First Plaintiff v Defendants

ENVIRONMENT PROTECTION - Principles of environment protection - Whether liquidators are occupiers of contaminated land - Dumping and abandonment of waste - Clean up - Whether liquidators cease to be occupiers of land on clean up by the Environment Protection Authority - Recovery of clean up costs - Statutory debt - Charge on land - Environment Protection Act 1970 (Vic) ss 1A, 1D, 1F(2), 1G(1), 1K, 4(1) definitions of 'occupier' and 'premises', 4(3), 4(3A), 4(4), 62(1)-(3), 66B(1).

1 The Environment Protection Authority ('EPA') and the State of Victoria ('State') apply under s 568B(2) of the Corporations Act 2001 (Cth) ('Corporations Act') to set aside a disclaimer by Stephen Longley and Melissa Humann, the liquidators ('liquidators') of the Australian Sawmilling Company Pty Ltd (in liquidation) (ACN 075 382 580) ('TASCO'). The liquidators were appointed on 14 March 2019 by way of creditors' voluntary winding up under s 499 of the Corporations Act. On 30 April 2019, the liquidators disclaimed TASCO's interest as the registered proprietor of 14.49ha of land at 300-400 Broderick Road, Lara being the land comprised and described in Certificates of Title Volume 10365 Folio 535 and 536 ('subject land'). The subject land was once used as a sawmill.

2 TASCO has an issued capital of $2,650,000, comprising of 2,650,000 fully paid ordinary shares. Between 1 June 2012 and 27 December 2018, Dongwha Australia Pty Ltd (ACN 104 629 058) ('Dongwha Australia') was the only shareholder of TASCO. Since 27 December 2018, Dongwha Australia Holdings Pty Ltd (ACN 102 337 922) ('Dongwha Holdings') has been the only shareholder of TASCO. According to a letter dated 11 February 2019 from the liquidators to a TASCO director, the transfer of shares to Dongwha Holdings was undertaken for the purpose of putting TASCO into liquidation.

3 Chae Kwang Byeong and Hyun Seog Kim have been directors of:

(a) TASCO, from 25 February 2015 and 1 November 2017 respectively;

(b) Dongwha Holdings, from 25 February 2015 and 1 February 2017 respectively; and

(c) Dongwha Australia, from 25 February 2015 and 1 November 2017 respectively.

4 Iljun Son has also been a director of Dongwha Australia since 28 May 2018.

5 Dongwha Enterprise Co Ltd ('Dongwha Korea') is a company located in South Korea and is publicly listed on the Korean Securities Dealers Automated Quotations. At all relevant times, it has been the owner of all of the issued capital in Dongwha Australia.

6 Dongwha Australia has an issued capital of $97,566,843, and total equity of $22,831,894 including property, plant and equipment of $69,221,746 as at 31 December 2019, according to its financial statements filed with the Australian Securities and Investments Commission ('ASIC') on 29 April 2020. Dongwha International Co Ltd, a Hong Kong company, is the ultimate holding company of Dongwha Holdings, which has an issued capital of $3,009,000. All Dongwha companies are part of the Dongwha Korea group of companies ('Dongwha Group').

7 The parties filed an agreed statement of facts. The agreed facts included:

(a) Dongwha Holdings, which is owed $543,600;

(b) Dongwha Australia, which is owed $1,518,869,82;

(c) the State Revenue Office of Victoria, which is owed an amount yet to be determined for land tax; and

(d) the Australian Taxation Office, which is owed an amount yet to be determined in respect of PAYG.

1. The [subject land] contains, and has since 2016 contained, large stockpiles of industrial waste.
2. On the assumption that the work required to clean up the large stockpiles of industrial waste on the [subject land] had been completed by on or before 30 April 2019, the market value of the [subject land] as at that date was $11,155,000 (excluding GST).
3. The [subject land] was unsaleable as at 30 April 2019 and is presently unsaleable.

1. Prior to their appointment, Dongwha Australia granted to the [liquidators] a deed of indemnity dated 19 February 2019.
2. Dongwha Australia has paid the [liquidators'] legal costs to date in respect of this proceeding.
3. It is not known whether Dongwha Australia will be willing or able to satisfy an indemnity with a value of or exceeding the Estimated Clean Up cost.
4. By letter dated 29 April 2019, the EPA told the [liquidators] that it had decided to exercise its power to:

(a) enter the [subject land] under s 55(1) of the Environment Protection Act 1970 (Vic) ('EP Act'); and

(b) conduct a clean up of the [subject land] under s 62 of the EP Act.

1. The EPA has already incurred some costs in cleaning up the waste stockpiles on the land and those costs are set out in [the affidavits].
2. On 30 April 2019, the [liquidators] made arrangements with the EPA in respect of the [subject land], at the EPA's request, which included providing for the EPA's security contractors to access and secure the [subject land].

8 In January 2013, TASCO leased the subject land to Central Demolition Recycling and Plant Hire Pty Ltd (ACN 160 742 834) ('Central Demolition') at an initial rental of $110,000 per annum plus GST. In about May 2013, the City of Greater Geelong ('Council') issued a temporary planning permit for a materials recycling business. In 2015, the Council refused an application to extend the temporary permit.

9 In about June 2014, Central Demolition ceased to occupy the subject land. C & D Recycling Pty Ltd (ACN 165 693 603) ('CDR') then occupied the subject land and operated the materials recycling business.

10 In March 2015, TASCO issued a notice to vacate to CDR. In May 2015, TASCO made an enforcement application against CDR for breaches of permit conditions. The application was resolved at a compulsory conference at the Victorian Civil and Administrative Tribunal ('Tribunal') on the basis of a site rehabilitation plan to be achieved by 1 June 2017. In August 2015, TASCO granted CDR a licence to occupy the subject land until 31 May 2017.

11 In May 2016, the EPA issued a pollution abatement notice and a clean up notice to CDR. The pollution abatement notice was revoked by the EPA in July 2016.

12 In July 2016, the Tribunal heard an application for review of the Council's failure to grant a permit for materials recycling on the subject land. On 4 August 2016, the Tribunal directed the Council to issue a permit for the use and development of part of the subject land for materials recycling subject to conditions. The permit included conditions required by the Country Fire Authority ('CFA') and EPA relating to fire risks, and risks to the environment or human health.

13 On 7 November 2017, an amended pollution abatement notice was issued by the EPA to CDR.

14 The subject land was leased until 2018. There were numerous non-compliances with permit conditions. By this time, the subject land contained large stockpiles of mixed construction and demolition waste including concrete, asbestos, hard and soft plastics, tyres, carpet, foam and metal. There was approximately 320,000 m3 of material in the stockpiles. Waste removal had virtually ceased. Stockpile heights were excessive and there was a serious fire risk. On 10 January 2018, there was a fire in one of the stockpiles.

15 On 31 May 2018, the Tribunal made an enforcement order against CDR and David McAuliffe, a director of CDR and TASCO, to undertake staged containment and management activities on the subject land. The enforcement order included requirements to develop and implement:

(a) an approved preliminary fire management plan by 31 August 2018;

(b) an approved development management plan by 30 September 2018; and

(c) an approved rehabilitation plan by 30 September 2018.

16 In about August 2018, CDR went into liquidation, and ceased to occupy the subject land. The liquidators of CDR disclaimed CDR's licence to occupy the subject land.

17 By a deed of indemnity between Dongwha Australia and the liquidators dated 19 February 2019 ('deed of indemnity'), Dongwha Australia indemnified the liquidators:

(a) in an unlimited amount against any shortfall in available assets as to environmental liabilities; and

(b) an amount limited to $500,000 as to expenses, remuneration, and claims other than environmental liabilities.

18 Relevant definitions in the deed of indemnity are:

Available Assets means property and assets of [TASCO] which are available to the Liquidators to pay Claims, Expenses and Remuneration.

...

Environmental Liability means any actions, proceedings, claims, suits, demands, payments, debts, costs, charges, expenses or losses incurred by the Liquidators... under any Environmental Law arising out of, or in connection with, the External Administration of [TASCO] or the proper performance by the Liquidators of their role as External Administrators of [TASCO].

19 Clauses 4.1 and 4.2 of the deed of indemnity provide:

Indemnity for Shortfall in Available Assets

Subject to the Liquidators' compliance with their obligations under this Deed and at law, if there is any shortfall in Available Assets to pay in full any amount or amounts that is, are or will become due in respect of Claims, Expenses or Remuneration (Shortfall), [Dongwha Australia] agrees to indemnify, and to keep indemnified, the Liquidators against any such Shortfall, to the full extent of any such Shortfall on the terms of this Deed.

Extent of Indemnity

The parties agree that [Dongwha Australia's] obligation under clause 4.1 to indemnify the Liquidators:

(a) is limited to the amount of $500,000 (inclusive of GST) for any Shortfall attributable to Expenses, Remuneration and all other Claims other than Environmental Liabilities; and

(b) is unlimited for any Shortfall attributable to Environmental Liabilities.

20 Clause 4.3(d) of the deed of indemnity excludes from indemnity:

...any Environmental Liability arising out of the failure of a Liquidator or any of the Liquidator's partners, agents or employee to use reasonable endeavours to minimise that liability or prevent it from being incurred in the performance or exercise of the Liquidators' powers, authorities, duties or discretions.

21 As to the liquidators' obligations in litigation, cl 6.2 provides:

The Liquidators agree that they will pursue all claims which they may make in respect of:

(a) any applicable insurance cover or other indemnity available to the Liquidators; and

(b) to the extent available, any other rights of recovery of the Liquidators that arise in connection with the External Administration of [TASCO].

22 Dongwha Australia has rights of subrogation to the rights and claims of the liquidators in relation to any claim discharged under the deed of indemnity. Clause 8 provides:

(a) [Dongwha Australia] will be subrogated to the rights and claims of the Liquidators in relation to any Claim discharged by [Dongwha Australia] under this Deed. Without limitation, the right of subrogation includes all rights of recovery of the Liquidators and continues whether or not payment has in fact been made and whether or not the Liquidators have been fully compensated for their actual loss.

(b) The Liquidators shall provide reasonable assistance and co-operation to [Dongwha Australia] to enable the indemnifier to recover any amount paid by it under the indemnity under this Deed, such assistance to be at the cost of [Dongwha Australia].

23 In mid-March 2019, the liquidators determined that TASCO had insufficient funds to meet additional security requirements and fire protection costs of the subject land. Funding would be exhausted in six to seven weeks.

24 On 29 April 2019, the EPA served notice of its intention to enter onto the subject land and conduct a clean up under ss 55(1) and 62 of the EP Act.

25 On 30 April 2019, the liquidators disclaimed TASCO's interest in the subject land under s 568A(1)(b) of the Corporations Act.

(a) the subject land was unsaleable or not readily saleable;

(b) the subject land gave rise to a liability to pay money or some other onerous obligation; and

(c) it was reasonable to expect that the costs, charges and expenses that would be incurred in realising the subject land would exceed the proceeds realised.

27 Except for the resolution of this proceeding, the liquidators have completed all tasks required of them to finalise the liquidation of TASCO. There will be no dividend to creditors. Were it not for this proceeding, the liquidators would take steps to conclude the liquidation by deregistration of TASCO under s 601AA of the Corporations Act.

(a) the affidavit and exhibits of Catherine Wilson, Chief Executive Officer, EPA deposed 14 May 2019;

(b) the affidavit and exhibits of Grant Sutherland, estate agent and valuer, deposed 4 May 2020; and

(c) the affidavit and exhibits of Sandra Stoklossa, Chief Financial Officer, EPA deposed 8 May 2020.

29 Mr Sutherland prepared an expert report as to the market value of the subject land assuming clean up was completed on or before 30 April 2019. On this basis, he found the market value of the subject land to be $11.155 million excluding GST.

