Disclaiming mining leases: Linc Energy and the Canadian GT v OW cases

Next Friday will mark an important day in the jurisprudence of QLD insolvency, mining tenement and environmental laws with the Linc Energy High Court (HC) case being heard by the QLD Government seeking special leave.

The case simply boils down to whether or not a liquidator can disclaim mining land, mineral development licences and environmental authorities, such that the QLD Government’s environmental protection order (EPO) has no effect.

It is almost inevitable that the HC will grant leave, due to the number of interveners and the high profile nature of the dispute.

But which way will the HC go on the overall case?

Well we can glean an idea from the Canadian Supreme Court (equivalent to our HC) case called Re Grant Thornton v Orphan Wells (CSS). The CSS case deals with very similar issues (but instead of our Government running the case, Orphan Wells is), and has already been heard in a full hearing back in February 2018, meaning it is at least 7 months ahead.

I have been fortunate enough to be able to watch the CSS case hearing in full and witness first hand the eloquence and non-combativeness of Senior Counsel in that court. They even crack jokes! No doubt, the HC will be keenly following the outcome of the CSS.

The below is my summary of the key points raised in the CSS:

  1. Orphan Wells: The case requires more than just statutory interpretation, because the Canadian Constitution is a “living tree” and was built on “cooperative federalism”. This means that before a Court finds an inconsistency between Commonwealth and State legislation (typically Cth wins out) the Court must start from an interpretation that does not read into an inconsistency and only in extreme circumstance should they move away from that.
  2. GT: Disagrees with point 1, and says that there is clear inconsistency here between Cth and State legislation.
  3. Orphan Wells: the State legislation does not create a risk of a Liquidators personal liability and the State is not trying to upset the priority positions of creditors. It is for GT to prove otherwise.
  4. GT: there is a big risk of personal liability being brought home to the Liquidator, in circumstances where the EPO is given after their appointment and where the Liquidation has no funds.

I am forever waiting the outcome of the CSS and will provide an update as soon as I hear something.

Stay tuned also for next Friday.





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