Would At Home Pty Ltd become liable for pollution damages if it purchases Factories Pty Ltd?

Question from RY, Would At Home Pty Ltd become liable for pollution damages if it purchases Factories Pty Ltd?

Answer from AI:

In general, when a company purchases another company, it may also inherit the liabilities of the purchased company. However, the specifics of the liability transfer can depend on the structure of the purchase, the nature of the liabilities, and the laws of the jurisdiction. In Australia, the Corporations Act 2001 (Cth) and the principles of common law generally govern these matters.

Liability in a Share Purchase

When all the shares of a company are purchased, as is being considered by At Home Pty Ltd, the purchasing company typically inherits all the assets and liabilities of the purchased company. This is because the purchased company continues to exist as a separate legal entity, and its obligations remain intact.

However, this is a general principle and the specifics can vary based on the terms of the purchase agreement and the nature of the liabilities.

Environmental Liabilities

In the case of environmental liabilities, such as the pollution of Woolloongabba Creek, the situation can be more complex. Australian environmental laws, such as the Environment Protection and Biodiversity Conservation Act 1999 (Cth), can impose strict liability for environmental damage. This means that a company can be held responsible for environmental damage even if it did not intentionally cause the damage.

Successor Liability

In some cases, a purchasing company can be held liable for the actions of the purchased company under the principle of “successor liability”. This principle can apply when the purchasing company continues the operations of the purchased company and benefits from those operations.

Legal Advice

Given the complexity of these issues, it is strongly recommended that At Home Pty Ltd consult with a legal professional before proceeding with the purchase. A legal professional can provide advice tailored to the specific circumstances, including the potential liabilities associated with the pollution of Woolloongabba Creek and the pending lawsuits.

Further Resources

For more information on the potential liabilities associated with purchasing a company, you may wish to consult the following resources:

• The Corporations Act 2001 (Cth), which governs corporate transactions in Australia.
• The Environment Protection and Biodiversity Conservation Act 1999 (Cth), which sets out the environmental obligations of companies in Australia.