C2001/4871, Transcript of Proceedings [2001] AIRCTrans 2666 (4 October 2001)

AUSCRIPT PTY LTD
ABN 76 082 664 220

Level 4, 179 Queen St MELBOURNE Vic 3000
(GPO Box 1114J MELBOURNE Vic 3001)
DX 305 Melbourne Tel:[phone] Fax:[phone]

TRANSCRIPT OF PROCEEDINGS


O/N 0340

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

BOULTON J

C2001/4871, 4872, 4882, 4883, 4888,
4889, 4890, 4891, 4892, 4893, 4894,
4895, 4896, 4897, 4898, 4899, 4900
4987 and 4903

APPLICATIONS FOR EMPLOYMENT
TERMINATION ORDERS

Applications under section 170FB of the Act
by Australian Municipal, Administrative, Clerical
and Services Union and Others for an application
for an order for severance payment and accrued
entitlements for employees

AUSTRALIAN MUNICIPAL, ADMINISTRATIVE,
CLERICAL AND SERVICES UNION and OTHERS

Notifications pursuant to section 99 of the Act
of an industrial dispute re application for an
order for severance payment and accrued
entitlement for employees

AIRLINES OPERATIONS (DOMESTIC AIRLINES)
AWARD 2000

Application by the Automotive, Food, Metals,
Engineering, Printing and Kindred Industries
union to vary the above award re security of
entitlements

MELBOURNE

10.10 AM, WEDNESDAY, 19 SEPTEMBER 2001

Continued from 18.9.01

PN1302

HIS HONOUR: Mr Borenstein.

PN1303

MR BORENSTEIN: Your Honour, I was informed early this morning by my learned friend Dr Jessup that he was not in a position to immediately cross-examine Ms White. And we have one other witness, the details of which I gave to Dr Jessup earlier this morning, that we would seek to call this morning. Dr Jessup and I had a discussion as to the way in which the case might progress thereafter. And having regard to the need that he had to get instructions, what we arrived at - the position we arrived at was that he would cross-examine Ms White first thing tomorrow morning, that depending on the circumstances with the witness we are going to call this morning, that might occur tomorrow morning as well. And that subject to any evidence which he might wish to present to the Commission tomorrow morning, we would then move into submissions.

PN1304

For our part, we would accept that we should put our submissions first. We do not have a particular view as to how - the order of the parties thereafter, and then it would be anticipated that those submissions, our submissions would probably end before the end of the day tomorrow if we got a start a reasonable into the morning, and then we would aim at completing all the submissions, including any reply on Friday, and so that the matter could be completed by Friday. But I apprehend, your Honour, that there may need to be some discussion between the other parties as to the order in which they make their submissions.

PN1305

But for this morning, your Honour, what we have programmed is evidence from Ms Sandy Brookes who is an employee of Ansett Australia, who will give some evidence about the Treasury function in Ansett. And we have some documents that contain the award prescriptions and enterprise bargaining agreements that relate to the various entities that are in issue, the various operating entities that are in issue, which we would tender. We have given a copy of the folder to Dr Jessup yesterday evening to have a look at. We have not heard anything back from him about that, but we do not think they will be contentious and will only take a moment or two to hand it up to your Honour.

PN1306

HIS HONOUR: Yes.

PN1307

MR BORENSTEIN: So we would for our part be reasonably brief this morning.

PN1308

HIS HONOUR: Mr Borenstein, just a couple of questions about where the matter is going. The application, as I understand it, relates mainly to this issue regarding the payment of moneys into a trust fund by either the Ansett companies or in default by Air New Zealand.

PN1309

MR BORENSTEIN: Yes.

PN1310

HIS HONOUR: Does it relate to any matters that might concern the access to documents which might be held by Air New Zealand relating to employee entitlements?

PN1311

MR BORENSTEIN: Your Honour, we are looking at that situation having regard to circumstances that have been drawn to our attention about the records and the state of the records, and it may be that before we sit down at the end of our submissions we will be saying to the Commission that there should be a provision made insofar as it is within the power of Air New Zealand to provide the information necessary to compute the various entitlements that they should be directed to provide that information so far as it is needed by Ansett.

PN1312

But it is something that we would, before we made the submission, would want to discuss with the administrator and his representatives to see the extent to which that is necessary. If it is necessary, obviously we would deal with it, but if it is not necessary, then it would not be something that we would need to trouble the Commission about.

PN1313

If, for example, the administrator has in place a process for calculating the entitlements without the need to go to Air New Zealand, well, then, so be it. But if the administrator has been prevented from doing that because records are kept by Air New Zealand or things of that kind, then obviously we would seek to address that and we would seek to ask the Commission to include some sort of order or direction about the provision of that information. But I understand that there are discussions taking place between the administrator and Air New Zealand and it may be that those are matters that will be resolved without the need to trouble the Commission about then.

