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Bombardier Transportation Australia Pty Ltd v Alstom Transport Australia Pty Limited (No 2) [2022] FCA 880 (25 July 2022)

Last Updated: 28 July 2022

FEDERAL COURT OF AUSTRALIA

Bombardier Transportation Australia Pty Ltd v Alstom Transport Australia Pty Limited (No 2) [2022] FCA 880

File number:	WAD 119 of 2022
Judgment of:	JACKSON J
Date of judgment:	25 July 2022
Date of publication of reasons:	27 July 2022
Catchwords:	CORPORATIONS - application to approve scheme of arrangement pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) - scheme by way of reconstruction or amalgamation - transfer of all assets and liabilities between two wholly owned subsidiaries - sole member - consideration of relevant matters - application for orders pursuant to s 413 to facilitate transfer of assets and liabilities - consideration of effect on employees - interaction of s 413 and enterprise agreements made under the Fair Work Act 2009 (Cth) - scheme approved - orders made
Legislation:	Corporations Act 2001 (Cth) ss 411, 412, 413, 602, Part 5.1, Chapter 6 Fair Work Act 2009 (Cth) ss 3, 50, 51, 52, 53, 539, 562, 567, Chapter 2 Part 2-1 Division 2 Subdivision D, Part 2-4, Part 2-8 Personal Property Securities Act 2009 (Cth) ss 34, 66, 67, 162
Cases cited:	Amcor Limited, in the matter of Amcor Limited (No 2) [2019] FCA 842 Barrick (Australia Pacific Exploration) Pty Limited v Barrick (PD) Australia Pty Limited, in the matter of Barrick (Australia Pacific Exploration) Pty Limited (No 2) [2017] FCA 1076 Bombardier Transportation Australia Pty Ltd v Alstom Transport Australia Pty Limited [2022] FCA 816 Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron (TAPL) Pty Ltd [2022] FCA 220 Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron (TAPL) Pty Ltd (No 2) [2022] FCA 381 Hibernian Friendly Society (NSW) Ltd [2002] FCA 1139 In the Application of United Medical Protection Limited [2007] FCA 631 In the Matter of Foundation Healthcare Limited [2002] FCA 742 In the Matter of Foundation Healthcare Limited (No 2) [2002] FCA 973 National Trustees Executors and Agency Company of Australasia Ltd v Federal Commissioner of Taxation (Cain's Case) [1954] HCA 71; (1954) 91 CLR 540 Re Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849 Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357 Ridd v James Cook University [2021] HCA 32 Seven Network Limited, in the matter of Seven Network Limited (No 3) [2010] FCA 400 Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84; (2014) 222 FCR 152 Trajkoski v Director of Public Prosecutions (WA)  [2010] WASCA 119 ; (2010) 41 WAR 105
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	89
Date of hearing:	25 July 2022
Counsel for the Plaintiff:	Mr AJ Papamatheos with Mr J Wang
Solicitor for the Plaintiff:	King & Wood Mallesons
Counsel for the Defendant:	The defendant did not appear

ORDERS

THE COURT ORDERS THAT:

1. Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the plaintiff and its sole member, Alstom Transport Australia Holdings Pty Ltd (Scheme), a copy of which is Annexure A to these orders, is approved.
2. Pursuant to s 411(12) of the Act, the plaintiff is exempted from compliance with the requirements of s 411(11) of the Act.
3. The orders at paragraphs 4 and 5 below are made pursuant to s 413 of the Act for the purpose of facilitating the Scheme and are subject to, and in accordance with, the terms of the Scheme. In the orders below, capitalised nouns and acronyms not defined in these orders have the meanings and interpretations given to them by the Scheme.
4. Pursuant to s 413(1) of the Act, with effect from the Implementation Time, the Scheme is to be implemented by the following steps taken in the following order, and speaking as at that time:

(a) first, all of the Assets of the plaintiff, including any subject to security interests, are to be transferred to, and vested in, the defendant without the need for any further act or deed, including crediting the retained earnings and reserve and share capital accounts of the defendant with the balances of the retained earnings and reserve and share capital accounts of the plaintiff immediately before Implementation Time;

(b) second, all of the Liabilities of the plaintiff are to be transferred to, and become Liabilities of, the defendant without the need for any further act or deed;

(c) third, all legal proceedings (if any) pending by or against the plaintiff are to be continued by or against the defendant without the need for any further act or deed, other than an amendment of the record of the relevant court or tribunal which will be the responsibility of the defendant; and

(d) fourth, the plaintiff is to be deregistered by ASIC without winding up following the plaintiff serving a notice of deregistration on ASIC and at the expiry of 60 days after service of such notice.

5. Pursuant to s 413(1)(g) of the Act, on and from the Implementation Time:

(a) the defendant or any director, officer, company secretary or other duly authorised signatory of the defendant from time to time may, in the name of the plaintiff, sign all documents and do all things required to be done by the plaintiff to complete or perfect the transfer of the Assets and Liabilities of the plaintiff as contemplated by the Scheme, whether by lodgement, registration, notification or otherwise;

(b) in contracts, titles, licences and applications for the grant or renewal of such titles or licences which form part of the Assets and Liabilities transferred to, and vested in, the defendant pursuant to sub-paragraphs 4(a) and 4(b) above, and to which the plaintiff is named as a party, any reference to the plaintiff is to be read as a reference to the defendant; and

(c) the defendant may use, disclose and otherwise handle all information transferred and vested in it by the plaintiff provided always that the defendant shall receive the information upon the same terms as the plaintiff held the information and subject to the Liabilities of the plaintiff in respect of that information.

