Lombe, in the matter of Bosnjak Holdings Pty Ltd (Subject to a Deed of Company Arrangement) [2005] FCA 1366

2. Pursuant to s 447A(1) of the Act, Pt 5.3A of the Act is to operate in relation to the Companies so that: (a) section 449E(1)(a) of the Act also provided that the applicants, in their capacity as Deed Administrators of the Companies, if the Deeds of Company Arrangement so provide, are entitled to such remuneration for work performed in relation to all the Companies as is fixed by a resolution of any committee of inspection appointed to Westbus, which is passed after the members of that committee have received no less than seven days written notice of the amount of remuneration claimed by the applicants, together with details of the manner in which the amount claimed is comprised and calculated being a resolution agreed to by members of the committee who (i) contribute a majority in number of the members of the committee voting on the resolutions; and (ii) account for a majority by value of the debts of the creditors who are (or are represented by) the members of the committee voting on the resolutions.

(b) one of the functions of the Committee of Inspection of Westbus is to fix, by resolution of that Committee, the remuneration of the applicants in their capacity as Deed Administrators of all the Companies, if the Deeds of Company Arrangement so provide, after the members of that Committee have received no less than seven days prior written notice of the amount of remuneration claimed by the applicants together with details of the manner in which the amount claimed is comprised and calculated.

3. The applicants' costs of this application be costs in the administration of the Companies.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF BOSNJAK HOLDINGS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 341 435; BOSNJAK BROS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 107 264; BOSNJAK ENTERPRISES PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 648 260; BOSNJAK INVESTMENTS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 911 446; BOSNJAK PROPERTY DEVELOPMENTS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 040 960; BOSNJAK'S COACH LINES PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 001 085 918; BOSNJAK'S INTERNATIONAL SALES PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 648 242; BLUE RIBBON BUS COMPANY PTY LIMITED (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 088 325 615; ENIWILL PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 003 160 370; PARRAMATTA BUS CO PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 449 436; SMITHFIELD COACH IMPORTS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT ) ACN 001 224 415; ST. MARYS BUS SERVICES PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 532 534; and WESTBUS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 000 201 267 (collectively, the Companies)

REASONS FOR JUDGMENT 1 This application concerns the application of s 447A of the Corporations Act 2001 (Cth) (the Act)to the method of fixing the remuneration of the applicants as Administrators and as Deed Administrators of a group of companies listed above (the Companies) comprising the Westbus Group. The principal operating company was Westbus Pty Ltd (Westbus). 2 On 31 January 2005 the applicants, David John Frank Lombe and Peter George Yates, were appointed joint and several voluntary Administrators of the Companies. 3 On 11 March 2005 I made orders relating to fixing the remuneration of the applicants as such Administrators and published my reasons for doing so on 21 March 2005 (Lombe, re Bosnjak Holdings Pty Limited (Administrators appointed) (2005) 53 ACSR 8; [2005] FCA 275). The substantial effect of those orders was that the remuneration of the applicants in relation to work concerning all of the Companies was to be fixed by resolution of the Committee of Creditors appointed to Westbus. 4 The remuneration of the Administrators as such up to 31 May 2005 was fixed at meetings of the Committee of Creditors on 23 March 2005, 25 May 2005 and 29 June 2005. The Adjourned Second Meeting of Creditors approved remuneration of the Administrators for the periods 1 June 2005 to 16 July 2005 and 17 July 2005 to 4 August 2005. On 26 August 2005 there was a fourth meeting of the Committee of Creditors at which the remuneration of the Administrators for the period 5 August 2005 to 25 August 2005 was approved. 5 On 26 August 2005 each of the Companies executed a Deed of Company Arrangement in accordance with resolutions passed at the Adjourned Second Creditors' Meeting held on 5 August 2005. The applicants were appointed as Deed Administrators in respect of each of the Companies. 6 A resolution was passed at the Adjourned Second Meeting of Creditors that a Committee of Inspection be appointed to Westbus (the Committee of Inspection). The following were elected to the Committee of Inspection: (a) Transport Workers Union (the TWU); (b) National Bus Company Pty Limited (NBC); (c) Transcool (NSW) Pty Limited; (d) Autoplex Pty Limited (e) Health Services Australia Limited; and (f) Dataspeed Pty Limited.

Four of those parties were represented on the Committee of Creditors. The total value of the claims admitted for voting purposes of the above members of the Committee of Inspection is $101,638,069.95. This represents approximately 99 per cent of the total claims admitted for voting purposes of the Companies. National Bus Company Pty Limited represents over 92 per cent of all creditors' claims. 7 A Committee of Inspection has only been formed for Westbus. Committees of Inspection were not formed for any of the other Companies for the following reasons: (a) Westbus is the primary operating company; (b) the Committee of Inspection reflects 99 per cent of the total creditors of the companies; (c) NBC is the largest single creditor of the companies and is a member of the Committee of Inspection; (d) the cost of managing and convening meetings for committees of inspection of all of companies would be substantial given that 13 separate meetings would have to be convened rather than just one. This additional cost was considered to be unnecessary in the circumstances; (e) there was only one committee of creditors (being the committee for Westbus) during the administration period and this proved to be a successful model; and (f) the Deeds of Company Arrangement entered into by the Companies provide for the pooling of assets and liabilities.