30 Ms Stoklossa said that the EPA first entered the subject land on around 29 April 2019 to prepare for the commencement of clean up works. On around 6 January 2020, the EPA released to market a request for proposal to remove, dispose of and remediate the waste stockpiles on the subject land. It is likely that the clean up costs will be five times the value of the subject land or more.

31 The liquidators relied on the affidavit and exhibits of Mr Longley deposed on 15 August 2019.

32 There are no disputed issues of fact. Witnesses were not cross-examined.

33 Dongwha Australia and Dongwha Holdings were served with the originating process and supporting affidavit but did not appear or seek to be heard.

34 On 29 January 2020, the liquidators caused a notice of a constitutional matter to be given to the Attorneys-General of the Commonwealth of Australia, States and Territories. No Attorney-General intervened or sought to be heard at the trial.

35 Sections 5E(1)-(4) of the Corporations Act provide:

(1) The Corporations legislation is not intended to exclude or limit the concurrent operation of any law of a State...

(2) Without limiting subsection (1), the Corporations legislation is not intended to exclude or limit the concurrent operation of a law of a State...that:

(a) imposes additional obligations or liabilities (whether criminal or civil) on:

(i) a director or other officer of a company or other corporation; or

(ii) a company or other body; or

(3) Without limiting subsection (2), a reference in that subsection to a law of a State...imposing obligations or liabilities, or conferring powers, includes a reference to a law of a State...imposing obligations or liabilities, or conferring powers, by reference to the State...in which a company is taken to be registered.

(4) This section does not apply to the law of the State... if there is a direct inconsistency between the Corporations legislation and that law.

36 Sections 5G(1) to (3) of the Corporations Act provides:

(1) This section has effect despite anything else in the Corporations legislation.

(2) This section does not apply to a provision of a law of a State or Territory that is capable of concurrent operation with the Corporations legislation.

(3) This section applies to the interaction between:

(a) a provision of a law of a State...(the State provision); and

(b) a provision of the Corporations legislation (the Commonwealth provision);

only if the State provision meets the conditions set out in the following table:

(a) the State provision operated, immediately before this Act commenced, despite the provision of:

(i) the Corporations Law of the State or Territory (as in force at that time); or

(ii) the ASC or ASIC Law of the State or Territory (as in force at that time);

that corresponds to the Commonwealth provision; and

(b) the State provision is not declared to be one that this section does not apply to (either generally or specifically in relation to the Commonwealth provision) by:

37 Section 5G(11) provides:

A provision of the Corporations legislation does not operate in a State or Territory to the extent necessary to ensure that no inconsistency arises between:

(a) the provision of the Corporations legislation; and

(b) a provision of a law of the State...that would, but for this subsection, be inconsistent with the provision of the Corporations legislation.

38 Section 474(1) of the Corporations Act deals with the custody and control of a company's property by the liquidators:

If a company is being wound up in insolvency...

(a) in a case in which a liquidator...has been appointed - the liquidator...must take into his or her custody, or under his or her control, all the property which is, or which appears to be, property of the company;

...

39 Section 474(2) gives the Court jurisdiction to vest the company's property in the liquidator:

The Court may, on the application of the liquidator, by order direct that all or any part of the property of the company vests in the liquidator and thereupon the property to which the order relates vests accordingly and the liquidator may, after giving such indemnity (if any) as the Court directs, bring, or may defend, any action or other legal proceeding that relates to that property or that it is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property.

40 Section 545 of the Corporations Act limits the liability of liquidators to incur expenses in relation to the winding up of a company, and provides:

(1) Subject to this section, a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property.

(2) The Court or ASIC may, on the application of a creditor or a contributory, direct a liquidator to incur a particular expense on condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended and, if the Court or ASIC so directs, gives such security to secure the amount of the indemnity as the Court or ASIC thinks reasonable.

(3) Nothing in this section is taken to relieve a liquidator of any obligation to lodge a document (including a report) with ASIC under any provision of this Act by reason only that he or she would be required to incur expense in order to perform that obligation.

41 Part 5.6 div 7A of the Corporations Act empowers liquidators to disclaim property in certain circumstances. Section 568(1) provides:

(1) Subject to this section, a liquidator of a company may at any time, on the company's behalf, by signed writing disclaim property of the company that consists of:

...

(c) property that is unsaleable or is not readily saleable; or

(d) property that may give rise to a liability to pay money or some other onerous obligation; or

(e) property where it is reasonable to expect that the costs, charges and expenses that would be incurred in realising the property would exceed the proceeds of realising the property...

...

whether or not:

(g) except in the case of a contract - the liquidator has tried to sell the property, has taken possession of it or exercised an act of ownership in relation to it...

...

42 Section 568B provides:

(1) A person who has, or claims to have, an interest in disclaimed property may apply to the Court for an order setting aside the disclaimer before it takes effect, but may only do so within 14 days after:

(a) if the liquidator gives to the person notice of the disclaimer, because of paragraph 568A(1)(b), before the end of 14 days after the liquidator lodges such notice - the liquidator gives such notice to the person...

...

(2) On an application under subsection (1), the Court:

(a) may by order set aside the disclaimer; and

(b) if it does so - may make such further orders as it thinks appropriate.

(3) However, the Court may set aside a disclaimer under this section only if satisfied that the disclaimer would cause, to persons who have, or claim to have, interests in the property, prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company's creditors.

43 Section 568C deals with when a disclaimer takes effect and provides:

(a) in a case where only one application under section 568B for an order setting aside the disclaimer...is made within the period that that section prescribes for making the application - the application, or each of the applications, is unsuccessful; or

(b) no such application is so made.

(2) For the purposes of subsection (1), an application under section 568B is successful if, and only if, the result of the application, and all appeals (if any) arising out of the application, being finally determined or otherwise disposed of is an order setting aside the disclaimer (whether or not further orders are also made).

...

44 Section 568D is concerned with the effect of a disclaimer and provides:

(1) A disclaimer is taken to have terminated, as from the day on which it is taken because of subsection 568C(3) to take effect, the company's rights, interests, liabilities and property in or in respect of the disclaimer property, but does not affect any other person's rights or liabilities except so far as necessary in order to release the company and its property from liability.

(2) A person aggrieved by the operation of a disclaimer is taken to be a creditor of the company to the extent of any loss suffered by the person because of the disclaimer and may prove such a loss as a debt in the winding up.

45 Section 8 of the Corporations (Ancillary Provisions) Act 2001 (Vic) ('Ancillary Provisions Act') is the State counterpart to s 5G. This provides:

(1) Any provision of a relevant law of the State that -

(a) makes...provision in relation to a matter in a manner that is inconsistent with a provision or provisions of a national scheme law of this jurisdiction...

...

is declared by this subsection to have effect despite the provision or provisions of the national scheme law of this jurisdiction with which it is inconsistent and as if the relevant law...had itself provided expressly for this outcome.

...

(4) For the purposes of subsection (1), a provision of a relevant law of the State is inconsistent with a provision of a national scheme law of this jurisdiction if it would be inconsistent within the meaning of section 109 of the Constitution of the Commonwealth of Australia if the national scheme law were an Act of the Commonwealth.

...

(6) In this section -

matter includes act, omission, body, person or thing;

relevant law of the State means a law of the State enacted or made before the relevant time (whether or not it is in force before that time) other than a national scheme law of this jurisdiction or a previous State corporations law.

46 The purpose of the EP Act is 'to create a legislative framework for the protection of the environment in Victoria having regard to the principles of environment protection'.[1] Those principles are set out in ss 1B to 1L. The four most relevant principles are the 'Intergenerational Principle',[2] the 'Polluter Pays Principle',[3] the 'Shared Responsibility Principle'[4] and the 'Enforcement Principle'[5]. These principles are expressed in the following terms respectively:

The present generation should ensure that the health, diversity and productivity of the environment is maintained or enhanced for the benefit of future generations.

Persons who generate pollution and waste should bear the cost of containment, avoidance and abatement.

Protection of the environment is a responsibility shared by all levels of Government and industry, business, communities and the people of Victoria.

Enforcement of environmental requirements should be undertaken for the purpose of -

(a) better protecting the environment and its economic and social uses;

(b) ensuring that no commercial advantage is obtained by any person who fails to comply with environmental requirements;

(c) influencing the attitude and behaviour of persons whose actions may have adverse environmental impacts or who develop, invest in, purchase or use goods and services which may have adverse environmental impacts.[6]

47 Section 4(1) contains the definitions which apply 'unless inconsistent with the context or subject matter'. They include the terms 'occupier' and 'premises'. Both are defined in an inclusory manner:

occupier in relation to any premises includes a person who is in occupation or control of the premises whether or not that person is the owner of the premises and in relation to premises different parts of which are occupied by different persons means the respective persons in occupation or control of each part

premises includes messuages, buildings, lands, and hereditaments of every tenure and any machinery, plant, appliance, or vehicle used in connexion with any trade carried on at any premises and includes a ship

48 Section 4(3) modifies the definition of 'occupier' and provides:

For the purposes of this Act, the definition of 'occupier' -

(a) subject to paragraph (b), does not include a person being a financial institution and acting solely as a holder of a security interest in the premises, or as a mortgagee in possession, or which is, or appoints, a controller of the premises;

(b) does include a person being a financial institution when acting as a mortgagee in possession or which is, or appoints, a controller of the premises -

(i) for the purposes of the abatement of any environmental hazard in respect of the premises pursuant to a notice under section 31A, 31B or 62A; or

(ii) having possession and day to day active management and control of the premises (other than in respect of pollution that occurred prior to the financial institution becoming mortgagee in possession or becoming or appointing a controller).

49 Section 4(3A) defines 'controller' in these terms:

In subsection (3), controller means a receiver, or a receiver and manager, of the premises, or anyone else who is in possession or has control of the premises for the purpose of enforcing a security.

Where a word or phrase is given a particular meaning in this Act, other parts of speech and grammatical forms of that word or phrase have, unless the contrary intention appears, corresponding meanings.

51 Section 62 of the EP Act is concerned with the abatement of pollution, and authorises the EPA to conduct a clean up. Sections 62(1)-(3) provide:

(1) Notwithstanding anything to the contrary in this Act, where -

(a) pollutants have been...discharged;

(b) a condition of pollution is likely to arise; [or]

...

(d) any industrial waste...appears to have been abandoned or dumped...

...

the [EPA] may conduct a clean-up or cause a clean up to be conducted as the [EPA] considers necessary.

(2) The [EPA] may recover any reasonable costs incurred by the [EPA] in taking any action under subsection (1) from...the occupier of the premises on which anything referred to in subsection (1)(a) to (e) has occurred in any court of competent jurisdiction as a debt due to the [EPA] and when recovered is to be paid into the Consolidated Fund.

(2A) Reasonable costs includes labour, administrative and overhead costs determined on such basis as the [EPA] considers appropriate incurred as a result of or apportionable to any action taken by the [EPA] under subsection (1).

(3) If the [EPA] cannot recover costs under subsection (2) from the occupier of the premises on which anything referred to in subsection (1)(a) to (e) has occurred the costs become a charge on the property of the occupier or the land of which the premises forms part...

52 Section 66B of the EP Act is concerned with offences by corporations and partnerships. Section 66B(1) provides:

If a corporation contravenes, whether by act or omission, any provision of this Act or a notice...under this Act, each person who is a director or is concerned in the management of the corporation is also guilty of the offence which relates to the contravention and liable to the penalty for that offence.

53 The six main issues for decision by the Court are:

(a) Are the liquidators occupiers of the subject land for the purpose of s 62(3) of the EP Act?

(b) Did the liquidators cease to be occupiers of the subject land because the EPA entered the subject land and is conducting a clean up under s 62(1) of the EP Act?

