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.