Thai-based Airlines Battle Covid Restrictions

August 15, 2021 Edward Dever

Flying under the radar is the recent creditor approval of the rehabilitation plan for Nok Air. The plan goes before the Central Bankruptcy Court on 26 August 2021 for approval.

The prospects for airlines such as Nok Air and Thai Airways seem grim at present given the surge in Covid-19 cases throughout Thailand.

In July, the Civil Aviation Authority banned all flights to and from provinces declared Covid-19 hotspots (dark red zones) forcing all airlines to halt domestic operations. Nok Air shifted its temporary base to U-tapao airport near Rayong in an effort to keep some flights operational and continue to service Phuket which has reopened to vaccinated foreign tourists under a Sandbox model, as well as limited other flights.

The Government was forced to make exceptions to the grounding of flights to support the viability of the Sandbox programs like Phuket and Koh Samui.

Reported Covid-19 cases in Thailand currently exceed 20,000 per day (out of an estimated population of 70 million). The actual case numbers are likely to be significantly higher. The Government's admission that cases are likely to double in the next month indicates a failure of current restrictions to contain the spread of the Delta variant. The Government's approach to dealing with the Delta variant has been 'too little too late' although the rollout of vaccinations continues.

After much success battling Covid-19 in 2020, several policy failures have helped the spread of Covid-19 throughout Thailand, including the failure to cancel the Songkran New Year holidays in April and shifting Covid-19 positive cases back to their home provinces to alleviate the strain on Bangkok's medical resources.

The failure to enforce a proper lockdown is linked to business pressures and an inability to offer anything more than meagre Government financial support to individuals affected by a lockdown. Lockdowns also make social distancing more difficult for multi-generational households.

With a significant portion of the country's annual GDP linked to foreign tourism, the battle ahead for Thai-based airlines and other tourism related business is a mammoth one. The Government's plans to completely open up the country to vaccinated foreign tourists by mid-October (the 120 day plan) seem in tatters with the airlines remaining on life support.

Nok Airlines PCL - Creditors’ Meeting Resolution

CAAT allows special Sandbox charter flights to Bangkok

Country to reopen 'in 120 days'

August 2021

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Pets in Apartments - NSW Update

July 27, 2021 Edward Dever

Some interesting comments in the post-Cooper March 2021 decision in McGregor v The Owners – Strata Plan No 74896 [2021] NSWCATCD 1.

This NCAT matter involved the refusal by an owners corporation for a dog to be kept in an apartment block which was part of a larger complex, each block with separate by-laws and all subject to a community management statement.

The applicant dog owners were self represented. And that was probably their downfall.

The by-laws expressly prohibited dogs but not other pets such as cats, with an exception in the townhouse by-laws for small dogs which were permitted in the townhouse section of the complex.

The applicants placed significant reliance on the decision of the NSW Court of Appeal in Cooper. In that case, the effect of the Court’s decision was that a “blanket ban” on the keeping of pets was “harsh, unconscionable or oppressive”.

The applicants' prime application was misconceived as it sought relief under Section 157 of the Strata Schemes Management Act which allows the Tribunal to approve a pet where the by-laws permit a pet with owners corporation approval and that approval has been unreasonably withheld. Neither of these conditions was met.

The applicants also chose the wrong by-law to request the Tribunal to declare as invalid. The applicants should also have included the Community Association as a respondent.

In the circumstances, it was not necessary for the Tribunal to consider the effect of Cooper on the relevant by-law but the Tribunal did note that the by-law did not, in any event, constitute a “blanket ban” of the type considered in that decision.

It will be interesting to see whether other owners corporations seek to distinguish Cooper on the basis that their by-laws, while prohibiting dogs, do not prohibit other animals.

July 2021

The Telltale Signs of Economic Malaise

July 15, 2021 Edward Dever

In 1998, I was looking out from a 19th floor window of Telecom Tower on Ratchadaphisek Rd in Bangkok towards the plots of land below. It was during a break in one of the interminably long creditor meetings for TelecomAsia, part of the CP Group.

Among the buildings was a plot of land covered in pink taxis, handed back to the taxi company by drivers unable to make a living in the post-1997 Asian Economic Crisis world.

