High Court rules in favour of Linc Energy

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Johnson Winter & Slattery has advised the liquidators of Linc Energy (Linc) in a successful High Court ruling handed down in September.

The case, which had been before the Courts since late 2016, concerned the liquidators’ obligations to cause Linc to comply with an Environmental Protection Order (EPO) issued by the Queensland Government in relation to environmental liabilities arising from Linc’s operation of its underground coal gasification test facility at Chinchilla, Queensland.

The liquidators argued that given they disclaimed the Chinchilla land and mining licenses in July 2016, the liabilities under the EPO were terminated under the relevant provisions of the Corporations Act, as they related to the disclaimed property. The Queensland Government argued that there was an inconsistency between the Federal laws concerning the effect of the disclaimer and the State environmental laws relating to the EPO liabilities. It said this inconsistency was to be resolved in favour of the State laws, due to another rarely utilised provision of the Corporations Act.

The High Court refused to grant the Queensland Government special leave to appeal the Court of Appeal’s decision in March 2018 in favour of the liquidators. Given the important implications of the issues in dispute, particularly regarding resolution of the apparent inconsistencies between State environmental laws and the Federal winding up provisions, the decision of the High Court to refuse a full hearing was surprising to many. The matter was being closely followed by the insolvency industry and State and Federal governments.

Although the High Court has brought an end to this matter in favour of the liquidators, the case has highlighted the need for insolvency practitioners to remain cautious when taking appointments to companies with potentially significant environmental liabilities.

Key JWS advisors were Insolvency Partner David Proudman and Dispute Resolution Partner Dougal Ross.

JWS previously advised the administrators of Linc on the administration process, and continue to advise the liquidators (Grant Sparks, Stephen Longley and Martin Ford of PwC) in relation to the winding up of Linc generally.

About Johnson Winter & Slattery

JWS is engaged by major Australian and international corporations and investment funds as legal counsel on their most challenging transactions and disputes throughout Australia and surrounding regions.

Our role: Our representation of major corporations in many landmark and transformational deals and complex disputes positions us as a leading independent Australian firm.

Our approach: With an appreciation of our client's commercial needs, we blend legal expertise with commercial and market awareness to deliver high quality legal services. This means working closely with clients and their in-house counsel to understand their commercial objectives, and ensuring our approach is tailored to deliver timely commercial outcomes.

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Kate Potter, Business Development Director
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