NSW court says minister has no duty of care to protect against climate change

The previous decision sent shockwaves through the mining and oil and gas sectors given the significant impact it could have on the development of future projects and expansion of existing projects.

Whilst the applicant, Sharma, was unsuccessful in her application for an injunction to stop the expansion of the mine, the case established a new common law duty of care to protect children under the age of 18 from the harm associated with increased CO2 emissions. The implications of the case also extended to government bodies and authorities, intimating that they needed to consider a wider range of factors before issuing permits and licenses.

Although the Federal Court’s decision has effectively restored the ‘status quo’ in respect of the obligations and duties of ministers when discharging their statutory obligations, it is a clear indication that those participating in the energy and resources sector must be cognisant of increasing business risks which are emerging when investing in, or developing, carbon intensive projects. These types of climate litigation proceedings are trending upwards globally, and this is a business risk which the energy and resources sector will need to tackle head on to avoid challenges, delays and ultimately increased capex to develop these types of projects.

The implications of this decision have been far-reaching and will likely have repercussions in other common law jurisdictions, such as the UK.

This case could certainly be used as a yardstick by English courts expressing similar doubts to the Federal Court about issues including whether it is appropriate for the courts, in a claim for negligence, to be evaluating public policy decisions made at the highest governmental level; the lack of proximity in the relationship between the minister and the claimants; the risk of indeterminate liability to a very wide class of persons if a duty were imposed; and the difficulty for the claimants of establishing that it was reasonably foreseeable that the minister's decision would cause them injury. 

Previously, shareholders and other climate interest groups have brought claims based on a breach of directors’ duties under the Corporations Act 2001 (Cth), misleading and deceptive conduct under the Australian Consumer Law, breach of trustee duties and others. We may also see arguments about issues such as the causation and foreseeability of damage in cases running negligence or nuisance climate litigation claims against private corporations, which appear to be on the rise based on recent climate litigation statistics.

Climate litigation risk is now a very real business risk and although this case was overturned for largely public policy reasons and the inability of the original claimant to establish a sufficient nexus between causation and harm, public policy has been evolving more rapidly around climate change and this area is certainly one which should be carefully monitored.   

There is a high likelihood that the decision of the Federal Court will be appealed. Consequently, this area of law is far from settled and we can expect to see further developments in respect of this matter in the short to medium term. 

The court's ruling

It was the Federal Court’s view that upholding the original decision would result in a significant change of the public policy surrounding climate change. It held that changes to public policy are a matter for the legislative branch and are outside the power and responsibility of the judiciary. Upholding the primary judge’s decision would blur the separation of power between the arms of government to increase the role of the judiciary beyond its legitimate scope.

To impose the duty would be “incoherent and inconsistent” with the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). In the first instance decision, the primary judge held that there was an implied duty to consider human safety when approving applications in respect of sections 130, 133 and 136 of the EPBC Act. The Federal Court instead found, based on the express wording of those provisions, human safety was not a relevant consideration. The mandatory considerations required by the minister were sufficiently contained within the relevant sections. To go beyond the consideration listed under those sections would extend their scope beyond was what initially intended.

In consideration of the negligence point, the Full Bench held that the element of causation could not be sufficiently established. The link between the minister’s decision and the impact of climate change related harm was insufficient. The court explained that whilst the minister’s decision did result in an increase in CO2 emissions, and contribute to climate change, the nexus between the decision and direct harm on children was weak. If causation was established, the duty imposed on the minister was not proportionate to the amount of additional resulting climate related harm. The court cited heatwaves, bushfires, and water level rising as other climate change related impacts that were outside the control of and unaffected by the minister’s decision.

The Full Bench found that the EPBC Act did not create any relationship between the minister and those persons potentially harmed by any decision made under the EPBC Act, a critical requirement to establish a duty of care.

Co-written by Emilie Jones of Pinsent Masons.