PN1314

HIS HONOUR: There are a whole range of uncertainties involved in this matter and there are press reports every day in relation to developments. I might refer in particular to the proposed Commonwealth legislation.

PN1315

MR BORENSTEIN: Yes.

PN1316

HIS HONOUR: It is not clear at this stage just what that legislation might provide.

PN1317

MR BORENSTEIN: Yes.

PN1318

HIS HONOUR: Which could be quite relevant in terms of the type of orders that you are seeking in these proceedings.

PN1319

MR BORENSTEIN: Yes. Yes.

PN1320

HIS HONOUR: It is also not clear what attitude, indeed, the Commonwealth takes to the orders that you are seeking in these proceedings.

PN1321

MR BORENSTEIN: Yes. Yes. Your Honour, we - - -

PN1322

HIS HONOUR: The other area of uncertainty relates to the assets of the Ansett companies, and indeed the actions which might be taken by the administrators which might be directed towards re-establishing the operations of those companies and keeping people in employment or liquidating the assets. The creditors' meeting, according to reports in The Australian newspaper, which I looked at this morning, was given certain assurances from the administrator relating to the assets and the ability to cover employee entitlements.

PN1323

Now, if those assurances are in fact met, then that would mean that the order that you are seeking might turn out to have no potential operation, in which case the entire exercise - I mean, it might become more relevant what attitude the administrator might take to the making of an order which is one against the Ansett companies as well as being sought against Air New Zealand, but the proceedings would then take on a different complexion.

PN1324

MR BORENSTEIN: Your Honour - - -

PN1325

HIS HONOUR: I suppose the other uncertainty - I might as well put all the matters before you - - -

PN1326

MR BORENSTEIN: Yes, your Honour.

PN1327

HIS HONOUR: - - - and then you can choose the way in which to answer it, the other uncertainty is just what the administrator is going to do and if the administrator is going to seek to get the operations of Ansett or some of the Ansett Airlines up and running again. I think I raised with you yesterday the question of the need for everybody to focus on whatever are the most important issues at the time, and I wonder whether any of those developments might mean that there is a cause to, as it were, cause in relation to the present proceedings to, as it were again, let the dust settle and see exactly what is the position in relation to all these companies.

PN1328

MR BORENSTEIN: Your Honour, the matters that you have raised as matters of uncertainty are obviously present. We, too, have been conscious firstly about the prospect of Commonwealth legislation. We haven't seen any legislation yet and clearly if there is such legislation, we would take that into account in determining how the matter proceeded thereafter, but the public announcements of the legislation certainly would suggest that not all of the benefits that are sought to be protected by this award would be included in the scheme of the legislation would set up.

PN1329

Until we see the legislation, we have progressed on the basis that we have to protect our clients under the law as it stands presently, but we are conscious of the announcements about the legislation and we would certainly be closely looking at it once it is available to see what effect it does have on what we are pursuing.

[10.21am]

PN1330

So far as the valuation of the assets are concerned, your Honour, we have not treated those statements that have been made by the administrator at the meeting yesterday as being any firm or clear valuation, because we are conscious of the fact that the administrator has only had a very short time in the position, and we were also conscious of the fact that he had considerable criticism to make of the state of the accounts that were left behind when the companies were put into administration, and particularly the accounts of the dealings as between the various Ansett companies and the parent company.

PN1331

And so we have approached those figures with a great deal of caution. We are conscious of the fact that although, on the face of it there is a substantial surplus of assets if one is to accept the figures reported in the newspaper, nonetheless those in charge of the companies felt that their state was so precarious that they took the decision, which is certainly a significant decision, to place all of the companies, all of them into administration and then when the administrator took over, the first administrator took over, he felt the need to stop all operations.

PN1332

So those people who actually have had to make decisions about the financial position of the company have all taken decisions which are ones that do not give us comfort about the ability of the Ansett companies to meet the entitlements. And as against that, we take into account the figures that are produced in the paper, and as I say, we take them - we approach them with caution because of the limited information and limited time that people have had to produce those sort of estimates.

PN1333

And we are concerned that my client, our client's members are able to be protected and we are not sure when the administrator will be able to provide a reliable assessment of the ability of the Ansett companies to pay this money or not. And indeed, whether people will be made redundant, have their employment terminated before that time, in which event some sort of protection would be required before that is known. So in terms of the valuation of the assets, we have taken a view, your Honour, that at this early stage in the administration that that does not provide us with a great deal of comfort yet.

