More than 150 Strandline Resources employees are likely to be paid out of a Commonwealth scheme instead of a $4.75 million trust after a court ruling over the liquidated company.
The Federal Court of Australia on Tuesday found 166 employees were employed by Strandline Resources instead of the subsidiary Coburn Resources.
The “true employer” over the 166 people involved will be the company responsible for paying employee entitlements, with Coburn having allocated a $4.75 million trust under a deed but Strandline having been placed into liquidation, according to the judgment.
Strandline and its operating subsidiary Coburn were developing a mineral sands mine, estimated at $338 million, before the asset was mothballed last year.
The federal government’s financier Northern Australian Infrastructure Facility loaned $150 million to Coburn mineral sands project in Shark Bay.
McGrathNicol receivers Robert Brauer, Jason Preston, and Linda Smith were appointed to manage Strandline and its subsidiary Coburn in early 2025.
The receivers applied to have a court ruling on the employer of 166 people, having notified the staff in a notice in September 2025.
“If the court determines that Strandline is your employer, the money available to pay employees would come from whatever money is left in Strandline,” the receivers wrote to the employees.
“It is not expected there will be any money available in Strandline to pay employee entitlements. As Strandline is in liquidation, (Fair Entitlements Guarantee) may pay your entitlements if Strandline cannot do so.”
While Strandline entered liquidation, its subsidiary Coburn executed a deed of company arrangement, that included $4.75 million being set aside to pay employees, in 2025.
According to the receivers’ note to employees, the federal government’s FEG scheme is not available to employees of a company that executed a DOCA.
The federal government claimed Coburn is the true employer of the 166 people with outstanding employee entitlements and the staff would not be able to access the FEG scheme.
In the recent court judgment, the Commonwealth argued that Coburn ultimately bore the financial burden of Strandline employees.
However, Federal Court judge Darren Jackson found Strandline was not financially dependent on Coburn to pay its employees.
“With respect, the proposition that Coburn ultimately bore the financial burden of the employment of all employees is at too high a level of generality to be useful. Nor is it demonstrably true,”
“In relation to funds from lenders, while Coburn appears to have been the principal debtor for the $338 million of funding for the project, (Strandline) SRL stood as guarantor and provided security for the senior secured facilities.”
Justice Jackson said Coburn’s indebtedness to Strandline grew over time, from $14.6 million in 2021 to just under $207 million in mid-2025.
“This suggests that during the period in which the employees were employed, the net flow of funds was from SRL to Coburn, not the other way around,” he said in his judgment.
Justice Jackson ordered the Commonwealth to pay the receivers' costs in the legal proceedings.