6. For the purpose of transferring the Assets and Liabilities from the plaintiff to the defendant pursuant to the orders at sub-paragraphs 4(a) and 4(b) above and s 53(3)(c) and 53(4)(c) of the Fair Work Act 2009 (Cth), pursuant to s 413(1)(g) of the Act on and from the Implementation Time, subject to and in accordance with the Fair Work Act 2009 (Cth):

(a) the defendant is to be covered by all of the enterprise agreements that covered the plaintiff immediately before the Implementation Time (Enterprise Agreements) as the employer;

(b) the plaintiff is not to be covered by those Enterprise Agreements as the employer; and

(c) for the avoidance of doubt, each Enterprise Agreement will cover all employees in relation to their employment with the defendant to the same extent as they were, or would have been, covered in relation to their employment with the plaintiff before the Implementation Time.

7. The parties, or any director or officer of any party, and any employee or union representing the employees of the plaintiff have liberty to apply for any further orders pursuant to s 413 of the Act as may be considered necessary or desirable.
8. Within 7 days of making these orders, the plaintiff must give written notice to all its employees and relevant unions of the approval of the Scheme and the proposed deregistration of the plaintiff pursuant to sub-paragraph 4(d) above.

Annexure A

REASONS FOR JUDGMENT

JACKSON J:

Background

1. On 12 July 2022, orders were made (First Orders) convening a meeting for the purpose of considering a scheme of arrangement (Scheme) proposed by the plaintiff, Bombardier Transportation Australia Pty Ltd, and approving the distribution of the scheme booklet: Bombardier Transportation Australia Pty Ltd v Alstom Transport Australia Pty Limited [2022] FCA 816 (Bombardier (No 1)).
2. The Scheme was approved on 14 July 2022 by Bombardier and Alstom Transport Australia Pty Ltd's common sole member and parent company, Alstom Transport Australia Holdings Pty Ltd (Alstom Holdings). All three companies are wholly owned subsidiaries of a listed French company, Alstom SA.
3. On 21 July 2022, the second hearing for approval of the Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act) was held. That hearing was adjourned to 25 July 2022 so that Bombardier and the Court could consider further certain issues about enterprise agreements that are canvassed below. Court approval of the Scheme will result in the transfer by Bombardier of the entirety of its business and undertaking to Alstom Transport, so that the business and undertaking of Bombardier and Alstom Transport is conducted by a single entity, being Alstom Transport.
4. In addition to approval of the Scheme, Bombardier also sought orders under s 413 to facilitate the implementation of the scheme of arrangement, leading to deregistration of the company by the Australian Securities and Investments Commission (ASIC) without a winding up.
5. Orders under s 411(4)(b) of the Act approving the Scheme and orders under s 413(1) to facilitate its implementation were made on 25 July 2022. These are the reasons for those orders.

Matters for consideration

6. Section 411(4) of the Act provides for a scheme of arrangement to be binding on, relevantly, members of a company with share capital, if at a meeting convened in accordance with an order of the Court, a resolution in favour of it is passed by a majority in number of members and by 75% of the votes cast on the resolution, and if it is approved by the Court. That is, the Court's power to approve a scheme is derived from s 411(4)(b) of the Act: Hibernian Friendly Society (NSW) Ltd [2002] FCA 1139 at [8] (Conti J).
7. In Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron (TAPL) Pty Ltd (No 2) [2022] FCA 381 at [9] (Chevron (No 2)), Banks‑Smith J made the following observations about the matters to be considered in the exercise of the power:

The matters the Court must take into account in deciding whether to approve a scheme were summarised in Seven Network Limited (No 3) [[2010] FCA 400] and David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753 (Farrell J) and include whether:

(a) the orders of the Court convening the scheme meeting were complied with;

(b) the resolution to approve the scheme was passed by the requisite majority, and whether other statutory requirements have been satisfied;

(c) all conditions to which the scheme is subject (other than court approval and lodgement of the Court's orders with ASIC) have been met or waived;

(d) the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it;

(e) there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme;

(f) the company has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; and

(g) the Court is satisfied under s 411(17) that the scheme has not been proposed to avoid Chapter 6 of the Act, or that the company has a statement from ASIC that it has no objection to the scheme.

8. The shareholders' vote in favour of a scheme is evidence of its inherent fairness; if a majority of the shareholders have approved the scheme, it is unlikely that the scheme would be unreasonable: Amcor Limited, in the matter of Amcor Limited (No 2) [2019] FCA 842 at [11] (Beach J). In Seven Network Limited, in the matter of Seven Network Limited (No 3) [2010] FCA 400 at [31]‑[32], Jacobson J said:

The principles which govern the exercise of the court's discretion to approve a scheme are well settled. The court has a discretion whether to approve a scheme, and is not bound to approve it merely because it has previously made orders for the convening of meetings or, as I said earlier, because the statutory majorities have been achieved: Re NRMA Ltd (No 2) [2000] NSWSC 408; (2000) 156 FLR 412 at [22]. Santow J there referred to a passage from a well-known text on takeovers and reconstructions, in which it was said that the court's jurisdiction is supervisory; it is concerned to be satisfied that there has been an absence of oppression, and that the compromise or arrangement is one which is capable of being accepted.
It has been said on many occasions that the court will usually approach the task upon the basis that the members are better judges of what is in their commercial interests than the court. Santow J said in Re NRMA Ltd (No 2) at [23], citing earlier authority:

After all, it is their (the members') money which is at stake.

9. Of course, it is also necessary to consider at this stage whether the orders sought under s 413 are appropriate, including examination of the specific requirements for the orders proposed: Chevron (No 2) at [11].