PN1334

As for pausing to see what the various proposals are that might see some or all of the business functioning again, your Honour, your Honour would expect and reasonably so that the administrator would be in close communication with various union bodies. And for our part we would be seeking before we provide a final order to your Honour, to certainly be in communication with the administrator and those representing the administrator to ensure that any order that we seek would have, so far as is possible, no impact and pose no impediment to the return of the whole or any part of the Ansett Group to operation, but at the same time seeking to ensure that as far as is possible that there is some protection for the entitlements of the people concerned.

PN1335

And in that regard we are, of course, conscious of the fact that it is all very well for someone to say we will get such-and-such a part of the airline up tomorrow or next week, but one still does not have any certainty as to whether that will be an ongoing situation or simply a temporary situation. And for that reason there is a need to - in view of what has transpired, there is a need to address the question of some sort of protection for the entitlements, even if some or all of the airline is able to resume operation.

PN1336

So that the is the thinking that informs our approach presently, your Honour, but as I said, your Honour can be confident that those instructing me, and certainly Mr Watson's interests, are in close contact with the administrator and seeking to co-operate as far as is possible, including in the way in which the matters are progressed in the Commission to do whatever we can to facilitate the efforts of the administrator to rescue this group if that is at all possible.

PN1337

But as at this morning, we are not in a position to say to your Honour that we can, having regard to our interests, stop the case for the moment to see what emerges. It may be that that situation will change, but as at present, we are not in a position to say that to your Honour.

PN1338

HIS HONOUR: Yes. I raise those matters because of the timetable which you suggested which might have seen the case conclude by Friday. I am not sure that, as it were, the dust would have settled sufficiently by then to enable me to make an informed and appropriate decision regarding some of the matters that are raised in the proceedings.

PN1339

MR BORENSTEIN: Well, your Honour, I understand the force of what your Honour is putting. The difficulty is that we are not sure when the dust will settle. It may settle next week, it may be next month. It is something about which I am not instructed at the moment and about which I would anticipate getting some instructions in the course of the day. Can I perhaps suggest this as a course for the moment, your Honour; can we call Ms Brookes so that her evidence can at least be taken. Can we hand up the documentary evidence we have got and then perhaps we would take some time at that stage and go back to our clients and convey to them what your Honour has put this morning and then come back to your Honour with any further things we want to say about the timetabling that we have suggested. Obviously the other parties would do likewise in the interim.

PN1340

HIS HONOUR: Could I also put you on notice of two matters; one relating to the relevant provisions of Corporations Law. It would seem to me that there will be significant reference to the Corporations Law in the course of the proceedings, and apart from, I think, one exhibit that you have handed up, I don't think the Commission has been given all the material that might be relevant to be looked at and considered in relation to the Corporations Law, so could you endeavour to cover that within your submissions.

PN1341

The other matter relates to section 89A of the Act. No doubt you have given consideration to that, an if this matter is to be pursued as an exceptional matters matter, of course the provisions of the Act provide for the way in which that might be dealt with by the Commission.

PN1342

MR BORENSTEIN: Yes, your Honour.

PN1343

HIS HONOUR: I imagine at some stage you would be making submissions in relation to section 89A.

PN1344

MR BORENSTEIN: Yes, your Honour.

PN1345

HIS HONOUR: Yes. Well, is there any objection to us proceeding to hear the evidence? Clearly, all those matters that I have just raised with Mr Borenstein, I could ask everyone else at the bar table the same questions, but it might be more appropriate for me to give you a little bit of notice that those are matters which you will have to give me some guidance on in relation to the future programming of this matter. I take it there is no objection to us proceeding to hear the witness evidence.

PN1346

MR BORENSTEIN: In that event, your Honour, I call Sandy Brookes.

<SANDRA BROOKES, SWORN [10.32am]

<EXAMINATION-IN-CHIEF BY MR BORENSTEIN

PN1347

HIS HONOUR: Yes, please be seated, Ms Brookes.

PN1348

MR BORENSTEIN: Ms Brookes, your full name is Sandy Brookes?---My real name is Sandra Brookes, but yes, Sandy, I go by Sandy.

PN1349

And your address is 92 Barnett Street, Kensington?---Correct.

PN1350

And you are an employee of Ansett Australia Limited?---Correct.

PN1351

And you have been with Ansett Australia Limited since 1996?---Correct.

PN1352

Your present position is Acting Banking Manager of Ansett Australia Limited, is it?---Yes.

PN1353

And prior to taking up that position you were Assistant Banking Manager at Ansett Australia?---Correct.

PN1354

And how long were you Assistant Banking Manager?---I took over the position in January 2000.

PN1355

Okay. Now, at the time that you went into the position of Assistant Banking Manager, can you tell us how treasury functions of Ansett - I am sorry, where the treasury function of Ansett was carried out?---It was carried out in Melbourne.

PN1356

And by whom was it carried out?---There was - Richard Dawe was the treasurer, and then he had direct reports which managed the different areas of treasury.

