Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia

REASONS FOR JUDGMENT 1 The administrators of the Ansett group of companies have applied to the Court for a direction pursuant to s 447D of the Corporations Act 2001 (Cth) ("the Act") that they may properly and justifiably continue to operate the business referred to as the Ansett mainline airline business for a further period of time ending no later than 28 February 2002. 2 A brief recitation of facts and circumstances referred to in earlier judgments relating to the administration of the Ansett group of companies is necessary to put the application in context. 3 On 12 and 14 September 2001, Messrs Peter Hedge, Gregory Hall and Allan Watson ("the first administrators"), were appointed administrators of Ansett Australia Limited and the other companies set out in Schedule A to this judgment (other than Ansett Australia and Air New Zealand Engineering Services Ltd), in accordance with the provisions of Pt 5.3A of the Act. I will refer to these companies and to Ansett Australia and Air New Zealand Engineering Services Ltd collectively as "the Ansett group". Those appointments occurred as a result of resolutions of the boards of directors of the various companies in the Ansett group on 12 and 14 September 2001. 4 The first administrators caused the airline operations of the Ansett group to cease at 2.00am on Friday, 14 September 2001. The Ansett group did not recommence airline operations until 29 September 2001. 5 On 17 September 2001, I ordered that the applicants, Mr Mark Korda and Mr Mark Mentha ("the administrators"), be appointed joint and several administrators of the Ansett group and that Michael James Humphris be appointed administrator of three Hazelton companies, with effect from the time that the first administrators gave notice in writing of their resignation as administrators of the Ansett group. This they did on 17 September 2001, whereupon the administrators were appointed administrators of the Ansett group and Mr Humphris was appointed administrator of the Hazelton companies. On 4 October 2001, the administrators were appointed administrators of Ansett Australia and Air New Zealand Engineering Services Ltd pursuant to the provisions of Pt 5.3A of the Act. 6 On 18 September 2001, the first meetings of creditors of the various companies in the Ansett group were held in accordance with s 436E of the Act. The appointment of the administrators was confirmed and a committee of creditors was appointed in respect of each of the companies in the Ansett group. 7 In the ordinary course, by virtue of the provisions of s 439A of the Act, the second meeting of creditors provided for by Pt 5.3A of the Act, should have been convened by 12 October 2001, or thereabouts, and the meetings held no later than 17 or 19 October 2001. The Court has power under s 439A(6) of the Act to extend the period within which that meeting must be convened. 8 On 28 September 2001, the administrators applied to the Court for an order, which was made on 1 October 2001, extending the convening period for the second meeting of creditors of the Ansett group to 12 December 2001. (A similar order was made on 23 October 2001 extending the convening period for the meeting of creditors of Ansett Australia and Air New Zealand Engineering Services Ltd to 12 December 2001.) On 28 November 2001, the administrators filed a further application in which they sought an extension of the convening period for the second meeting of creditors of the companies in the Ansett group to 22 January 2002. This extension was granted on 5 December 2001. A second meeting of creditors was convened within that period and was held on Tuesday, 29 January 2002. On that date, certain resolutions were passed by creditors, including an adjournment of the meeting for a period of up to sixty days. 9 As soon as they were appointed, the administrators commenced the process for the sale of the Ansett mainline airline business. Their objective was to keep the Ansett mainline airline business in existence and to maximise the return to creditors. The events which occurred on 11 September 2001 in the United States of America had a depressing impact on the aviation industry, and it was extremely difficult at that time to sell an airline. The administrators knew that unless the Ansett group recommenced flying operations there was no realistic prospect of selling the airline as a going concern. The settlement of outstanding issues with Air New Zealand Limited provided the administrators with the cashflow to meet operational costs. 10 The administrators believed that if the Ansett group went into liquidation, the value of its assets would be significantly diminished and priority creditors would not be paid their entitlements in full. 11 On Saturday 29 September 2001, the Ansett group recommenced flying operations with ten A320 airbuses flying 424 sectors each week. This remained the position until 31 January 2002. The administrators budgeted on trading to that date and incurring additional trading losses and additional costs during the period up to that date which they considered were reasonable to incur, given the object of Pt 5.3A of the Act and the likely realisation of assets of the Ansett group on a liquidation. The administrators understood that the period from October to January was a relatively good period of trading in the aviation industry, but that February was the worst trading month in the aviation industry. 12 The sale process undertaken by the administrators involved seeking to procure interested parties to make offers to purchase the mainline airline business. 13 Four parties were actively involved in the sale process for the mainline airline business. These parties were: (a) Tesna Holdings Pty Ltd ("Tesna"), representing the interests of Messrs Lindsay Fox and Solomon Lew; (b) ANstaff, representing the interests of Ansett staff, predominantly pilots; (c) Singapore Airlines Limited, which was invited by the administrators to participate in the sale process; (d) Lang Corporation Limited, a listed public company, expressed interest in acquiring some of the Ansett group's terminal aviation assets and employing approximately 2,000 Ansett employees. Singapore Airlines Limited did not submit an offer for the Ansett mainline airline business, but agreed to provide the administrators with consultancy services. ANstaff made an offer on 14 November 2001 to buy the Ansett mainline airline business. That offer was withdrawn on the following day. 14 The administrators had discussions with the interested parties and on 8 November 2001, Tesna made a written offer to the administrators to purchase the Ansett mainline airline business. The administrators accepted that offer on the same day. The administrators accepted the Tesna offer because they held the view that it would maximise the chances of the Ansett mainline airline business remaining in existence, and would result in a better return to creditors. 15 The Tesna sale agreement was subject to the satisfaction of a number of conditions precedent and it provided for settlement and completion on 31 January 2002. That date was fixed by the administrators specifically because of their concerns about increased trading losses in February and their desire to minimise those losses. The completion date has been extended on several occasions and is presently extended, as I understand the position, at least to the date of the delivery of these reasons for judgment. At the conclusion of the hearing, counsel for the administrators said that there would be no change to the course upon which the administrators had embarked within the time frame I had proposed for giving judgment. 16 The terms of the Tesna sale agreement provide for the interest of the Ansett group in a number of assets to be transferred to Tesna or its nominees. The assets are numerous and, in general terms, comprise all the assets used by the Ansett group in the mainline airline business. The assets include rights under leases to domestic airline terminals and other interests in property leases, plant and equipment and stock and spare parts which are owned by third parties and are subject to third party claims. 17 It is not necessary for the purposes of this application to consider in any detail the terms and provisions of the Tesna sale agreement. That is the subject of another application presently pending before the Court. However, for present purposes, it is pertinent to note the following matters: · Tesna will make, or has made, offers to employ up to 4,000 employees and assume responsibility for employee entitlements based on a new enterprise bargaining agreement negotiated with the Australian Council of Trade Union ("ACTU") and relevant unions. At the present time, the administrators understand that Tesna is proposing to offer employment to around 3,000 employees; · the purchase price for the sale includes $270m for the sale assets and the assumption by Tesna of up to $244m in liabilities. This latter amount depends upon the number of Ansett employees employed by Tesna; · Tesna intends to operate a full services airline which will have a new marketing scheme similar to the former Ansett Global Rewards Scheme, which the administrators consider may provide enhanced benefits to former Ansett Global Reward members who maintain loyalty with the airline to be operated by Tesna; · the administrators agreed to continue to operate Ansett's airline operations in the manner they have done since 29 September 2001 until the completion date specified in the agreement, namely 31 January 2002; · the sale was subject to the approval of the creditors of the Ansett group at the second creditors' meeting. 18 The administration of the Ansett group has been, and continues to be, a complex administration and the sale of the mainline airline business to Tesna has involved, in general terms, the following matters: · the lease to Tesna of a number of A320 aircraft previously operated by the Ansett group which are subject to finance and operating leases; · the negotiation of a new enterprise bargaining agreement with the ACTU and relevant unions representing employees; · the assignment of domestic terminal leases to Tesna; · the continuation by the Ansett group of maintenance services to Tesna; · the transfer of information technology used by the Ansett group to Tesna and provision by the Ansett group to Tesna of plant and equipment subject to the interests of lessors and other third parties; · the provision to Tesna by the Civil Aviation Safety Authority ("CASA") of a new airline operating certificate. 