(c) Does s 545(1) of the Corporations Act bar the EPA's claim for clean up costs if TASCO has insufficient available property to meet these costs?

(d) Are the EPA and the State persons who have, or claim to have an interest in the subject land within the meaning of ss 568B(1) and (3) of the Corporations Act?

(e) Would the liquidators' disclaimer cause prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to TASCO's creditors under s 568B(3) of the Corporations Act?

(f) Should the Court exercise its discretion to set aside the disclaimer under s 568B(2) of the Corporations Act?

54 The principles of statutory construction are well established. In Project Blue Sky Inc v Australian Broadcasting Authority, the plurality said:

[T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.[7]

55 In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory), the High Court said:

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.[8]

56 The plurality of the High Court emphasised the importance of text, context and purpose in SZTAL v Minister for Immigration and Border Protection:

The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.[9]

57 In CIC Insurance Ltd v Bankstown Football Club Ltd, the majority of the High Court said:

[T]he modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous.[10]

58 These principles are consistent with s 35(a) of the Interpretation of Legislation Act 1984 (Vic), which requires that when interpreting an Act, a construction that would promote the purpose or object underlying the Act is to be preferred to a construction that would not promote that purpose or object.

Issue 1 - Are the liquidators occupiers of the subject land for the purposes of s 62(3) of the EP Act?

59 The parties regarded this issue as a central issue for determination.

60 The EPA and the State submitted in substance that:

(a) the defined term 'occupier' in s 4(1) of the EP Act includes a person who is in control of the premises, whether or not that person also occupies the premises;

(b) in ordinary usage, 'control' means the power of directing or commanding;

(c) the liquidators have the legal duty to take custody or control of all of TASCO's property;

(d) on liquidation, all of the property of TASCO remained vested in TASCO under the liquidators' control;

(e) the liquidators on appointment acquired the same rights of control as TASCO had over its assets; and

(f) the definition of 'occupier' in the EP Act should not be read down to exclude from its operation a significant category of persons who are likely to have control over property that is at risk of causing environmental harm if not properly managed.

(b) TASCO remains the person in occupation or control of the subject land. While the liquidators are agents of TASCO and act in its name, they are not persons in occupation or control of the subject land in their own name and right;

(c) the liquidators disclaimed the subject land on behalf of TASCO;

(d) the EP Act recognises the doctrine of separate legal personality and makes express provision for it where Parliament intended;

(e) Parliament did not intend for the liquidators' personal property to be susceptible to clean up costs incurred by the EPA;

(f) the company, its directors and liquidators (in the absence of a disclaimer) remain obliged to comply with their statutory obligations in the EP Act; and

(h) the term 'occupier' in the EP Act should be construed so as not to exceed the legislative power of the State of Victoria and in a manner that is consistent with s 545 of the Corporations Act.

62 A liquidator may be described as an agent for the company occupying a position which is fiduciary in some respects and is bound by the statutory duties imposed by the Corporations Act.[11]

63 In Linter, the plurality of the High Court approved a passage from a leading text as to the effect of a winding up order:

Whether the company is insolvent or solvent, the company holds its property beneficially but subject to the statutory scheme of liquidation under which the liquidator is to pay creditors and distribute any surplus among members. Unsecured creditors and contributories have the benefit of the liquidator's administration of the company's estate. Their special interest is to some extent like that of objects of a discretionary trust; they have a right to have a fund of assets protected and properly administered. That interest, although not an interest in specific assets, will be protected against third persons.[12]

64 Tamberlin J in Sydlow Pty Ltd (in liq) v TG Kotselas Pty Ltd described the nature of the office of liquidator in these terms:

The office of a person appointed liquidator to a corporation does not fit any precise legal category or classification which defines the rights and liabilities attaching to that office. It is a hybrid composite with elements of fiduciary, trustee, agent, officer of the corporation and (in some instances) "officer" of the Court. Attached to those elements are the obligations along with the powers and discretions which apply to those roles. The liquidator's office is described in Loose on Liquidators... as:

'...a cross between a trustee and an agent or, alternatively, like the directors, whose powers terminate upon the commencement of a winding up, as a fiduciary agent of the company. Thus a liquidator must not only act bona fide and reasonably and exercise his powers for their proper purposes only but must also exercise reasonable care and skill in the performance of his duties....

A liquidator is also under a fiduciary duty in respect of the assets of the company of which he is appointed...

The liquidator differs from the normal agent, however, in that he himself controls the actions of his principal, ie the company. Furthermore his duties as agent of the company are subject to his overriding statutory duties to apply the company's assets in paying creditors and to distribute any surplus amongst the members.'[13]

65 Section 474(1) of the Corporations Act requires a liquidator of a company being wound up in insolvency to take custody or control of all of the company's property. Section 474(1) does not directly apply here. However, the position is the same where a company is wound up voluntarily.

66 In Re Amerind Pty Ltd; Commonwealth of Australia v Byrnes, the Court of Appeal said:

The property for distribution to creditors of an insolvent individual vests in the trustee in bankruptcy (with specified exclusions). In the case of a corporation, ordinarily the property remains vested in the company, albeit under the liquidator's control. Exceptionally, the Court may order that the property vest in the liquidator.[14]

67 In Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq), Gordon J dissenting but not on this point said:

In a voluntary winding up, subject to the provisions of the Corporations Act as to preferential payments, the property of the company must be applied in satisfaction of its liabilities equally and, subject to that application, must, unless the company's constitution otherwise provides, be distributed among the members according to their rights and interests in the company. To achieve this, the liquidator must take into their custody, or under their control, all of the property which is, or appears to be, the company's property. But, in the absence of a vesting order made under a provision such as s 474(2) of the Corporations Act, the appointment of a liquidator to a company does not divest the company of its beneficial ownership in, or render the liquidator a trustee of, the company's assets[15]

68 In Linter, the plurality of the High Court held that although the appointment of a liquidator to a holding company did not affect the beneficial ownership of shares held in a subsidiary company,[16] it did result in a change of control over the shares held by the holding company in the subsidiary company for the purposes of s 80A(3) of the Income Tax Assessment Act 1936 (Cth) ('Income Tax Act').[17] The plurality of the Court described the winding up order as 'a drastic act in the law which disrupted any exercise [by the controlling family] of legal or equitable rights and powers'.[18]

69 McHugh J held that the 'continuity of control' test in s 80A(3) did not require a positive change in beneficial ownership before the entitlement to a deduction was lost.[19] McHugh J said:

If anybody had control of the voting power in [the subsidiary company], arguably it was the liquidator of [the holding company]... The concept of "control" of, or the "capacity to control", the voting power in [the subsidiary company] contemplates the existence at a particular point in time of enforceable and immediately exercisable rights enabling such control. That requires consideration of any matters or facts that then bear on the existence of those rights, such as the appointment of a liquidator under the [Corporations Act].[20]

Construction of the definition of 'occupier' in s 4(1) of the EP Act

70 The term 'occupier' in s 4(1) of the EP Act is a pivotal expression that underpins the operation of important provisions of the EP Act. It is defined in an inclusive, but not exhaustive way. It includes a person in occupation, whether or not the owner. It also includes a person in control of premises, whether or not that person is the owner or in physical occupation.

71 In Dilworth v Commonwealth of Stamps, Lord Watson said:

The word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretative clause declares that they shall include.[21]

72 The issue which arises for decision in this proceeding is whether the liquidators subsequent to their appointment were persons in control of the subject land. The relevant inquiry focuses upon the liquidators' relationship with the subject land and whether that relationship is properly characterised as 'control'.

73 In Federal Commissioner of Taxation v Australian & New Zealand Banking Group Limited, the High Court considered whether the contents of safety deposit boxes at a bank's premises were in the custody or under the control of the bank for the purposes of the production of documents under s 264(1)(b) of the Income Tax Act.[22] Stephen J at first instance observed that the words 'custody' and 'control' took their meaning from the context of s 264(1)(b).[23] His Honour accepted that the word 'custody' meant physical control, describing the words 'custody' and 'control' as used in a descending order of immediacy in relation to the ability to produce documents.[24]

74 On appeal, Gibbs ACJ observed that s 264 did not speak of 'possession', but used the wider and vaguer words 'custody' and 'control'. The two words were sometimes used as synonyms.[25] Gibbs ACJ referred to the text An Essay on Possession in the Common Law, where a distinction was drawn between 'physical control, detention or de facto possession', which was said to be 'an actual relation between a person and a thing...matter of fact', and 'legal possession', which is 'a definite legal relation of the person to the thing possessed'. [26] Physical control was generally called 'custody'.[27]

75 Gibbs ACJ held that 'control' for the purposes of s 264(1) was not limited to physical control, or to a person who had parted with possession but retained a right to legal possession. The question was whether the person whom had been given the notice to produce documents had such custody or control as to be able to produce the relevant documents.[28]

The content of "control" is somewhat different from that of "custody"; however, both are "wide enough to include many types of possession which are not commensurate with full ownership... It is difficult to ascribe a precise meaning to "control" in s. 264 as the content of the word is normally dictated by its context and can vary from sole absolute dominion over the object "controlled" to "something weaker than 'restraint', something equivalent to 'regulation'"... Although the use of the composite expression "in his custody or under his control" does not assist us in determining the precise limits of the meaning of "control", it does evidence a legislative intention to employ the words in their widest sense.

...

There is to my mind no reason to limit the scope of "custody and control" to "exclusive custody and control".[29]

77 In Comptroller General of Customs v Zappia, the High Court unanimously held that an employee of the holder of a warehouse licence could meet the description of 'a person who has, or has been entrusted with the possession, custody or control of dutiable goods which are subject to customs control' in s 35A of the Customs Act 1901 (Cth).[30]

The critical reference within the description to "the possession, custody or control" must be read in that context, recognising that none of the terms "possession", "custody" or "control" has a fixed legal meaning and that the power or authority of a person in relation to a thing connoted by any one or more of those terms in statutory collocation is a question of degree. The individual terms, used disjunctively, serve to indicate both that the requisite degree of power or authority is not closely confined and that the requisite degree of power or authority can arise from such a range of sources that, depending on the circumstances, one term might be more appropriate to use than another.

...

The reference to "the possession, custody or control" of dutiable goods is appropriately construed as a compendious reference to that degree of power or authority which is sufficient to enable a person to meet the obligations both to keep those goods safely and, on request by a Collector.... A person who "has" the possession, custody or control of dutiable goods within the meaning of the section is a person who possesses power or authority in relation to those goods to that degree, irrespective of the manner in which that person might choose to exercise that power or authority.[31]

79 In DPP (Vic) v Ferguson, Kaye J construed the expression 'effective control' found in ss 9 and 70(1) of the Confiscation Act 1997 (Vic) and held:

It is clear...that a defendant may have the effective control of property notwithstanding that that defendant has no legal, equitable or other interest in the property. Thus, s.9(2) enables a Court to be guided by the reality, rather than the legal structure, of the relationship of the defendant to the property in question. What is relevant is the de facto, rather than the de jure, relationship between the defendant and the property. In ordinary usage, "control" means the power of directing or commanding. Ordinarily, a person may be in effective control of real property if that person has the power to make and implement basic decisions which affect the ownership, possession, use and enjoyment of property. In terms of real property, effective control would therefore encompass the de facto power to make and implement decisions such as to sell, lease, use, exclude others from possession of, and make significant improvements to, the property...[32]

80 Kaye J followed the earlier decision of DPP (Vic) v Tat Sang Loo & Anor, where Ashley J described effective control as control which is practically effective, even though it is not supported by any proprietary interest or legally enforceable power, although it might also be control de jure.[33]

81 In Sale Elderly Citizens Village Inc v Environment Protection Authority Victoria, Quigley J reviewed the legislative history and construction of s 62A of the EP Act which deals with the service of clean up notices on occupiers and polluters. Her Honour observed that the scope of clean up responsibilities under the EP Act extends well beyond polluters and said:

There is nothing in the definition of 'occupier' which confines the term 'occupier' to someone who is also the polluter. Further, to confine the term 'occupier' to someone who is also the polluter would allow a non-polluter occupier to avoid any responsibility for the polluted land that it occupies. This would be contrary to the 'Shared Responsibility Principle' and the 'Intergenerational Equity Principle'.

