No duty to consider climate change impacts: Full Federal Court overturns Sharma decision on appeal

The Full Federal Court recently overturned the primary judgement that the Commonwealth Minister for the Environment (Minister) owed a duty to take reasonable care to avoid causing personal injury to all children who ordinarily reside in Australia (Children) when exercising her powers under the Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act).

The full judgement is available here and our previous report on the primary judge’s decision can be found here.

The Full Court allowed the appeal, finding that the Minister’s powers under the EPBC Act did not support the creation of a novel duty of care. Chief Justice Allsop cautioned that, as this case required a consideration of climate change policy, it was inappropriate for judicial resolution and that the creation of such duty should be decided through the political progress.

The case is one of several climate change cases currently litigated before the Federal Court of Australia. The degree to which this decision will impact the other cases is unclear. However, most of the claims are being brought under statutory causes of action such as misleading and deceptive conduct, rather than common law negligence and are therefore unlikely to be affected by the impact of the Full Court’s decision.    

Clyde & Co partners, Dean Carrigan, Jacinta Studdert and Jacques Jacobs provide a summary of the matter and its implications going forward.

Background

On or around 11 February 2016, Whitehaven Coal Pty Ltd applied to the Minister to expand their Vickery Coal Project.  The Minister is required to assess Whitehaven’s application in accordance with s130(1) and s133 of the EPBC Act.

Eight school students residing in Australia (the Applicants) sought a declaration that a duty of care be recognised and 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.

On 27 May 2021, the Court held at first instance, 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 declared that the Minister has a duty to take reasonable care to avoid causing personal injury or death to Australian children. However, an injunction was refused.

On Appeal

The Minister’s appeal was heard by the Full Federal Court which unanimously found that the duty of care should not be imposed on the Minister for the following reasons:

Chief Justice Allsop:

• The judicial branch was not the appropriate branch of government to determine complaints about the reasonableness of government conduct where such complaints are political in nature 
  • “It is the relationship of government or the governing with the governed. If the relationship and the uncontested evidence together call forth a duty, it is political duty not a legal duty of care” [266]
• The duty would be incoherent and inconsistent with the EPBC Act and the legal and government framework of responsibility for the protection of the environment as it would create a mandatory consideration beyond the considerations required by the EPBC Act on its proper construction.
  • “The EBPC Act does not contain as an overall purpose the safety of human life” [268]
  • A central error of the primary judge was to construct the duty by individual analysis of salient features.
• The central issue was that the relationship between the Applicants and the Minister lacked the relevant connection necessary for the imposition of a duty of care.
  • “The relationship is not between neighbours in the legal sense amenable to responsibility in the private law of torts. The relationship is one of government and governed in connection the protection of species, communities and water recourses in a limited decision under the EPBC Act” [346]

Justice Beach

• There was no relevant relationship between the Minister and the Children and no sufficient closeness or directness between the Minister’s exercise of statutory power and the likely risk of harm.
  • “In the present case there is no physical, temporal or relational closeness between the Minister and her exercise of power and its consequence on the one hand and the claimant class on the other hand.”  [695]
• To impose a duty would result in indeterminate liability as the number of members of the claimant class are not readily ascertainable today.
  • “the true potential claimant loss, if a duty is to be owed, cannot be foreclosed by the pleader’s construct” [746]
• In his conclusion, His Honour noted that “the primary judge planted the seed of a cause of action” but that “it is for the High Court not us to engineer new seed varieties for sustainable duties of care, modifying concepts such as “sufficient closeness and directness” and indeterminacy to address the accelerating complexity, multiple links and cross-links of causal relations”

Justice Wheelahan

• The EPBC Act does not erect or facilitate a relationship between the Minister, and the respondents and those whom they represent, that supports the recognition of a duty of care.
  • “the recognition of a common law duty of care…would radically alter the scope and subject matter of the decision making obligation of the Minister…” [852]
• It would not be feasible to establish an appropriate standard of care, with the consequence that there would be incoherence between the suggested duty and the discharge of the Minister’s statutory functions.
  • “there are issues which in the context of the present case bear upon the social compact of the welfare of the Commonwealth, and which over the centuries have engaged the minds of philosophers and economists. Their resolution is uniquely suited to elected representative and executive government responsible for law-making and policy-making”  [868]
• It was not reasonably foreseeable that the approval of the extension to the coal mine would be a cause of personal injury to the respondents or those whom they represent, as the concept of causation is understood for the purposes of the common law tort of negligence.

Conclusion

The Applicants have already indicated that they will seek to appeal the decision and have until 12 April 2022 to apply for special leave to the High Court. We will be closely monitoring whether an appeal is allowed and if so, what decision will be made.

This decision demonstrates some of the conceptual problems that arise within the law of negligence (in its current form) when applied to climate change litigation and suggests that it is not the most suitable cause of action for activist climate change action, in comparison to other statutory causes of action that arise under the Corporations Act or the Australian Consumer Law. Future climate cases based on negligence will need to grapple with how a potential plaintiff is able to establish loss, resolve the issues of indeterminacy of liability and establish causation. Each of these problems will be difficult issues.  It is of course possible that the High Court will take up Justice Beach’s comments on the development of the common law.

Australia’s climate change litigation activists are unlikely to be too disheartened by this decision and will be looking to continue to use litigation as a tool to change the behaviour of the government and corporate Australia. We expect Australian climate related litigation and regulatory action to continue to increase, evolve and expand in the next decade with an increased focus on the private sector, particularly focused on financial services, managed investment, fossil fuel, retail, travel and transport and construction/infrastructure sectors.  This could include mass tort-based claims or securities class actions stemming from alleged inadequate climate transition planning and inadequate climate related disclosure.  Further, Australian corporate regulators have indicated that climate disclosures are an area of priority and we are seeing an increase in greenwashing claims. 

It is important for businesses to consider and monitor climate litigation, 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. For more information on how Clyde & Co can assist with current and future high impact risks and liabilities challenging the resilience of organisations, see here.