Cleanaway Waste Management has lost a Victorian Supreme Court decision regarding alleged historical underpayment of landfill levy at its Melbourne Regional Landfill. The court ruled against Cleanaway in favour of the EPA, confirming an underpayment of $6.9 million for FY18. This represents a material liability that will now crystallise on the company’s balance sheet unless the decision is successfully appealed.
The dispute centred on whether materials purchased from an adjacent Boral quarry should have been subject to landfill levy. Cleanaway argued that the type of product involved did not constitute “waste” as defined under levy legislation. The Supreme Court’s ruling rejects this argument and establishes that the materials in question were subject to the levy. This determination has implications beyond the single case, as it sets a legal precedent for how similar materials are treated under Victorian waste management tax law.
The FY18 liability of $6.9 million is only the beginning of the financial exposure. The EPA has conducted audits for FY19 and FY22, identifying alleged additional underpayments of $4.7 million and $7.2 million respectively. While these audits have not yet been the subject of court proceedings, they suggest a systemic issue spanning multiple years and potential total exposure of approximately $18.8 million. These amounts are stated before costs and interest, meaning the final liability could be materially higher once legal and compliance costs are added.
For investors, the timing and potential magnitude of this impact requires careful consideration. The company must now decide whether to appeal the decision within 42 days. An appeal could delay resolution but carries execution risk. Even if Cleanaway chooses not to appeal, the company still faces audits for FY19 and FY22, which could follow a similar path to court. The audit outcomes suggest the EPA views this as a significant compliance matter, which may also invite scrutiny of other compliance areas across the company’s operations. Additionally, the ruling may prompt the EPA to examine similar arrangements at other Cleanaway facilities or across the waste management industry more broadly.
Shareholders should monitor the appeal decision closely over the coming weeks, as this will signal management’s assessment of the case strength. Any appeal decision, coupled with commentary on the FY19 and FY22 audits, will be critical to understanding the true cash and balance sheet impact. The announcement has been flagged as price sensitive and is classified as material by the ASX.
View the full ASX announcement (PDF)
About Cleanaway Waste Management Limited (ASX: CWY)
Cleanaway Waste Management Limited is Australia’s largest waste management business providing collection, processing, treatment, recycling, and disposal of waste across municipal, commercial, and industrial sectors. The company operates a national footprint and handles hazardous liquids, medical waste, and various industrial waste streams. It also owns and manages transfer stations, recycling facilities, and landfills across Australia.
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