19 By 28 January 2002, the day before the holding of the second creditors' meeting, it had become apparent to the administrators that the sale to Tesna would not be completed by 31 January 2002 because the administrators would not be able to reach agreement with a number of third parties prior to the completion date. The administrators decided that it was in the interests of the creditors of the Ansett group that the administrators continue to negotiate with Tesna and the relevant third parties, for up to a further thirty days, for the purpose of completing the sale to Tesna on substantially the same commercial terms provided for in the sale agreement. 20 The administrators estimated that the continued operation of the mainline airline business would incur losses to the Ansett group during February 2002 of approximately $6m per week, comprising trading losses of approximately $2.5m and information technology and other infrastructure costs of approximately $3.5m. This weekly trading loss is greater than the weekly trading losses incurred by the Ansett group since 29 September 2001. This is due to a diminution in ticket revenue, the increase in the use of aircraft, at Tesna's request, from ten aircraft to fourteen aircraft and an increase in weekly sectors flown from 424 to 530. Mr Korda estimated that between 29 September 2001 and the end of December 2001 the losses incurred in operating the mainline airline business were of the order of $15m‑$20m and that there was probably a break‑even position in January 2002. 21 The administrators have accepted Tesna's position that it is critical to its plans that the Ansett mainline airline business be sold as a going concern. It is for that reason that the administrators believe that they should continue to operate the mainline airline business, and to incur the weekly losses referred to, during any further negotiation period after 31 January 2002. 22 Prior to the holding of the second creditors' meeting on 29 January 2002, the administrators decided that they would recommend to the creditors that the Ansett group continue trading at a loss so as to achieve settlement and completion of the sale agreement with Tesna. Mr Korda explained the administrators' reasoning in the following terms: "In ordinary circumstances Mark Mentha and I would be very reluctant to continue to run a business at a considerable loss, in the hope that it can be sold as a going concern in the future, particularly where the ability to conclude that sale is dependent in part on matters beyond the control of the purchaser and ourselves, such as the obtaining of agreements and consents from third parties. These concerns are exacerbated by the fact that the transaction did not settle on the date originally agreed. However, in the particular circumstances of this administration, and as a result of our assessment as to the likelihood that the third parties will in fact reach agreement and our assessment as to the probable time‑frame in which that agreement will be reached, we came to the view that it was prudent to continue to pursue the Tesna Sale and to continue to conduct the business in the meantime. Mark Mentha and I carefully balanced the advantages and disadvantages of continuing trading at a loss. We also had specific regard to the primary objects of Part 5.3A of the Act in reaching our decision to recommend to creditors that we should continue to do so." 23 The second creditors' meeting was held on Tuesday, 29 January 2002. A report by the administrators to the creditors in accordance with the provisions of s 439A(4) of the Act had been made available to creditors. That report disclosed a substantial excess of liabilities over assets in the Ansett group. It stated that if the creditors did not approve the sale to Tesna, priority entitlements might not be paid in full and there would be no funds available for ordinary unsecured creditors. It stated that if the sale to Tesna was approved, terminated employees should receive their entitlements in full with employees transferred to Tesna being reliant on Tesna for their entitlements, and a dividend of up to 5 cents in the dollar would be possible for ordinary unsecured creditors. The report also outlined the terms of the sale agreement with Tesna. 24 Mr Korda told the meeting that the transaction was complex and that it would not be completed by 31 January 2002. He said that the outstanding issues related to third parties who were the owners of domestic terminals which were leased to Ansett, licensors of information technology and lessors of aircraft. Mr Korda told the meeting that the administrators believed that Tesna would complete the sale, although he acknowledged that Tesna may decide not to complete the sale and that was a risk. He said that it may take up to thirty days to complete the sale, having regard to a number of outstanding issues and matters which he explained. He referred to the disadvantages of extending the completion date for the sale to Tesna, which included the fact that the Ansett group would incur trading losses of up to $2.5m per week and would have to carry information technology systems and other infrastructure costs of approximately $3.5m per week. He also said that if the Tesna sale did not complete within thirty days there might not be sufficient funds to pay the priority creditors in full. Thereafter, creditors at the meeting asked the administrators questions which were answered. 25 A resolution was then put to the meeting in the following terms and passed: "That the creditors approve the sale of the Ansett mainline airline to Tesna Holdings Pty Ltd as described in the First Report to Creditors with a completion date of 31 January 2002 or such other date as the Administrators may agree." That resolution was in a different form to that notified to creditors in the notice of meeting which only provided for approval of the sale, and did not provide for a completion date of 31 January 2002 or such other date as the administrators may agree. 26 The administrators have formed the view that it is in the best interests of the creditors of the Ansett group that they (the administrators) continue negotiations with Tesna for the purpose of completing the sale by 28 February 2002. They have also formed the view that in order to achieve this result they should continue operating the mainline airline business for the purpose of completing the sale. They have formed these views notwithstanding the potential losses which will be incurred if the agreement with Tesna is not completed. The dilemma facing the administrators is that the Tesna sale is dependent upon various third parties consenting to assignment of leases and rights in relation to other property to Tesna. There is also the issue of CASA issuing an airline operating certificate to Tesna which is dependent upon a number of matters, including Tesna obtaining assignments of leases to domestic terminals and the assignment of rights in relation to various items of information technology. 27 These issues have given rise to concerns of the administrators which Mr Korda expressed in the following terms: "We are concerned that if the Tesna Sale does not complete, and by continuing to operate the business we have reduced the pool of funds available to creditors by trading losses and delaying the ultimate cessation of all other costs and expenses, disgruntled parties might seek, with the 'wisdom of hindsight' to allege we have failed in our duty to creditors and in our obligations as administrators to maximise the return to creditors. Presently we believe that by continuing to trade we are complying with the objects of Part 5.3A namely, to keep as much of the Ansett business in existence and maximise the return to creditors. However, in doing so, we may be jeopardising the return to creditors if the sale does not complete." 28 The administrators explained their concerns in the following submission: "The administrators are concerned that, if they act on the commercial evaluation they have made and the commercial decision they have reached by continuing to trade during the month of February, and thereby incur substantial losses and additional expenses which might otherwise not be incurred (totaling approximately $6m per week), they will be moving outside the ordinary parameters of insolvency administration, and outside the ordinary parameters of operation of Part 5.3A. In the absence of a direction, they are concerned that they will be subjected to allegations that they have acted unreasonably or in breach of their duties if the losses are incurred but the sale does not eventuate." 29 At the present time, no‑one has put to the administrators that, in making the decision to continue negotiations with Tesna after 31 January 2002 and maintaining the operation of the mainline airline business, notwithstanding the losses which are being incurred and will continue to be incurred, the administrators are failing, or have failed, in their duty to creditors and in their obligations as administrators to maximise the return to creditors. 30 The administrators have estimated that if the Tesna sale is completed by 28 February 2002, the estimates of returns to creditors given in the report to creditors will be achieved as they have factored into those figures the expected weekly losses from operating the mainline airline business during February 2002. If the Tesna sale is not completed, the mainline airline business will not remain in existence and there will be no funds available, after payments to priority creditors, for any payments to ordinary unsecured creditors. 31 The administrators believe that there are good prospects of reaching a resolution of outstanding issues in relation to the Tesna sale and that there are good prospects of completing that sale in February 2002. 