DAVID COLLEY & ORS (according to attached Schedule) v PASMINCO LIMITED

REASONS FOR JUDGMENT 1 On 19 September 2001 administrators were appointed of Pasminco Limited and a number of its wholly‑owned subsidiaries ("the Pasminco group") pursuant to the provisions of Pt 5.3A of the Corporations Act 2001 (Cth) ("the Act"). On 26 September 2001 the first meeting of creditors of the companies in the Pasminco group was held pursuant to s 436E of the Act. At that meeting a Committee of Creditors was appointed in accordance with s 436E(1) of the Act. Nominated representatives of the Australian Workers' Union ("the AWU") and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, also known as the Australian Manufacturing Workers' Union ("the AMWU") were included as members of the Committee of Creditors. At that time a considerable number of employees of the Pasminco group which had a number of remote worksites were members of the AWU and the AMWU and those unions represented those employees in negotiating industrial relations issues with the Pasminco group. 2 On 30 August 2002 the creditors of the Pasminco group resolved, pursuant to s 439C of the Act, that the companies in the Pasminco group execute deeds of company arrangement. These deeds provided for restructure of the Pasminco group and were executed, together with other documents relating to the restructure, on 4 October 2002. 3 Since the administration commenced in September 2001, the AWU and the AMWU have been significantly involved in the administration process and have represented their members by the participation of the union officials nominated on the Committee of Creditors. 4 The AWU and the AMWU are two major unions amongst others with members employed by the Pasminco group. The administrators have admitted claims lodged by members of the two unions exceeding $5m. It should be noted that the terms and conditions of employment of the union members employed by the Pasminco group are governed by industrial instruments obtained by, inter alia, the AWU and the AMWU with the relevant employer company. Those industrial instruments are recognised under both Commonwealth and State industrial relations legislation. 5 On or about Friday 14 March 2003 the administrators of the deeds of company arrangement prepared for delivery to creditors a copy of their first report and confirmation that meetings of creditors of the companies in the Pasminco group would be held on Friday 28 March 2003 pursuant to the deeds of company arrangement. I was informed that the letter and accompanying report were not posted until the following Monday 17 March 2003. In the notice which was given of the meeting the agenda was set out in the following terms: "1. To consider the Deed Administrators' First Report to Creditors for the abovenamed companies. 2. For creditors to consider a resolution to vary the Deeds of Company Arrangement of certain of the abovenamed companies pursuant to Section 445A of the Corporations Act (2001). 3. To fix the further remuneration of the Voluntary Administrators pursuant to Section 449E of the Corporations Act (2001). 4. To fix the further remuneration of the Deed Administrators pursuant to the Deeds of Company Arrangement. 5. Any other business that may be lawfully brought forward." 6 The notice also provided: "Proxies to be used at the meeting should be lodged at the office of the Deed Administrators by 4.00pm on Wednesday 26 March 2003. A corporate creditor may only be represented by proxy or by an attorney appointed pursuant to Corporations Regulations 5.6.28 and 5.6.31A or by a representative appointed under Section 250D of the Corporations Act." 7 The letter accompanying the report and notice of meeting stated that the purpose of the meeting was to be: "i) Provide creditors with an update in relation to the status of the administration and in particular, the ongoing restructure of Pasminco; ii) Seek creditors' approval for two (2) variations to the Deeds of relevant Companies pursuant to Section 445A of the Corporations Act (2001). iii) Advise creditors of the outcome of the Pricing Committee meeting to be held prior to the meetings of creditors; iv) Provide an opportunity for questions from creditors; and v) Seek creditors' approval for the unpaid fees of the Administrators and Deed Administrators." The letter also noted that proxy forms submitted for previous meetings of creditors would not be valid for the meeting and that creditors who intended to vote needed to complete the enclosed new proxy form. 8 The AWU and the AMWU have received advice from their legal advisers that the variations to the deeds of company arrangement to be proposed at the meeting pursuant to s 445A of the Act are of particular importance for the union members who are creditors in the Pasminco group. They have also received advice that it is important that those employees support the proposed variations, particularly the variation which will enable the deed administrators to execute a deed of cross assumption of claims on or before 23 April 2003 when the revocation of the current deed of cross guarantee will take effect. The AWU and the AMWU have received advice that this variation is important for employee creditors of the companies in the Pasminco group as it will enable them to continue to enjoy the measure of protection given to their entitlements by reason of the current deed of cross guarantee between companies in the Pasminco group. 9 The difficulty presently facing the AWU and the AMWU and their members who are creditors of the companies in the Pasminco group is that officials of the two unions do not have sufficient time either to obtain proxies or powers of attorney from all their members who are creditors of the companies in the Pasminco group to enable them to represent their members at the meeting on 28 March 2003. 10 The unions' officials only became aware on or about 13 March 2003 of the proposal by the deed administrators to call a further meeting of creditors to be held on 28 March 2003 and, as I noted earlier, the report and notice of the meeting were not posted until 17 March 2003. 