENTHA and

  MARK ANTHONY KORDA
  (As Administrators)

Plaintiffs

JUDGE:

GOLDBERG J

DATE:

4 JANUARY 2002

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

On 14 December 2001, I pronounced orders in this proceeding. I now publish my reasons for making those orders.
The plaintiffs, who are the administrators of Ansett Australia Limited and the other companies set out in Schedule A to these reasons (“the Ansett group”), have applied to the Court for directions and orders that the Court approve the terms of a deed into which the administrators propose to enter with the Commonwealth of Australia and that the administrators may properly perform and give effect to the deed. The directions are sought pursuant to ss 447A(1) and 447D(1) of the Corporations Act 2001 (Cth) (“the Act”).
The administrators also seek orders pursuant to s 447A(1) of the Act that Pt 5.3A of the Act is to operate in relation to the Ansett group as if it provided that:
“4.1the Entitlement Payments referred to in Part 4 of the Schedule to the Determination under Subsection 22(1) of the Air Passenger Ticket Levy (Collection) Act 2001 are debts incurred by the Administrators in the performance and exercise of their functions and powers…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FCA 1806
Decision Date: 4 JANUARY 2002

CaseChat Overview and Summary

The case of Re Ansett Australia Ltd (No 1) involved the Federal Court of Australia and the administrators of Ansett Australia Limited and other companies in the Ansett group. The administrators sought orders and directions to approve a deed between the administrators and the Commonwealth of Australia, relating to the priority of repayment of payments made by the Commonwealth in respect of employee entitlements. The Commonwealth intended to protect employees who were denied their monetary entitlements as employees and wanted the repayments of the amounts advanced under the scheme to have priority equal to the priority the Commonwealth would have received in any winding up of a company.

The court had to decide whether the administrators could properly and justifiably execute the deed and whether the Corporations Act 2001 (Cth) should operate in a certain way in relation to the Ansett group. The court considered the legal issues, the interests of the unsecured creditors, and the purpose of the Act. The court concluded that it had the power to make such orders under s 447A of the Act and that it should exercise that power in favour of making the orders sought.

The court ordered that the debts incurred by the administrators as a result of advances made to the administrators by the Commonwealth under the scheme were debts incurred in the performance and exercise of their powers and functions as administrators for services rendered. The repayment of the debts formed an expense of the administration, which expenses were to be paid out of the property of the Ansett group before any distribution was made to unsecured creditors. The court also ordered that the debts incurred by the administrators were to have the priority equal to the priority the Commonwealth would have received, under Section 560 of the Act in any winding up of a company had it advanced a payment of the kind contemplated by Section 560 of the Act. The court directed that the administrators may properly and justifiably execute a deed containing particular provisions, which should be set out in the Court order.

Orders