...

In the absence of an identified polluter, if 'occupier' was confined to someone who was also the polluter, it would mean that polluted land may remain polluted indefinitely. In Premier Building & Consulting Pty Ltd v Spotless Group Limited (No. 12), Byrne J said in the context of s 62A(2) that:

'This is a case where Parliament has imposed statutory rights and obligations upon various persons where land is polluted. It could hardly be said that, for example, the occupier of land has a right to assert an exemption from these provisions so that the land remains indefinitely in a polluted state.'[34]

82 In Yarra City Council v Metropolitan Fire and Emergency Service Board, the Court of Appeal said:

s 62A is intended to make sure that the occupier, as the first recipient of the notice, cleans up and, secondly, that there is recovery from 'the person who is actually responsible'. Section 62A(2) envisages recovery of clean up costs from a person who has greater responsibility for the pollution or industrial waste which forms the subject of the clean up notice than the occupier, who first receives the notice.[35]

83 While s 62 of the EP Act is concerned with the clean up of contaminated sites by the EPA and the recovery of reasonable clean up costs from polluters and occupiers, similar principles apply.

84 Section 66B(1) makes directors and persons concerned in the management of a corporation that contravenes the EP Act, whether by act or omission, guilty of an offence. A liquidator may also be a person concerned in the management of a corporation. To establish a defence, the director or person concerned in the management of a corporation must prove in substance that:

(a) the person was not in a position to influence the conduct of the corporation in relation to the contravention;

(b) the person used due diligence to prevent the contravention; or

(c) the corporation was not guilty of the offence in the first place.[36]

85 Given the wide net of ancillary criminal liability cast by s 66B, it is plain that liquidators have significant environmental responsibilities under the EP Act in respect of the corporations for which they are appointed and exercise control.

86 However, it does not follow that because liquidators may have ancillary criminal liability under s 66B, they do not have civil liability under s 62(2). Each provision of the EP Act must be considered in its own right to see whether it applies and takes effect.

87 Liquidators have the important statutory power to disclaim unsaleable or onerous property in order to protect themselves and the unsecured creditors that they represent.[37] The position of liquidators is protected by the requirements of s 568B(3) of the Corporations Act. An application to set aside a disclaimer must be made within 14 days and the Court must be satisfied that the disclaimer would cause prejudice to persons who have, or claim to have, an interest in the property that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company's creditors.[38] Even then, exercise of the power under s 568B is in the discretion of the Court, which can impose conditions, require undertakings, or make further orders.[39]

88 The purpose of the EP Act is clear. It is to create a legislative framework for the protection of the environment in Victoria having regard to the principles of environment protection.[40] The Intergenerational Principle speaks of maintaining the health, diversity and productivity of the environment.[41] The Polluter Pays principle states that persons who generate pollution and waste should be responsible for the costs of its containment, avoidance and abatement.[42] The Shared Responsibility Principle describes protection of the environment as a responsibility shared by all levels of industry and business.[43] The Enforcement Principle has purposes that include 'better protecting the environment and its economic and social uses', and 'ensuring that no commercial advantage is obtained by any person who fails to comply with environmental requirements'.[44]

89 The day is long past when responsibility for environmental clean up of industrial waste or contamination was confined solely to persons who have dumped or abandoned industrial waste or other perpetrators of contamination. Under the scheme of the EP Act, criminal and other liability for clean up of premises or clean up costs extends to:

(a) persons who fall within the definition of 'occupier' within s 4(1);

(b) financial institutions and receivers in the circumstances described in s 4(3); and

(c) to corporations, directors, partnerships, unincorporated associations and their managers in the circumstances described in s 66B of the EP Act.[45]

90 As a foundational term, the definition of 'occupier' affects the application and operation of numerous provisions of the EP Act. The construction of the term 'occupier' to include liquidators as controllers of the premises of corporations in liquidation would potentially render them responsible for compliance with abatement and clean up notices,[46] the payment of reasonable clean up costs incurred by the EPA,[47] and the furnishing of information to the EPA[48] in accordance with the respective statutory provisions. They would be in the same position as other occupiers of land in Victoria.

91 The construction of the definition of 'occupier' to include liquidators of corporations is entirely consistent with the object and purpose of the EP Act and the protection of the environment. It would be contrary to the object and purpose of the EP Act if clean up obligations were read down with the result that companies occupying or controlling land on which large quantities of waste had been dumped and abandoned could be placed in liquidation without any effective sanction to clean up the land or pay reasonable clean up costs. Where constructional alternatives are available, the EP Act should be construed to uphold clean up obligations, and not let clean up costs pass by default to the State.

Liquidators' arguments that they did not have control over the subject land

92 The liquidators disputed that they were in control of the subject land, submitting that they controlled TASCO, and TASCO controlled the subject land. They submitted correctly that legal ownership of the subject land is vested in TASCO and not in the liquidators in the absence of an order under s 474(2) of the Corporations Act. Therefore, they say, their control of the subject land was exercised as agents for TASCO.

93 These submissions do not answer the case put by the EPA and the State. The statutory test of 'occupier' does not require that a person be the owner or be in possession of the premises. It is sufficient if the person is 'in control of the premises'. The liquidators are in physical and legal control of the subject land as an asset of TASCO. While they are agents of TASCO and act with the benefit of the powers set out in the Corporations Act, this does not alter the fact that they have control over the property of TASCO including the subject land.

94 A related argument developed by the liquidators was that TASCO was the occupier of the subject land and that they were not. Linter established that on liquidation a corporation's property remains vested in that corporation, and not in the liquidators, in the absence of a vesting order under s 474(2) of the Corporations Act.[49] Again, the answer to this argument is that it is the liquidators who have custody and control of the company's property. The fact that they have custody and control of the company's property is entirely consistent with the company's ownership of the property.

95 In their outline of submissions, the liquidators refer to McPherson's Law of Company Liquidation.[50] While the passage cited confirms that it is the company in liquidation that is the owner of the company's property and assets, it also refers to s 474(1) of the Corporations Act stating that a liquidator or provisional liquidator must take into his or her custody or control all of the property to which the company is or appears to be entitled.

96 The liquidators relied on Federal Commissioner of Taxation v Macquarie Health Corporation Ltd & Ors.[51] In this decision, Emmett J observed that after the appointment of a liquidator, there is no change in the beneficial ownership of the company's property, and that the company continues as a legal entity capable of owning property. However, Emmett J also observed that a person who holds property of the company is obliged to deliver it to the liquidator unless that person is a secured creditor. Further, control of all of the company's property is taken from the directors and vested in the liquidator.[52] Re Middle Harbour Investments Ltd (in liq) was cited by the liquidators, but takes their argument no further.[53]

97 In Warrender Estates Ltd v Simpson, a liquidator carried on the business of a company in liquidation in leased premises.[54] He was held by the New South Wales Court of Appeal not to be personally liable to pay for the use and occupation of the leased premises on the ground that the occupation of the premises was not the occupation of the liquidator but of the company.[55] The case is concerned with occupation of premises, and not with 'control' in the current context.

98 The liquidators also cited MacIntosh v Lobel, in which the New South Wales Court of Appeal decided that the principal of a one-director company was not in possession of premises leased by the company so as to support an action for trespass.[56] The issue before the Court was the possession necessary to support an action in trespass, which is an entirely different issue to the question before me.

99 In 1994, Parliament added ss 4(3) and (3A) to the EP Act. The effect of the amendment was to exclude from the definition of 'occupier' in s 4(1) financial institutions acting solely as holders of security interests in premises or as mortgagees in possession, or receivers and managers or persons in control of the premises for the purpose of enforcing a security unless the controller was appointed for the purpose of abatement of environmental hazards, or was in possession and had day to day active management and control of the premises.

100 While Parliament specifically limited the liability of financial institutions when they act as mortgagees in possession, controllers or managing controllers,[57] it did not legislate to remove or limit the liability of liquidators.

101 The position of liquidators fundamentally differs from that of receivers and managers, and was not affected by the introduction of ss 4(3) and (3A) into the EP Act. Unlike receivers and managers, liquidators can disclaim unsaleable or onerous property. If they do so, their obligations concerning the property end. In Longley v Chief Executive, Department of Environment and Heritage Protection, the Queensland Court of Appeal held that the effect of a disclaimer of property was to terminate the company's rights and obligations, including its obligations under an environment protection order.[58]

102 In a letter dated 3 April 2019 to the EPA's solicitors, the liquidators stated:

As Liquidators, we have assumed full control of [TASCO's] affairs, and the powers of the directors have been suspended.

103 The letter then described what the liquidators had done in these terms:

Since our appointment as Liquidators we have:

• Undertaken best endeavours to maintain and implement further initiatives under the Preliminary Fire Management Plan (PFMP) for Fire Protection Works (FPW)
• Engaged with contractors to progress the draft versions of the Fire Management Plan (FMP), Stage Three remediation plan, and a summary of works for the holistic remediation of the site
• Liaised with the Agencies and other government authorities including Emergency Management Victoria (EMV), WorkSafe and the [CFA] in relation to site management, the FPW and future remediation works.

104 The letter proposed that relevant agencies and the State provide about $6 million in funding to the liquidators to allow them to develop site remediation options and associated budgets, including conducting a tender process for private operators to conduct the site remediation works.

The Liquidators consider that they are very well placed to assist in the reduction of risk..., and the eventual efficient remediation of the [subject land], for the benefit of the State and the businesses and residents in the surrounding areas.

106 I am satisfied that upon their appointment the liquidators had both physical and legal control over the subject land.

107 Prior to their appointment, TASCO had completed the erection of fencing, increased security, and commenced implementation of a preliminary fire management plan. The cost of these steps was funded by loans from Dongwha Holdings totalling $2,042,000 for the period 1 May 2018 to 14 March 2019.

108 Upon their appointment, the liquidators took steps to secure the property (including enhancing security), undertook fire management remediation plans, engaged with contractors to progress the fire management plans and put a comprehensive proposal to the EPA to develop remediation options and final remediation works. Under their proposal to the EPA and State, the liquidators proposed that they prepare the site remediation plan and tender the work to be funded by the State. The liquidators disclaimed the property the day after the EPA notified them of its intention to proceed with a clean up under s 62 of the EP Act and recover the clean up costs from TASCO.

109 It was open to the liquidators to proceed with additional security or fire protection measures, or to have undertaken other works on the subject land. The fact that they chose not to do so does not mean that they did not have control over the subject land.

110 Quite apart from their physical control, the liquidators have the right and capacity to exercise legal control over the subject land. They have comprehensive powers and authority over the property and affairs of TASCO including the subject land. It is true that they act as agents for TASCO but this does not mean that they are not 'occupiers' under the extended definition in s 4(1) of the EP Act. Their control is further demonstrated by their ability to disclaim the subject land on behalf of TASCO.

111 The control of the liquidators over the subject land is undisputed and has been so since the date of their appointment. There has been no physical or legal impediment to their control over the subject land.

112 I find as a matter of fact that the liquidators have been in control of the subject land from their appointment. Their control has subsisted to the present day, as under s 568C(1) of the Corporations Act a disclaimer is only effective when an application to set aside the disclaimer under s 568B is unsuccessful.