PN1357

And were these persons employees of Ansett Australia?---Yes, they were.

**** SANDRA BROOKES XN MR BORENSTEIN

PN1358

And did you work with them?---Yes, I did.

PN1359

And were you part of one section of the administration of Ansett Australia?---Correct.

PN1360

Okay. Can you tell the Commission what the treasury functions that were performed by that group were?---Treasury was split into several areas. We had risk management which looked after the day to day funding of the group, we had the accounting section which did all the treasury accounting, cash management and banking, which is the section I was in, that looked at the transactional banking relationships with our domestic banker, and we had aircraft trading, which looked after the sale of aircraft, and corporate finance, which did the leasing of aircraft.

PN1361

All right. Now, in the course of last year did you become aware that Air New Zealand became the 100 per cent shareholder of Ansett?---Yes.

PN1362

And following that were there any changes to the treasury area in Ansett which you have just described to us?---Yes. The treasury funding, so the risk management area, ceased in Melbourne. The staff were still there till November, but at the end of August it ceased, and my area of treasury, cash management and banking, took on that function, reporting directly to Auckland treasury.

PN1363

So after November of last year what part of the previous treasury administration was left within Ansett Australia?---We retained our cash management and banking tasks, and we took on the coordination of reporting cash flow on behalf of the Ansett group through to treasury Auckland.

PN1364

Okay. Now, when you talk about treasury Auckland, can you tell us who or what it is that you are referring to?---Treasury Auckland is headed by Robert McDonald, he is the group treasurer. They then were split into pretty much the same areas we had here in Melbourne by Simon Langston, the deputy treasurer being Paul Kellaway, he looked after risk management. I dealt basically on a day to day basis with him and Richard Edwards, the treasury dealer, who I reported cash flow through to.

**** SANDRA BROOKES XN MR BORENSTEIN

PN1365

And are these - do you know by whom these persons that you have mentioned are employed?---Air New Zealand.

PN1366

Okay. Now, the function that - the reporting function that you have just referred to, can you explain to the Commission what that reporting function involves?---On a daily basis we would print off the bank statement balances for all Ansett group accounts from our electronic banking systems and firstly fax that to New Zealand Auckland Treasury.

PN1367

Okay. Now, just let me stop you there, the entities that - whose bank balances you are reporting, are they the various subsidiary airlines and so on - - -?---Yes. Yes.

PN1368

- - - that operate under the Ansett umbrella?---Yes.

PN1369

Okay. So how do you get their bank balances each day?---We have an electronic banking system here in Treasury Melbourne and their accounts are reported on that system.

PN1370

Okay. So you take those accounts and I missed what you said you did with them. Can you just repeat that?---I fax them to New Zealand Treasury.

PN1371

Okay. And to anyone in particular?---The Treasury dealer, Richard Edwards.

PN1372

A name?---Richard Edwards.

PN1373

Richard Edwards. And he is one of the people you mentioned earlier as being employed by Air New Zealand, is that correct?---Yes.

**** SANDRA BROOKES XN MR BORENSTEIN

PN1374

Okay. And then do you know what happened with that information once you passed it on to him?---The information we collated was fed through to New Zealand by both fax and e-mail and we gave them a group position of whether we were basically up or down for the day. So whether we had excess funds or needed to borrow funds. We would let them know that position. It was then their decision whether they - how much they actually borrowed or invested on behalf of the group.

PN1375

Okay. And so far as these various entities that you were monitoring in Australia were concerned, why was it important to know on a day-by-day basis what their bank balances were?---From that we then asked them to report to us their expected receipts for the day and their scheduled payments for the day so we could get an end of day - predict an end of day balance and then decide - Treasury Melbourne would then decide what funds that were required.

PN1376

Okay. When you talk about funds that are required, were these various entities working to some sort of limits?---There was a group limit. They didn't have individual limits, they had group limits.

PN1377

And can you just explain what that is?---With our banker we had what they call a set-off report and that basically grouped all the Ansett bank accounts into a group and we had a daily overdraft limit as well a cumulative debit balance limit on those accounts.

PN1378

Okay. And what was the significance - for the process that you were involved in, what was the significance of those daily overdraft limits and the other debit limits that you mentioned?---From the figure that I then reported through to Treasury Auckland, they would manage the funds so that we did not go over our daily overdraft limit for the group and then also sweep funds between the accounts so we didn't go over our cumulative balance for the day.

**** SANDRA BROOKES XN MR BORENSTEIN

PN1379

When you say sweep the funds, can you just tell us - most of us here are laymen - what that means?---Okay. If an account was in debit, we had a dollar figure that the total of the accounts could not be in debit more than $75 million. They would then - so if an account had $30 million in credit sitting in there and another account had $35 million in debit, they would sweep funds from the one in credit to the one in debit, so that the debit balance - - -

PN1380

And so then they moved the funds?---They moved the funds.