The floating of the baht by the Thai government on July 2, 1997 precipitated a wider Asian economic crisis engulfing, among others, the economies of South Korea, Indonesia and the Philippines. The seeds of Thailand's crisis had, however, been sewn a number of years earlier.

1998 was before widespread mobile phone use in Thailand (and phones with cameras) so I didn't take a photo of the flamboyance of pink taxis below. People didn't take cameras to restructuring meetings.

One interesting aspect of the TelecomAsia group restructuring involved debt associated with the roll out of the Personal Cordless Telephone (PCT) network in Bangkok. This was an ultimately unsuccessful forerunner of today's mobile networks which was popular at that time in Tokyo. It allowed you to use your home phone number as a mobile number with enough handsets for the whole family. Wander the streets of Bangkok and you can still see relics of the network - decommissioned cell sites attached to telegraph poles with the telltale "PCT' logo.

Fast forward to 2021 and another economic crisis - this one brought on by Covid-19.

Taxis are once again being parked en masse as drivers struggle to find fares in a city without tourists and with many workers working from home or unemployed.

As Thailand trials reopening the country with its Phuket Sandbox model for vaccinated travellers as well as ramping up vaccination efforts, it is hoped that these taxis will soon be circulating throughout Bangkok once more. However, with reported daily Covid-19 case numbers over 9,000 for Thailand, the reality is that they may be parked for some time.

Business baffled by gaffes

July 2021

Queensland Tenancy Reforms Draw Near

July 8, 2021 Edward Dever

On 18 June 2021, the Qld Government introduced the Housing Legislation Amendment Bill 2021.

The Bill sets forth the long awaited reforms of tenancy legislation which were the subject of a lengthy public consultation process.

Part of the draft reforms relate to tenants' rights regarding pets.

It was expected that Qld would follow the southern States approaches.

The Bill falls short of Victoria's keeping pets as of right approach . (The Qld Greens Private Member's Bill is closer to the Victorian model.) Further, Qld strata schemes would be entitled to use their by-laws to restrict pets which seems contrary to the position in NSW following the Cooper case.

It is not clear at this stage whether a blanket 'no pets are allowed' strata by-law will be acceptable to the Qld Government given that a landlord will be unable to use 'no pets are allowed' as grounds for refusing pets. But it seems unlikely.

Proposed Section 184E(1)(f) is quite broad. However, the days of complete strata pet bans seem over and not destined to make a return.

The Qld Government may take the view that QCAT (or an appeal court) will confirm that the use of blanket no pet by-laws in Qld strata schemes is "oppressive or unreasonable" and therefore adopt a similar approach to the NSW Court of Appeal in Cooper. In the past, strata by-laws that have prohibited pets have been ruled as oppressive and unreasonable by QCAT and, prior to that, by the CCT.

This may be the reason the Qld Government has not moved to amend the Body Corporate and Community Management Act 1997 to exclude no pet by-laws and align this Act with the prohibition on complete pet bans in Section 184D(5) of the Bill.

The Bill has been referred to the Queensland Parliament Community Support and Services Committee with a report due by 6 August 2021.

The closing date for written submissions to the Committee is 12.00pm, Tuesday 13 July 2021.

Participate in the Committee process

Housing Legislation Amendment Bill 2021

Housing Legislation Amendment Bill 2021 - Explanatory Notes

Greens Private Member's Bill - Residential Tenancies and Rooming Accommodation (Tenants’ Rights) and Other Legislation Amendment Bill 2021

Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250

July 2021

Cambodia - Supercars And Lions Become Consumer Accessories

June 30, 2021 Edward Dever

The sight of supercars and pet lions shows how much things have changed in Cambodia in the past 25 or so years.

I remember my first flight into Phnom Penh's Pochentong International Airport in 1995. As we landed, I looked out across the scorched bare fields and thought Pol Pot had really done a number on the country.* Of course, it was the middle of the hot season. When I flew in later in the year, there was a rich tapestry of rice fields as we came into land. Those fields consumed a Vietnam Airlines flight (VN815) in September 1997 when it crashed short of the runway in poor weather.

When I checked in at the Cambodiana Hotel (the only acceptable hotel choice at the time), The Killing Fields was the in room movie of the day. Meetings were often held in the hotel. Several Government officials lived in the hotel in those days. You generally just ate in the hotel. By the third day, you had eaten everything on the menu. The two restaurants and room service shared the same limited menu items.

