Australia: Liquidator of a mining company issued with an environmental protection order

Last Updated: 14 June 2017
Article by Damien Butler


The recent decision of his Honour Justice Jackson of the Queensland Supreme Court in Longley & Ors as liquidators of Linc Energy Limited (In Liquidation) v Department of Environment and Heritage Protection [2017] QSC 53 raises significant issues of the interaction between the Corporations Act 2001 (Cth) and the Environmental Protection Act 1994 (Qld) (EPA), and contains some significant practical implications for liquidators, administrators and receivers.


Linc Energy operated a pilot underground coal gasification project at Chinchilla in Queensland. The company was the proprietor of a parcel of land, and held a Mineral Development Licence (MDL) and a Petroleum Facility Licence (PFL) relating to its operation on the land. In association with the MDL and the PFL, the company held environmental authorities (EAs).

On 15 April 2016, the applicant Liquidators were appointed as administrators to the company. On 13 May 2016, the Department of Environment and Heritage Protection (DEHP) issued an environmental protection order (EPO) to the company in administration as the recipient. On 23 May 2016, the company's creditors resolved that the company be wound up, and the former administrators were appointed as its liquidators.

On 30 June 2016, the Liquidators issued a notice disclaiming the land, site infrastructure, MDL, PFL, and the EAs under section 568(1) of the Corporations Act. Following the disclaimer, the DEHP went into possession of the land and facilities.


The DEHP contended that, notwithstanding the disclaimer, the company is obliged to comply with the EPO and the Liquidators are obliged to ensure that the company complies with the EPO where there are funds available in the winding up to do so.

In one of those typically convoluted applications arising from the Corporations Act, the Liquidators applied to the Court for directions that they would be justified in:

  • not causing the company to comply with the EPO, and
  • not causing the company to comply with any further EPOs issued by the DEHP

The central question in the dispute was whether the disclaimer had the effect of discharging the company from future compliance with any obligations under the EPO and, if not, whether the liquidators are bound to cause the company to comply.


There was no significant dispute that the Liquidators' right to disclaim onerous property could be exercised in the context of the land, MDL, PFL and various items of infrastructure situated on the land. There was significant dispute about whether the EAs are property that could be the subject of a disclaimer. Ultimately, his Honour found that he was not required to determine whether the EAs are in fact property because the EPO clearly related to the land and site infrastructure, and due to his findings regarding the basis for the EPO.

His Honour found that the EPO was issued to secure compliance with the general environmental duty under the EPA.

This left a clear inconsistency between the ability of a liquidator to disclaim onerous property under the Corporations Act on the one hand, and the effect of an EPO issued under the EPA on the other, where powers under both appear to have been validly exercised. What, then, is the effect of the disclaimer of the property the subject of the EPO?


After lengthy exposition of interest mainly to lovers of constitutional law, his Honour found that the relevant legislative provisions dealing with inconsistencies between commonwealth and Queensland laws did not operate to invalidate the relevant provisions of the EPA. It is worth noting that both parties advanced arguments that their particular interpretation of the relevant provisions served the public purpose of the legislation, but his Honour declined the opportunity to prefer one public purpose over another.

The outcome of his Honour's reasoning was that the company was not absolved of the obligation to comply with the terms of the EPO by reason of the Liquidators' notice of disclaimer. His Honour then moved to consider the terms of section 493 of the EPA which requires "executive officers" of a corporation to ensure that the corporation complies with the EPA.

His Honour was not minded to accept the Liquidators' submissions that the essential nature of a liquidation is that liquidators are not concerned with or take part in the corporation's management, and accordingly found that Liquidators are executive officers under the EPA. Executive officers commit an offence if they fail to ensure that a corporation complies with the EPA.


As this was an application for directions on specific factual grounds, the orders made by his Honour were limited to refusing the directions sought. He specifically did not decide whether EAs are disclaimer property, nor whether the conclusions that he reached would apply to EPOs issued under another ground.

However, some distinct principles can be drawn from the judgment:

  1. Where an EPO is issued to a company to secure compliance with the general environmental duty under section 319 of the EPA, liquidators will not be able to avoid the company's obligation to comply with the EPO by disclaiming the land or infrastructure to which the EPO relates. In this case, the EPO was issued prior to the disclaimer, but his Honour's reasoning implies that the relevant timing of the disclaimer and the issuance of the EPO are irrelevant.
  2. As liquidators are executive officers for the purposes of the EPA, the liquidators are obliged to ensure that the company complies with the EPO.
  3. The liquidators' costs of doing so are expenses of the liquidation ranking in priority to the claims of other creditors of the company under section 556 of the Corporations Act.


While this case was specifically about a company in liquidation, and whether a liquidator is an executive officer, his Honour's reasoning regarding the liability of a liquidator would appear to also apply to administrators, and to receivers of the whole of a company's assets.

By agreement between the parties in this case, any obligation of the liquidator to cause the company to comply with the EPO was limited to the assets of the company. This is a commendable approach by the DEHP, as the potential ramifications of a liquidator having unlimited personal liability under any EPO issued to the company prior to or after the liquidation would most likely lead to a refusal of insolvency practitioners to consent to accepting an appointment to any company with any exposure to environmental harm.

As it is, the priority afforded to the costs and expenses of complying with an EPO must give any insolvency practitioner pause in similar circumstances, as the result of being issued with an EPO could be that those costs would rank in priority to their remuneration, including remuneration incurred in undertaking the work required by compliance with the EPO.

Due to the parties' agreement, the extent of liquidators' personal liability is untested. Nothing in the reasoning of and conclusions reached in this decision imply that a court would limit that liability to the assets of the company.

There are general principles that liquidators are not required to undertake any actions in a liquidation where there are insufficient funds, but whether those principles could apply where a failure to cause the company to comply is an offence is a fascinating, if potentially terrifying, question for liquidators contemplating the liquidation of mining companies and others involved in potentially environmentally damaging industries.

Damien Butler
Restructuring and insolvency
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Damien Butler
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.