8 The Administrators entered into an agreement for the sale of the assets and business of the Companies on 22 August 2005 prior to the execution of the Deeds of Company Arrangement. It is intended that this sale process will be completed by 30 September 2005. 9 The Deeds of Company Arrangement of all the Companies provide that the Committee of Inspection of Westbus is able to approve the Deed Administrators' remuneration. The Administrators stated in the Third Report to Creditors that they had applied to the Court for orders that, if a Deed of Company Arrangement was approved, a Committee of Inspection would be empowered to approve the remuneration of the Deed Administrators. 10 At the Adjourned Second Meeting of Creditors, Yates said words to the effect that: 'I will not put it as a motion, but I put it to the meeting that what the deed administrators will be doing is seeking the approval of the Court for the committee of inspection to have the authority to approve and fix the future remuneration of the administrators and the deed administrators.' and words to the following effect: 'All those in favour of that approach, if you could raise your hand and say aye? All those against, could you raise your hand and say against? I note that there was one person, Mr Bob Bosnjak, who was against that.' 11 Mr Bob Bosnjak claimed to be a creditor of Bosnjak Holdings Pty Ltd (Subject to A Deed of Company Arrangement) (BHPL). Mr Bosnjak has brought a claim under s 106 of the Industrial Relations Act 1996 (NSW) in respect of his dismissal by BHPL as its Managing Director. That claim has not yet been heard. Although the Administrators had received advice that such a claim is not an admissible claim as at the date of the commencement of the administrations of the Companies, the Administrators admitted Mr Bosnjak for $1 for voting purposes. Mr Bosnjak is also a director of Fexuto Pty Ltd, which is a shareholder of BHPL. Mr Bosnjak was given notice of this application and an invitation to appear. There was no such appearance. 12 The Deed Administrators estimate that the cost of holding a creditors' meeting for each of the Companies to approve the Administrators' and Deed Administrators' fees will be approximately $40,575.00 and the cost of holding meetings of committees of inspection for each of the Companies will be approximately $26,908.75, as opposed to holding a Committee of Inspection meeting, which will be approximately $11,046.75. 13 The work that will be performed by the Deed Administrators will be work done for the entire group of Companies, however that work will be apportioned to those of the Companies to which that work relates as during the Administration. To this end, the Deed Administrators will maintain a separate charge code for each of the Companies so that work performed for each of the Companies can be separately apportioned and recorded. The time recording will occur at the time the task is completed by the relevant person. 14 The Administrators anticipate that there will be expenses that were incurred up to and including 25 August 2005 that have not yet been received and so were not included in the amount approved at the Meeting of Creditors on 25 August 2005. There is also a possibility that some internal fees may not have been processed in due time. The Committee of Creditors is now defunct and cannot deal with such residual items. 15 The substance of the application is that the Committee of Inspection of Westbus be authorised to fix the remuneration of the Deed Administrators and also the residual fees and expenses arising out of the Administration.

Deed Administration 16 The reasoning reflected in the decision to approve a similar arrangement for the Administration is also cogent in relation to this particular Deed Administration and need not be repeated. That reasoning is reinforced by the judgment of Barrett J of the Supreme Court of New South Wales in Re CarLovers Carwash Ltd [2005] NSWSC 879. In my opinion, the structure of the Westbus group and the composition of the Committee of Inspection make that body appropriate to make the necessary decisions. It represents the overwhelming body of creditors and has substantial continuity with the prior Committee of Creditors. That continuity is significant in view of the sale of the assets of the Westbus Group. I am satisfied that such a committee of inspection is more appropriate in the first instance than the Court in undertaking the task of fixing remuneration. I agree with the opinion of Barrett J that not too much weight can be placed upon mere saving of costs of calling of meetings and the like in favour of orders of the kind here proposed. Whilst not insignificant, they are a small proportion of the costs and fees of the administration generally and are part of the price for the operation of the statutory scheme. The appropriate question is the most efficient way of adequately protecting the creditors at the same time as doing justice to the Deed Administrators. Waiver or variation of the statutory scheme should not be regarded as a matter of course. I take into account in this decision the factor that was of some weight in my previous decision, namely, that the provisions of s 449E(2) of the Actprovide a mechanism to cure any inappropriate action one way or the other by the Committee of Inspection.

Residual fees and expenses 17 It is sensible that the residual fees and expenses of the Administration be dealt with in the same way as the main body of those fees and expenses were dealt with. That would support the proposed role to be played by the Committee of Inspection which, as I have said, is the successor, in substance, to the Committee of Creditors. The proposal is unusual as the Administration has come to an end. However, there is little doubt that an application could be made to the Court pursuant to s 449(E) of the Act at this stage. Further, a meeting could be called pursuant to s 445F for that purpose (cf s 473). That being so, there is no reason why the operation of s 447A of the Act would not and should not extend to giving such a role to the Committee of Inspection in the particular circumstances of this case.

Notice 18 This matter has been dealt with ex parte. The creditors in general, and members of the Committee of Inspection in particular, are aware of the substance of the application. The one creditor who expressed opposition to it has been given particular notice. I note that the Australian Securities and Investment Commission was served in Re CarLovers Carwash Ltd. Whether or not that is desirable, I do not see it as a necessary step. I also note that the Commissioner of Taxation abstained from voting on the issue. I considered whether particular notice should be given to that creditor. I do not think that it is necessary in this case in view of the disclosures which have been made and in view of the ability of a creditor to make application pursuant to s 449E of the Act. 19 The orders sought will be made with one qualification. It seems to me that there is merit in the decision by Barrett J in Re CarLovers Carwash Ltd (in turn, picking up a decision of Campbell J in Re Regis Towers Real Estate Pty Limited (Administrators appointed) (2003) 51 ACSR 628) that a resolution of the Committee of Inspection in these circumstances should be required to be passed both by majority in number and a majority in value of the creditors represented on the Committee. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Associate: Dated: 20 September 2005 Counsel for the Applicants: BA Coles QC

Solicitor for the Applicants: J Scarcella of Blake Dawson Waldron