09 Jul 2021

Federal Court's final orders in children's novel climate change case clarify duty of care, but impact still to play out

The Federal Court has made the final orders in a recent case brought by school-aged children concerning the Minister's common law obligations to avoid the risk of physical harm from climate change when determining whether to grant a federal environmental approval for the proposed Vickery Coal Mine extension project.

The Federal Court recently determined in a climate case known as "Sharma" that that the Minister owes a duty of care not to cause harm when exercising her power to grant an environmental approval that is required for the proposed Vickery Coal Mine extension project (Initial Determination). The Vickery Coal Mine extension project, if it proceeds, is expected to contribute 100 million tonnes (Mt) of carbon dioxide (CO2) through the burning of the additional extracted coal (known as Scope 3 Emissions).  

The final orders made yesterday has enshrined the Initial Determination into law and adds further clarity as to the specific content of the duty of care.

The novel duty of care

In particular, it was confirmed that the novel duty of care:

  • applies to all children under 18 years of age who ordinarily reside in Australia at the time of the commencement of the proceedings (Children) but not children ordinarily residing outside Australia;
  • requires that the Minister "avoid causing" harm; and
  • the nature of the harm is "personal injury or death" to the Children arising from the emissions of carbon dioxide from the burning of coal extract from the extension project. An argument from Minister that the harm is should be limited to foreseeable harm caused by bushfires or heatwaves only (rather than harm generally from emissions of carbon dioxide) was rejected.

The appeal

The making of the final orders starts the clock on the 28-day appeal window for the Federal Minister of the Environment and/or Vickery Coal Pty Ltd to decide whether or not to appeal the decision if there is a legal basis for doing so.

The Minister has announced this morning she will lodge an appeal, although the grounds are not yet clear.

What this means for future project approvals

At this stage, the implications of Sharma remain that:

  • regulators are likely to apply greater scrutiny to Scope 3 emissions when assessing the environmental impacts of a project and may apply conditions of approval requiring proponents to avoid, mitigate or offset CO2 emissions;
  • proponents should give significant consideration to reduction and offset measures to increase the likelihood of approval and reduce the risk of legal challenge; and
  • the decision may spur further litigation challenging government decisions in other environmental approval settings, such as state environmental approvals. However, the case needs to be understood in context, and turned very much on its own facts (including the decision making power and vulnerability of the applicants) and the statutory context in which the decision was made.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.