So long for now, but not necessarily auf wiedersehn, adieu… the Sharma appeal and what happens next for climate duty
Minister for the Environment v Sharma  FCAFC 35
Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment  FCA 560, the 2021 Federal Court decision which elicited a resounding hallelujah and heralded a new era of climate duty, has been overturned on appeal to the Full Federal Court.
The outcome should not necessarily be seen as an indication that the imposition of climate duties is headed for purgatory, however. As litigants climb every mountain in pursuit of climate justice, the right set of facts may well sound in a duty.
In the meantime, the lack of a duty on the part of the Minister in this instance might see more insureds and their insurers exposed to different types of claims.
In February 2016, Whitehaven Coal Pty Ltd applied to the Minister for the Environment to extend a coal mine development in New South Wales project pursuant to section 68 of the Environmental Protection and Biodiversity Conservation Act 1999 (the Act).
The applicants (being school children represented by a nun) issued proceedings in the Federal Court of Australia seeking declaratory and injunctive relief to preclude the Minister from failing to discharge her duty to exercise her power under s 130 and s 133 of the Act with reasonable care so as not to cause them harm (see ).
The Federal Court’s decision
At first instance, Justice Bromberg found that the Minister has a duty to take reasonable care to avoid causing personal injury or death to all children in Australia (but not overseas) when considering the application to extend the mine. Kennedys’ earlier article on this judgment can be viewed here.
The decision was appealed to the Full Federal Court.
The Full Federal Court’s decision
The question for the Full Court was simply whether the duty of care existed (as no damage had yet been suffered, questions around breach and causation did not arise for determination).
On 15 March 2022, the Minister’s appeal was unanimously allowed, albeit for differing reasons centred upon:
- The imposition of such a duty being inconsistent with the decision making power conferred upon the Minister under the Act (at ).
- The indeterminacy of the class (at ).
- A lack of reasonable foreseeability that the approval of the extension would be a cause of personal injury to the respondents, within the understanding of causation for the purposes of the common law tort of negligence (at ).
- The nature of the relationship between the children and the Minister:
- Chief Justice Allsop saw there as being a lack of special vulnerability and control (at );
- Justice Beach thought the relationship lacked sufficient closeness and directness (at ); and
- Justice Wheelahan did not see there as being any relationship of neighbourhood (at ).
Interestingly, Justice Beach noted in obiter that the concepts of closeness and directness had potentially reached their shelf life. However, he recognised that it was the domain of the High Court rather than the Federal Court 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” (at ).
Despite these comments, Sharma declined to proceed with an application for special leave, meaning this is the end of the line for this specific duty.
Where next for the climate duty?
The Full Court’s decision in Sharma, while perhaps disappointing for many, it should not be assumed that Australian courts will look to deny the existence of climate duty in other circumstances.
In Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority  NSWLEC 92, the NSW Land and Environment Court found with respect of the 2019/2020 bushfires that the EPA failed to perform its statutory duty to develop environmental quality objectives, guidelines and policies to ensure protection of the environment from climate change.
Another major test will be the case of Pabai Pabai & Anor v Commonwealth of Australia, listed for hearing in the Federal Court on 6 June 2023. In this matter, First Nations’ leaders from the Torres Strait islands of Boigu and Saibai are challenging the Australian Government’s failure to reduce greenhouse gas emissions in breach of an alleged duty of care, which they argue has already seen sea levels rise 6cm in only a decade.
In the private sphere, the outcome of Lliuya v RWE AG  will be significant if the court recognises that a private company could be liable for the climate change related damages of its greenhouse gas emissions. The outcome of this German case will also provide insight into how courts might approach the issue of the liability of a greenhouse gas emitter for harms arising in a different jurisdiction.
A duty of care is an obligation to take reasonable steps not to cause foreseeable harm to another person or their property.
Perhaps absent some significant changes, the harms of climate change will be argued to be increasingly foreseeable and, if so, we will start to see climate litigants exploring new and novel bases for a duty of care.
While climate litigation in Australia is currently more proactive in seeking to prevent future harm (with litigants seeking declaratory relief and injunctions), it would be remiss to not look to the future and anticipate:
- litigation being used to compel companies to reduce their carbon footprint or reduce their adverse environmental impacts;
- regulators not allowing companies to misrepresent their sustainability and green practices as part of their value proposition, with ASIC already making good its August 2022 commitment to prioritise greenwashing (ie the practice of representing a financial product, an investment strategy or a business’s operations are more environmentally friendly, sustainable or ethical than it actually is) by taking its first action for greenwashing against listed energy company, Tlou Energy Limited, with the company paying $53,280 in October 2022 for alleged false or misleading sustainability-related statements made to the Australian Securities Exchange a year earlier;
- litigation becoming reactive with individuals seeking damages for harm actually suffered;
- a potential growth area for representative proceedings with cross-jurisdictional complexities;
- novel recovery options for insurers and their insureds; and
- questions being asked at the underwriting stage to understand what safeguards an insured has in place to guard against climate litigation.
This article was co-authored by Cara Cross, Paralegal.
- Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment  FCA 560
- Minister for the Environment v Sharma  FCAFC 35
Related item: Rewriting the risk: Addressing the challenge of climate change
Read other items in the Australian Insurance Brief – November 2022