PN1381

All right. And who was it that would do that movement of the funds?---The Treasury Auckland.

PN1382

Okay?---The dealer.

PN1383

And did you receive back from Treasury Auckland any communications about any funds movements that they did?---Yes. They would fax back a copy of that set-off report and it would list next to the bank accounts that they had taken out 20 million from one account and put it into the other account.

PN1384

Okay. To your knowledge apart from that function, were there other circumstances in which funds were removed from accounts of the subsidiary companies in Australia?---In relation - just sweeping funds they did. They maintained - they managed the Ansett Australia Holdings Limited bank accounts and that is basically where all the Treasury function was performed out of those bank accounts.

PN1385

Okay. Now, was it also part of your function to be involved in - or in relation to foreign currency accounts of the various subsidiaries in Australia?---Yes.

PN1386

Can we take an example of one of them and can you explain to us what happens or happened in relation to them? Let us say we take one of the subsidiaries, say, Kendell Airlines just at random?---Okay.

**** SANDRA BROOKES XN MR BORENSTEIN

PN1387

Can you tell us what interest Kendell Airlines had in relation to foreign currency dealings?---They had their own US dollar bank account and the balance of that account was always maintained at a minimum amount and when they required funds and they had scheduled payments, they would notify me of their requirements. So if they needed $2 million that they were paying out, I would then feed that information through to Treasury in Auckland via our foreign currency cash flow which we did on a daily basis as well. And they would then fund the accounts so Kendell could make their payments.

PN1388

And when you say they would fund the accounts, who are you referring to?---Air New Zealand.

PN1389

Okay. Your Honour, I have no further questions of this witness.

PN1390

DR JESSUP: Your Honour, I will need to take instructions and I don't have any reason to think that I will need more than the day that my learned friend referred to for that purpose, so I would be able to complete my cross-examination tomorrow morning if that would be convenient. I would seek leave, however, to ask some questions in point of clarification so that I will be assisted in getting instructions about the kind of things that the witness is referring to, as I did yesterday.

PN1391

HIS HONOUR: Yes.

PN1392

DR JESSUP: Yes, thank you, your Honour.

<CROSS-EXAMINATION BY DR JESSUP [10.45am]

PN1393

DR JESSUP: Ms Brookes, could I ask you to go back to the time before Air New Zealand assumed 100 per cent equity in the Ansett group?---Yes.

**** SANDRA BROOKES XXN DR JESSUP

PN1394

As I understand it, you became Assistant Banking Manager in January 2000?---Yes.

PN1395

So the period of time over which you had experience during which Air New Zealand had a 50 per cent equity only was about six months?---I actually was in Treasury performing other functions. That current position I started in January. I actually joined Treasury in 1997.

PN1396

I understand that, but your period of time as Assistant Banking Manager was about six months before Air New Zealand took over the hundred per cent?---Yes, I can't remember when they exactly took over.

PN1397

You can't remember when they took over the hundred per cent?---No. When they actually -

PN1398

All right. Now, during the time before they took the full equity, how did the accounts work within the Ansett group?---The exact same way as they work now. They were basically managed through Treasury in Melbourne though. The same limits applied to all the accounts. They were just managed here in Melbourne and the dealing was done from Melbourne.

PN1399

Yes. So the process of ensuring that accounts didn't fall below a particular debit level was done in Melbourne, was it?---Yes.

PN1400

As between different companies in the Ansett group at that time?---Yes.

PN1401

And the process that you have described as sweeping was done in Melbourne?---Yes.

PN1402

As between the different companies within the Ansett group?---Yes.

**** SANDRA BROOKES XXN DR JESSUP

PN1403

Now, could I ask you now about the period after Air New Zealand took 100 per cent, as I understand it, Risk Management was the section that concerned the process of making sure that the accounts of no particular entity fell too far below the debit limit or the overdraft limit?---Correct.

PN1404

All right. Now, in relation to that Risk Management, advances were made, were they, as required from one of the companies in the group to a company that might be in risk of going over the overdraft limit?---Correct.

PN1405

And those advances would be made by any other company in the group that had available funds?---Correct.

PN1406

And it might be another company within the Ansett group?---Yes.

PN1407

Are you aware whether it was ever Air New Zealand Limited itself?---No.

PN1408

You are not aware of that?---No, I am nor aware of that.

PN1409

So you can't tell the Commission that any funds moved at any time from Air New Zealand into any of the accounts of one of the companies in the Ansett Group?---The way it worked was Treasury in Auckland had control of the Ansett Australia Holdings Limited accounts. Now, if they transferred money from the Ansett Australia Holdings Limited account to one of the subsidiaries who required the funds, how money got into the Ansett Australia Holdings Limited account I don't know, and if that came from Air New Zealand, I don't know.