Issue 2 - Did the liquidators cease to be occupiers of the subject land because the EPA entered the subject land and is conducting a clean up under s 62(1) of the EP Act?

113 The liquidators contended that by entering onto the subject land and conducting a clean up, the EPA became the occupier, and the liquidators ceased to be the occupiers. They say that the EPA took control of the subject land, and had the power to direct and command what happened on the subject land.

114 The EPA and State submit that the EPA's conduct of a clean up under s 62(1) does not mean that it excluded TASCO from occupation for the purpose of s 62(2) of the EP Act.

115 I accept the EPA's and the State's submission. There is no evidence that suggests that the EPA has become the occupier of the subject land. Moreover, clean up under s 62(1) of the EP Act does not terminate the liquidators' control over the subject land.

116 If s 62 were construed so that the conduct of a clean up by the EPA under its statutory power in s 62(1) had the effect of excluding occupation of the subject land by others, s 62(2) would be self-defeating, and reduced to absurdity. The purpose of s 62(2) is to permit the EPA to recover reasonable clean up costs from the polluter or occupier. The liquidators are occupiers of land on which industrial waste has been dumped and abandoned. It is not suggested that the EPA has acted beyond its statutory power under s 62(1) of the EP Act or done anything other than to clean up the subject land.

117 The correct question is whether the person who is said to be an occupier of premises satisfies the definition of 'occupier' in s 4(1) of the EP Act. In the interpretation of s 62(2), the singular is to be taken as including the plural.[59] There may be a multiplicity of persons who have the same relationship to land.[60] The possible existence of more than one occupier is the logical concomitant of the extended definition of 'occupier' in s 4(1). There is nothing in the EP Act that evinces a Parliamentary intention that there can only be one person who satisfies the definition of 'occupier' at any one time.

118 The liquidators also highlighted the use of the definite article in the expression 'the occupier' used in s 62 of the EP Act. However, the use of the definite article does not detract from the fact that the singular includes the plural in the absence of a contrary intention. In s 62, the expression can be read in the singular or the plural.

Issue 3 - Does s 545(1) of the Corporations Act bar the EPA's claim for clean up costs if TASCO has insufficient available property to meet these costs?

(a) s 545(1) of the Corporations Act gives them an immunity from incurring any expenses unless TASCO has sufficient available property;

(b) TASCO does not have sufficient available property; and

(c) there is a direct inconsistency between s 62(2) and s 545(1) such that s 62(2) is invalid by operation of s 109 of the Commonwealth of Australia Constitution Act (Cth) ('Constitution').

(a) s 545(1) of the Corporations Act does not give immunity from debts properly arising in accordance with statute;

(b) the EPA's right to recover under s 62(2) of the EP Act is not related to the liquidators' right not to incur any expense under s 545(1) of the Corporations Act;

(c) the liquidators have sufficient available property as they have an unlimited indemnity in relation to environmental liabilities from Dongwha Australia; and

(d) there is no inconsistency between s 62(2) and s 545(1). However, if there is, s 62(2) takes effect under the roll back provisions in s 5G of the Corporations Act.

The operation of s 545(1) of the Corporations Act

121 There are many examples of the operation of s 545(1). In Great Southern Managers Australia (in liq) v Thackeray (No 3), Le Miere J said that there was no duty owed by liquidators of an insolvent company which obliges them to incur expenditure which the company could not afford to meet.[61]

122 The Court of Appeal observed in Re McDermott (in their capacity as joint and several liquidators of Lonnex Pty Ltd (in liq)) that there was no general rule that once a liquidator had commenced litigation, it must be continued irrespective of the availability of funds as such a principle would run counter to s 545.[62]

123 In Maloney (in his capacity as liquidator of ZYX Learning Centres Ltd (formerly ABC Learning Centres Ltd) (in liq)), Jagot J declared under s 545(1) that the liquidator was not liable to incur any expenses in relation to steps necessary to distribute the residual funds to creditors given the insufficient available property.[63]

124 Derrington J observed in Lucas, in the matter of Filestock Pty Ltd (in liq) that a liquidator could not be expected to courageously embark upon litigation in the hope of securing funding at some time in the future.[64]

125 In Australian Securities and Investments Commission v Wily & Hurst, Brereton J said:

While there may be room for debate as to whether [s 545] applies only to out-of-pocket expenses and not to the liquidator's own time, authority favours the view that what a liquidator is expected to do must be affected where there are no available assets. In Clasquin SA v AAR International Pty Ltd, Cohen J said, of a materially identical predecessor provision:[65]

...

The question of the incurring of expense under the equivalent of s 429 was dealt with by Needham J in Re Tulloch Ltd (in liq) (1978) 3 ACLR 808... In that case the liquidator had been seeking to disclaim some real estate. It was held that where he had no funds available to him he was entitled to a direction that until he had assets available to him he would be justified in taking no action with respect to the keeping in repair of the property and the payment of rates in respect thereof.

...

I think that in general it is the duty of the liquidator to get in the books and records and to use them for the purpose of making such reasonable investigations as he can do. I think however that the general effect of s 429 is to relieve the liquidator from expenses other than those of a comparatively small nature which are required in order that he may carry out his statutory duties to provide reports, returns and the like. I do not consider that it requires him to expend large sums of money both in the getting in and the storage of records which would permit that to be done...

In Re Biposo Pty Ltd, Young J (as he then was) said:

[T]he situation will often occur that there will be little money in the winding up and the liquidator will have to cut corners that he might not otherwise cut, and the court must be very careful not to impose too strict a duty which would stop that happening.

In Jenkins v Jonkay Pty Ltd, Finkelstein J said:

...In deciding whether the liquidator is acting unreasonably it is necessary to have regard to s 545 of the Corporations Act. Subsection (1) provides that "a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property"...The effect of the section is that, apart from lodging certain documents, a liquidator is not required to do anything if he cannot recover his expenses. It means the liquidator commits no wrong in failing to carry out any duties.

And in Warner, Re GTL Tradeup Pty Ltd (in liq), Farrell J said (emphasis added):

...There is no doubt that the court must consider critically a liquidator's proposed remuneration and be reticent to approve it in whole or part where it is evident that the liquidator has undertaken work the commercial justification for which is obscure over and above the liquidator's capacity to earn fees from his or her pursuit. In evaluating whether particular activities should be pursued, the liquidator must have a primary purpose of maximising return to creditors, not maximising the return to the liquidator. However, Mr Bennett's point is well taken that the Corporations Act does not require the liquidator to perform his or her role without prospect of remuneration or indemnity: see ss 545 (assets insufficient to meet expenses of winding up) and 568 (disclaimer of onerous property).[66]

126 As these decisions show, the effect of s 545 is that, apart from lodging documents, liquidators are not required to take action and incur expense if they cannot recover their expenses. Section 545(1) operates as a cap on expenditure protecting liquidators from the consequences of failing to carry out their duties where there is insufficient available property. A liquidator's decision not to incur expenditure is subject to the oversight of the Court and ASIC under s 545(2).

127 The liquidators relied on Re Nortel GmbH (in administration) and other companies and other appeals.[67] The United Kingdom Court of Appeal held that a financial support direction or contribution notice issued after a company had gone into liquidation ranked as an expense of the liquidation. The obligation imposed by a financial support direction and the liability created by a contribution notice were created by statute, and were not provable debts or expenses under the expenses regime for liquidation and administration. A financial liability of a company in an insolvency process was a necessary disbursement of the liquidator.[68]

128 The Court applied the principle stated by Lord Hoffman in Re Toshoku Finance UK plc[69] to the effect that the necessary disbursements category of expense included all statutory liabilities imposed on a company in liquidation whether expressly, or by a criterion for liability (such as rateable occupation or property ownership) which made no distinction between companies which were, and were not, in liquidation.[70]

129 The principles stated in Re Nortel and Re Toshoku give wide scope to the term 'expenses' under the Insolvency Rules 1986 (UK). There is no UK equivalent to s 545 of the Corporations Act.

130 In New Zealand Flax Investments Ltd v Federal Commissioner of Taxation, Dixon J said:

"Incurred " does not mean only defrayed, discharged, or borne, but rather it includes encountered, run into, or fallen upon. It is unsafe to attempt exhaustive definitions of a conception intended to have such a various or multifarious application. But it does not include a loss or expenditure which is no more than impending, threatened, or expected.[71]

131 In Coles Myer Finance Ltd v Commissioner of Taxation, Deane J held that in determining whether a loss or outgoing had been incurred, the critical question was whether the taxpayer as a practical matter was 'definitively committed' or 'completely subjected' to the obligation to make the payment in the future even though it has not come under 'an immediate obligation enforceable at law' to do so.[72]

132 The meaning of the term 'incurs' was considered by the New South Wales Court of Appeal in Hawkins v Bank of China.[73] Gleeson CJ held that the word 'incurs' takes its meaning from its context and is apt to describe, in an appropriate case, the undertaking of an engagement to pay a sum of money at a future time, even if the engagement is conditional and the amount involved uncertain.[74] Kirby P held that the act of 'incurring' happens when the corporation acts so as to expose itself contractually to an obligation to make a future payment as a debt.[75]

133 At the present time, clean up works on the subject land have commenced but are not complete. The total cost of the clean up works is yet to be established. The EPA is yet to make a demand of the liquidators in any amount. Nonetheless it can be said that the liquidators have incurred an expense albeit of uncertain amount, or at least will incur an expense when the EPA demands payment of the clean up costs.

134 The EPA and State submit that there is sufficient available property within the meaning of s 545(1). The liquidators submit that there is not.

135 In construing the expression 'sufficient available property', it is important to have regard to the whole of s 545. First, the term 'property' is widely defined in s 9 of the Corporations Act to mean relevantly any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action. The expression 'thing in action' includes present or future claims against other persons.

136 Second, s 545(1) commences with the words 'subject to this section'. These words indicate a clear Parliamentary intention that s 545(1) is to be read subject to ss 545(2) and (3). Under s 545(2), the Court or ASIC may, on the application of a creditor or contributory, direct a liquidator to incur a particular expense on condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended. It is therefore plain that the definition of 'sufficient available property' may be satisfied by the availability to the liquidator of an indemnity for the recovery of the amount to be expended.

137 In the present case, the subject land is unsaleable and of no present value. However, in determining whether there is sufficient available property, regard must be had to the fact that the liquidators have the benefit of an unlimited indemnity from Dongwha Australia in relation to environmental liabilities. The existence of the unlimited indemnity for environmental liabilities means that there is sufficient property available to the liquidators who can call on the indemnity when a claim is made against them under s 62(2).

138 I therefore find that it is open to the liquidators to call on the indemnity when presented by the EPA with a demand under s 62(2). The EPA is willing to give an undertaking to the Court that will limit the liquidators' liability to the amount recovered by them under the indemnity given by Dongwha Australia. The liquidators' costs, charges and expenses all fall within the definition of 'environmental liability' in the deed of indemnity and are payable under the unlimited indemnity agreed between the liquidators and Dongwha Australia.

Do s 62(2) of the EP Act and s 545(1) of the Corporations Act operate concurrently?

139 Section 5E(1) states the clear intention of Parliament that the Corporations Act is not intended to exclude or limit the concurrent operation of any law of a State or Territory. The EP Act was enacted in 1970. Section 62(2) of the EP Act was in its current form well before the Corporations Act commenced. Given the express words of s 5E(1), s 62(2) of the EP Act and s 545(1) of the Corporations Act are to be construed as concurrent provisions unless there is a direct inconsistency.

