Liability for remediating contaminated land in Victoria – liquidators’ rights are curbed
The amendments to the Environment Protection Act displace the entirety of Chapter 5 of the Corporations Act and, relevantly for liquidators, their right to disclaim onerous property via section 568. This is a significant curbing of liquidators’ rights of disclaimer under section 568 of the Corporations Act.
Under section 297 of the Environment Protection Act, the EPA may apply to Court to recover the costs of undertaking clean-up actions, issuing notices, or taking monitoring or enforcement action. It now also says that section 297 “applies despite anything to the contrary in Chapter 5 of the Corporations Act”.
This would likely only affect a disclaimer under section 568 if the EPA has had to clean up a disclaimed site. Although the EPA could seek to displace a disclaimer to recover the costs of issuing a notice or monitoring compliance, it cannot use the Displacement Provisions to make a liquidator remediate a site. As a result, the EPA is more likely to undertake the clean-up of a disclaimed site and then seek to claw back costs already incurred from the liquidator.
There are some limits to the EPA’s power to take this route. Under section 294 of the Environment Protection Act, the EPA can only use the clean-up powers if there is an immediate or serious risk of harm to human health or the environment, or they have been provided a financial assurance under section 227. Nonetheless, liquidators should still carefully consider taking on contaminated sites as the EPA can apply to claw back its costs from liquidators despite a valid disclaimer of property if the site begins to present a serious risk of harm.
This presents an extra concern for liquidators. Under section 545 of the Corporations Act, a liquidator is not liable to incur any expense in a winding up of a company unless there is sufficient available property (subject to a Court or ASIC having the ability to direct a liquidator to incur an expense on the application of a creditor or contributory). This might not protect a liquidator, given the new Displacement Provisions, and case law in Victoria holding that section 545 did not apply to liabilities incurred under the EPA’s cost recovery powers. That means liquidators should be mindful that costs the EPA seeks to claw back from them may not be statutorily limited to the available property of the liquidated company.