11 Since they became aware of the proposal to call the meeting, the officials of the two unions have taken steps to try and obtain as many proxy forms and powers of attorney as they can from their creditor members to enable them to represent them at the meeting. 12 Although the letter under cover of which the report and the notice of meeting is dated 14 March 2003 and was posted on 17 March 2003, as at 21 March 2003 a significant number of employees who are members of the two unions had not received the deed administrators' first report. 13 The AWU has approximately 776 members employed by companies in the Pasminco group who are creditors of the various companies. The AMWU has approximately 170 members who are creditors. The members of the two unions who are creditors are spread across five different Pasminco group sites: (a) the Elura underground mine in Cobar New South Wales; (b) the Cockle Creek smelting operation in Newcastle, New South Wales; (c) the Port Pirie lead smelting site in South Australia; (d) the Roseberry site in northern Tasmania; and (e) the Hobart smelter in Tasmania. 14 Evidence was placed before the Court which demonstrated that the location of these sites, and the number of union employees at them, was such that it was not practicable for union officials either to visit the sites or communicate with the sites by telephonic or electronic means in such a way as to obtain proxies or powers of attorney from all their members within sufficient time to enable union officials to represent the members and vote on their behalf at the meeting. The unions have received some powers of attorney and proxy forms but many union members will be unable to supply them within sufficient time. 15 Accordingly the three applicants, namely Mr David Colley who is a member of the AMWU and a creditor of the Pasminco group, the AWU and the AMWU seek an order pursuant to s 447A of the Act that Pt 5.3A of the Act is to operate in relation to each of the companies in the Pasminco group, other than the fourteenth respondent, as if it provided that at the meeting to be held on 28 March 2003 pursuant to s 445F of the Act or otherwise under the deeds of company arrangement, each employee of the companies in the Pasminco group who is a member of the AWU has duly appointed Mr Glenn Thompson, and each employee who is a member of the AMWU has duty appointed Mr Bill Shorten, to be their attorney pursuant to reg 5.6.31A of the Corporations Regulations 2001 (Cth) for the purpose of the meeting, save for any employee who attends the meeting in person or any employee who signs a proxy or power of attorney appointing some other person to attend the meeting on his or her behalf. 16 The relief sought is supported by the companies in the Pasminco group other than the fourteenth respondent. I required that notice of the application be given to the Australian Securities and Investments Commission ("the Commission") and to other creditors of the companies in the Pasminco group. Neither the Commission nor any creditor has appeared before the Court to oppose the grant of the relief sought. 17 In Re Ansett Australia Limited (Admin Apptd); Rappas v Ansett Australia Limited (Admin Apptd) (2001) 39 ACSR 296 I made an order similar to the order sought so as to enable twelve unions whose members included employees of companies in the Ansett group to have their nominated officials appointed as attorneys for their members pursuant to reg 5.6.31A of the Corporations Regulations 2001 (Cth) for the purpose of voting at the first meeting of creditors of companies in the Ansett group pursuant to s 436E of the Act. I considered that I had the power to make that order under s 447A of the Act having regard to the interpretation placed on that section by the High Court in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279‑280. 18 The philosophy and policy lying behind Pt 5.3A, and in particular the execution and administration of deeds of company arrangement by companies subject to Pt 5.3A of the Act, is that the creditors of the company have a significant and substantial role in that administration. This is seen, for example, in s 445A which enables a deed of company arrangement executed by a company as a result of a resolution to that effect by its creditors to be varied by resolution passed at a meeting of the company's creditors. The significant role of creditors is also found in s 445B(1) of the Act which enables a creditor of a company to apply to the court for an order cancelling a variation made under s 445A. 19 I consider therefore that the Court should be concerned to ensure that whenever meetings of creditors of companies subject to a deed of company arrangement are called that any inhibitions upon, or barriers to, creditors being able to have their voice heard or vote cast at such meeting be overcome. More particularly is this so where there is a large body of creditors, such as employees, each with claims modest by reference to the overall indebtedness of the companies subject to deeds of company arrangement, but substantial and significant for each employee. 20 I am satisfied that in the present circumstances there are difficulties for a considerable number of members of the AWU and the AMWU in having their voice heard or their vote recorded at the meeting to be held on 28 March 2003. This is not of their own making but has been brought about by the diverse and in some cases remote locations in which they work, the difficulty in obtaining a signed proxy or power of attorney from them and the relatively short period of time which officials of the AWU and the AMWU have had to canvass the views of their members who are creditors of the Pasminco group and obtain proxies and powers of attorney from them. 21 Consistently with the philosophy and policy to which I have referred I am satisfied that the orders sought should be made.