140 Section 5E(2) is expressed in specific terms and states that the Corporations Act is not intended to exclude or limit the concurrent operation of a law of the State or Territory that imposes additional obligations or liabilities (whether criminal or civil) on a director or other officer of a company or other corporation. A liquidator is an officer of a corporation.[76]

141 The EP Act imposes additional obligations and liabilities both criminal and civil on officers of corporations. Sections 5E(1) and (2) are clear statements by Parliament that the EP Act and the Corporations Act are intended to have concurrent operation. It is only if there is a direct inconsistency between s 62(2) and s 545(1) that there is any need to consider the effect of s 5G.

Is there a direct inconsistency between s 62(2) of the EP Act and s 545(1) of the Corporations Act?

142 In Bow Ye Investments Pty Ltd (in liq) v DPP,[77] the Court of Appeal adopted the test for direct inconsistency stated by Dixon J in Victoria v The Commonwealth.[78] The test is whether the State law, if valid, would alter, impair, or detract from a law of the Commonwealth Parliament. The test has been consistently applied by this Court.[79] Direct inconsistency clearly arises where 'one law requires what the other law forbids'. There can also be direct inconsistency where the State law, if allowed to operate, would impose an obligation greater than that for which the federal law has provided.[80]

143 Indirect inconsistency arises when the intention of Parliament in enacting the federal law was that it should 'cover the field' with respect to its subject matter.[81] However there is no inconsistency if the federal statute assumes the operation of the common law as modified by State legislation. In that situation, the federal law operates within the setting of other laws so that it is supplementary to, or cumulative upon, the State law in question.[82]

144 In Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd, the Court of Appeal described the constitutional point as requiring close attention to the practical effect of the State law upon the rights and duties conferred under Commonwealth law.[83]

145 Section 62(2) speaks of the recovery of reasonable clean up costs as a debt due to the EPA, and directs that the debt when recovered is to be paid into the Consolidated Fund. Section 62(3) is concerned with what may be done if the debt is not recovered. When s 62 speaks of recovery of a debt, it plainly refers to recovery of a debt in accordance with the ordinary procedures available for debt recovery under law. In the case of a bankrupt person, the normal procedures are found in bankruptcy law, while in the case of an insolvent corporation they are found in corporate law.

146 There is no express or implied indication in s 62, in the EP Act generally or in any extrinsic material relating to the EP Act that Parliament intended s 62 of the EP Act to alter, impair or detract from the ordinary operation of bankruptcy or corporate law or to upset the administration of bankrupt estates by trustees in bankruptcy or insolvent companies by administrators or liquidators. To the contrary, the reference in s 62(3) as to what may be done if the EPA cannot recover its costs from the occupiers is consistent with the concurrent operation of s 62 with bankruptcy and insolvency statutes and laws.

147 Moreover, s 545 is a successor provision to earlier State corporate laws that also provided that liquidators are not liable to incur winding up expenses unless there are sufficient available assets. Similar provisions have been in operation in Victoria and other States for many years.

148 Section 62 of the EP Act was first enacted in 1973 and last relevantly amended in 1988. The statutory predecessor of s 545 was s 287 of the Companies Act 1961 (Vic) ('Companies Act'). Section 287 provided:

(1) Unless expressly directed to do so by the Registrar a liquidator shall not be liable to incur any expense in relation to the winding up of a company unless there are sufficient available assets.

(2) The Registrar may on the application of a creditor or contributory direct a liquidator to incur a particular expense on condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended and if the Registrar so directs gives such security to secure the amount of the indemnity as the Registrar thinks reasonable.[84]

149 When s 62 was enacted, it was intended that it would operate concurrently and in conjunction with State corporate law. It was never suggested that s 62 was inconsistent with s 287 of the Companies Act. The substitution of s 545 for the former s 287 makes no difference.

150 Since Federation, federal and State laws have provided for taxes, duties, imposts, fees and charges. Such laws ordinarily give rise to statutory debts similar in legal character to the statutory debt that arises under s 62(2). Municipal and water rates and charges are commonly payable in relation to property held during the course of liquidation.[85]

151 For example, ss 156(1) and (2) of the Local Government Act 1989 (Vic) provide for the owner of land to pay rates and charges, and if the owner of land cannot be found or identified, for the occupier or mortgagee in possession to pay. Unpaid rates and charges are a first charge on the land.[86] If a company in liquidation has no funds, the municipality can only recover rates by exercising its power of sale over the rated property. Whilst rates and charges are periodic imposts, this makes no difference to their fundamental character as statutory debts.

152 State taxes, duties, imposts, fees and charges where they apply post-liquidation have always operated concurrently with s 545 of the Corporations Act and its predecessors. The liquidators were unable to find any case or authority in which it had been held that there was inconsistency between a general State law levying an impost and s 545 of the Corporations Act or its predecessors.

153 The position is well illustrated by the seminal case of Re Tulloch Ltd (in liq).[87] In that case, the Commissioner of Land Tax, the municipal council and the water board all claimed statutory first charges and sought the sale of a mortgaged property held by a company in liquidation. The liquidator sought leave of the Court to disclaim the property.

154 Needham J held that the effect of disclaimer would be to escheat the property to the Crown. Thereafter the authorities could not levy land tax or future rates.[88] On a sale of the property the authorities had charges which took priority over the interest of the mortgagee.[89] Needham J declined to give the liquidator leave to disclaim on the basis that the prejudice to the mortgagee and authorities would exceed any prejudice to the liquidator.[90] However the liquidator was entitled to a direction under the statutory predecessor of s 545 that until he had assets available to him to do so, he would be justified in taking no action to keep the property in repair or pay rates or taxes.[91]

155 Logan J observed in Walsh v State of Queensland that Re Tulloch has been repeatedly applied in Federal and State Courts and has been something of a root authority in both corporate and personal insolvency law in relation to the consequences of a disclaimer insofar as that affects the holder of a registered mortgage.[92]

156 In my opinion, s 62(2) of the EP Act does not alter, impair or detract from s 545(1) of the Corporations Act. There is nothing in the text, context or purpose of s 62(2) that suggests that it does or should. Section 62(2) does no more than provide that in certain circumstances the EPA may recover reasonable clean up costs as a debt in a court of competent jurisdiction. It does not impinge on the priority for payment of debts or the procedure to be adopted in a bankruptcy or winding up. It gives no instruction or direction to liquidators. It does not affect the ordinary operation of s 545.

157 Section 545(1) applies to contractual and statutory expenses incurred in a liquidation. It does not provide an immunity from any specific type of liability. It simply provides that a liquidator is not liable to incur expenses in a winding up unless there is sufficient available property. If a creditor or contributory disagrees with a liquidator's decision not to incur expenses, the creditor or contributory can approach the Court under s 545(2).

158 Essentially, pt X of the EP Act, which includes s 62(2), and pt 5.6 of the Corporations Act, which includes s 545, have very different roles. The EP Act is concerned with the protection of the environment of Victoria, and with the imposition of liabilities on polluters and occupiers. Part 5.6 of the Corporations Act is concerned with the winding up of corporations, and the priorities to be given to debts and other liabilities. Section 545 operates as a cap on liquidators' liability. As in Re Tulloch,[93] it does not say that debts incurred under contract and statute are invalid or were not legally incurred. What it does say is that liquidators are not liable to incur post-liquidation expenses unless there is sufficient available property.

Is s 62(2) invalid by operation of s 109 of the Constitution?

159 For the reasons I have given, s 62(2) of the EP Act operates concurrently and in conjunction with s 545 of the Corporations Act. There is no direct inconsistency.

160 I was taken at length in submissions to s 5G of the Corporations Act, and it is desirable that I address these submissions. Section 5G is intended to govern the interaction between a provision of a law of a State and a provision of the Corporations Act if the State provision meets the conditions set out in the table in s 5G(3). Section 5G is complemented by s 8 of the Ancillary Provisions Act.

161 As I have said, s 62 of the EP Act predated the enactment of the Corporations Act. Section 287 of the Companies Act was in operation immediately before the Corporations Act was enacted. It follows that the requirements of Item 1(a) of the table in s 5G(3) are satisfied. There are no declared State provisions under Item 1(b).

162 The applicable provision is s 5G(11). This provides in substance that a provision of the Corporations Act does not operate in a State or Territory to the extent necessary to ensure that no inconsistency arises between the provision of the Corporations Act and the provision of a law of the State. If there were any inconsistency between s 545 and s 62, s 545 would not operate to the extent necessary to ensure that no inconsistency arose between the two provisions.

163 Both parties relied on the Queensland Court of Appeal decision of Longley.[94] In that decision, the appellants were the liquidators of an energy company that undertook an underground gasification project on a property which it owned. The respondent issued an environment protection order ('EPO') under the Environment Protection Act 1994 (Qld) ('EP Act (Qld)'), requiring additional monitoring infrastructure and rehabilitation works, and imposing additional reporting obligations. The liquidators disclaimed the property and the disclaimer went unchallenged. The respondent then sought to rely on s 5G(11) of the Corporations Act to enforce the EPO.

164 McMurdo JA held that the disclaimer operated prospectively to terminate the company's rights and obligations in relation to the property disclaimed, and automatically released the company from its ongoing correlative liabilities.[95] Section 5G(11) could not be relied on to disapply ss 568 and 568D of the Corporations Act, as there was real potential that compliance with the requirements of the EPO would mean that the liquidators would have insufficient funds to pay priority creditors or creditors who ranked equally with the costs of complying with the EPO.[96] This would have the effect that s 556 of the Corporations Act and the provisions of the EP Act (Qld) would operate inconsistently inside and outside of Queensland. Outside of Queensland, s 556 would not be disapplied by s 5G(11).[97]

165 The concerns that arose in Longley do not arise here. First, the disclaimer is not operative. Secondly, the EP Act is a public Act of Victoria and attracts full faith and credit across Australia.[98] The existence of a statutory debt is recognised inside and outside of Victoria. There is no inconsistent effect on the priority of creditors or equally ranked creditors as arose in Longley. The creditors will receive no dividend in any circumstances. Only the EPA, the State and the liquidators for their charges can benefit from the unlimited indemnity given by Dongwha Australia in respect of environmental liabilities. There is no impediment to the operation of s 5G(11).

166 If it were necessary to do so, I would hold as a consequence of s 5G(11) that s 545 of the Corporations Act does not operate to the extent necessary to ensure that no inconsistency arises with s 62.

Issue 4 - Are the EPA and the State persons who have or claim to have an interest in the subject land within the meaning of ss 568B(1) and (3) of the Corporations Act?

167 The liquidators submit that neither the EPA nor the State has standing to bring an application to set aside a disclaimer under ss 568B(1) and (3) of the Corporations Act. They say that the interest of the person seeking to set aside a disclaimer should be proprietary in character.

168 The EPA and the State submit that the term 'property' is not limited to proprietary interests, and that they have standing to bring this application.

169 As I have noted, the term 'property' is widely defined in s 9 to include any legal and equitable estate or interest whether vested or contingent in real or personal property of any description. It also includes a thing in action.

170 In Willmott Growers Group Inc v Willmott Forests Ltd (rec and mgr apptd) (in liq), the High Court considered the definition of 'property' in the context of a disclaimer by liquidators of a lease under s 568 of the Corporations Act.[99] The plurality said:

The breadth of the kinds of 'property' with which s 568(1) deals both demonstrates and requires that no narrow meaning can be given to the legal relationships which are embraced by the word 'property' whenever it is used in the provision. The word 'property' should be understood as referring to the company's possession of any of a wide variety of legal rights against others in respect of some tangible or intangible object of property.

If land was the only object of property with which s 568(1) dealt, the nature and extent of the property rights which may be disclaimed might usefully have been elucidated by reference only to general land law and, in particular, doctrines of estates. But s 568(1) does not deal only with property in land. It deals with a company's 'property' in, among other things, bilateral contracts. In that context, as well as in other contexts in which s 568(1) must operate, doctrines of estates cannot inform, let alone limit, the scope of the word 'property'.[100]

171 Section 568B applies not only to a person who has an interest in disclaimed property. It also applies to a person who claims to have an interest in the disclaimed property. It preserves the standing of a claimant to an interest in the disclaimed property even though the claimed interest has not been established.