32 Put shortly, the administrators have undertaken a detailed and considered commercial evaluation of the decision whether to continue airline operations for another month in order to consummate the sale to Tesna. They have made a business judgment that, consistently with the objects of Pt 5.3A of the Act, it is in the interests of the creditors of the Ansett group that negotiations continue for the purpose of completing the sale to Tesna, notwithstanding the fact that the initial date for completion, namely 31 January 2002, has passed and that it is also in the interests of creditors that the Ansett group continue to operate its mainline airline business during February 2002, notwithstanding the fact that during that period the Ansett group will incur further losses of the order of $6m per week. The administrators consider that the benefits to creditors if the sale to Tesna is completed outweigh the disadvantages of continued trading during February 2002. 33 As I have noted earlier, no‑one has suggested or complained that the administrators should not have formed the views they have formed and should not have made the decisions they have made. In particular, it has not been suggested that the administrators should not continue to operate the Ansett mainline airline business for a further period up to 28 February 2002 for the purpose of enabling the completion of the sale of that business to Tesna. No person appeared at the hearing of the application to put these views. 34 The ACTU and relevant unions appeared at the hearing and did not oppose the form of direction sought by the administrators. However, they did oppose the direction being given in respect of the period up to 28 February 2002 and contended that it should only be given in respect of the period up to 15 February 2002. Because of the uncertainty of the issues presently prevailing and, in particular, uncertainty as to the number of employees who would in fact be offered employment by Tesna, the ACTU submitted that the direction should be given only in respect of a short period of time, which could be reviewed. 35 Sydney Airport Corporation Ltd ("SACL") appeared at the hearing and did not wish to make any submission as to the merits of the application. It only appeared to respond to, and dispel, what it perceived to be criticism of its conduct in Mr Korda's affidavit. I did not read any such criticism in Mr Korda's affidavit, and Mr Korda disavowed any suggestion that SACL had been obstructive in the negotiations for the assignment of the Sydney domestic terminal lease. 36 As a result of my concern at a directions hearing that I may not have the benefit of argument opposing the direction sought by the administrators, the administrators arranged for a creditor, Mr Mark Wollan, to appear to put submissions through counsel opposing the direction sought by the administrators. In the events which occurred, the Australian Securities and Investments Commission ("the Commission") appeared and opposed the direction sought by the administrators. The creditor and the Commission, in general terms, submitted that I should decline to make the direction sought because the subject of the direction was solely a matter for the commercial and business judgment of the administrators and did not raise any issue or matter which gave rise to the exercise of the Court's jurisdiction to give directions. In particular, the Commission submitted that the administrators had the power to continue running the airline at a loss if they wanted to do so. 37 The submissions of the parties focused on the issues whether the direction sought by the administrators related to a matter which was committed to them for their commercial and business judgment and determination, whether there was any matter in respect of which the direction of the Court was sought and whether it was an impediment to the Court giving a direction that the direction sought related to a matter of business or commercial judgment. 38 The administrators accepted, correctly, that the issue raised by the application was not one of power. Clearly, the administrators have the power to operate the mainline airline business during the period of the administration if they so decide, and that is so whether or not they are able to operate the business at a profit or at a loss. Section 437A of the Act provides: "(1) While a company is under administration, the administrator: (a) has control of the company's business, property and affairs; and (b) may carry on that business and manage that property and those affairs; and (c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and (d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration. (2) Nothing in subsection (1) limits the generality of anything else in it." 39 It should be noted that s 436A of the Act empowers a company to appoint an administrator if its board of directors has resolved that, in the opinion of the directors, the company is insolvent or is likely to become insolvent at some future time and that an administrator should be appointed. The structure of Pt 5.3A contemplates that an administrator of a company may have to operate the business of a company under administration at a loss in order to further the objects of Pt 5.3A found in s 435A. The control of the business of a company under administration is absolute in the sense that, while it is under administration, no other person can perform or exercise any function or power as an officer of the company, except with the written approval of the administrator: s 437C. The discretion of the administrators to carry on the business of a company under administration is unfettered other than by a resolution of the creditors at a meeting convened pursuant to s 439A of the Act. 40 The nature of the power of an administrator of a company under administration to carry on the company's business was explained by the majority of the High Court (Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ) in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1. Their Honours said at 38‑39: "An administrator has the power to carry on trading though the company is insolvent, the personal liability of the administrator being the protection given by the Corporations Law to the company's creditors. … The administrator must act impartially as among all parties having or claiming to have an interest in the present or future assets of the company and must make those decisions which, in the light of contemporary circumstances, best serve those interests. It is for the administrator, in exercise of the discretionary powers conferred by s 437A, to decide whether or not to carry on the company's business and the form in which it should be carried on during the administration. … It is one thing to restrain Patrick Operations from giving effect to the termination of labour supply contracts and restraining those companies in ways that would, if the employees were to succeed at trial, permit the making of orders that would undo the transactions alleged to have been undertaken as a party to a conspiracy to engage in conduct in contravention of s 298K of the Act. But it is a very different thing to fetter the discretion of the administrators (and of the creditors) in the exercise of the powers they possess under the Corporations Law. It is for the administrators and the creditors (including the majority creditors, the employees) to take the decisions about continued trading." 41 The administrators disavowed any suggestion that they were asking the Court to make a business or commercial decision whether the Ansett group should continue to operate its mainline airline operations during February. They acknowledged that they had made the commercial decision and were not asking the Court, in effect - do you think we should extend the period of time? Nevertheless, the administrators appeared to be seeking an approbation, sanction or approval for that decision. This made it difficult to identify what was the "matter" in respect of which the direction of the Court was sought. After debate, counsel for the administrators submitted that the matter was "whether in the circumstances the administrators may properly act on their commercial judgment to continue trading in the month of February?" The relevant circumstances were identified by the administrators as follows: "• Continued trading is the only remaining avenue open to the administrators to further the primary 'preservation of business' object in s 435A. If the sale does not settle, the pursuit of that object will have compromised the secondary 'return to creditors' object. · The administration, and consequent trading, has already continued for a period considerably longer than that ordinarily provided for by Part 5.3A. If Part 5.3A is properly seen as providing for a confined period of 'breathing space' (which may properly involve trading including trading at a loss), an issue arises as to whether the administrators remain properly within the contemplated boundaries of that 'breathing space'. · Losses will almost certainly be incurred. The losses are of a significantly greater quantum than have been incurred to date. · The continued trading is in pursuit of a sale as a going concern which has already failed to settle on an agreed date and whose finalisation is contingent on matters, some of which are in large measure outside the control of the vendor and purchaser. · There is considerable potential for subsequent dispute should the sale not settle." The administrators were concerned as to whether they would be moving outside the ordinary parameters of insolvency administration and the operation of Pt 5.3A. 42 The administrators submitted that where difficult and potentially contentious decisions were required by liquidators, they have always been able to approach the Court for direction. They relied upon the following passage in Palmer's Company Precedents, 16th ed. 1952 at 240: "The power to apply for directions under the Act is not limited in any way, and the liquidator has a clear right to apply to the court for directions in regard to any particular matter, whether it involves a question of law or a question of discretion as to the management or realisation of the property