Materials relied on

10. In addition to the evidence already adduced at the first hearing, Bombardier relied upon the following affidavits:

(a) second affidavit of Mark Alan Coxon sworn on 18 July 2022;

(b) second affidavit of Rentian Zheng affirmed on 18 July 2022;

(c) third affidavit of Tabitha Marjorie Winton affirmed on 19 July 2022;

(d) affidavit of Christopher Norman John Hagstrom affirmed on 19 July 2022;

(e) affidavit of Alanna Margaret Billington affirmed on 19 July 2022;

(f) second affidavit of Christopher Norman John Hagstrom affirmed on 21 July 2022;

(g) second affidavit of Alanna Margaret Billington affirmed on 21 July 2022;

(h) fourth affidavit of Tabitha Marjorie Winton affirmed on 21 July 2022;

(i) affidavit of James Yu-Wen Wang sworn on 21 July 2022;

(j) third affidavit of Rentian Zheng affirmed on 21 July 2022;

(k) third affidavit of Christopher Norman John Hagstrom affirmed on 25 July 2022;

(l) third affidavit of Alanna Margaret Billington affirmed on 25 July 2022; and

(m) second affidavit of James Yu-Wen Wang sworn on 25 July 2022.

Procedural matters

11. Bombardier relied upon the above evidence to demonstrate it had satisfied the following procedural matters. It had to show, firstly, that the orders of the Court convening the scheme meeting were complied with. It was also incumbent on Bombardier to provide evidence that the meeting was properly convened and that the resolution to approve the Scheme was passed by the requisite majorities of members.
12. Pursuant to s 412(6) of the Act, the scheme booklet was required to be registered with ASIC prior to being sent to Alstom Holdings. ASIC must not register a copy of the statement unless the statement appears to comply with the Act and ASIC is of the opinion that the statement does not contain any matter that is false in material or materially misleading: s 412(8). Ms Zheng's second affidavit contains evidence showing that the scheme booklet was registered with ASIC as required prior to being sent to Alstom Holdings.
13. Bombardier has also adduced evidence (in Ms Winton's third affidavit) demonstrating that the scheme booklet, after ASIC registration, was sent to the directors of Alstom Holdings, the directors of Bombardier, the directors of Alstom Transport, and to the auditor of Bombardier prior to the scheme meeting.
14. Affidavit evidence before the Court (Mr Coxon's second affidavit) showed that the meeting was properly convened and the resolution to approve the Scheme was passed. Mr Coxon chaired it, as required by the First Orders. Alstom Holdings nominated a corporate representative to attend the scheme meeting and the corporate representative was present at the scheme meeting for the duration of the meeting. The record of the resolution approving the Scheme, as signed by the representative in accordance with sub-paragraph 3(h) of the First Orders, was in evidence before the Court.
15. As noted above, a scheme is only binding if the relevant majority is obtained, being a majority in number of the members present and voting, and 75% of the votes cast on the resolution. Alstom Holdings is the sole member of Bombardier and voted all of its shares in favour of the Scheme. As such, the requisite majorities were achieved.
16. The First Orders required Bombardier to publish a notice of hearing in the form of Annexure A to those orders in The Australian newspaper on or before 15 July 2022. Ms Zheng's affidavit evidenced compliance with that requirement.
17. Therefore on the evidence before the Court, the procedural requirements for approval of the Scheme were fulfilled.

All conditions precedent met

18. The Court will ordinarily require that all conditions precedent to the Scheme (other than the Court's approval and the lodgement of the Court's approval order with ASIC) have been satisfied or waived, so that there is no doubt about the binding nature of the Scheme: Chevron (No 2) at [20] applying In the Application of United Medical Protection Limited [2007] FCA 631 at [19] (Finkelstein J). Here, Bombardier supplied evidence in the form of a certificate executed by each of Alstom Transport and Bombardier confirming that all conditions precedent in the Scheme and the Implementation Agreement were satisfied or waived, other than the requirement for Court approval. I was satisfied that the Scheme would become binding on the parties once that approval was given.

Discretionary matters

Good faith and proper purpose

19. The Court should be satisfied that the shareholders (or creditors if applicable) have voted in good faith and not for an improper purpose: In the Matter of Foundation Healthcare Limited (No 2) [2002] FCA 973 at [27] (French J as he was then); Seven Network at [35].
20. Bombardier submitted that the Court should be satisfied that Alstom Holdings voted in good faith and not for an improper purpose, based on the following:

(a) the Scheme is for a restructure transaction of a kind ordinarily approved by the Court (see Bombardier (No 1) at [20]‑[21], [35]);

(b) the Scheme is a solvent restructure of the Alstom group of companies in Australia with the purpose of achieving corporate efficiency;

(c) there is positive shareholder equity for both Bombardier and Alstom Transport, with a substantial surplus predicted when the two companies combine, and given there are cross-guarantees in place which guarantees creditors of Bombardier recourse to the assets of Alstom Transport, the position of Bombardier's creditors will not be materially prejudiced by the Scheme;

(d) it was the independent expert's opinion that neither Bombardier's creditors who were to become creditors of Alstom Transport, nor the creditors of Alstom Transport who were to remain creditors of Alstom Transport, were likely to be prejudiced by implementation of the Scheme (see Bombardier (No 1) at [35]); and

(e) neither ASIC nor any creditor nor anyone else appeared at the second hearing to object to approval of the Scheme.

21. I accepted those submissions. On the evidence, the Scheme appeared to be proposed for the intelligible commercial purpose of consolidating and simplifying the commercial structure of Alstom Holdings and its subsidiaries, and there was no reason to think it had been proposed otherwise than in good faith and properly: see Bombardier (No 1) at [35].

The Scheme is fair and reasonable

22. Bombardier must demonstrate that the Scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it.
23. As noted above, the Court will approach the task upon the basis that the members are better judges of what is in their commercial interests than the Court. It will not readily conclude that a scheme is unreasonable or unfair if the members have approved it after having been properly informed of matters relevant to their decision-making.
24. Bombardier submitted that the Scheme is fair and reasonable and referred to the following matters in support of that submission:

(a) proof of the relevant statutory majorities is prima facie evidence of the fairness and reasonableness of the Scheme;

(b) in the scheme booklet, Bombardier's board unanimously recommended that Bombardier's shareholder vote in favour of the Scheme;

(c) no impediment has emerged since the Implementation Agreement was made; and

(d) the Scheme was proposed in order to yield commercial benefits for Bombardier's sole member.

