Shepard (Administrator), in the matter of Transtar Linehaul Pty Ltd (Administrators Appointed) [2025] FCA 1663 (19 December 2025)

ADAM SHEPARD AND CAMERON GRAY IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF FLEET REPAIRS & MAINTENANCE PTY LTD (ADMINISTRATORS APPOINTED) ACN 151 744 697 (and another named in the Schedule)

1. For the purposes of s 556 of the Corporations Act 2001 (Cth) ("Act"), Transtar Linehaul Pty Ltd (Administrators Appointed) ACN 123 148 774 is the employer of all of the employees (within the meaning of s 556(2) of the Act) in the group of companies comprising:

(a) Transtar Linehaul Pty Ltd (Administrators Appointed) ACN 123 148 774;

(b) Edgely Pty Ltd (Administrators Appointed) ACN 089 763 646;

(c) Fleet Repairs & Maintenance Pty Ltd (Administrators Appointed) ACN 151 744 697;

(d) Diesel Consulting Pty Ltd (Administrators Appointed) ACN 657 588 308; and

(e) Heavy Vehicle Management Pty Ltd ACN 631 973 156.

1. The costs of the proceeding be costs in the administration of the companies listed in paragraphs 1(a) to (d) above.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The issue that arises for urgent determination in this proceeding in the duty list is whether the people who did the work that constituted the business of a group of companies were the "employees" of a particular company in the group for the purposes of s 556 of the Corporations Act 2001 (Cth). Section 556 sets out the priority of payments to be made in the winding up of a company, including wages and other remuneration (s 556(1)(e)) and retrenchment payments (s 556(1)(h)) payable to "employees". The issue arises because the principal operating company in the group which earned the revenue and now has the cash realised from the sale of assets from which debts and claims can be paid was not the named employer on the contracts of employment; rather, other companies in the group were the named employers.
2. The group of companies, referred to as the Transtar Group, comprises:

(1) Transtar Linehaul Pty Ltd (Administrators Appointed) ACN 123 148 774 (Transtar);

(2) Edgely Pty Ltd (Administrators Appointed) ACN 089 763 646 (Edgely);

(3) Fleet Repairs & Maintenance Pty Ltd (Administrators Appointed) ACN 151 744 697 (Fleet Repairs);

(4) Diesel Consulting Pty Ltd (Administrators Appointed) ACN 657 588 308 (Diesel); and

(5) Heavy Vehicle Management Pty Ltd ACN 631 973 156 (Heavy Vehicle).