of the company. The liquidator should, for his own protection, apply to the court in every case of doubt, and should do so, where large sums are involved, even if his advisers express no doubt upon the matter. It has always been the practice in winding up to allow to the liquidator every opportunity of taking the directions of the court as to any question of difficulty in regard to which he wishes for guidance. For example, shall he sell part of the assets at a price offered, or postpone the sale in the hope of getting a better price? Shall he stop the business, and thus destroy the goodwill, or shall he keep it going for a while and thus have to risk further assets? … the court has full jurisdiction to give directions in relation to any particular matter; and it would seem that to decline to exercise that jurisdiction merely because a matter does not involve a question of law is contrary to the intention. It is a matter of everyday occurrence to obtain the direction of the court as to whether misfeasance proceedings should be taken." [emphasis added by the administrators.] I should point out that no authorities are cited in the text or in footnotes for these propositions, other than for the proposition that a liquidator should apply to the Court for directions "where large sums are involved". In Re Windsor Steam Coal Company (1901) Limited [1929] 1 Ch 151 is cited for that proposition. I do not consider that the case is authority for that proposition. A statement to that effect does not appear in any of the judgments. The case involved a liquidator compromising a claim made against the company of which he was liquidator in circumstances where the compromise was controversial, there was doubt about the validity of the claim, some creditors opposed compromise of the claim and the liquidator deliberately chose not to seek directions from the Court or to seek a resolution of creditors. The Court found that the claim which had been compromised by the liquidator was not valid. The only relevant statement of principle in the judgments of the Court of Appeal is (at 159) that the companies statutes afford liquidators the opportunity of going to the Court to obtain protection in any difficult circumstances in which the liquidator may be placed. Other propositions in the text are not controversial, such as a decision to postpone a sale of assets. 43 I accept that principles and authorities relevant to the rights of liquidators to seek directions from the Court are applicable to issues arising in relation to the rights of administrators to seek directions pursuant to s 447D of the Act. In Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141 at 149, Lindgren J said: "I see no distinction in the present respect between an application by administrators under s 447D and an application by a liquidator under s 479(3). … The procedure afforded by s 447D to administrators under a deed of company arrangement is clearly drawn from, and is in substance the same as, that afforded to liquidators by s 479(3)." I therefore regard authorities relevant to the construction and application of s 479(3) of the Act and its predecessor sections as relevant to the present application. 44 When liquidators and administrators seek directions from the Court in relation to any decision they have made, or propose to make, or in relation to any conduct they have undertaken, or propose to undertake, they are not seeking to determine rights and liabilities arising out of particular transactions, but are rather seeking protection against claims that they have acted unreasonably or inappropriately or in breach of their duty in making the decision or undertaking the conduct. They can obtain that protection if they make full and fair disclosure of all relevant facts and circumstances to the Court. In Re G B Nathan & Co Pty Ltd (1991) 24 NSWLR 674, McLelland J said at 679‑680: "The historical antecedents of s 479(3) [equivalent to s 447D of the Act], the terms of that subsection and the provisions of s 479 as a whole combine to lead to the conclusion that the only proper subject of a liquidator's application for directions is the manner in which the liquidator should act in carrying out his functions as such, and that the only binding effect of, or arising from, a direction given in pursuance of such an application (other than rendering the liquidator liable to appropriate sanctions if a direction in mandatory or prohibitrary form is disobeyed) is that the liquidator, if he has made full and fair disclosure to the court of the material facts, will be protected from liability for any alleged breach of duty as liquidator to a creditor or contributory or to the company in respect of anything done by him in accordance with the direction. … Modern Australian authority confirms the view that s 479(3) 'does not enable the court to make binding orders in the nature of judgments' and that the function of a liquidator's application for directions 'is to give him advice as to his proper course of action in the liquidation; it is not to determine the rights and liabilities arising from the company's transactions before the liquidation': [cases cited omitted]." 45 Although the administrators submitted that they had made the commercial decision to operate the mainline airline business at a significant loss during February 2002, and were not asking the Court to approve of, or pass judgment on, that business decision, they did submit that the Court was not precluded from giving consideration to business and commercial decisions. 46 The authorities are not uniform on the issue as to the extent to which a court may give a direction to a liquidator or to an administrator in relation to a matter which involves a business or commercial decision made, or to be made, by the liquidator or administrator. In some instances where directions have been given, it might be thought that the distinction between a business decision and a non‑business decision has become blurred. Nevertheless, it does not appear from the authorities that courts have given liquidators and administrators directions approving of business or commercial decisions in circumstances where no issue has arisen in relation to a legal matter or the propriety or reasonableness of the decision. For example, in Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd (1993) 7 ACSR 245, Lockhart J said at 247: "Sections of this kind [s 424 of the Corporations Law, the right of receivers to apply to the Court for directions] cannot, however, be resorted to for the purpose of seeking the intervention of the court to make a commercial decision for receivers or liquidators." 47 There are two sound principles why this is particularly so in relation to administrators appointed in accordance with Pt 5.3A of the Act. First, those decisions are particularly committed to administrators and withdrawn from officers of the company: s 437A and s 437C. Secondly, a court is not qualified and, in any event, is ill equipped to make or approve of such business decisions. In particular, the Court has not been privy to the negotiations and circumstances involved in the making of the business decision in respect of which the administrators seek approval. The point was made succinctly by Street CJ in Eq in Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207 at 232: "When the court is required to pronounce upon the commercial prudence of a transaction, it enters upon a slippery and uncertain field. Apart from the lawyer's disclaimer of expert qualifications in matters of business prudence, the very process of litigation and the necessary limitations upon the scope of admissible evidence restrict the available material to far less than is necessary for the making of a commercial decision." 48 However, the administrators submitted that a review of the relevant authorities demonstrated that there was no rule of law and no fixed principle that the consideration by the Court of commercial issues was precluded, although the administrators accepted that the need to pass judgment on the commercial prudence of a transaction was a ground upon which the Court might decline to give directions, particularly if the liquidator or administrator was seeking to pass the actual decision‑making onto the Court. The administrators submitted in the alternative that any need to consider commercial issues would not warrant a refusal to give directions where application was made within the context of one of the well recognised areas in which directions were sought, such as whether to act on a liquidator's commercial judgment to postpone a sale, and where there was a legitimate apprehension of subsequent accusations that the liquidator acted unreasonably. I turn to some of the relevant authorities. 49 In Re Codisco Pty Ltd [1974] CLC ¶40‑126, a provisional liquidator applied for directions in relation to the sale of the company's restaurant business. The liquidator had entered into an agreement for the sale of the business on terms and subsequently received a further offer for the sale of the business. A meeting of creditors resolved to express its preference for the second offer. There was, therefore, a controversial issue as to which sale transaction the liquidator should undertake. At the hearing, a number of creditors submitted that the Court should not approve the first agreement but should throw open the business for tender. One of the issues before the Court was whether a provisional liquidator had power to sell upon terms. Bowen CJ in Eq held in the affirmative. There were other controversial issues raised as to whether the first agreement for sale should be approved. Bowen CJ in Eq evaluated the competing views put before the Court and gave the Court's approval to the first transaction. It is apparent from the judgment that the Court was faced with a number of legal issues which were in dispute and also, particular objections to the transaction in respect of which the Court's approval was sought. I do not understand the judgment to be authority for the proposition that the Court will give directions as to the commercial prudence of a transaction where there is no issue as to the propriety or reasonableness of it and where there is no suggestion that the transaction is not within the power of the liquidator to undertake. 