25. I also accepted those submissions, and (subject to the question of disclosure) was accordingly satisfied that the Scheme is fair and reasonable.

Full and fair disclosure

26. It must be shown that there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the Scheme.
27. At the first hearing, the content of the scheme booklet provided to Alstom Holdings was considered. I was satisfied there would be full and fair disclosure as to the effect of the Scheme and any other material considerations to which the member ought have regard by the dispatch of the scheme booklet: Bombardier (No 1) at [31]. The evidence demonstrated that the scheme booklet was professionally drafted and went through a thorough verification process by Bombardier, Alstom Transport and Alstom Holdings and their advisers. It was approved by Bombardier's board for release on the basis that it was true and correct and it was also reviewed and registered with ASIC, prior to which ASIC must be satisfied the disclosure requirements are met.
28. Both the notice of the second hearing required by the First Orders and the scheme booklet were publicly available through the ASIC register from the date of lodgement, 13 July 2022 (prior to the scheme meeting and the second hearing), which gave any interested party an opportunity to be heard on the matter. No one sought to be heard.
29. Bombardier appropriately drew the Court's attention to the fact that one enterprise agreement, the 'Bombardier Transportation Australia Pty Ltd - ISST (In Service Support Technician) / Technician Specialist Agreement 2020 - 2024' was not mentioned in section 1.6 of the scheme booklet. It had only been approved by the Fair Work Commission recently, on 17 June 2022. Bombardier submitted and has supplied evidence by way of an affidavit of Ms Billington, Human Resources Director (Australia and New Zealand) of Alstom Transport and a director of both Bombardier and Alstom Transport that the omission was inadvertent and that Alstom Transport will continue to apply that enterprise agreement.
30. I was satisfied of those matters and on the basis of the evidence it is clear that the omission did not make a material difference to the adequacy of the disclosure effected by the scheme booklet. I was therefore satisfied that there had been full and fair disclosure which supported the appropriateness of approving the Scheme.

All matters brought to the Court's attention

31. Bombardier must demonstrate that it has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion.
32. In addition to the general principles addressed above, at the first hearing, counsel for the Plaintiff appropriately drew the Court's attention to the following matters:

(a) Bombardier's intent to seek orders pursuant to s 413 of the Act;

(b) the impact of the Scheme on creditors;

(c) the impact of the Scheme on secured creditors;

(d) the impact of the Scheme on employees of Bombardier; and

(e) the impact of the Scheme on material contracts.

33. These matters were considered in Bombardier (No 1) at [39]‑[59]. None of them presented a basis for refusing to make an order to convene the meeting, however by granting leave to convene the meeting, the Court does not give its imprimatur to the proposed Scheme (In the Matter of Foundation Healthcare Limited [2002] FCA 742 at [36] (French J); and see Seven Network at [8] above) and it was noted that some of them may need to be addressed further at the second hearing. It is appropriate to consider them below in the course of deciding whether orders made pursuant to s 413 of the Act are appropriate.

No proscribed purpose

34. The Court must be satisfied under s 411(17) that the Scheme has not been proposed to avoid the operation of the provisions of Chapter 6 of the Act, concerning takeovers, or that the company has a statement from ASIC that it has no objection to the Scheme. However a 'no objection' statement by ASIC does not bring the Court's discretion to an end: Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357 at [18] (Vaughan J).
35. There is a letter dated 20 July 2022 from ASIC in evidence confirming under s 411(17)(b) that it had no objection to the Scheme. There was also evidence that ASIC was kept informed of developments between that date and the final hearing of 25 July 2022 and ASIC did not appear or seek to withdraw or modify the letter.
36. In any event, Chapter 6 does not apply here so the Scheme will not avoid the operation of the chapter. It specifically applies to the acquisition of control over voting shares in a company with more than 50 members; or voting shares in a listed body; or voting interests in a listed registered scheme: see s 602(a) of the Act. Bombardier does not fall into any of those categories. So Chapter 6 does not apply to Bombardier and the purpose of the Scheme cannot be to circumvent the provisions of Chapter 6.

Exemption from s 411(11)

37. Bombardier also sought an order exempting it under s 411(12) from the operation of s 411(11) of the Act. That section provides that a copy of the orders of the Court made under s 411(4)(b) must be annexed to every copy of the company's constitution that is issued after the order has been made.
38. In Chevron (No 2) at [34], Banks‑Smith J decided, in similar circumstances, that it was appropriate to exempt the relevant company from compliance with s 411(11) given that the Scheme did not alter the constitution of the body whose assets and liabilities were being transferred. Her Honour also considered there was no ongoing purpose served by requiring the orders approving the Scheme to be annexed to that party's constitution.
39. Similarly, it was appropriate to provide an exemption from compliance with s 411(11) in this case.

Scheme approved

40. For the reasons given above, I made orders approving the Scheme.

Orders under s 413

41. Bombardier sought orders under s 413 of the Act which have the effect that, from the 'Implementation Time' (proposed to be 1 August 2022), the Scheme will be implemented by the following steps:

(a) first, all of Bombardier's assets will be transferred to, and vested in, Alstom Transport without the need for any further act or deed, but subject to security interests;

(b) second, all of Bombardier's liabilities will be transferred to Alstom Transport and will become its liabilities without the need for any further act or deed;

(c) third, all legal proceedings pending by or against Bombardier will be continued by or against Alstom Holdings without the need for any further act or deed, other than an amendment of the record of the relevant court or tribunal; and

(d) fourth, Bombardier will be deregistered by ASIC without winding up, 60 days after Bombardier serves a notice of deregistration on ASIC.