1. The directors of each of the first three of those companies, namely Transtar, Edgely and Fleet Repairs, are James Lahood and Nicole Leon. The director of Diesel is Elizabeth Leon-Searle, the 22-year old daughter of Nicole Leon. The director of Heavy Vehicle is Matthew Lahood, James Lahood's brother.
2. On 7 July 2025, Adam Shepard and Cameron Gray were jointly and severally appointed by resolutions of the directors of each the first four companies as administrators of those companies. Messrs Shepard and Gray, in their capacities as administrators of those companies, are the plaintiffs. The fifth company, Heavy Vehicle, is not in external administration.
3. Transtar was a Queensland based road transport operator and owned and operated a fleet of some 46 prime movers and 70 drop deck tautliner trailers. The fleet provided linehaul services to other businesses such as Couriers Please, Aramex, Hunter Express, Star Track Express and Food and Dairy Co. The administrators have sold the vehicles and trailers (to the value of approximately $5 million). They have paid the major secured creditor and wish now to make payments to unsecured creditors. There are sufficient funds to pay the employee entitlements of the employees of the group.
4. Even though the ultimate shareholding across the five companies is not common, they operated as a corporate group, with each of the other companies providing labour or services to Transtar which was the sole operating and revenue generating entity within the group. Edgely, for example, was the owner of premises from which Transtar and Fleet Repairs carried on their businesses. Diesel was the apparent employer of record for all of the drivers of the prime movers owned and operated by Transtar as Transtar did not have any employees of its own. Fleet Repairs operated a truck repair and maintenance service facility which mainly provided repair and maintenance services for Transtar's truck fleet, although Fleet Repairs also provided some repair and maintenance services to third parties. That generated income for Fleet Repairs, separately and outside of the group's activities, although it was insufficient for Fleet Repairs to meet its financial obligations. It was unable to pay all apparent employee entitlements and for the purchase of parts needed to undertake the repair and maintenance services being provided it. Heavy Vehicle provided back-office administration and management services to Transtar.
5. Diesel and Heavy Vehicle did not conduct any business activities of their own, separate from Transtar's business. Those two companies did not have any functions external to Transtar and did not have any of their own customers or clients. Neither Diesel nor Heavy Vehicle generated any revenue and they were wholly dependent on Transtar to meet payments to apparent employees for their entitlements and other operational expenses. Diesel had no realisable assets. Heavy Vehicle has approximately $100,000 in the bank as its only asset and a liability for employee entitlements of $527,738.13, if it was the true employer of employees apparently employed by it.
6. The usual practice was that Diesel, Heavy Vehicle and Fleet Repairs provided labour and services (exclusively in the case of Diesel and Heavy Vehicle and predominantly in the case of Fleet Repairs) to Transtar. Those entities then invoiced Transtar, from time to time, at cost, for amounts sufficient to cover the wages and other accrued entitlements due and owing to employees as well as for any shortfall in operating expenses of the group entities. Transtar then paid, from its own bank account, the relevant group entity to pay employee wages and other entitlements. Transtar also arranged for payment of all workers compensation premiums as well as payments to the ATO with respect to PAYG withholding tax.
7. Transtar usually made all decisions in relation to employees. For example, Transtar arranged the rosters for all drivers employed by Diesel. Those employees were all issued uniforms that bore the Transtar Linehaul name. Transtar also made all decisions concerning employee remuneration as well as disciplinary decisions and decisions relating to the hiring or termination of employees.
8. All decisions relating to Diesel were made by Nicole Leon and James Lahood as directors of Transtar and not by the director of Diesel, Ms Leon-Searle, who played no active role in Diesel.
9. There were no written agreements between any of the group entities in relation to the services that were provided by each entity to Transtar.
10. Heavy Vehicle is no longer trading but is still a registered company. It derives no revenue of its own. It carries on no current business activity, and all apparent employees have been terminated.
11. There is a long line of authority to the effect that the question of who the employer of the employees was for the purposes of Pt 5.6 of the Corporations Act - often referred to in the cases as the "true employer" - is to be determined as a matter of substance and the totality of the relationship between the parties should be considered. The authorities and applicable principles are cited by Black J in In the matter of Spitfire Corporation Ltd (in liq) [2022] NSWSC 340; 160 ACSR 394 at [66]- [67]. For the reasons given by Gleeson JA for the Court in Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Ltd (in liq) [2023] NSWCA 118; 111 NSWLR 446 at [158]- [165] in dismissing the appeal from Black J on this ground (notwithstanding that the appeal was allowed in part on a separate ground), and by Kirk JA for the Court in Agrigrain Pty Ltd v Rindfleish [2024] NSWCA 295 at [35]- [37], the trio of relatively recent High Court cases dealing with the character of the employment relationship, as distinct from the identity of the true employer, do not restrict the inquiry to the terms of the written contract.
12. In that regard, in WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456 the issue was whether the employer was employed as a "casual employee" for the purposes of the Fair Work Act 2009 (Cth). That is to say, it was the character of the employment relationship that was at issue and in relation to which the Court held (at [63]) that "nothing less than binding contractual terms are apt to characterise the legal relationship between employer and employee" and (at [67]) that "where the parties had committed the terms of the employment relationship to a written contract and thereafter adhered to those terms ... it is to those terms that one must look to determine the character of the employment relationship".
13. In Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; 275 CLR 165 the issue was whether the employee was an "employee" of the labour hire company with which he had a contract, also for the purposes of the Fair Work Act. That is to say, once again the issue was as to the character of the contractual relationship between parties admittedly in such a relationship with each other. That was the context in which the Court held that where "the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract" (at [59] per Kiefel CJ, Keane and Edelman JJ, and see also Gordon J at [174]-[175]).
14. In ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; 275 CLR 254 the issue was whether the people concerned were "employees" of the company for the purposes of the Fair Work Act and the Superannuation Guarantee (Administration) Act 1992 (Cth) and as "workers" for the purposes of the Long Service Leave Act 1955 (NSW). As in the previous case, the Court held that "the character of the relationship between the parties ... was to be determined by reference to the rights and duties created by the written agreement which comprehensively regulated their relationship" (at [8] per Kiefel CJ, Keane and Edelman JJ, see also Gordon and Steward JJ at [95]).
15. In the present case, there is no written contract between Transtar employees. Rather, they have written contracts with other companies in the group. Accepting that for present purposes they can have had only one true employer, the question becomes whether Transtar was their employer or whether their employer was the entity recorded as their employer on their written employment contracts.
16. That question can and should be answered with reference to orthodox agency principles: Resilient at [166]-[172].
17. The following factors lead me to conclude that the employment contracts apparently concluded by other companies in the group as "employer" are properly to be regarded as having been concluded by those companies as agents for Transtar and that Transtar was on that basis their true employer.
18. First, Transtar exercised practical and legal control over employees across the Transtar group. Transtar made decisions concerning hiring, disciplinary matters, remuneration and termination. It communicated directly with employees regarding leave and employment conditions. It directed employees to make important operational decisions for the group, such as the disposal of vehicles. It communicated with drivers providing instructions on matters such as routes and staffing.
19. Secondly, Transtar bore the financial burden of the employment. It was invoiced by group entities for wages and other employee entitlements as well as shortfalls and operational expenses and paid those invoices. Transtar paid insurance premiums, including workers compensation, under a group policy. It funded superannuation, payroll tax and workers compensation liabilities by paying lump-sum amounts to other entities within the group when those liabilities fell due. That was pursuant to invoices from the other entities which did not identify any particular contracted service or employee. Rather, they were in gross sums as the entities' source of income to pay the debts.
20. Thirdly, the named employers had limited revenue and assets to meet employee entitlements and they had no substantial business purpose other than acting as employer of record. Other than to a very limited extent in the case of Fleet Repairs, the other entities did not have any source of income or business activity independent of Transtar; they had no intelligible business objective independent of Transtar.
21. The short point is that the other entities in the group operated essentially as divisions of Transtar's business with little attention paid to separate corporate personality.
22. For those reasons, I am satisfied that the employees of the group companies were truly the employees of Transtar for the purposes of s 556 of the Corporations Act.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

ADAM SHEPARD AND CAMERON GRAY IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF DIESEL CONSULTING PTY LTD (ADMINISTRATORS APPOINTED) ACN 657 588 308