11 October 2022
9 min read
#Environmental, Social and Governance (ESG), #Government, #Dispute Resolution & Litigation, #Planning, Environment & Sustainability
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Australia is the climate change litigation capital of the world, having more climate change litigation per capita than any other nation. Governments are frequently targeted by litigants and, with a number of recent cases challenging the boundaries of climate change law, it is worth taking a look at where climate change litigation is heading.
Government bodies are subject to a number of litigation risks related to ESG issues, including the risk of litigation brought by members of the public for failing to effectively anticipate, manage and disclose climate change risks. Federal and state governments need to be aware of the legal risks of a changing climate, which include many of the physical risks associated with climate change, but can also include transition risks such as changes in policy and technological innovation. Unlike their private counterparts, government bodies are often subject to greater accountability through the general law and their governing statutes, as well as judicial/merits review and accountability legislation (see legislation such as the Administrative Decisions (Judicial Review) Act 1977 (Cth), Administrative Appeals Tribunal Act 1975 (Cth)) and Public Governance, Performance and Accountability Act 2013 (Cth)).
In Australia and internationally, litigants have sought to compel governments to act on climate change using the common law of tort.
The most well-known cases in this regard are Sharma v Minister for the Environment [2021] FCA 560 and its appeal Minister for the Environment v Sharma [2022] FCAFC 35 (Sharma), which concerned a challenge by a representative class of children against a Ministerial approval granted under environmental legislation to extend a coal mine. At first instance, the judge held that there was a real risk of harm to the represented class arising from the carbon emissions the extension would cause, that the Minister had substantial control over the risk of harm and that the children were vulnerable to that risk. The judge held that the Minister owed all Australians under 18 years of age a duty of care to exercise her powers under environmental legislation with reasonable care to not cause them harm. However, the judge did not find that the Minister was likely to breach that duty.
On appeal, the Full Court overturned the finding that the Minister owed the children a duty of care. Chief Justice Allsop and Justice Wheelahan held that the environmental legislation did not create a relationship between the parties that gave rise to a duty, that the duty would be inconsistent with the Minister’s obligations under the relevant Act and that any assessment of breach of the duty would create policy questions that were not appropriate for judicial consideration. Justice Beach held, among other things, that there was no physical, temporal or relational closeness between the Minister’s exercise of her powers and any harm caused to the claimants.
Although the appeal in Sharma dismantled a radical yet short-lived extension of a duty of care to avoid harm from the future effects of climate change, comments made by Justice Beach at the conclusion of his judgment suggest that further challenges will likely be made in this area. Justice Beach agreed that action needed to be taken to limit carbon emissions and conceded that the applicants may eventually suffer damage and have a complete cause of action. He noted that indicia used in determining duty, such as sufficient closeness and directness, may no longer be applicable for climate change litigation, where the harm complained of may have little temporal or geographical relationship to the impugned conduct. As foreshadowed by Justice Beach, High Court determination may be needed to create any ‘sustainable duties of care’.
Similar criticisms of attempts to extend tort law to cover climate change harms were made in the case of Smith v Fonterra [2021] NZCA 552 (Smith v Fonterra). In that case, elders from Maori groups and a climate change spokesperson claimed that a number of companies owed a duty of care to the people of New Zealand to limit or offset their carbon emissions. The Court of Appeal found that the application was effectively seeking to create a court-supervised regulatory regime and that the judiciary lacked the requisite expertise and accountability that other public intuitions may have. The Court of Appeal concluded that the issue required “a sophisticated regulatory response at a national level, supported by international coordination.”
It is uncertain to what extent the common law may be used to force climate change action from governments. However, members of the public will likely continue to test the boundaries of the common law. If the judiciary is uncomfortable with reforming tortious concepts, such as duty of care, legislative development may be needed.
One of the main areas of climate change litigation risk for private enterprises is in relation to consumer protection laws, such as mandatory disclosure obligations and prohibitions on misleading and deceptive conduct. (For a detailed summary of recent ASIC guidance on this topic, read our article on ASIC's new ‘greenwashing’ guidance). While government bodies are not subject to the same consumer protection regime as corporations, many common requirements apply.