50 In Re Statewide Investments Ltd (in liq) (1981) 6 ACLR 265, an application was made by liquidators for directions that they be at liberty on behalf of the company to enter into a contract for the sale of certain land, the terms of which provided for an extended period for completion to allow for rezoning of the land. Master Lee approached the application as one where a liquidator was seeking to postpone the sale of assets, in circumstances where the liquidator was under an obligation to realise the assets and apply them in satisfaction of the liabilities of the company and pay any surplus to those entitled. Master Lee noted that counsel for the liquidators contended that the commercial prudence of the proposed transaction was beyond doubt, and that the application did not in fact to seek to have the Court pronounce upon the commercial viability of the transaction. The application was rather put on the basis of asking the Court to give a direction that the liquidators be at liberty to enter into the contract with an inevitable delay in the completion of the winding up. Master Lee approached the application on this basis and said at 268: "It is clear from the above references that it is not improper for a liquidator to seek the guidance of the court as to whether or not to postpone the sale of certain assets, this obviously being to cover the situation contended for by counsel that a postponement of the sale of the ordinary course would run counter to the primary duty of the liquidator to expedite the winding up and bring it to an early conclusion." 51 I do not consider this case to be an authority for the proposition that a court will pronounce upon the commercial prudence of a transaction. The application was one where a liquidator was seeking, in effect, to engage in conduct which might be thought to be contrary to his statutory obligation to realise the assets of the company as expeditiously as possible. 52 In Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115, Young J considered that Master Lee's doubts in Re Statewide Investments Ltd (in liq) (supra), whether the Court could give directions where the question was one of the commercial prudence of a transaction in respect of which the liquidator had power to act, were precluded in New South Wales by the decision in Re Codisco Pty Ltd (supra) as applied by Needham J in Newmont Pty Ltd v Laverton Nickel NL (1978) 3 ACLR 830 at 832. In Newmont, the issue was whether the Court had power under s 236(3) of the Companies Act 1961 (NSW) to grant approval to an agreement made by a provisional liquidator after its execution. It was submitted that once a provisional liquidator entered into an agreement, the only power of the Court was to say whether it was valid or invalid. Needham J considered that submission to be inconsistent with Re Codisco Pty Ltd (supra) in which Bowen CJ in Eq had given approval under s 236(3) to an agreement which had been entered into by a provisional liquidator. 53 I therefore do not consider Young J to be saying in Sanderson that a court will give directions as to the commercial prudence of a transaction where its propriety and reasonableness is not in issue, and where there is no suggestion that the liquidator or administrator did not have power to make the decision. Indeed, Young J disavowed this proposition when he said at 117: "Essentially, then, though there is wide jurisdiction given to the court under s 379(3) of the Code, it is usually only proper to exercise that power where the matter involves guidance to the liquidator on matters of law or principle or to protect him against accusations of acting unreasonably. The court does not usually consider it proper to intervene and make the liquidator's commercial decision for him. Indeed, the court is always reluctant to credit itself with any degree of competence in this field at all." 54 Young J identified the areas in which a court will usually give directions in the following passage at 117: "However, it is also true to say that virtually all the cases on s 379(3) or its predecessors, [the equivalent of s 447D of the Act] involve one of the following four classes of cases: (a) guidance to the liquidator on matters of law … (b) questions involving legal procedure … (c) whether a liquidator should act on his commercial judgment to postpone a sale because he recognises his legal duty ordinarily requires him to reduce the company's assets into cash as soon as possible and to distribute …or (d) where there are two or more competing purchasers for the company's property and the liquidator has acted mala fide or in an absurd or unreasonable or illegal way …" Young J had earlier observed at 116: "Although s 379(3) of the Companies Code is expressed in wide terms, it seems to me clear that it does not permit the liquidator or provisional liquidator to come to the court whenever he feels some unease about a situation and wishes to obtain some sort of insurance against the possibility of error, as well as assurance that he is on the right track." 55 In Commissioner for Corporate Affairs v Harvey [1980] VR 669, in which the Court was considering an inquiry into the conduct of a liquidator, Marks J said at 716: "What the liquidator was to do was simple enough. His first task was to keep the contracts on foot (preserve the assets) but if he felt there was a problem to be resolved his duty was to take steps to have it resolved. If that meant seeking directions from the Court then he was obliged to do so. … He was under a clear duty to inform the Court of any impediment, including lack of funds, to his proper conduct of the liquidation." Marks J recognised that there had to be an issue or an impediment which gave rise to the seeking of directions. 56 In Shiraz Nominees (in liq) v Collinson (1985) 10 ACLR 7, Franklyn J was not prepared to give directions that the liquidators be at liberty to commence an action against a company to recover an amount for goods sold and delivered, or directions as to which other persons should be named as defendants in the proposed action. It is apparent from the judgment that Franklyn J was not satisfied with the evidence which had been placed before the Court. However, his Honour took the view (at 12‑13) that the application was in substance: "an application for the court to exercise the discretion properly to be exercised by the liquidators, and in fact to pronounce on the commercial prudence, viability and wisdom of instituting the proceedings in question. On the evidence available to me the liquidators have, after investigation, concluded that, subject to the availability of the requisite evidence, a good cause of action exists for the recovery of all or part of the sum in question, but that even if judgment is obtained, because of an absence of information there is no reason to believe that the amount thereof could be recovered. On that basis they are asking the court to make a determination that should be made by them, and without producing any evidence as to even attempts made to assess the chances of recovery from Russell, and, as to Nominees, on producing evidence that falls far short of suggesting that a full and proper search and inquiry has been made." Franklyn J concluded that the liquidators had not made the decision at all, but had sought to have the Court make the decision for them. This, his Honour was not prepared to do. 57 In Re Lemon Tree Passage & Districts RSL and Citizens Club Co‑Operative Limited (1987) 11 ACLR 796, Young J was presented with an application by a liquidator for directions as to whether the liquidator should commence proceedings against committee members of the Lemon Tree Passage & Districts RSL Sub‑Branch. Young J concluded that the liquidator had an arguable case against someone and that the case was not fruitless, but held that there was insufficient material before him to enable the question to be answered. He stood the matter over to enable the liquidator, if he wished, to continue the proceeding and place further material before the Court. It is clear from the judgment that Young J was prepared to consider giving the directions sought if adequate material was placed before him. However, the feature which distinguished the facts before him from those in Shiraz Nominees (supra) was that there was an issue as to who should be the nominated defendants, having regard to the fact that the sub‑branch was not incorporated. Young J referred to a number of difficult legal questions which were involved. In the course of considering the approach a court should take when asked whether a liquidator should commence proceedings, Young J observed at 798: "Today the liquidator does administratively what, in earlier ages, was done by officers of the court within the court system. Accordingly, it seems to me that, apart from very rare cases, such as the circumstance adverted to by Powell J [determining a hypothetical question], the court should not take the view that it can just leave one of its officers floundering, and that if the liquidator asks for advice, then some advice and directions should be given." However, there is no suggestion in the judgment that Young J was taking a view different from that expressed by him in Sanderson v Classic Car Insurances Pty Ltd (supra). Indeed, Young J went on to say at 798‑799: "… I should make it plain that the foregoing remarks apply only where the question is one which is within the classes of questions on which the liquidator may legitimately seek directions. If the matter is one for his discretion, or for his commercial judgment, the court may very well consider that it is inappropriate for it to become involved in a matter which is better left to the liquidator's commercial expertise. I dealt with such situations in Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 at 117. Ordinarily, however, a question as to whether a liquidator should commence proceedings or settle proceedings which involve questions of law and procedure are proper cases for the court to consider under s 379(3) of the Code." I do not consider Young J to be saying that just because a liquidator or administrator has a difficult problem to resolve and may be "floundering", it is appropriate for the Court to give directions on the matter. Young J was not acceding to the proposition that it was appropriate for the Court to give a liquidator or administrator directions on a matter involving a commercial or business judgment. 