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Minister found to owe duty of care to consider climate change in decision making

  • Legal Development 15 June 2021 15 June 2021
  • Asia Pacific

Background

On or around 11 February 2016, Whitehaven Coal Pty Ltd applied to the Commonwealth Minister for the Environment (Minister) to expand their Vickery Coal Project which would increase the total coal extraction from 135 to 138 million tonnes. When combusted, the additional coal extracted was estimated to produce about 100Mt of C02.

The Minister is required to assess Whitehaven’s application in accordance with s130(1) and s133 of the Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act). The Applicants sought an injunction to restrain the Minister from exercising her powers under the EPBC Act. They alleged that the Minister’s powers create a statutory duty of care and that the injunction is necessary to restrain an apprehended breach of that duty. 

The Applicants alleged that towards the end of this century, they will likely suffer mental or physical injury, including ill-health or death as well as economic and property loss as a result of their exposure to climatic hazards induced by increasing global surface temperatures driven by the further emission of C02.  The Applicants alleged that additional emissions from the Vickery Coal Project will be significant and material to the increase. For the most part, the parties agreed that additional emissions will have an impact on the surface temperature, but, disputed the significance of the temperature increase.

Interestingly, the Applicants in the proceedings were eight Australian children who brought the proceedings as a class action on behalf of all children who ordinarily reside in Australia (Children). As a consequence of their youth, the proceedings were brought by their litigation representative Sister Marie Brigid Arthur. Importantly the Applicants did not seek damages.

Duty of Care

In considering whether this novel duty of care exists, the Court took a multi-factorial assessment, in which ‘salient features’ relevant to the appropriateness of imputing a legal duty upon the Minister were assessed and weighed. This approach is a uniquely Australian concept for the assessing of a novel duty of care.

The Court noted that where the Respondent is a repository of statutory power, imposing a duty of care can raise problems that require a close examination of the terms, scope and purpose of the relevant statutory regime. Moreover, whilst the ultimate question is whether a requisite relationship exists between the statutory authority and a class of persons, the criteria for assessing whether that relationship exists is to be found in the salient features of that relationship.

Among the seventeen salient features already established under common law, the Court noted that the following were relevant for this particular case:

  • the purpose to be served by the exercise of the power;
  • the control over the relevant risk by the repository of the power;
  • the vulnerability of the persons put at risk; and
  • coherence.

The Applicants emphasised the degree and nature of control able to be exercised by the Minister to avoid harm (control), the vulnerability of the Children (vulnerability), the reasonable foreseeability and nature of the harm (reasonable foreseeability) as well as a recognised category of relationship between the Minister and the Children (recognised relationship). The Minister contended that the posited duty was extraordinary, submitting that there was no precedent for a duty analogous to the duty contended for by the Applicants. Further, the Minister contended that ‘reasonable foreseeability’, ‘control’, the salient features of ‘proximity’, ‘reliance and responsibility’ as well as ‘indeterminacy’ all supported the rejection of the duty for which the Applicants contend.

The Court determined that the potential harm faced in the event of a 3°C rise in global temperatures would be catastrophic, with one million of today’s Australian children expected to suffer at least one heat-stress episode serious enough to require acute care in a hospital, thousands likely to suffer premature death from heat-stress or bushfire smoke and substantial economic loss and property damage will be experienced.

 The various types of harm contended for by the Applicants depended upon there being a nexus between an increase in global average surface temperature and the increased frequency or gravity of extreme climatic events such as heatwaves or bushfires. The Court noted that while the prospective contribution to the risk of exposure to harm made by the approval of the extraction of coal may be characterised as “tiny,”  the Minister’s prospective contribution is not so insignificant as to deny a real risk of harm to the Children.

The Court held that the Minister has direct control over the foreseeable risk because it is her exercise of power upon which the creation of that risk depends. Therefore, there is a direct relation between the exercise of the Minister’s power and the risk of harm to the Children resulting from the exercise of that power.

The Court ultimately held that the risk of harm to the Children was not remote, was reasonably foreseeable, and was therefore a real risk. In doing so, the Court rejected the Minister’s approach to ‘reasonable foreseeability’, which was described as amounting “to a contention that the mere possibility of a break in the causal chain will suffice to deny the reasonable foreseeability of harm,” [194] and established a duty to take reasonable care not to cause personal injury.