Occasionally, meetings would be held in fairly run down mansions such as the former French Ambassador's residence which apparently had then become Pol Pot's HQ and then the UN HQ before assuming the function of the offices of the Council for the Development of Cambodia (CDC). If you didn't keep the hotel car at a meeting, you would need to flag down a motorcycle to take you back to the hotel. From memory, it was USD 1.00 for the return trip.

On one of my trips, the first set of new traffic lights in Phnom Penh was installed. The first escalator in a shopping centre was some years away (2002).

Legal agreements needed to be comprehensive as the laws in many areas were deficient or non-existent. You could register a company at the Ministry of Commerce but there was no company law.

The practice of first-in-time in registering trademark applications was a fluid concept if you were a business person with sufficient influence within the government. The government would also roll out tanks to protect said business person's hotel during the 1997 coup. And he wasn't sanctioned when he shot out the front tyre of a Royal Air Cambodge Boeing 737 after disembarking. (That was an interesting discussion with the Chairman of RAC.)

Intellectual property enforcement was in its infancy. Sheraton had some success, getting a hotel using its name to change to "Sharaton" but the "McSam Restaurant" logo bore a striking resemblance to McDonald's.

The wealth disparity in Cambodia was evident back then but has only grown over the intervening years. The seeds of that growth were planted during and immediately after the UN period. The difference in 2021 is that wealth and conspicuous consumption are on constant display, particularly among the elite's offspring. One need look no further than the Supercars of Phnom Penh Instagram page.

Pet lion seized from home in Cambodia capital after appearance on TikTok

* It is estimated that the Pol Pot regime killed around 25% of Cambodia’s population between 1975 and 1979.

June 2021

Thai Airways Cleared For Takeoff But Needs Funding

June 22, 2021 Edward Dever

On 15 June 2021, Thailand's Central Bankruptcy Court approved THAI's rehabilitation plan. The plan administrators will now implement it.

THAI remains financially crippled by years of mismanagement and Covid-19's coup de grace. It is now seeking around Bt 50 billion (USD 1.6 billion) over the next three years from government and private financial institutions in order to stay afloat. Current cash reserves are not expected to last past 2021.

The acting CEO hopes THAI will complete plan implementation within five years. However, if THAI remains balance sheet insolvent in three years, it faces delisting by the SET. This issue may be resolved by the proposed capital increase under the Plan. There are also plans for debt to equity conversions but these relate mainly to accrued interest amounts and will not take place until year 4 of the Plan.

THAI's plan approval comes at a time when Thailand has been hit with a third Covid-19 wave with reported cases exceeding 3,000 per day. Bangkok remains in de facto lockdown. The Thai Prime Minister has declared that the country will open to foreign tourists within the next 120 days. Phuket will be the first province opened under the "Phuket Sandbox" model on 1 July.

THAI ticket holders owed refunds may be waiting some time. While ticket holders will be paid 100% of ticket value, the deadline for repayment is 31 March 2024. THAI may also offer travel vouchers in lieu of cash.

THAI rehabilitation plan summary

June 2021

The Threat of Criminal Proceedings as a Gag

June 10, 2021 Edward Dever

All too often, Thailand's criminal defamation provision and the Computer Crime Act are used as a weapon by anyone accused of misconduct to gag media reporting.

The latest instance involves claims that certain parties were involved in attempts to bring about a favourable court ruling in relation to excise duty payable on the import of Toyota Prius parts into Thailand. The duty amount involved is USD 350 million.

The issue came to light following an internal investigation by Toyota and its disclosure to the US SEC that its Thailand operations may have violated the Foreign Corrupt Practices Act. A grand jury has been empanelled in Texas to examine the issue.

In response, all named parties have threatened criminal defamation proceedings and action under the Computer Crime Act against parties involved in the initial reporting. Some parties have also made the same threat against Toyota and anyone who shares the reporting on social media. The result of these threats is two-fold - it gags media not wanting to be dragged into criminal proceedings but also amplifies interest in the issue.

The Court of Justice has indicated that it will investigate the issue. This seems odd given that there is a National Anti-Corruption Commission in Thailand and the issues raised would seem to fall within their authority. The NACC is apparently investigating allegations that Rolls Royce paid bribes to Thai Airways.