42. I set out s 413(1) in full in Bombardier (No 1) and will not do so again here. For the reasons given in that decision at [39]‑[41], I was satisfied that the Court's discretion to make orders under the section was enlivened here. The orders that could thus be made relevantly include orders that provide for:

(a) the transfer to Alstom Transport of the whole or a part of the undertaking and of the property or liabilities of Bombardier (s 413(1)(a));

(b) the continuation by or against Alstom Transport of any legal proceedings pending by or against Bombardier (s 413(1)(c)); and

(c) the deregistration by ASIC, without winding up, of Bombardier (s 413(1)(d)).

43. Upon those orders being made, Alstom Transport became directly bound by them as it is the defendant in this proceeding.
44. Section 413(1)(g) also gives the Court power to make orders providing for such incidental, consequential and supplemental matters as are necessary to ensure that the reconstruction or amalgamation is fully and effectively carried out. Under that provision, Bombardier sought orders that on and from the Implementation Time:

(a) Alstom Transport or other suitably authorised persons may sign documents and do other things in Bombardier's name to complete or perfect the transfer of assets and liabilities;

(b) in contracts, titles, licences and applications for the grant or renewal of such titles or licences which form part of the transferred assets and liabilities in which Bombardier is named as a party, any reference to Bombardier is to be read as a reference to Alstom Transport; and

(c) Alstom Transport may use, disclose and otherwise handle all information transferred to and vested in it on the same terms as Bombardier held the information and subject to Bombardier's liabilities in respect of that information.

45. I was required to consider whether as a matter of discretion orders should be made in these terms. Subject to the following specific matters, I was satisfied that the orders are necessary and appropriate in order to implement and give full effect to the Scheme that the Court has approved.

Transfer of assets and liabilities

46. The terms 'property' and 'liabilities' as defined in s 413 should be read expansively, rather than narrowly: Re Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849 at [90]‑[91] (Lindgren J).
47. In addition to the orders sought by Bombardier outlined above, the transfer of assets and liabilities is contemplated by cl 4.1(a) and cl 4.1(b) of the Scheme. The transfer of all assets and liabilities is fundamental to the reconstruction or amalgamation sought by Bombardier. Subject to certain specific matters that were raised at the first hearing and briefly considered in Bombardier (No 1) (at [46]‑[59]), I was satisfied that orders providing for such transfers were necessary and appropriate. Those specific matters are the effect of the orders on: holders of security interests; employees, including those employed under enterprise agreements; and material contracts. There was also comment in Bombardier (No 1) on the position of creditors (as distinct from holders of security interests), and Bombardier's submissions about good faith and proper purpose summarised above also avert to their position. There is no need to add to any of that here, as there was no reason to think that the position has changed, so there was still no reason to think that creditors will be prejudiced by the implementation of the Scheme.
48. The other specific matters will be addressed further below, but it is appropriate first to comment briefly on a few other subjects.

Transfer of legal proceedings

49. Clause 4.1(c) of the Scheme contemplates the transfer of all legal proceedings by or against Bombardier to Alstom Transport.
50. There is evidence (in Mr Hunt's affidavit and Ms Winton's second affidavit, both read into evidence at the first hearing) that Bombardier has conducted litigation searches across Australia, including searches covering the High Court of Australia, this Court and the Supreme Courts of each of the States and Territories.
51. Some of the proceedings identified in these searches have been effectively finalised. There was no reason to think that any party to a proceeding that has not been finalised will be prejudiced by a change of the other relevant party (in each case, Bombardier is a defendant) to Alstom Transport. To the extent that any of the opposing parties in the litigation end up being successful in obtaining a money judgment against Alstom Transport, based on the amounts claimed, their positions will be amply covered by the combined assets and liabilities of the two companies as detailed in respect of creditors below. I was satisfied that it was appropriate to make an order for the continuation of legal proceedings as part of the implementation of the Scheme.

Incidental, consequential and supplemental matters

52. Incidental, consequential and supplemental matters are contemplated by cl 4.1(d) of the Scheme.
53. Bombardier submitted that the proposed orders were necessary to ensure that the reconstruction or amalgamation embodied in the Scheme is fully and effectively carried out. It also specifically noted that the order seeking for any reference to Bombardier to be a reference to Alstom Transport in contracts, titles, licences and other relevant legal instruments is necessary to ensure that the restructure is fully and effectively carried out to reflect the transfers of key parts of Bombardier's business.
54. I accepted that the orders sought were within the bounds of s 413(1)(g), such that they were necessary to properly implement the Scheme, and to bring about a seamless and effective transfer: see Chevron (No 2) at [52].

Deregistration of Bombardier

55. The Scheme contemplates deregistration of Bombardier without winding up at cl 4.1(e). Given that the entirety of Bombardier's business undertakings will be transferred to Alstom Transport, there was no impediment to an order of this kind and it was appropriate to be made to finalise the Scheme.

Liberty to apply

56. Bombardier sought an order that any party, and any director or officer of any party, and any employee or union representing the employees of Bombardier have liberty to apply for further orders under s 413 that are necessary or desirable. The Court may order that there is liberty to apply in order to facilitate the making of any orders addressing subsequent or additional matters that are necessary to give effect to a reconstruction or amalgamation: Chevron (No 2) at [53]. The order was reasonable to ensure that issues that may have been unforeseen at the time of the second hearing can be dealt with appropriately at a future date.

