Linc Energy: appeal decision delivered

Articles Written by Dougal Ross (Partner)

JWS has achieved a significant win on behalf of Linc’s liquidators, PPB Advisory, in their proceedings against the Queensland State Government in relation to Linc’s environmental liabilities. The Queensland Court of Appeal has unanimously overturned the Supreme Court judgment of Jackson J, which was the subject of an appeal hearing in September 2017 at which Bret Walker SC appeared for the liquidators.  

The key issues 

The Court of Appeal found that the State environmental liabilities were “in respect of” the property disclaimed by liquidators, and therefore those liabilities were terminated by the effect of the disclaimer provisions in the Corporations Act.  On the issue of the apparent inconsistency between the State and Federal legislation, the Court found that section 5G(11) of the Corporations Act could not operate to dis-apply the Commonwealth winding up provisions in one State only (in this case Queensland) or to displace the termination effect of the disclaimer on some of a company’s liabilities, but not otherwise impact the effect of the disclaimer.

The implications 

The primary judgement had wide-ranging consequences for the insolvency industry, as it raised a number of uncertainties as to the extent of liability of insolvency appointees for State environmental liabilities and, importantly, effectively elevated a liquidator’s costs of causing a company to comply with these liabilities above the liquidator’s own remuneration, employee entitlements and other unsecured creditors. These issues were the subject of our previous article in relation to the primary judgment (see link below).

Given the significance of this matter to various stakeholders, we will wait to see if the Queensland State Government seeks special leave to take the issue to the High Court.

A more detailed analysis of the appeal outcome by JWS practitioners will be issued in due course.

Access the full decision in the March 2018 judgment here

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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