PN1410

I see, thank you. And also in the other direction, do you know anything about whether moneys went from one of the Ansett companies to Air New Zealand?---Again, any activity from that Ansett Australia Holdings account, which is the accounts Treasury maintained, I didn't have detailed information on that. All I received was an end-of-day balance; as to what made up that end-of-day balance, I am not sure.

**** SANDRA BROOKES XXN DR JESSUP

PN1411

Yes. Now, you have referred to a holdings account. I think you also referred - it may have been that I misheard you - to the holding company or Ansett Australia Holdings, something like that?---It is Ansett Australia Holdings Limited which performs all the treasury functions.

PN1412

Yes. Do you make a distinction between Ansett Holdings Limited and Ansett Australia Holdings Limited?---Yes, Ansett Australia Holdings Limited is a separate company under Ansett Holdings Limited.

PN1413

Yes. And the company you are talking about is Ansett Australia Holdings Limited, is it?---Correct.

PN1414

And as far as your knowledge goes, that was the limit as between which the different funds moved, was it?---Ansett Holdings Limited was the group accounts; Ansett Australia Holdings Limited was a group within that accounts.

PN1415

What group account were in Ansett Holdings Limited?---That would be all entities.

PN1416

All Ansett accounts?---Yes.

PN1417

Yes, but not including Air New Zealand accounts?---No.

PN1418

No?---No.

PN1419

And the evidence that you have given is confined to movements at or below the level, if I can put it that way, of Ansett Holdings Limited?---Sorry, can you repeat that?

**** SANDRA BROOKES XXN DR JESSUP

PN1420

What you know about, Ms Brookes, are the movements of money that occurred at or below the level of Ansett Holdings Limited; that is, between Ansett Holdings Limited and the companies in the Ansett group or between different companies in that group?---When they swept funds, yes. The other dealings within those accounts, no.

PN1421

I beg your pardon?---The other dealings within those accounts, no.

PN1422

I am not sure that I fully gather what you are saying. Your answer to me was when they swept the funds, are you covering in that answer also the Risk Management operations you are referring to?---No. I was aware if they transferred, say, $5 million between Ansett Australia Holdings Limited to Kendell. I was not aware of any other transactions that went through that Ansett Australia Holdings Limited account.

PN1423

Were you aware of any transactions between the Holdings Limited account, as you have described it, and Air New Zealand Limited?---No.

PN1424

Now, you gave evidence that you would fax to Auckland or e-mail to Auckland the position of all the companies in the group, and then they would decide how much had to be borrowed or invested - - -?---Correct.

PN1425

- - - as between those companies?---Yes.

PN1426

Now, you used the word, "borrowed"; was that because when there was a movement of funds from one company to the other, then in your understanding it was the recipient company that borrowed the money from the other company?---That is two separate issues. The net position I reported at the end of the day would mean that we require - if we were, say, $10 million negative, we required funds to be put into our account and Treasury Auckland would then borrow the funds from wherever; I am not sure where they got the funds from.

**** SANDRA BROOKES XXN DR JESSUP

PN1427

And when you refer to - - -?---In relation to an account being in debit, that was then money swept between the accounts.

PN1428

Yes, well, I will have to get you to clarify that. This is when you reported what you described as the net position of the group?---Yes.

PN1429

And what do you mean by the group in that sense?---All bank accounts within the - under the Ansett Holdings Limited bank - group.

PN1430

Yes, yes, but not including Ansett Holdings Limited itself?---Including Ansett Australia Holdings Limited.

PN1431

I see, but not including Ansett Holdings Limited?---There is no bank account for Ansett Holdings Limited.

PN1432

I see. So up to and including Ansett Australia Holdings Limited were the accounts that you dealt with?---Yes.

PN1433

And you would report to Auckland whether overall on a net position they were either in credit or in debit?---Correct.

PN1434

All right. Now, if they were in debit, what do you say happened?---They would borrow funds. They would ensure that the funds were in the accounts by the end of the day so we did not break our daily overdraft limit.

PN1435

Yes, I understand that, but I am putting the position that you gave that the group as a whole, the net bottom line was a debit of some millions of dollars shall we say, what would then happen?---The Treasury dealer would go out to the market and borrow money. That is based on what we used to do here in Treasury, so I am assuming they did the same thing there in Treasury.

**** SANDRA BROOKES XXN DR JESSUP

PN1436

Yes. So as you understand it - - -

PN1437

HIS HONOUR: When you are talking about the group as a whole, what are you referring to?---Ansett Australia Limited, Ansett Australia Cargo, Kendell, Skywest, all the entities within the group.