Specific issues concerning the effect of the proposed s 413 orders
The holders of security interests

57. As noted in Bombardier (No 1) at [51], all holders of security interests registered under the Personal Property Securities Act 2009 (Cth) (PPSA) have been given notice of the proposed Scheme so as to permit them to take steps to protect their positions, and have been given the opportunity to attend the hearing. No secured creditor appeared at the second hearing.
58. As also noted in Bombardier (No 1) at [49], s 413(2) of the Act permits the Court to make an order that upon the transfer and vesting of assets, specified security interests will cease to take effect. No order of that kind is sought here, but the provision is relevant because it seems to contemplate that in the absence of such an order, security interests will be transferred along with the assets to which they are subject. The transfer and vesting order proposed by Bombardier is expressed to take effect so that assets are transferred subject to any security interests.
59. In Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron (TAPL) Pty Ltd [2022] FCA 220 at [65] (Chevron (No 1)) (and in Chevron (No 2) at [80]) Banks‑Smith J gave the following summary of 'the manner by which provisions of the PPSA accord protection to a secured party where a transfer proceeds, provided it takes certain steps to protect its own interests':

(a) the PPSA permits a transfer of the collateral the subject of a security interest regulated by the PPSA;

(b) a security interest in collateral is perfected if a financing statement is registered: s 21(1)(a);

(c) registration is regulated by Part 5.3 of the PPSA;

(d) s 162 provides that a financing statement may be registered to reflect a transfer of collateral before or after the transfer;

(e) if there is a transfer, s 34(1) accords temporary protection to the secured party who at the time of the transfer held a perfected security interest in the collateral, in that they have perfection for a prescribed period of time;

(f) s 66 and s 67 then deal relevantly with priorities of securities in transferred collateral; and

(g) if registration is effected by the secured party against the new grantor within the specified time, priority with respect to the collateral is maintained.

60. I respectfully adopt that summary. Banks‑Smith J also noted in Chevron (No 2) (at [82]) that s 162 of the PPSA permits a secured party to register a financing statement as to its security interest in collateral which is to be transferred (in this case to Alstom Transport), before or after the transfer occurs. At [83] her Honour noted and evidently accepted submissions to the effect that the PPSA expressly contemplates a scenario such as the transfer of collateral that is the subject of security interests, and gives the secured parties priority if they register a financing statement within time. That occurs, in particular, by the combined operation of s 34(1), which provides for temporary 'perfection' of a security interest after transfer, and s 66 and s 67 of the PPSA, which provide for the priority of a pre‑existing perfected security interest, over the collateral that was granted by a transferor, over security interests in the same collateral that are granted by the transferee.
61. As such, the notices that Bombardier provided to the holders of security interests in its assets gave them a fair opportunity to preserve their positions consequent on the transfers to be effected by the Scheme. I was therefore satisfied that orders providing for the transfer of assets subject to security interests were appropriate to be made.

Employees

62. Bombardier has given notice of the Scheme to its employees and to relevant union State branches. This included notice that upon implementation, the employees will become employees of Alstom Transport. No employee or union expressed opposition to the Scheme and none of the recipients of the notice appeared at the second hearing.
63. Subject to particular consideration of enterprise agreements, the position is still as described in Bombardier (No 1) at [54]: employees will be transferred on the same terms and conditions as apply to them in their employment with Bombardier and their accrued entitlements, including recognition of prior length of service with Bombardier, will also be recognised.

