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Legal bill adds to Gunns' woes

AAP logoAAP 21/09/2016 Andrew Drummond

The debt has risen even further for liquidated Tasmanian timber company Gunns, with the business ordered to pay legal costs in its latest failed bid to sue the state.

The Tasmanian Supreme Court on Wednesday dismissed an appeal lodged by the company, which claimed the state failed to fulfil a duty of care when it didn't grant a water licence.

Before its collapse in 2012 Gunns had diversified into viticulture and built a $750,000 dam at Evandale, near Launceston, to service a nearby vineyard, while a water licence was pending.

First applied for in 2005, the licence was never granted as the then-government oversaw changes in policy to approve such permits, and subsequently the 295-megalitre dam - completed in 2010 - was never filled as planned using a nearby water course.

Gunns sued for damages for wasted expenditure but were unsuccessful, with a Supreme Court judge in November rejecting the claim.

The full court on Wednesday also found in favour of the state.

"(Gunns) knew it did not have a licence when it commenced construction of the dam, it took a risk in commencing construction absent a licence, and it could have decided not to commence construction," Supreme Court Justice Shan Tennent published in her judgement.

"(Gunns) proceeded in reliance on an assumption it made without pressing for finalisation of its licence application."

Chief Justice Alan Blow further ordered that Gunns pay the state's undisclosed legal costs.

The Department of Primary Industries, Parks, Water and Environment acknowledged the judgement but offered no comment.

A spokesman for liquidator KordaMentha said the action by Gunns started before their appointment.

"On legal advice KordaMentha continued the action in accordance with our statutory obligation to act in the best interests of creditors," he told AAP.

"The matter is now finished."

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