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Linc Energy survives appeal to High Court
Johnson Winter & Slattery has advised the liquidators of Linc Energy in a successful High Court ruling against the granting of special leave to the Queensland government.
Grace Ormsby
Firm: Johnson Winter & Slattery (liquidators of Linc Energy), Herbert Smith Freehills (Queensland Government)
Value: –
Area: Insolvency, Resources
Key players: Key advisers for JWS included partners David Proudman and Dougal Ross
Deal significance: The case, which had been before the courts since 2016, concerned a liquidator obligation to cause Linc to comply with an environmental protection order issued by the Queensland Government. The order was in relation to environmental liabilities arising from Linc’s operation of an underground coal gasification test facility in Chinchilla, Queensland.
Liquidators argued that given disclaiming of the Chinchilla land and mining licenses in July 2016, liabilities under the order were terminated by relevant provisions of the Corporations Act as they related to the disclaimed property.
The Queensland government argued an inconsistency between federal laws concerning the effect of the disclaimer and state laws relating to environmental protection order liabilities. It argued this inconsistency was to be resolved using state law provisions, due to other rarely used Corporations Act provisions.
The High Court refused the granting of special leave to the Queensland government to appeal the Court of Appeal’s March 2018 decision in favour of liquidators.
The closely followed matter has important implications for the issues in dispute, especially the resolution of apparent inconsistencies between Queensland’s state environmental laws and federal winding up provisions.
The case highlighted “the need for insolvency practitioners to remain cautious when taking appointments to companies with potentially significant environmental liabilities,” according to a JWS statement.