Enterprise agreements

64. In Bombardier (No 1) at [55]‑[56] I noted that some of Bombardier's employees were employed under enterprise agreements and that it may have been necessary at the second hearing to consider issues such as the interaction between orders made under s 413 of the Act and the legislative character of enterprise agreements made under the Fair Work Act 2009 (Cth) (FWA). Bombardier made further submissions to me on that subject before and at the second hearing.
65. As the submissions noted, in Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84; (2014) 222 FCR 152 at [89], the Full Court (Jessup, Tracey and Perram JJ) held that the legal efficacy of the terms of an enterprise agreement arises under statute and not the common law of contract. It may further be observed that the terms can be binding on employees who never agreed to them, even by way of voting to approve an enterprise agreement or a variation to it: see Toyota at [88]‑[89]. The Full Court went so far as to say (also at [88]) that 'an enterprise agreement is an agreement in name only'. At [90] their Honours said, '[a]n enterprise agreement is a statutory artefact made by persons specifically empowered in that regard, and under conditions specifically set down, by the FW Act. It is enforceable under that Act, and not otherwise.' And at [97] they said that an enterprise agreement 'is a specific instrument made only under the detailed regime for which Pt 2-4 [of the FWA] provides and enforceable only as provided by the FW Act'. In Ridd v James Cook University [2021] HCA 32 at [11] the High Court cited Toyota at [89] in support of the proposition that the FWA gave statutory force to the terms of the relevant enterprise agreement and applied those terms to the relevant employer and all of its employees.
66. A question that arose was whether, in view of all that, orders under s 413(1) of the Act can be effective to transfer the rights and obligations of Bombardier as the present employer under the enterprise agreements to Alstom Transport as the new employer, and the rights and obligations of the employees. The intent of the Scheme is to effect those transfers while preserving all employees' rights, and a question also arose as to what form of orders were necessary to achieve that outcome.
67. The researches of counsel for Bombardier and my own researches revealed no prior judicial consideration of those questions. Bombardier referred to Re Stork ICM at [96]‑[99] in which Lindgren J expressed the view that a scheme could transfer a right of insurance indemnity by operation of law and so not engage a '"no assignment of interest without consent" provision'. But that was a purely contractual right, so the case does not shed direct light on the issue.
68. Bombardier submitted, and I accepted, that the mere fact that the enterprise agreements have a legislative character does not mean that an order under s 413(1) of the Act will be ineffective to transfer the rights and obligations under them. It is routine to transfer rights and obligations having a statutory character under schemes of arrangement. The transfers of Commonwealth and State statutory petroleum interests considered in Chevron (No 2) at [71]‑[75] are an example. Bombardier also gave the example, somewhat more removed from the present context, of the transmission by operation of law to an executor of a deceased's 'title' to a distribution under the Wool Realisation (Distribution of Profits) Act 1948 (Cth): National Trustees Executors and Agency Company of Australasia Ltd v Federal Commissioner of Taxation (Cain's Case) [1954] HCA 71; (1954) 91 CLR 540.
69. The issue arose not at that general level of principle but at the level of statutory interpretation. It arose because, as the passages from Toyota set out above indicate, the FWA contains detailed provisions for the making, approval and coming into effect of enterprise agreements and variations to enterprise agreements. It also makes specific provision for transfers of business: FWA Part 2-8. The issue in light of those detailed provisions is whether and how an order under the more generally applicable provisions of s 413 of the Act can have effect to transfer rights and obligations under enterprise agreements.
70. This was an unopposed application in which the Court did not have the benefit of a contradictor to argue the issue fully. It was also an application in which notice of the Scheme and the second hearing had been given to employees and unions representing them, and none decided to appear to oppose the orders or to make submissions about their terms. In those circumstances, it is appropriate to express the following views about the issue on the basis that they gave the Court sufficient confidence that the orders proposed by Bombardier would be efficacious, so as to permit them to be made. The liberty to apply already mentioned was extended to employees and unions, so that if that confidence proves to be misplaced, the situation can be remedied.
71. On that basis, I accepted Bombardier's submission that neither the detailed provisions in the FWA as to variation of an enterprise agreement, nor the detailed provisions as to transfers of businesses, evidence a legislative intention that those provisions set out the only ways that variations or transfers of enterprise agreements can occur. The two legislative regimes, being the regime for enterprise agreements under the FWA and the regime for corporate reorganisations by schemes of arrangement under Part 5.1 of the Act, both of which address the subject matter of corporate reorganisation, should be read to operate rationally, efficiently and justly together: see Trajkoski v Director of Public Prosecutions (WA)  [2010] WASCA 119 ; (2010) 41 WAR 105 at  [50] ‑[52]. The main provision that opens the regimes to a reading of that kind is s 53(3)(c) of the FWA.
72. Section 53(3)(c) appears in Chapter 2 Part 2-1 Division 2 Subdivision D of the FWA. It is that subdivision that gives legal efficacy to an enterprise agreement. It does so by providing in s 50 that a person must not contravene a term of an enterprise agreement. A contravention of s 50 can attract a civil penalty: see s 539. However other conditions need to be satisfied before a person can contravene an enterprise agreement or have an entitlement under it. The enterprise agreement must apply to the person: s 51. An enterprise agreement applies to an employee, employer or employee organisation only if it is 'in operation' and it 'covers' the employee, employer or organisation: s 52(1)(a) and s 52(1)(b). That concept of coverage is therefore central to the legal efficacy of the agreement.
73. An enterprise agreement covers an employee or employer if the agreement is expressed to cover them: s 53(1). The enterprise agreements that are relevant here are expressed to cover Bombardier and its employees at certain sites or on certain projects, but are not expressed to cover Alstom Transport or its employees. So after the Scheme is implemented, the coverage for which s 53(1) provides will be incomplete. (There is some confusion in an enterprise agreement known as the Dry Creek Rail Car Depot Enterprise Agreement 2021, because it names as the employer party 'Alstom Transportation [sic] Australia Pty Ltd', but the Fair Work Commission decision approving the agreement names Bombardier as the employer, so I will assume that is what was intended by the instrument.)
74. However s 53(3) allows for other ways in which coverage may apply. It provides:

Effect of provisions of this Act, FWC orders and court orders on coverage

(3) An enterprise agreement also covers an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement covers the employee, employer or organisation:

(a) a provision of this Act or of the Registered Organisations Act;

(b) an FWC order made under a provision of this Act;

(c) an order of a court.

