The possibility of the West Australian government legislating to get around the insolvency disclaimer provisions of the Corporations Act was again raised before a Senate hearing this week; my earlier comments are here. This mirrors similar issues in Queensland – Linc Energy and the Queensland government’s reliance upon section 5G of the Corporations Act – and, in Canada, where a similar issue was heard only last week before the Supreme Court of Canada in Ottawa.
In evidence on 14 February 2018 before the Senate Environment and Communications References Committee – Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities – the WA concern was explained on two bases, as to how insolvency law
- “affects mining companies’ site rehabilitation obligations: the ability of insolvent mining companies to use the provisions of the Corporations Act to avoid paying the costs of site rehabilitation by claiming mine leases as onerous property during the liquidation process”; and as to
- “the lack of transparency in the treatment of future liabilities under Commonwealth accounting standards, which means that companies do not have to disclose future rehabilitation liabilities on a site-by-site basis”, a responsibility of the Australian Accounting Standards Board (AASB).
The AASB chair appeared before the Parliamentary Joint Committee on Corporations and Financial Services on 16 February 2018 although this issue was not raised.
I have explained that a COAG committee is to report on these two issues by mid-2018. No doubt the process will be assisted by expert Treasury advice on insolvency law.
Other issues raised before the Environment Committee were the idea of creating “a federal abandoned mines commission” similar to Canada’s Orphan Wells Association; the separate environmental regulation roles between the Commonwealth and the states; the absence of national regulatory standards; and the regulation of offshore oil and gas extraction, and uranium mining.
The Committee is due to report by the second last day of the autumn sittings, 2018.
Further comments shortly
The tension between environmental regulation and insolvency law is important internationally. It was the subject of a panel debate and scholarly papers at a conference of the University of British Columbia in Vancouver which I attended on 9 February 2018.
This website will report on that conference shortly, covering retail insolvency, secured transactions, bitcoin, pre-insolvency advice, restructuring, cross-border, technology, and more.
A report on the legal and policy issues being debated in Canada on environmental regulation will also be provided.
Finally, for the moment, a video recording of the Canadian Supreme Court proceedings – Orphan Wells Association v Grant Thornton – before 7 justices, on 15 February 2018, is here.