In April last year the liquidator of Australian Sawmilling Company Pty Ltd (Company) exercised its power under section 568(1) of the Corporations Act 2001 (CA) to disclaim unsaleable property that contained large stockpiles of industrial waste.
The Environment Protection Authority (EPA) and State of Victoria applied to the Supreme Court of Victoria to set aside the liquidator’s disclaimer pursuant to section 568(B)(2) of the CA. In the proceeding, the Court was required to consider the responsibility and role of liquidators in regard to contaminated land under the Environment Protection Act 1970 (EP Act). One of the key questions for the Court to decide was whether liquidators are occupiers of the subject land for the purpose of section 62(3) of the EP Act.
Are liquidators occupiers of the land for the purposes of section 62(3) of the EP Act?
Section 62 of the EP Act is concerned with the clean-up of contaminated sites by the EPA. It enables the EPA to recover costs from an occupier of contaminated land on which a clean-up is being conducted, and in certain circumstances enables clean-up costs to become a charge on an occupier’s personal property.
In this case, the EPA and State submitted that a liquidator should be considered an ‘occupier’ of land under section 4(1) of the EP Act.1
In order to arrive at a decision on this issue, the Court considered the duties and powers of liquidators, the construction of relevant provisions of the EP Act and the overall purpose of the EP Act. The Court found that the inclusion of liquidators within the meaning of the term ‘occupier’ under the EP Act is consistent with the Act’s object and purpose to protect the environment in Victoria.2
What are the implications of liquidators’ being considered occupiers under the EP Act?
The term ‘occupier’ underpins a number of important provisions in the EP Act. The Court acknowledged in its judgment that if liquidators are captured by the term occupier, they would have the same responsibilities as other land occupiers in Victoria.3 In particular, liquidators may be responsible for:
- Compliance with abatement and clean up notices under section 28B and 62A of the EP Act;
- The payment of reasonable clean-up costs incurred by the EPA under section 62(2) of the EP Act; and
- Furnishing of information to the EPA under section 54 of the EP Act.4
However, it is worth noting that section 545(1) of the CA will operate to:
- Protect liquidators from personal liability under the EP Act;5 and
- Limit the extent of a liquidator’s liability to the amount specified in their indemnity relating to environmental liability (if any).6
This decision reinforces the significant responsibilities that liquidators have under the EP Act, particularly in regard to the companies that they control.
Did this environmental responsibility impact on the Court’s decision to set aside the disclaimer?
The Court exercised its discretion under section 568B(2) of the CA to set aside the liquidators disclaimer. Importantly, the Court noted that it should be “wary of disclaimers where environmental liabilities are to be passed onto taxpayers or innocent persons.”7 With reference to previous cases, the Court reinforced its view that corporations should not use voluntary liquidation as a way of avoiding their environmental responsibilities.
HWL Ebsworth Lawyers has expertise in advising on matters regarding contaminated land and the responsibilities of liquidators. Please contact James Lofting of our Planning, Environment and Government team to discuss any aspect of the above.
This article was written by James Lofting, Partner and Laura Kenny, Law Graduate.
1 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .
2 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .
3 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .
4 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .
5 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .
6 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .
7 EPA & Anor v Australian Sawmilling Company Pty Ltd (in liq) & Ors  VSC 550, .