75. The word 'court' is not defined in the FWA, so it must be taken to have its ordinary meaning and clearly to include the Federal Court. So by s 53(3)(c) the FWA, at least, contemplates that an order of this Court may provide for or have the effect that an enterprise agreement covers a given employer and/or employees. Section 53(4)(c) provides, in a similar way, for a court order to say when an employee, employer or employee organisation is not covered by an enterprise agreement.
76. The question of construction which then arises is: under what power can the Court make such an order? There are at least three possible sources of the power. The first is another provision or provisions of the FWA. However it does not appear that any other section of that Act provides for court orders about the coverage of enterprise agreements. The second is s 53(3)(c) itself. And the third is any other law that confers power, such as s 413 of the Act.
77. While it was not necessary to reach a concluded view, I am inclined to think that the third source is the one that the drafters of s 53(3)(c) should be taken to have had in mind. If they had intended to give all courts potentially wide ranging power to change the coverage of enterprise agreements, it would be surprising that they would have done so in a sub-paragraph that is expressed as stating the consequence of an order, rather than as conferring the power to make it, and which makes no provision for applications to be made, and states no criteria or guidelines for the exercise of the power.
78. Bombardier pointed to the fact that s 53(3)(b) only permits a Fair Work Commission order to affect coverage if it is an order 'made under a provision of this Act', while s 53(3)(c) does not contain such a limitation. Bombardier submitted that this indicates that in the case of a court order there is no need to find a source of power elsewhere in the FWA, so s 53(3)(c) is the source of such power. But it could equally be explicable as a recognition that unlike the Fair Work Commission, a court is not a creature of the FWA, and may well derive relevant powers from other sources. Bombardier submitted that the conferral of jurisdiction on federal courts in s 562 and s 567 gives reason to suppose that the legislature had in mind the possibility of curial supervision of changes in coverage of enterprise agreements. That is so, and is consistent with the evident contemplation of that possibility that is reflected in s 53(3)(c). But it does not follow that s 53(3)(c) confers the power to change coverage on the courts.
79. It appears to me that the more sensible reading of the sub-paragraph is that it reflects a recognition that other statutes or laws may confer a power to make orders that change the position of employers or employees who are subject to enterprise agreements, and that it can be expected that a court of law exercising those powers will do so with due regard to the objectives of fairness that are inherent in the enterprise bargaining regime (see FWA s 3(f)). Section 53(3)(c) thus provides a mechanism by which court orders concerning coverage can operate for the purposes of the central provisions of Chapter 2 Part 2-1 Division 2 Subdivision D of the FWA that give enterprise agreements their legal effect.
80. Providing for such a mechanism would be pointless if the regimes found elsewhere in the FWA for variation of enterprise agreements, and for transfers of businesses, detailed and prescriptive as they are, provide for the only ways in which the coverage of an enterprise agreement can be changed. Neither of those specific regimes contemplate that coverage can be changed by court order. To give s 53(3)(c) any effect, it must be taken to admit of the possibility that the power to alter coverage is found elsewhere or, conceivably, in s 53(3)(c) itself.
81. It was not necessary to reach a concluded view on which of those two possibilities is correct because, whichever the source of the power, in the circumstances the Court would exercise the power having regard to the same objectives of fairness, so as to minimise any risk that employees will suffer any prejudice as a result of the Scheme. That is how the Court has sought to exercise the power under s 413(1) of the Act in this case. The orders Bombardier ultimately proposed included an order that was designed specifically to engage s 53(3)(c) and s 53(4)(c) of the FWA, and I was satisfied that it was appropriate to make that order.
82. Bombardier also drew my attention to two categories of specific terms in the enterprise agreements. The first category of terms imposed consultation requirements. These were in essentially identical terms in each enterprise agreement. They are engaged if the employer 'has made a definite decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise that is likely to have a significant effect on the employees': e.g. cl 9(1)(a) of the Bombardier Transportation Australia Pty Ltd (Dandenong) Enterprise Agreement 2020. There is express provision in cl 9(9) of the above agreement (for example), that a major change is likely to have a significant effect on employees if it results in, relevantly, a 'major change to the composition, operation or size of the employer's workforce or to the skills required of employees'.
83. Bombardier advanced several arguments as to why it has not been in breach of these provisions, even assuming that it has not consulted employees about the Scheme. For example, the terms are engaged by a major change in relation to the employer's enterprise, and there is reason to believe that each enterprise covered by the enterprise agreements will continue unchanged. But I did not consider that it was necessary or appropriate to comment or rule on those arguments. I note the approach that Barker J took in Barrick (Australia Pacific Exploration) Pty Limited v Barrick (PD) Australia Pty Limited, in the matter of Barrick (Australia Pacific Exploration) Pty Limited (No 2) [2017] FCA 1076 at [94] in connection with possible breaches of financial reporting requirements in the Act by the proponent company there.
84. Consistently with that approach, for the following reasons I did not consider that a possible breach of the consultation requirements in the employee agreements presented an impediment to the s 413(1) orders:

(a) if there has been any breach of these provisions, it has already occurred and that will not be changed by the implementation of the Scheme;

(b) Bombardier and Alstom Transport each confirmed satisfaction of all conditions precedent to the Scheme and so may be taken to be willing to assume any risks to which they are each exposed by reason of any breach of the consultation provisions;

(c) the employees and unions were notified of the Scheme in advance of its implementation, and were given an opportunity to appear at the second hearing, and none decided to do so, so the likelihood that anybody wishes to complain about any alleged breach of the consultation requirements is low;

(d) for the reasons given above and also outlined in Bombardier (No 1) at [56], it does not appear that the interests of employees are likely to be adversely affected by the Scheme, further lowering the likelihood that anyone will complain; and

(e) the orders require further notice to employees and unions of the approval of the Scheme and the proposed deregistration of Bombardier, so that in the unlikely event that anyone does wish to complain specifically about the conduct of that company, they have advance notice of the need to do so before it is deregistered.

85. The other category of relevant provisions in the enterprise agreements are those that make provision for the transfer or transmission of the employer's business or undertaking. These vary between the different enterprise agreements. It is not necessary to set out their terms or address them in detail. I was satisfied that none of them present any impediment to the implementation of the Scheme. To the contrary, some of them will help with that implementation, or may help to achieve its stated objectives, for example by making express provision for the preservation of employees' accrued entitlements and continuity of service.

Material contracts

86. In Bombardier (No 1) at [57]‑[58] I described evidence that Bombardier had obtained all contractually required consents from counterparties to material contracts. There were also contracts with Transport for Victoria where, despite a difference of opinion as to whether consent was required, Bombardier had complied with a number of conditions that the counterparty sought to impose and intended to comply with the balance of those conditions as notified by the counterparty.
87. There was evidence that the majority of the conditions sought to be imposed have been complied with. The outstanding conditions appeared to pertain to legal opinions about the enforceability of certain bank guarantees in foreign jurisdictions. Bombardier and Alstom Transport were prepared to take the commercial risk of proceeding with the Scheme without those outstanding conditions having been fulfilled. There was evidence in Mr Wang's two affidavits of communications with legal advisers for the counterparty, from which it appeared that it too was aware that the conditions were not going to be fulfilled at the time of making the orders and before the implementation of the Scheme, but it did not object to that implementation. There was no need for the Court to second guess the commercial judgments these various parties have made and I considered that the outstanding conditions ought not stand in the way of approval of the Scheme.
88. Required consents under some of the material contracts were conditions precedent to the Implementation Agreement and Scheme: cl 3.1(f) of the Implementation Agreement. Both parties to the Scheme and to the Implementation Agreement, that is Bombardier and Alstom Transport, had signed a certificate that all conditions precedent had been complied with or waived and, once again, there was no need for the Court to second guess the commercial judgments inherent in that certificate.

Conclusion

89. For the above reasons, I was satisfied that it was appropriate to make orders approving the Scheme and orders under s 413(1) for its full implementation.

Associate:

Dated: 27 July 2022