58 In Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83, the liquidators of three companies sought the authority of the Court to compromise claims by and against the companies in pending court proceedings, and other claims which had been made. They also sought directions that they were justified in entering into the transactions recorded in the deeds constituting the compromises. The liquidators were required to obtain the authority of the Court to compromise the claims in accordance with s 377(1) of the Companies (NSW) Code. Giles J noted that directions given to a liquidator pursuant to s 379(3) of the Code (the equivalent section to s 447D of the Act) fulfilled a different function from the authorisation of a compromise pursuant to s 377(1) of the Code and doubted that there was a separate issue in relation to directions pursuant to s 379(3) of the Code. Giles J said at 85: "It is generally not appropriate in an application for directions to make the liquidator's commercial decisions for him where he has full power to act (Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115), and the liquidator should not seek directions as a kind of insurance that he has made the right commercial decision. It is nonetheless common for a liquidator to seek directions as to whether he is justified in entering into a particular compromise, but in the present case I doubt that there is really any separate issue in relation to directions pursuant to s 379(3). If the liquidators are given the authority for which they ask it will follow that they are justified in exercising the power they will then have." Giles J therefore approached the matter on the basis of approving compromises, rather than giving directions. Accordingly, Giles J's observations do not assist the administrators. 59 In Re Addstone Pty Ltd (in liq) (1997) 25 ACSR 357, a liquidator of two companies sought directions as to how the liquidator should continue to conduct two separate proceedings instituted in the Supreme Court of the Australian Capital Territory by the two companies. The proceedings had been dismissed on the ground that they had no prospect of success and appeals by the companies against the dismissals were pending. The liquidator sought directions as to whether he should cause the companies to provide security for costs in the appeals and whether he should continue to prosecute the appeals on behalf of the companies. There were controversial issues involved as officers and persons associated with the companies wanted the liquidator to take a number of steps calculated to have the proceedings continued. Those persons had put the liquidator on notice that any failure on his part to prosecute fully the proceedings, including the appeals, would result in them suing him for breach of duty and negligence. 60 Mansfield J gave directions that the liquidator would be acting appropriately in the absence of any opportunity in the immediate future to negotiate some other resolution in discontinuing the appeal. In the course of his reasoning, Mansfield J considered the extent to which the Court should provide assistance to the liquidator. His Honour said at 362‑363: "Some judges have observed that the procedure should not be used to excuse a liquidator from taking difficult commercial judgments (eg Shiraz Nominees Pty Ltd (in liq) v Collinson [citation omitted]) but, even in such circumstances, a liquidator has been given directions when confronted with an accusation of acting unreasonably: Sanderson v Classic Car Insurances Pty Ltd [citation omitted], and by way of contrast it has been observed that it is appropriate for a liquidator to seek directions as to whether to institute or continue or to continue to defend proceedings involving questions of law and procedure: [cases omitted] … The suggested dichotomy between a liquidator's commercial judgments on the one hand and a liquidator's decision with respect to the conduct of proceedings on the other is, in my view, not a matter of legal significance but only of practical significance." His Honour then referred to Sanderson v Classic Car Insurances Pty Ltd and Shiraz Nominees and continued at 363: "While the court may be reluctant to give directions when purely commercial considerations are relevant to the liquidator's decision, even in relation to the conduct of litigation, there will be circumstances where it is or may be appropriate to do so. One of those circumstances may be where the liquidator's proposed decision is the subject of criticism by a particular creditor or creditors as being unreasonable or mala fides." Mansfield J was prepared to give directions, notwithstanding that he considered that forming a view about the potential outcome of the appeals involved the making of a commercial decision about whether the proceedings were worthwhile. Those directions were given against a background of a positive indication that the liquidator would be sued for breach of duty and negligence if he did not fully prosecute the appeals. It can therefore be seen that there was an additional feature to the matter, other than simply the approval of a commercial judgment. 61 In Re Tietyens Investment Pty Ltd (1999) 31 ACSR 1, a liquidator sought the approval of the Court pursuant to s 477(2A) of the Corporations Law for the compromise of a debt and, in the alternative, sought directions pursuant to s 479(3) of the Corporations Law in relation to the compromise. The liquidator had entered into a compromise agreement with the other parties, but had obtained the opinion of a Queen's Counsel that the agreement was not in the best interests of creditors. The other parties appeared at the hearing and argued that the application for approval was not competent as the claims sought to be compromised were not debts. In substance, the other parties were supportive of the approval of the compromise. The liquidator no longer considered the compromise to be in the best interests of creditors. 62 Weinberg J concluded that the liquidator's decision to decline to support the compromise agreement because he did not, in his commercial judgment, consider it to be in the best interests of creditors, was a decision which was open to the liquidator to make. His Honour continued at 28: "I cannot see why the court should not, having so determined, provide to the liquidator such protection as may be afforded by directions being given pursuant to s 479(3) of the Corporations Law." His Honour therefore directed that the liquidator may act upon legal advice received and not implement the compromise. 63 I do not consider Weinberg J to be acceding to the proposition that it is appropriate to give a direction that a liquidator may act in accordance with his commercial judgment where there is no issue in contest, or under challenge, and where there is no question as to the propriety or reasonableness of a liquidator's conduct. Weinberg J gave the direction within the framework of the controversial issues as to whether or not the liquidator should proceed with the compromise agreement and whether or not the liquidator could act upon senior counsel's advice and not implement the compromise agreement. 64 In Re Ansett Australia Limited and Mentha [2001] FCA 1439, I gave a direction approving a Memorandum of Understanding entered into between the administrators, Air New Zealand Limited and others and a direction that the administrators may properly perform and give effect to the Memorandum. The directions sought did not relate solely to a business or commercial decision made by the administrators. There were legal issues involved relating to releases of causes of action by the administrators when they had not had sufficient time to investigate the causes of action and the conduct of the potential defendants or the quantification of the claims. In particular, there were legal issues involved in the release of claims under a letter of comfort. 65 This review of the authorities satisfies me that the prevailing principle adopted by the courts, when asked by liquidators and administrators to give directions, is to refrain from doing so where the direction sought relates to the making and implementation of a business or commercial decision, either committed specifically to the liquidator or administrator or well within his or her discretion, in circumstances where there is no particular legal issue raised for consideration or attack on the propriety or reasonableness of the decision in respect of which the directions are sought. There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, the decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised. It is insufficient to attract an order giving directions that the liquidator or administrator has a feeling of apprehension or unease about the business decision made and wants reassurance. There must be some issue which arises in relation to the decision. A court should not give its imprimatur to a business decision simply to alleviate a liquidator's or administrator's unease. There must be an issue calling for the exercise of legal judgment. 66 The administrators may be correct in their submission that there is no rule of law and no fixed principle that a consideration of commercial issues is precluded, as the jurisdiction of the Court to give directions under provisions such as s 447D and s 479(3) of the Act is discretionary. The exercise of that discretion will vary depending upon the nature and novelty of the matters and issues which are brought before the Court. From time to time, the Court is necessarily drawn into a consideration of commercial issues where there is a matter giving rise not only to the need to make a business or commercial decision, but also to issues of propriety, power, reasonableness of conduct, contested issues of legal principle or procedure or challenges to the decision made by the liquidator or administrator. Such a situation arose, for example in Re Codisco Pty Ltd (supra), Sanderson v Classic Car Insurances Pty Ltd (supra) and Re Addstone Pty Ltd (in liq) (supra). Nevertheless, there is the well‑established principle to which I have referred, namely that a court will not give directions approving of a commercial or business decision made by a liquidator or administrator where the decision is within the power of the liquidator or administrator, and there is no challenge to it or other issue arising in relation to it such as propriety or reasonableness, or calling for the exercise of legal judgment. 