Injunction

In considering whether to grant an injunction, the Court accepted that it has the power to issue one against an officer of the Commonwealth. However, the Court did not grant the injunction because it was not satisfied that the restraint would not create incoherence, as it ‘may deny rather than induce the reasonable response which the duty of care requires.’ [502] Moreover, the Court noted that, with reference to the fact that harm was not imminent, it was ‘undesirable to pre-empt the Minister’s decision,’ [508] – namely that it would be far more appropriate to assess whether a breach of the duty should be restricted once the Minister has made a decision on whether she will approve the coal mine extension.

Conclusion

At this stage it’s difficult to determine the “winner” in this case. Given the creation of a novel duty of care, it is very likely that the Minister will appeal the decision. In its press release to the ASX, Whitehaven Coal stated that it welcomed the decision and looks forward to receiving EBPC Approval. On the other hand Ava Princi, one of the Applicants, stated that the judgement was “both thrilling and deeply relieving”. 

Although he refused to grant an injunction, the judge requested that the parties consider the effect of the decision before he would confirm his declaration. One of the issues for the parties to consider is the future affect of the declaration. As the matter was run as a class action on behalf of children who reside in Australia or elsewhere, the declaration may have consequences for the whole class and any future litigation by any Australian child.  

This decision is another example of the Court considering climate change in the context of applications for approval for development.  However, the decision has broader implications than this.

The decision confirms that Australia is becoming an important venue for novel climate change litigation. Other recent examples include:

  • In 2019, a beneficiary of the industry super fund, REST, filed a lawsuit against the fund, arguing that its failure to provide adequate information relating to its exposure to climate-related risks prevented him from making an informed judgment about the management and financial condition of the fund. On 2 November 2020 the proceedings settled, just before trial. The terms of settlement are confidential, but REST released a press statement agreeing to comply with Task Force on Climate-related Financial Disclosures (TCFD) recommendations on disclosure and risk assessment, including conducting "stress tests" on its investment portfolio. (settlement statement from REST)
  • Equity Generation Lawyers, the same lawyers acting in this case have launched another class action against the Australian Commonwealth Government concerning its issue of sovereign bonds.[1] The case is still going through the early interlocutory stages and a decision is not likely until 2022. 
  • The claim does not seek damages but instead seeks declarations that the Commonwealth has failed to disclose the material risk that climate change presents to the bonds' value over time. An injunction preventing the promoting or issuing of bonds without providing material information related to climate change has been sought. If successful, the case may also expose financial institutions and corporates to securities class actions risk from failures to make adequate climate change disclosures in issuing documents and prospectus.
  • In Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 the Land and Environment Court refused a development consent under the Environmental Planning and Assessment Act 1979 (NSW) for a new mine, in part because of its negative effect on climate change resulting from the project’s greenhouse gas emissions.

Chief Justice Preston, at [525], recognised that “[t]here is a causal link between the Project’s cumulative GHG emissions and climate change and its consequences. The Project’s cumulative GHG emissions will contribute to the global total of GHG concentrations in the atmosphere. The global total of GHG concentrations will affect the climate system and cause climate change impacts. The Project’s cumulative GHG emissions are therefore likely to contribute to the future changes to the climate system and the impacts of climate change. In this way, the Project is likely to have indirect impacts on the environment, including the climate system, the oceanic and terrestrial environment, and people.” The decision marks the first time that a coal mine has been rejected in Australia because of its future contribution to climate change.

At this stage, climate change litigation is mainly focused on the actions of the government, however it is expected that it will affect a wider proportion of Australian corporates, their directors and their insurers in the not too distant future.  This is also in the context of ever-increasing requirements of and supervision by APRA and ASIC in relation to climate risk disclosure requirements.

Contact us

It is important for businesses to consider and monitor regulators’ comments and requirements on climate change related risks. Clyde & Co remains committed to mapping and understanding climate change risk alongside a growing network of cross-sector experts and collaborators, to help our clients navigate the rapidly evolving risk landscape they face. If you would like to discuss the issues raised and how this may impact your business please contact Dean Carrigan, Jacques Jacobs and / or Jacinta Studdert.

Read more

You can read more about APRA and ASIC’s climate risk disclosures in the following articles:

  • ASIC’s Report 593 on Climate Risk Disclosure By Australia’s Listed Companies, which can be accessed here; and
  •  Article on APRA’s Draft CPG 229 Climate Financial Risks Guidance, which can be accessed  here.

Clyde & Co regularly publishes articles on identifying and managing the risks resulting from climate change, which can be found at the Resilience Hub


[1] Kathleen O’Donnell v Commonwealth of Australia & Ors (Federal Court, VID482/2020).

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