PN1438

So it is the Ansett group?---Group. All the accounts are grouped together.

PN1439

DR JESSUP: And I think you said a moment ago that if there was a group debit of some millions of dollars at a particular time - this would all have to be adjusted on a daily basis, wouldn't it?---Yes, we reported cash flow daily.

PN1440

Yes. If there was a group debit at the time when the reckoning was taken on a particular day, as you understood it, Treasury in Auckland would go on to the market, did you say?---Yes.

PN1441

And borrow some money to make up that debit?---Yes.

PN1442

Yes. And if there was a group credit, what would happen then?---They would invest the money on the market.

PN1443

Yes. Yes, thank you. Was the principle the same in relation to the foreign currency accounts of which you gave Kendell as an example?---Yes, but there was no group limit; that worked on individual account basis.

PN1444

Yes. And if the foreign currency account - do I take it from your evidence about Kendell that that was an example, but the same could apply to any of the subsidiaries?---Correct.

**** SANDRA BROOKES XXN DR JESSUP

PN1445

So insofar as foreign currency accounts were concerned, each subsidiary had its own running balance?---No. Kendell and Skywest had their own US dollar bank accounts and all - the only other entities that had foreign currency accounts was Ansett Australia Limited and Ansett Australia Holdings Limited.

PN1446

Yes. And they looked after all the other operating divisions, did they? That is, the foreign currency needs of all the other operating divisions were operated through Ansett Australia Limited or Ansett Australia Holdings Limited?---Correct, through - yes.

PN1447

And that was the position before Air New Zealand took a hundred per cent equity, too, was it?---Yes.

PN1448

Yes. And for what sort of requirements would the divisions need foreign currency?---As to what payments they were making in foreign currency, I was never reported that level of detail. I was only given a total at the end of the day to say this is what we require. I never got the breakdown of what payments and who they were paying them - for what amount.

PN1449

Yes. Going back to the example of Kendell, if Kendell was in debit at the end of a day on their foreign currency amount, that would need to be rectified, wouldn't it?---Yes.

PN1450

Yes. And you said that you would report the shortfall or the deficiency to Auckland?---Yes.

PN1451

And it would be rectified at that end?---They would fund the account.

PN1452

Yes. Do you know where from?---No.

**** SANDRA BROOKES XXN DR JESSUP

PN1453

If Kendell was in surplus or had more foreign currency than it needed at the end of a particular day, what was done about that?---They never had excess funds.

PN1454

It never happened?---No, they never received any receipts into their US dollar account.

PN1455

Yes, I see, thank you. Well, when foreign currency was provided to Kendell from within the group, do you know how that was treated in the group accounts; was it an advance?---Through their advance account.

PN1456

Mm?---Through their advance account.

PN1457

It was an advance to Kendell, was it?---Yes.

PN1458

Yes. And the other sweepings that you referred to that operated within the group, were they also advances from one company to another?---Correct.

PN1459

Yes.

PN1460

Your Honour, I would seek break it off at that point. You may have observed that I have gone into a little detail in relation to that and it is quite possible that I won't need to cross-examine further, but it is a very technical area and we would wish the opportunity to take some instructions.

PN1461

HIS HONOUR: Yes. Dr Jessup, will you be seeking to lead any evidence?

PN1462

DR JESSUP: We haven't formed a concluded view on that, your Honour. I have given a preliminary indication to my learned friend, Mr Borenstein, as between counsel, but I won't announce what that is, but we would - in part, it will depend upon the instructions which we take between now and tomorrow morning, in very large part obviously.

**** SANDRA BROOKES XXN DR JESSUP

PN1463

HIS HONOUR: Yes. Well, if you are not going to announce what it is, then I shouldn't feel inhibited in saying that I believe that evidence should be led tomorrow.

PN1464

DR JESSUP: You should feel no such inhibition, your Honour. We are certainly working on the basis that if there is to be any evidence, we would be under an obligation to call it tomorrow.

PN1465

HIS HONOUR: Is there anyone else at the bar table who wishes to ask Ms Brookes any questions?

PN1466

Yes, thank you, Ms Brookes. You will be required to attend the proceedings tomorrow morning?---Thank you.

<THE WITNESS WITHDREW [11.00am]

[11.00am]

PN1467

MR BORENSTEIN: I wonder whether we could ask that Dr Jessup let us know by, say, 4.30 this afternoon whether he will require Ms Brooks back tomorrow so we can make the necessary arrangements.

PN1468

HIS HONOUR: There won't be any re-examination?

PN1469

MR BORENSTEIN: There will be - there may be, your Honour, briefly, but - well, on the material presently I wouldn't anticipate we would need to call her back ourselves but I would like to know whether she needs to be here for further cross-examination tomorrow morning.

