The Situation: In a landmark judgment, on 27 May 2021, the Federal Court of Australia ruled in Sharma v Minister for the Environment  FCA 560 (Sharma) that, when deciding whether or not to grant approval to a coal mine development, the Federal Minister for the Environment owed a duty of care to all children under the age of 18 who ordinarily reside in Australia to avoid causing them personal injury as a consequence of increased carbon dioxide emissions.
The Result: The finding that government decision-makers owe a duty of care to Australian children to protect them from harms caused by climate change breaks new legal ground in Australia. If Sharma is upheld following any appeal, the decision will have significant consequences for businesses in emissions-intensive industries seeking approval for projects, with government decision-makers likely to be increasingly mindful of the emissions contributions of such projects when deciding whether or not to approve them.
Looking Ahead: The Federal Court expressly left open the question of whether the novel duty of care it recognised could apply in other scenarios. As such, Sharma creates a risk that claimants—including class action claimants—could bring actions seeking to impose similar duties on corporations in emissions-intensive industries.
As reported in our previous Jones Day "Climate Report" newsletter, the Vickery Extension Project ("the Project") is a AUD $700 million proposal by Whitehaven Coal Limited (an ASX-listed Australian coal miner) to construct an open-cut coal mine and associated on-site infrastructure near Gunnedah, New South Wales. If approved, the Project is expected to extract a total of 33 million tonnes of coal over the 25 year life of the project, causing an estimated 100 million tonnes of carbon dioxide to be emitted into the Earth's atmosphere.
Given that the Project is anticipated to impact threatened species and water resources, it requires approval from the Minister under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) ("EPBC Act").
In 2020, eight Australian children brought proceedings on their own behalf, and as representatives for every young person who ordinarily resides in Australia under the age of 18 ("the Children"). The Children argued that the Minister owes all Australian children a duty to exercise her powers under the EPBC Act with reasonable care so as not to cause them harm, including mental or physical injury and ill-health caused by exposure to climatic hazards as a result of increased global temperatures. The Children sought declaratory and injunctive relief to preclude the Minister from failing to discharge this purported duty of care.
The Decision of the Federal Court
Based on evidence presented to the Federal Court by a number of climate scientists, Justice Bromberg found that the burning of coal from the Project was likely to cause a "tiny but measurable increase to global average surface temperatures". Justice Bromberg found that this would increase the risk of global average surface temperatures increasing beyond 2°C above pre-industrial level, causing catastrophic climatic hazards.
Justice Bromberg held that a reasonable person in the position of the Minister would foresee that, by reason of the Project's effect on increased carbon dioxide emissions and global surface temperatures, the Children would be exposed to a risk of death or other personal injury. Justice Bromberg said (at paragraph 491 of his judgment):
"By reference to contemporary social conditions and community standards, a reasonable Minister for the Environment ought to have the Children in contemplation when facilitating the emission of 100 Mt of CO2 into the Earth's atmosphere".
Justice Bromberg concluded that the Minister has a duty to take reasonable care to avoid causing personal injury to the Children when deciding, under the EPBC Act, to approve or not approve the Project.
However, Justice Bromberg dismissed the children's application for an injunction, as he was not satisfied that there was a reasonable apprehension that the Minister would in fact breach her duty of care in exercising her discretion under the EPBC Act, given that she had not yet indicated what decision she would make. Justice Bromberg suggested that a more nuanced response for the Minister, which might fall short of unconditional approval, remained available. As such, Justice Bromberg considered that it was "highly undesirable" to pre-empt the Minister's decision and a more appropriate course would be to consider if action should be taken for breach of duty once it was known that the Minister proposed to approve the Project and on what terms.
The recognition by the Federal Court of Australia of a duty of care owed to all young people in Australia by a government decision-maker breaks legal ground in Australia. If this single judge decision remains the law following any appeal, it may have significant consequences for Australian businesses.
First, Sharma may mean that government decision-makers exercising discretion to approve emissions-intensive projects under planning or environmental legislation will be increasingly mindful of their duty of care to Australia's children, and may be reluctant to approve emissions-intensive projects.
Secondly, if upheld on appeal, the recognition of a novel duty of care to avoid foreseeable harm from an increase to global average surface temperatures may create risks for corporations with existing emissions-intensive projects. In Sharma, the Minister argued that a finding of a duty of care risked opening the "flood-gates" to imposing liability on "all or a multitude of persons involved in generating emissions of greenhouse gases". Justice Bromberg rejected this argument, finding that the relations between the Minister and the Children in this decision were peculiar to them but that "this does not mean that some or even many of the characteristics found in that relationship may not be found in the relations between others".
Based on this reasoning, it is possible that future claimants will attempt to argue that corporations in emissions-intensive industries also owe a similar duty to Australian children. This could lead to Australian claimants seeking to pursue "climate change class actions," which are already regularly filed against corporations based in the United States. In the United States, many of these actions have been dismissed on the basis of "non-justiciability," i.e., the Courts have sought to avoid deciding on complex policy decisions that are best determined by the government. However, such an argument was not accepted by Justice Bromberg, who said in his reasons, "[a] political controversy can never provide a principled basis for a Court declining access to justice".
Three Key Takeaways
- The decision in Sharma is a landmark decision in Australia, and is the first of its kind in recognising that an Australian government decision-maker owes a duty of care to young Australians to avoid the risk of harm from personal injury from the effects of climate change.
- Subject to any appeal of the Sharma decision, Australian businesses should be aware that government decision-makers may be increasingly mindful of their duty of care to Australian children when deciding whether or not to approve emissions-intensive projects under planning or environmental legislation. Projects with significant carbon emissions are likely to face increased scrutiny and, even if approved, may be subject to private challenge.
- There is also the possibility that the decision in Sharma will lead to an increase in private litigation, including class actions, against Australian corporations in emissions-intensive industries, as claimants seek to broaden the duty of care recognised by the Federal Court.
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