67 One can find an analogy with the refusal of a court to make a business decision committed to an administrator in the refusal of a court to direct a trustee as to how to exercise the trustee's discretion. There is a jurisdiction in the Court under which trustees can seek directions in relation to matters arising in respect of the trust they are administering. The jurisdiction is one where trustees, in doubt about their powers or in relation to a particular issue arising in relation to the administration of a trust, are entitled to seek directions from the Court: Re Atkinson [1971] VR 612 at 615. However, the courts have refused to give directions to trustees as to how they should exercise their powers and discretions where no issue of power or propriety arises: Re Osborne(1863) 2 SCR(NSW) Eq 89 at 91; Re the Will of Gilchrist (1867) 6 SCR(NSW) Eq 74 at 78; Gisborne v Gisborne [1877] 2 App Cas 300 at 307; In re Pilling [1906] 2 KB 644 at 647-648; In re Allen‑Meyrick's Will Trusts (1966) 1 WLR 499 at 503; Re Driller [1972] 21 FLR 159 at 173, 175; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 441. 68 The administrators submitted that their decision involved a consideration of issues which were not just "commercial". The submission was as follows: "They have taken into account the primacy of the continuation of business object provided for in Section 435A(a), they have taken into account the less tangible benefits of preservation of the business, such as continued employment, and they have taken into account the views expressed by the creditors who attended the meetings. They have considered and had regard to the ordinary conduct of insolvency administrations and the time limits ordinarily provided for in Part 5.3A. It is not just a commercial decision in the sense of being a 'quasi‑mathematical' exercise. They seek the Court's confirmation that they have not, and are not, proceeding in an inappropriate manner." This submission identifies the manner, in part, in which the administrators have reached their commercial decision and the factors and issues to which they have had regard. But it does not expose any controversial issue of power, conduct, propriety, reasonableness or legal principle in respect of which the direction is sought. 69 That the issue, with which the administrators are concerned, is a commercial one for them and not the Court is demonstrated by the fact that the administrators did not seek a direction from the Court when they decided to recommence airline operations on 29 September 2001, when they entered into the sale agreement with Tesna on 8 November 2001, and when they agreed to extend the time for completion of that sale agreement. At each of those points of time, the administrators expected to incur losses in operating the mainline airline business and they made a commercial decision that that was the appropriate course to take. The situation presently before the Court is no different than at those earlier points of time. The administration has continued, and the trading losses have increased and are now expected to increase at a greater rate. The commercial decision is more acute, but it has been made by the administrators and it is no different in kind or character than the earlier decisions they made. All that can be said is that, perhaps, the stakes are greater. 70 The administrators submitted that the application, nevertheless, fell within two recognised areas where a court would give directions, notwithstanding that the directions involved a consideration and approval of a business or commercial decision. The first area was whether to act on a liquidator's judgment to postpone a sale. The second area was where there is a legitimate apprehension of a subsequent accusation that the liquidator had acted unreasonably. The first area is not readily applicable to an administration situation. In a liquidation situation, the obligation of a liquidator is to realise the assets of the company as expeditiously as possible and a liquidator is only permitted to carry on the business of the company so far as is necessary to enable disposal of the business or its winding up: s 477(1)(a) of the Act. In an administration situation, governed by Pt 5.3A of the Act, the principal objective is to maximise the chances of the company, or as much as possible of its business, continuing in existence. There is no question of the power of the administrators to carry on the business of the Ansett group on the terms which they, in their commercial judgment, regard as appropriate. 71 The second area is not satisfied on the material placed before the Court. The administrators may have an apprehension of the possibility of a subsequent accusation that they have acted unreasonably, but that apprehension is not based on any existing circumstance. Rather, it arises out of the complexity of the administration and the commercial decision they have taken to sell the mainline airline business to Tesna in circumstances where the sale is taking longer to complete than was initially anticipated. 72 Unlike the circumstances in Re Addstone Pty Ltd (in liq), no‑one has threatened to take proceedings against the administrators if they extend the time for the completion of the sale to Tesna and continue to operate the mainline airline business in the meantime, albeit at a significant on‑going loss. No‑one has suggested that the administrators are not acting within power in continuing to operate the mainline airline business at a loss or that they have not acted with propriety. 73 The administrators tendered an article which appeared in the Friday, 8 February edition of The Australian Financial Review for the purpose of demonstrating that the administrators' apprehension was well‑founded. That article was not tendered to prove the truth of the statements in it, but rather to demonstrate that there was a basis for the administrators' apprehension. The article has very little, if any, probative value for present purposes. It refers to the concern of creditors as to the lack of detail in relation to the sale to Tesna, the concern that further delays will impact adversely on Ansett staff and to the concern of frequent flyer point holders that their return may be reduced. The article refers to concerns about delays in finalising completion of the sale to Tesna, but there is no basis for a fear of a complaint against the administrators which warrants the intervention of the Court and its approval of their business decision. 74 The administrators submitted that the fact that they were working within the framework of Pt 5.3A of the Act warranted the intervention of the Court, notwithstanding the authorities and principles to which I have referred. It was said that an administration under Pt 5.3A, in effect, added a different dimension to the power of the Court to give directions to the administrators about a matter arising in connection with the performance of their functions and powers and that the Ansett group administration, in particular, was unusual because of its length, presently of the order of almost five months. 75 Part 5.3A of the Act finds its genesis in the 1988 Australian Law Reform Commission Report No 45, entitled "General Insolvency Inquiry", colloquially known as the "Harmer Report". Paragraph 127 of the Report states: "The court will have power, on application by a creditor or member of a company or the CAC, to supervise the conduct of administrators. The recommendation reflects two considerations of policy: · the administrator should act independently and · the court, although not necessarily involved in the procedure, should nevertheless have a supervisory role." That supervisory role is found in numerous provisions of Pt 5.3A. In particular, it is found in s 447A which empowers the Court to "make such order as it thinks appropriate about how [Pt 5.3A] is to operate in relation to a particular company" and in s 435C(3) under which the Court can order that the administration is to end. There are numerous other sections in which the Court is given a role in the administration. I refer, for example to s 438D(3), s 439A(6), s 440B(b), s 445B(2), s 445D, s 445G, and s 449B. 76 This supervisory role should be considered in the context of a short time frame (subject to extension by the Court) within which administrators are to convene the meeting of creditors at which the future of the company is to be decided. That time frame is that the meeting must be convened within 21 days after the administration begins (or within 28 days if the administration begins in December or on a day which is less than 28 days before Good Friday): s 439A(5). The administrator must give creditors, together with the notice of meeting, a statement setting out reasons for their opinion whether it would be in the creditors' interests either for the company to execute a deed of company arrangement, or for the administration to end, or for the company to be wound up. 77 The structure of the time periods imposed on administrators by Pt 5.3A, albeit subject to extension by the Court, is such that the administrators are under time pressures in the conduct of the administration. However, I do not consider that this consequence should attract the Court into the decision‑making of the administrators to the extent of participating in the business or commercial decisions of the administrators. Of course, the Court will support and supervise the administrators if controversial issues, legal issues or challenges to their power or the propriety of their conduct arise. But I do not regard Pt 5.3A as requiring the Court to support or confirm decisions of the administrators whenever the administrators are apprehensive, or anxious, or concerned that with hindsight someone might be critical of the administration. 