O’Donnell v Commonwealth of Australia (Federal Court of Australia VID482/2020) is an ongoing case relating to disclosure obligations concerning Commonwealth-issued exchange-traded government bonds. The representative applicant was an investor in a number of bonds who alleged that the Commonwealth did not adequately disclose the risk the Australian economy will face from climate change and that bondholders were subject to material risk as a result.
The claim was made under section 12DA of the Australian Securities and Investments Commissions Act 2001 (Cth), which prohibits misleading and deceptive conduct in relation to financial services. Although the matter is still awaiting a final hearing, the application itself demonstrates a willingness by affected consumers and investors to hold government bodies accountable for insufficient climate change disclosure. Arguably, governments are exposed to a greater degree of consumer action risk than banks, superannuation funds and investment managers, since governments are also responsible for the policy-making and administration necessary to mitigate climate change risk.
In Australia, climate change litigation against governments based on the protection of human risks is far less developed than in many jurisdictions overseas. Unlike Ireland, India, Canada and France, Australia does not have a federal charter of human rights – although Victoria, Queensland and the ACT have each enacted human rights legislation.
The first climate change litigation in Australia brought against a government body under human rights legislation is the Queensland case of Waratah Coal Pty Ltd v Youth Verdict Ltd (Queensland Land Court, MRA050-20 (ML70454) EPA051-20 (EPML00571313)) (Waratah Coal). Waratah Coal involves an environmental group’s challenge to the decision to grant a mining lease and rights to develop a coal mine. Under the Human Rights Act 2019 (Qld) (Human Rights Act), it is unlawful for a public entity to act or make a decision that is not compatible with human rights or that fails to give proper consideration to human rights. The applicant alleges that the grant of the mining applications will contribute to climate change and thereby infringe a number of rights under the Human Rights Act. Waratah Coal survived a strike-out application in 2020 and the case is still ongoing. The outcome may determine the prospects of future rights-based climate change litigation in Australia.
While there is no charter of human rights at the Commonwealth level, it is possible that rights-based litigation may be based on other sources of rights and protections. This can be seen in the case of Pabai Pabai and Guy Paul Kabai v Commonwealth of Australia (VID622/2021) (Pabai Pabai). Pabai Pabai is a representative action brought by leaders from the Gudamalulgal Nation of the Torres Straight Islands. The applicants claimed that the Commonwealth breached its duty to the Torres Strait Islanders by not setting carbon emissions reduction targets consistent with the best available science. The applicants argue that the future impacts of climate change will cause sea levels to rise, which will cause many islands in the Torres Strait to become uninhabitable. Although Pabai Pabai is a duty of care case, the applicants rely on the Torres Strait Treaty, which obliges the Commonwealth to take a number of actions to protect the marine environment of the Torres Strait.
Rights-based climate change litigation against governments may also be adjudicated by international bodies of which Australia is a member of. For example, in September 2022, the United Nations Human Rights Committee determined in an action brought by 14 Torres Strait Islander representatives that Australia had failed to take mitigation and adaption measures against the effects of climate change.[1] The Human Rights Committee found that Australia had infringed on a number of rights of the complainants protected by the International Covenant on Civil and Political Rights. It is possible that future rights-based actions will also need to use international treaties or other sources of law to establish any rights that are said to be infringed.
Without the codification of human rights legislation federally, the scope of human rights litigation will continue to be more restricted in Australia than in other jurisdictions globally. Until more robust rights-based legislation is in place, the experience of states, like Queensland, with human rights legislation will need to be used for guidance instead.
It is clear that Australian litigants are eager to hold governments accountable for any perceived climate change failings, whether from insufficient disclosures of climate risk, the approval of fossil fuel projects contributing to climate change or the failure to set targets to successfully mitigate climate change.
Although litigants are pushing the boundaries of the common law and statutory causes of action, Australian courts are demonstrating reluctance to create new causes of action for future damage that may be caused by climate change. However, future ESG legislation, including any enactment of a national charter of human rights or the recently enacted greenhouse emissions reduction target, may provide a possible avenue to significantly expand the scope of climate change litigation against governments.
If you have any questions about ESG or are seeking assistance with climate change litigation, please contact us below or send us your enquiry here.
[1] Views adopted by the Committee under article 5(4) of the Optional Protocol, concerning communication No. 3624/2019.
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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