172 Under s 62(3) of the EP Act, the reasonable clean up costs incurred by the EPA can be made a charge on the subject land. The EPA is a prospective chargee of the subject land. Given that clean up works have commenced, it is virtually certain that the EPA will take the benefit of its statutory charge over the subject land and sell the subject land after clean up. If necessary, the EPA could obtain a vesting order to exercise its rights and realise its security.[101]

(a) the radical title to the subject land;[102] and

(b) to be the fee simple owner upon the vesting or escheat of the subject land in the event of disclaimer, subject to any mortgages or charges on the land.[103]

174 There is no doubt that the EPA and the State have the interests in the subject land that they claim. At the very least, the claims are persuasive and credible. The EPA and the State have standing to make application to set aside the disclaimer under s 568B of the Corporations Act.

Issue 5 - Would the liquidators' disclaimer cause prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to TASCO's creditors under s 568B(3) of the Corporations Act?

175 Under s 568B(3) of the Corporations Act, the Court may set aside a disclaimer only if satisfied that the disclaimer would cause to persons who have or claim to have interests in the property prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company's creditors.

176 The precondition in s 568B(3) requires the Court to assess the prejudice caused to the EPA and the State if the disclaimer is not set aside, with the prejudice caused to the company's creditors if it is. In the present case, two of the creditors are Dongwha entities. The only other creditors are the State for land tax for an undetermined amount, and the Australian Taxation Office for PAYG estimated to be $10,358.

(a) the prejudice to them if the disclaimer was not set aside amounted to a very large sum of money. Full details of the likely amount are contained in the confidential evidence;

(b) the amount likely to be paid to TASCO's creditors whether or not the disclaimer is set aside is nil; and

(c) there will be no dividend to creditors in any circumstances.

(a) the Court should not be satisfied that the EPA and the State will suffer prejudice if recourse to the indemnity is lost; and (b) Dongwha Australia is a creditor of TASCO in the amount of $1,518,889.82. The amount of debt will increase considerably in the event that the disclaimer is set aside. Dongwha Australia will suffer a loss just as great as the clean up costs recovered from TASCO by the EPA.

179 I accept as common ground that TASCO's creditors will receive no dividend, whether or not the disclaimer is set aside.

180 In Re Real Investments Pty Ltd, Chesterman J considered the precondition in s 568B(3), and said:

[Section 56B(3)] does not look to what subservient advantage may be wrought from the consequences of the disclaimer. It compels examination of what the primary consequence will be to those interested in the property or contract and the creditors should there be a disclaimer. Anything beyond direct consequences is to be ignored.

The language of the section suggests this approach. It talks of prejudice that the disclaimer 'would' cause, not that it 'might' cause. Any comparison beyond the immediate and direct effect of the disclaimer is too hard to evaluate with the necessary certainty to arrive at a conclusion that disproportionate prejudice 'would' occur. [104]

181 As the passage highlights, the precondition is concerned with the primary consequences of a disclaimer to those interested in the property and to the creditors. It is the immediate and direct effect with which the precondition is concerned, not future potentialities or indirect consequences.

182 Dongwha Australia was the sole shareholder of TASCO from 2012 until 2018 when Dongwha Holdings became the sole shareholder. The deed of indemnity recites that TASCO's directors have resolved to appoint the liquidators as joint and several liquidators, and that the liquidators' acceptance of the appointment is conditional upon Dongwha Australia indemnifying them on the terms and conditions of the deed of indemnity.

183 Under cl 2.1 of the deed of indemnity, $187,000 is provided to the liquidators as fire protection funding, and an amount of $288,750 as liquidation funding. Schedules to the deed of indemnity prescribe the hourly rates that may be charged by the liquidators' firm, the fire protection activities and costs that may be undertaken or incurred. Another schedule provides liquidation fee estimates for different liquidation scenarios. The 'Complex liquidation with aggressive and litigious stakeholders' scenario envisages '[s]ignificant disputes and litigation with the relevant authorities who dispute and attempt to frustrate the site disclaimer'. This scenario was expected to take 12-18 months to resolve.

184 Dongwha Australia voluntarily entered into the deed of indemnity as an inducement to the liquidators to accept appointment. It is inevitably the case that if the liquidators obtain indemnity under the deed of indemnity, Dongwha Australia will incur corresponding loss.

185 The deed of indemnity was relied on by the liquidators when they accepted their appointment. There is no reason to doubt that it was executed in good faith, and will be honoured by Dongwha Australia as a subsidiary of Dongwha Korea. There is no evidence which suggests that the unlimited indemnity in respect of environmental liabilities could not be met by Dongwha Australia if it were called on to do so. I reject the liquidators' submissions that I should not be satisfied that the EPA and the State will suffer very substantial prejudice if recourse to the indemnity is lost.

186 The precondition in s 568(3) is concerned with prejudice that setting aside the disclaimer 'would cause to the company's creditors'. This is a reference to the company's creditors in or relating to their capacity as creditors. The Court is concerned with the immediate or direct effect on creditors if the disclaimer is set aside. It is not concerned with indirect consequences or the consequence to creditors in some other capacity.

187 Dongwha Australia's role as the chosen indemnifier of the Dongwha Group is unrelated to its role as TASCO's creditor. Its role as indemnifier of the liquidators under the deed of indemnity is essentially coincidental to its capacity as a creditor of TASCO. Another company could have been chosen for this role by Dongwha Korea. If the liquidators' indemnity in the deed of indemnity is called on, that will not result in prejudice to Dongwha Australia in its capacity as one of TASCO's creditors.

188 I am satisfied that the disclaimer would cause prejudice to the EPA and the State that is grossly out of proportion to the prejudice that setting aside the disclaimer would have on TASCO's creditors. Apart from delay in the finalisation of the liquidation, there is no prejudice to TASCO's creditors.

189 The EPA and the State proffered an undertaking to the Court in substance in the following terms:

(a) making a call on [Dongwha Australia] under clause 5.2 of the [deed of indemnity] in respect of any judgment order made against them, or liability admitted by them, under s 62(2) of the [EP Act] concerning the [subject land]; and

(b) diligently pursuing payment from [Dongwha Australia] in respect to that judgment, order or admitted liability under clause 5.3 of the [deed of indemnity].

the [EPA] and the [State] undertake to limit recourse to the enforcement or recovery under such judgment, order or admitted liability against the [liquidators] to:

(c) the property and assets of TASCO available to meet the expenses of the [liquidators] under section 556(1) of the [Corporations Act]; and

(d) any payment received by the [liquidators] under clause 5.3 of the [deed of indemnity].

190 The undertaking confines any relief that may be obtained by the EPA and the State to the amount of any payment received by the liquidators under cl 5.3 of the deed of indemnity. The undertaking gives additional protection to the liquidators and the creditors.

191 The liquidators submit that the undertaking should be modified in a number of ways:

(a) subclause (a) of the undertaking should expressly refer to costs orders that may be made against the liquidators in these proceedings;

(b) a proviso should be added to subclause (b) of the undertaking to limit the requirement for the liquidators to take such steps to diligently pursue Dongwha Australia as are commercially reasonable having regard to what assets, if any, are readily realisable for value in the liquidation of TASCO;

(c) the liquidators are not required to personally meet the associated costs of any steps to be taken under subclause (b); and

(d) subclauses (c) and (d) should be amended to make it clear that the 'property and assets' and 'payment' referred to in those subclauses are net of any fees, expenses and/or costs incurred by the liquidators, including those incurred in diligently pursuing payment from Dongwha Australia in accordance with subclause (b).

192 I will settle the final form of the undertaking after hearing the parties following hand down of the judgment to ensure that the liquidators are to the extent necessary put in funds by the EPA and the State for their own fees, expenses and costs including legal costs and expenses to conduct the proceeding against Dongwha Australia. I will also require that they be indemnified against any judgment, order or costs order that may be made against them in the proceeding.

Issue 6 - Should the Court exercise its discretion to set aside the disclaimer under s 568B(2) of the Corporations Act?

193 The EPA and the State submitted that the Court should exercise its discretion to set aside the disclaimer. They submitted that:

(a) in the context of a voluntary liquidation, the financial consequences of the liquidation should not be avoided. Dongwha Australia has agreed to bear the financial consequences by way of an indemnity to the liquidators;

(b) as a matter of public policy, it is inappropriate that liabilities for which the liquidators have an indemnity be passed on to the State;

(c) a disclaimer should not be used as a device by those controlling TASCO to avoid liability for the contaminated waste;

(d) companies should not be permitted to go into voluntary liquidation as a mechanism to avoid environmental responsibilities; and

(e) a disclaimer should not be permitted to be used to burden the Crown with the regulatory responsibilities of occupiers of land.

194 The liquidators submitted that the Court should determine in its discretion not to grant relief. They submitted that:

(a) the liquidators are not responsible for the contamination on the subject land and took steps to remediate it. They also engaged with the EPA and other bodies in the process;

(b) it would be unfair if the disclaimer were set aside and the liquidators were left with the burden of meeting the clean up costs, and the risk of pursuing Dongwha Australia under the indemnity which may or may not be satisfied;

(c) TASCO's continued interest in unsaleable property for an indefinite time is inimical to the liquidators' functions. In the ordinary course, the liquidators would complete the deregistration process and resign; and

(d) the exercise of discretion against the liquidators would create uncertainty and risk for liquidators generally and may engender reluctance among practitioners to take on a liquidation where a company's property is potentially affected by environmental contamination.

195 I accept the submissions of the EPA and the State. While there are no specific criteria for the exercise of the Court's discretion, some assistance can be gained from the principles of environment protection in the EP Act.

196 The Intergenerational Equity Principle suggests that the industrial waste deposited on the subject land should be cleaned up now rather than left for future generations.[105] The Polluter Pays principle states that persons who generate pollution and waste should be responsible for its containment, avoidance and abatement.[106] The Shared Responsibility Principle states that environment protection is a responsibility shared by Government, industry and business.[107] The Enforcement Principle suggests that enforcement of environmental requirements should be undertaken for the better protection of the environment and its economic and social uses, and to ensure as much as possible that commercial advantage is not obtained by any person who fails to comply with environmental requirements.[108]

197 In Tubbs v Futurity Investments Ltd & Anor, the liquidators disclaimed an industrial plant containing a toxic substance.[109] Hansen J held that if the disclaimer was allowed, it would mean that a voluntary liquidation was no more than a way in which the company in liquidation could avoid its regulatory obligations. It was against public policy to pass the onus onto the Crown to avoid legal obligations.[110]

198 In Sullivan v Energy Services International Pty Ltd (in liq), a liquidator in a voluntary liquidation disclaimed numerous barrels of contaminated waste stored in a transport company's depot.[111] Young CJ set aside the disclaimer by adopting the reasons given by Hansen J in Tubbs and finding on the whole of the evidence that the disclaimer was a device by those controlling the company to avoid liability for the contaminated waste.[112] There was no appreciable prejudice to creditors as they were all to be paid.[113]

199 Young CJ said that the whole exercise had been one of the company to rid itself of its obligations with respect to hazardous goods by foisting them onto the transport company or onto the taxpayer by having the property declared bona vacantia and so vest in the Crown.[114]

200 The liquidation here is a voluntary liquidation. TASCO and Dongwha Australia are part of the Dongwha Group and have the same ultimate holding company. The indemnity was voluntarily given as a condition of the liquidators' acceptance of the appointment. The deed of indemnity was drawn up by legal advisers so as to be acceptable to Dongwha Australia and to the liquidators.