78 I accept that the administration has been operating for a relatively lengthy period. The creditors' meeting which was held on 29 January 2002 has been adjourned for no more than sixty days. If a deed of company arrangement is proposed at the adjourned meeting, the administration will have then continued for more than six months. The reason for that is the complexity of the administration, having regard to the size of the Ansett group and the nature of its business and assets. Notwithstanding the length of the period of the administration to date, there is no suggestion that the length has given rise to questions about the propriety and reasonableness of the administrators' conduct. The length of the administration has occurred following court orders, after applications by the administrators, to extend the convening period for the holding of the meeting required by s 439A of the Act. 79 I do not consider that the length of the administration, of itself, is a reason for expanding the range of matters in respect of which it is appropriate for the Court to give directions to administrators in respect of matters arising in connection with the performance or exercise of their functions and powers. It is the nature of the matter in respect of which directions are sought which will dictate whether it is appropriate for the Court to give directions. 80 The administrators submitted that it was appropriate for the Court to give directions where an administrator proposes to embark on a course which the administrator considers to be in the interests of creditors, but which is unusual or controversial. They relied on the judgment of Finkelstein J in Mentha v G E Capital (1997) 27 ACSR 696 at 701‑702. Finkelstein J said that there were some unusual features of the proposal before him which warranted the giving of directions. Those features related to the "pooling" of assets and liabilities of all the companies in the group which were under administration in the one company. That proposal involved a consideration of the legality and propriety of the "pooling" proposal. The unusual features of the proposal therefore did not relate to a business or commercial decision but rather to a legal issue involved in the proposal. 81 The fact that the administrators have decided, after four and a half months, to continue to operate the mainline airline business at a significant loss is a decision that is within their power to make. It is consistent with the object of Pt 5.3A as the administrators have formed the view that this is the manner in which they may maximise the chances of as much as possible of the business of the Ansett group continuing in existence, and that it is also the manner in which there may be a better return for creditors than would result from an immediate winding up of the group. 82 The administrators contended that there is a potential tension between the two objects in s 435A of the Act in circumstances where trading losses will continue to occur. I doubt that there is such a tension as it is implicit in the primary object of s 435A that a company under administration may have to trade at a loss in order to maximise the chances of its business continuing in existence. If that possibility cannot be achieved, then the return to creditors, which becomes the administrators' aim, should be a return which is better than would be achieved from an immediate winding up. It is clear from the terms of s 435A, and the whole of Pt 5.3A, that decisions designed to achieve the objects of s 435A cannot be made immediately upon the commencement of the administration. It is quintessentially a business or commercial decision, to be made by the administrators, to balance the objects in Pt 5.3A and determine the extent to which the Ansett group should continue business operations, albeit at a loss, in order to achieve those objects. 83 I do not consider that there is a potential tension between the objects in s 435A in circumstances where continued trading will incur losses. But even if there is, it is a tension brought about by the need to make an informed business and commercial decision, not by the existence or intrusion of a legal issue which might be the subject of directions by the Court. 84 In the present circumstances, it has not been suggested that the Ansett group should be wound up. Even if that suggestion had been made, it is still within power for the administrators to continue trading if they believe that ultimately that course will achieve a better return for creditors than an immediate winding up. I agree with the observation of Sundberg J in Dallinger v Halcha Holdings Pty Ltd (administrator appointed) (1995) 18 ACSR 835 at 842: "The machinery provided by the Part should be available in a case where, although it is not possible for the company to continue in existence, an administration is likely to result in a better return for creditors than would be the case with an immediate winding up." 85 Although there has been concern expressed as to the delay in the completion of the sale to Tesna, no‑one has suggested that the administrators should not persevere with trying to complete the sale. The creditors voted at the meeting on 29 January 2002 to approve the sale with such completion date as might be agreed upon by the administrators. The administrators informed the creditors that continued trading at a loss would occur whilst negotiations for the completion of the sale continued. The creditors approved of the sale and completion as agreed by the administrators with knowledge that significant trading losses would continue. The administrators' business decision to continue trading at a loss has not been challenged and I do not consider that in the present circumstances there is in fact any potential tension between the objects in s 435A of the Act. 86 The resolution of the creditors is significant as courts usually take the view that the creditors are in the best position to consider what is to their commercial advantage: Re English Scottish & Australian Chartered Bank [1893] 3 Ch 385 at 409; Re Spedley Securities Ltd (in liq) (supra) at 186. In Mentha v G E Capital Ltd (supra) Finkelstein J observed at 701: "But in the case of an arrangement under Pt 5.3A it is for the creditors to decide upon the reasonableness of the proposal. Here the legislature has recognised that it is the creditors who are best placed to decide what course of action is in their interests. Of course the court has certain overriding powers which would permit it to intervene if an arrangement was unfair or contrary to the interests of the creditors or the company as a whole: see for example ss 445E(f) and (g). I imagine this power that would not often be exercised against the will of a majority of independent creditors." 87 The administrators submitted that the direction sought did not require the Court to exercise any commercial judgment. The administrators acknowledged that they have already exercised their commercial judgment and made a commercial decision based on that judgment. The administrators said that the direction sought addressed the question whether they may properly act in accordance with their commercial assessment. They contended that trading at a loss took them outside the ordinary parameters of insolvency administration and rendered them vulnerable to subsequent criticism. I do not accept this submission for the reasons explained in pars 38 to 40 above. 88 The propriety of their decision to continue trading at a loss is not in issue and has not been challenged, nor has the reasonableness of the commercial decision which they have made. In the present circumstances, there is no matter or issue before the Court in respect of which directions as to the propriety and reasonableness of the conduct of the administrators need be sought. To give the direction sought by the administrators would be, in substance, for the Court simply to approve of the commercial judgment and decision made by the administrators. For the reasons to which I have referred, that is not an appropriate direction for the Court to make. 89 Counsel for Mr Wollan opposed the direction sought by the administrators and submitted that there was no issue calling for legal judgment, or for the exercise of judicial power which warranted the making of that direction. I have accepted that submission. However, he submitted it would be proper for the Court to make a direction that: "The administrators are not inhibited by the provisions of Pt 5.3A in the circumstances disclosed in the application from continuing to trade notwithstanding that the disclosed losses are being incurred." The difficulty with that formulation is that it is another way of saying that the administrators have the power under Pt 5.3A to continue trading at a loss. But there is no issue as to whether the administrators have that power. It is accepted by the administrators that they have that power and it has not been called into question. 90 The same difficulty arises with the form of direction propounded by the Commission as an appropriate direction for the Court to make. The Commission opposed the direction sought, but submitted that it was appropriate for the Court to give a direction that: "Pursuant to Part 5.3A of the Corporations Act 2001 the Administrators have power to decide whether or not to continue trading the Ansett mainline business at a loss." That is not an issue or matter for determination in this proceeding. The administrators accept that they have this power, as does the Commission and the other parties. 91 I am satisfied that I should not accede to the application made by the administrators because to do so would be doing no more than giving the Court's imprimatur to a business decision made by the administrators in circumstances where no issue as to power, propriety, reasonableness, or requiring the exercise of judgment on a legal issue arises. 92 The application will be dismissed. I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

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