Bribery is endemic in certain South East Asia countries. At times, it is quite sophisticated, involving offshore payments dressed up as consulting arrangements or interposed entities in joint ventures allowing share participation.

It often involves the purchase of equipment at inflated prices. One of the odd outcomes of this type of arrangement is bribes being depreciated as a component of a balance sheet asset due to the relevant asset's higher initial carrying value.

The grand jury investigation in the US may shine an uncomfortable light on certain dealings in Thailand..

June 2021

Creditors Approve THAI's Rehabilitation Plan

May 30, 2021 Edward Dever

On 19 May 2021, Thai Airways creditors approved the rehabilitation plan at an adjourned online creditors meeting.

According to THAI's SET Notice, creditors holding over 91% of debt attending the meeting and voting approved the plan, including three amendments proposed by the planner, Bangkok Bank and the Federation of Savings and Credit Cooperatives of Thailand Limited

On 28 May, the Central Bankruptcy Court set a hearing date on 15 June to consider the plan and two objections raised by creditors.

The plan, as approved by creditors, appears to be more of a standstill arrangement with creditors deferring repayment in the hope that THAI's business can be revived and no hard decisions implemented to repair the balance sheet.

THAI faces the prospect of delisting from the SET if it is unable to fix its balance sheet insolvency within three years.

It is also unclear how THAI will fund the cash required to effectively restart the business.

Thai Airways says court hearing on business restructuring moved to mid-June

May 2021

Government Squabbles Ahead of THAI Creditor Vote

May 10, 2021 Edward Dever

Concerns that Thai Airways is just a toy for members of the Thai Government to argue over are reinforced by claims that the Finance Ministry will not participate in any recapitalisation under its rehabilitation plan.

The current argument centres around whether THAI should once again become a state enterprise with the Ministry of Finance increasing its shareholding above 50%.

The reduction below 50% prior to THAI entering rehabilitation proceedings was largely an exercise in shuffling the excess shareholding to satellite Government-linked funds.

The Finance Minister appears to be in support of his Ministry regaining majority control of THAI. The head of the State Enterprise Policy Office (SEPO) is taking the contrary view, arguing that THAI is effectively a money pit and pouring more funds into it cannot be justified to taxpayers.

THAI's plan was scheduled to be voted on by creditors at a meeting on 12 May. Creditors seemed likely to support it given the prospects for THAI if the plan is rejected. However, the vote has now been delayed until 19 May.

Govt 'won't back' billion-baht THAI cash injection

May 2021

VCAT's Treatment of Pets - A Warning for Queensland Landlords

April 5, 2021 Edward Dever

Once Covid-19 starts to disappear from the Qld government's radar, expect the government to return its attention to tenancy reform.

Part of the proposed reforms would allow tenants to keep pets as of right in residential tenancies, with landlords being able to challenge the issue at QCAT.

Media reports indicate that, of 18 VCAT application involving pets which have proceeded to final determination, only one landlord has been successful.

Since the Victorian tenancy reforms, apparently 340 applications relating to pets have been submitted with 139 matters withdrawn or settled.

It seems inevitable that some type of reform will occur. Adopting Victoria's broad reforms may overwhelm QCAT in the short term until landlords realise the likely futility of contesting the issue.

Hopefully, there is guidance on what constitutes reasonable grounds for refusing consent for a pet. There are residential properties which are clearly not suitable for certain pets.

As an example, keeping large dogs locked up in small apartments with no outdoor fenced areas while owners are at work is not appropriate for the pet and the likely noise will lead to higher tenant churn rates in nearby apartments.

At the time of submissions on the proposed Qld reforms, the estimated timeframe for QCAT hearing an animal related order (a non-urgent tenancy related matter) following the conciliation process was twenty weeks from lodgement to hearing. Without some form of streamlined process, it is unlikely that a matter would be resolved until most of a six-month tenancy has expired.

Also, without modification, adoption of the Victorian model would put landlords in breach of certain local government requirements regarding the maximum permitted number of dogs on premises. It is not clear whether landlords would be required to make excess pet applications and whether such an application would need to be completed on a continual basis as tenants move in and out with animals such as dogs. Perhaps this will constitute reasonable grounds for refusing consent.

Few landlords succeed in pet challenges under Victorian rental laws

April 2021