201 The Court should be wary of disclaimers where environmental liabilities are to be passed onto taxpayers or innocent persons. The Court should discourage the use of voluntary liquidation as a device to avoid environmental responsibilities, or to impose unwanted or unexpected burdens on the taxpayer. Where there are opportunities open to recover the costs of environmental clean up, they should be taken unless outweighed by other factors.

202 It is common ground that the clean up costs will vastly exceed the value of the subject land, and that TASCO has no other assets. Loss of access to the indemnity from Dongwha Australia would cause the EPA and the State serious prejudice. The position of TASCO's creditors is unaffected if the unlimited indemnity for environmental liabilities is called upon.

203 It is unlikely that the liquidators will suffer any material prejudice. They are protected by the deed of indemnity, which extends to their remuneration charged on a time cost basis. They are also prevented from personal liability by s 545 of the Corporations Act, which limits their liability for expenses in the winding up, and by the undertaking.

204 It is true that the liquidators are not personally responsible for the contamination of the subject land and took steps to remediate and manage contamination on the subject land. It is also true that they engaged with the EPA and other bodies about the process. However, they will not be liable beyond the amount of clean up costs recovered under the deed of indemnity, and will receive their professional fees and expenses.

205 The process of liquidation will take somewhat longer than would have been the case had the disclaimer been effective. However, I consider this an acceptable outcome given that the liquidators are to be remunerated for their time under the deed of indemnity.

206 As to the position of insolvency practitioners generally, I do not consider that the exercise of my discretion to permit the EPA and State to recover clean up costs to the extent of the indemnity would have any impact on their willingness to accept liquidation appointment. Their legal and financial position is well protected by the Corporations Act.

207 I conclude that the factors that favour the exercise of discretion substantially outweigh those that do not, and will exercise my discretion to set aside the disclaimer.

208 I am satisfied that the disclaimer would cause prejudice to persons who have, or claim to have, interests in the subject land, that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to TASCO's creditors for the purposes of s 568B(3) of the Corporations Act.

209 I am satisfied that an order should be made under s 568B(2)(a) of the Corporations Act setting aside the disclaimer on the basis of an undertaking to be given by EPA and the State. I will resolve the final terms of the undertaking with the parties after this judgment is handed down.

AUSTRALIAN SAWMILLING COMPANY PTY LIMTIED (in liquidation) (ACN 075 382 580)

STEPHEN GRAHAM LONGLEY (in his capacity as liquidator of the Australian Sawmilling Company Pty Ltd (in liquidation))

MELISSA JANET MARY HUMANN (in her capacity as liquidator of the Australian Sawmilling Company Pty Ltd (in liquidation))

[7] (1998) 194 CLR 355, 384 [78] (McHugh, Gummow, Kirby and Hayne JJ) (citations omitted).

[8] [2009] HCA 41; (2009) 239 CLR 27, 46-7 [47] (Hayne, Heydon, Crennan and Kiefel JJ).

[9] [2017] HCA 34; (2017) 262 CLR 362, 368 [14] (Kiefel CJ, Nettle and Gordon JJ) (citations omitted).

[10] (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ) (citations omitted).

[11] Federal Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) [2005] HCA 20; (2005) 220 CLR 592, 607 [33] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ) ('Linter'), citing Thomas Franklin & Sons Ltd v Cameron [1935] NSWStRp 72; (1935) 36 SR (NSW) 286, 296 (Davidson J); Commissioner for Corporate Affairs v Harvey [1980] VicRp 64; [1980] VR 669, 695 (Marks J).

[12] Linter (n 11) 612 [54], citing Harold Ford et al., Ford and Austin's Principles of Corporations Law, (Butterworths, 7th edn, 1995), 1013.

[13] [1996] FCA 1384; (1996) 65 FCR 234, 238-239, citing Loose on Liquidators (Jordan Publishing, 3rd edn, 1989), 13.

[14] [2018] VSCA 41; (2018) 54 VR 230, 246 [63] (Ferguson CJ, Whelan, Kyrou, McLeish and Dodds-Streeton JJA), appeal dismissed in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20; (2019) 93 ALJR 807.

[15] [2015] HCA 48; (2015) 257 CLR 544, 595 [163] (citations omitted).

[16] Linter (n 11) 603 [20] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[21] [1898] UKLawRpAC 56; [1899] AC 99, 105-6, quoted in YZ Finance Co Pty Ltd v Cummings [1964] HCA 12; (1964) 109 CLR 395, 398 (McTiernan J, Taylor and Windeyer JJ agreeing).

[22] (1979) 143 CLR 499 (Gibbs ACJ, Mason, Jacobs, Murphy JJ) ('Commissioner of Taxation v ANZ').

[23] Federal Commissioner of Taxation v Smorgon (1977) 16 ALR 721, 726.

[25] Commissioner of Taxation v ANZ (n 22) 519.

[26] Ibid, quoting Frederick Pollock and Robert Wright, An Essay on Possession in the Common Law (Clarendon Press, 1888), 26.

[28] Commissioner of Taxation v ANZ (n 22) 520.

[29] Ibid 533, quoting Johnston Fear & Kingham v Commonwealth [1943] HCA 18; (1943) 67 CLR 314, 324 (Rich J); Bank of New South Wales v Commonwealth [1948] HCA 7; (1948) 76 CLR 1, 385 (Dixon J) (emphasis added).

[30] (2018) 265 CLR 416 (Kiefel CJ, Bell, Gageler, Nettle and Gordon JJ).

[31] Ibid 428-9, [30]-[32] (footnote omitted).

[32] [2006] VSC 484, [49].

[33] [2002] WASC 121; (2002) 130 A Crim R 452, 457, appeal allowed on unrelated grounds: Tat Sang Loo v DPP (Vic) [2005] VSCA 161; (2005) 12 VR 665 ('Tat Sang Loo').

[34] (2018) 55 VR 494, 503 [38], [40] (emphasis in original), quoting Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 12) [2007] VSC 377; (2007) 64 ACSR 114, 208 [437] and citing EP Act ss 1G, 1D.

[35] (2017) 233 LGERA 135, 192 [255] (Warren CJ, Tate and Osborn JJA).

[37] Corporations Act s 568.

[38] Ibid s 568B(3).

[39] Ibid s 568B(2).

[45] See ibid ss 19A(8), 27, 28B, 62, 62A and 66B.

[50] McPherson's Law of Company Liquidation (Westlaw AU Thomson Reuters) [7.120].

[51] (1998) 88 FCR 451 (Emmett J).

[53] [1977] 2 NSWLR 652, 659 (Bowen CJ)), 668 (Helsham J).

[54] [1933] NSWStRp 34; (1933) 33 SR (NSW) 390 (Harvey ACJ, James and Halse Rogers JJ).

[56] (1993) 30 NSWLR 441, 476 (Mahoney JA), 477 (Cripps JA), 454-455 (Kirby P contra).

[57] Victoria, Parliamentary Debates, Legislative Assembly, 31 March 1994, 772 (Geoff Coleman)

[58] (2018) 331 FLR 33 (Gotterson and McMurdo JJA and Bond J) ('Longley').

[59] Interpretation of Legislation Act 1984 (Vic) s 37(c).

[60] See for example Director of Public Prosecutions v Hazelwood Pacific Pty Ltd & Ors [2020] VSC 279, [78] (Keogh J).

[61] [2011] WASC 195, [48].

[62] [2019] VSCA 23, [43] (Whelan AP, McLeish and Hargrave JJA).

[63] [2016] FCA 398; (2016) 241 FCR 357, 359 [17].

[64] [2018] FCA 1425, [7].

[65] Companies (NSW) Code 1981 s 429.

[66] [2019] NSWSC 521, [83]-[86], quoting Clasquin SA v AAR International Pty Ltd (1989) 25 ACLR 9, 11-12; Re Biposo Pty Ltd (1995) 17 ACSR 730, 734; Jenkins v Jonkay Pty Ltd [2007] FCA 858, [10]; Warner, Re GTL Tradeup Pty Ltd (in liq) [2015] FCA 323; (2015) 104 ACSR 633, [70].

[67] [2012] 1 All ER 1455 ('Re Nortel').

[69] [2002] UKHL 6, [25]-[30] ('Re Toshoku').

[70] Re Nortel (n 67) 1482 [95], [96]. See Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd [2012] VSC 112; (2012) 265 FLR 33, 51-2 [81], [84] (Sifris J); Timbercorp Securities Ltd (in liq) v Plantation Land Ltd [2009] FCA 741, 7-8 [20] (Finkelstein J); Australian Securities and Investments Commission v Letten (No 13) [2011] FCA 1151, 18-20 [48]-[52] (Gordon J).

[71] [1938] HCA 60; (1938) 61 CLR 179, 207, adopted in Federal Commissioner of Taxation v James Flood Pty Ltd [1953] HCA 65; [1953] 88 CLR 492, 507 (Dixon CJ, Webb, Fullagar, Kitto, Taylor JJ).

[72] [1993] HCA 29; (1993) 176 CLR 640, 670-671.

[73] (1992) 26 NSWLR 562.

[76] Corporations Act s 9, definition of 'officer'.

[77] [2009] VSCA 149; (2009) 229 FLR 102, 115-6 [70]-[71] (Warren CJ), (Buchanan JA and Vickery AJA agreeing).

[78] [1937] HCA 82; (1937) 58 CLR 618, 630.

[79] See Tat Sang Loo (n 33); IG Index PLC v New South Wales [2006] VSC 108; (2006) 198 FLR 132 (Bongiorno J).

[80] Telstra Corporation Ltd v Worthing [1999] HCA 12; (1999) 197 CLR 61, 76 [27] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ) ('Telstra Corporation').

[81] Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466, 489 (Isaacs J); Ex parte McLean [1930] HCA 12; (1930) 43 CLR 472, 483 (Dixon J); Telstra Corporation (n 80) 76 [28].

[82] Attorney General (Vic) v Minister for Employment and Workplace Relations [2007] HCA 9; (2007) 230 CLR 369, 401-2 [54] (Gummow, Hayne, Heydon and Crennan JJ).

[83] [2016] VSCA 247; (2016) 337 ALR 452, 500 [177] (Warren CJ, Tate and McLeish JJA), citing Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9, [115] (Basten JA).

[84] The Commissioner for Corporate Affairs superseded the Registrar of Companies, see Companies (Interstate Corporate Affairs Commission) Act 1974 (Vic) s 24.

[85] In the United Kingdom, rates are payable on property held during liquidation as a necessary disbursement. See Exeter City Council v Bairstow [2007] EWHC 400 (Ch) (Richards J).

[86] Local Government Act 1989 (Vic) s 156(6).

[87] (1978) 3 ACLR 808 ('Re Tulloch').

[92] [2019] FCA 871, [16].

[95] Ibid 46-7 [50], [52] (Gotterson JA agreeing and Bond J agreeing generally).

[98] Constitution s 118.

[99] [2013] HCA 51; (2013) 251 CLR 592.

[100] Ibid 603 [36]-[37] (French CJ, Hayne and Kiefel JJ).

[101] See Corporations Act s 568F(1)(b).

[102] See Mabo v State of Queensland (No 2) [1992] HCA 23; (1992) 175 CLR 1, 48-9 (Brennan J).

[103] See Corporations Act s 568D; Re Tulloch Ltd (n 87); National Australia Bank Ltd v New South Wales [2009] FCA 1066, [8], [9], [23], [27]-[28] (Rares J); Commonwealth Bank of Australia v State of Queensland [2018] FCA 1041, [4(b)], [4(c)] (Rangiah J).

[104] [1999] QSC 89; [2000] 2 Qd R 555, 565.

[109] [1998] 1 NZLR 471 ('Tubbs').

[111] [2002] NSWSC 937.