PN1470

HIS HONOUR: Well, if you could indicate that, Dr Jessup, by this afternoon if you are going to require any further opportunity to cross-examine the witness.

PN1471

DR JESSUP: Yes, your Honour, we will do that.

PN1472

MR BORENSTEIN: Your Honour - - -

PN1473

HIS HONOUR: In the event that there is no further cross-examination and no re-examination, then Ms Brooks won't be required to attend.

PN1474

MR BORENSTEIN: Thank you, your Honour. Your Honour, that is all the viva voce evidence that we have to call. There is one issue that arose yesterday in relation to the documents which I propose to take up with Dr Jessup today in the hope of reaching some agreement. Your Honour may recall that there was a question of where a document came from and we have some information to convey to him that maybe the document can then be accepted without the need to call anybody to confirm how it was obtained.

PN1475

Beyond that, your Honour, we have proposed to tender a bundle of awards and enterprise agreements and unless it is necessary for us to go through them one by one what I would propose to do is simply hand your Honour a folder of them as one exhibit. As I said we gave a copy to Dr Jessup yesterday so if there were any problems they could be communicated to us and we have not heard anything. So could we do that now and then ask your Honour to stand the matter over until tomorrow morning so that we can attend to various matters that your Honour has raised with us?

PN1476

HIS HONOUR: Yes. It is just one folder of materials?

PN1477

MR BORENSTEIN: I am told there is just one, your Honour.

PN1478

HIS HONOUR: Yes, and I see it does have an index.

PN1479

MR BORENSTEIN: We have an index to the other folder too, your Honour, which we will distribute in the course of the day.

EXHIBIT #B15 FOLDER OF MATERIALS CONTAINING AGREEMENTS AND AWARDS

PN1480

MR BORENSTEIN: Your Honour, in relation to the folder that we dealt with yesterday, it didn't have the index and in respect of which Dr Jessup raised the question about documents that hadn't been referred to, we have identified those documents that are to be removed from the folder and we have got an index. And I wonder whether in the course of the day we might have leave to approach your Honour's associate to make the necessary culling of that folder rather than take up time in open court?

PN1481

HIS HONOUR: Yes.

PN1482

MR BORENSTEIN: Thank you.

PN1483

HIS HONOUR: Yes, well, there are a number of matters that you will need to address in the proceedings tomorrow as to the future course of the proceedings. Is there a need for us to start other than at 10 o'clock in the morning?

PN1484

MR BORENSTEIN: Your Honour, there is presently a logistical difficulty. We have been informed that there has been listed the application for the stay in relation to the appeal at 9 am tomorrow for the President. If our learned friends were minded to defer that application then it might be wise to start perhaps half an hour earlier but presently it would be an embarrassment to start earlier given the listing. I would imagine that Dr Jessup would want to be at the hearing of the stay application and I would certainly be there. So perhaps we could just leave it at 10 o'clock for the moment. If things change in the course of the day we could perhaps communicate with your Honour's office.

PN1485

HIS HONOUR: Well, Dr Jessup - - -

PN1486

DR JESSUP: Your Honour, I don't know whether this is premature. It is only a matter of programming and I know that your Honour will be considering these matters again tomorrow, but it would certainly assist our side of things if there was some indication that in a worst possible scenario whether your Honour will be proposing to sit on, say, Monday or Tuesday or whatever it might be next week.

PN1487

Now, I have assured my learned friend, Mr Borenstein, that we want to get the whole thing finished this week if possible but as your Honour has said this morning it is fluid and there are a number of different interests will be making a contribution to the submissions and, as I say, there is a pragmatic matter which has arisen and if it were the fact that your Honour is going to simply sit on Monday and continuously thereafter if it should be necessary, then we can make the necessary arrangements to accommodate that.

PN1488

HIS HONOUR: Yes. Well, there are a number of uncertainties at this stage but if one assumes that the case proceeds and there is no reason for me to set a different timetable, then I would propose to continue to sit until the matter is completed which might mean the weekend or might mean Monday or Tuesday of next week.

PN1489

DR JESSUP: Yes. Well, I am grateful for that indication, your Honour.

PN1490

HIS HONOUR: Yes. Well, we will adjourn until 10 o'clock in the morning.

ADJOURNED UNTIL THURSDAY, 20 SEPTEMBER 2001 [11.07am]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

SANDRA BROOKES, SWORN PN1347
EXAMINATION-IN-CHIEF BY MR BORENSTEIN PN1347
CROSS-EXAMINATION BY DR JESSUP PN1393
WITNESS WITHDREW PN1467
EXHIBIT #B15 FOLDER OF MATERIALS CONTAINING AGREEMENTS AND AWARDS PN1480