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Contaminated land – November 2000

In brief: Liability for contaminated land is an increasingly important issue - with liability varying from State to State. Paul Lalich(view CV) looks at the issues involved and explains Australia's different regimes in the first of a two-part series.

This article was first published in the Australian Property Journal, Volume 36, No. 4, November 2000.

Contaminated land issues are becoming increasingly important in the context of commercial transactions and corporate management. Different regulation in the States and Territories of Australia has meant that liability for contaminated land varies depending upon jurisdiction.

Of particular concern to owners and occupiers of land is the allocation of liability for the remediation of contaminated sites. Most legislation dealing with contaminated site management is premised on the principle that the polluter should be responsible for the remediation of contaminated land. However, recognising that in some circumstances it may be impractical or impossible to allocate liability to the polluter, most legislation establishes a hierarchy of liability. Generally, the owner or occupier of the contaminated site will be the next most appropriate person to be allocated liability, followed by lenders (e.g, mortgagees) and local authorities.

This is the first article in a two-part commentary on liability issues pertaining to contaminated land. It provides a broad overview of the regulatory framework in each Australian jurisdiction. The second instalment will analyse the effect of these laws in the context of a hypothetical case study.

What is a Contaminated Site?

A contaminated site is defined under the Guidelines published by the Australian and New Zealand Environment and Conservation Council (ANZECC) and the National Health and Medical Research Council (NHMRC) as:

"a site at which hazardous substances occur at concentrations above background or local levels and which is likely to pose an immediate or long-term hazard to human health or the environment."

Generally, laws dealing with contaminated sites use definitions similar to this as a trigger for the issuing of orders or notices to remediate contaminated land.

New South Wales

In New South Wales the Contaminated Land Management Act 1997 (NSW) (the CLMA) is the principal piece of legislation governing contaminated land.

The CLMA attaches liability for contaminated land to the person who caused the contamination. However, the following hierarchy of liability exists if it is not practicable to hold the polluter liable:

  • the owner of the land (the definition of owner does not include an occupier of land);
  • the notional owner of land (a notional owner includes a mortgagee in possession of land or someone with a vested interest in land or who has rights to dispose of or otherwise deal with a freehold interest in land).

Under the CLMA, if the Environment Protection Authority (EPA) believes that a site presents a significant risk of harm to the environment or human health, it may issue a remediation order requiring the appropriate person to remediate the land. It is important to note that an owner of land who has complied with a remediation order (although not responsible for causing the contamination), may recover the costs of complying with that order from the person who was responsible for the contamination.

If an appropriate person is unable to comply with a remediation order, the local authority becomes liable for the remediation of the contaminated site. The local authority is entitled to be reimbursed for the cost of undertaking the remediation work if the remediation work was undertaken on the basis that the appropriate person failed to comply with the remediation order. The local authority can issue a costs notice to recover its costs and may, in certain circumstances, register this notice on the title of the remediated land. The charge has priority over all other encumbrances.

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Queensland

In Queensland, the key provisions are found in the Environmental Protection Act 1994 (Qld) (the Qld EPA). As the Qld EPA is premised on the polluter pays principle, primary liability for contaminated land is allocated to the person who caused the contamination. However, the following hierarchy of liability exists under the Qld EPA if it is not practicable to hold the polluter liable:

  • the local council that gave approval for an activity which resulted in the contamination (provided, however, that the approval was given contrary to legislative requirements and the local council should have known that contamination would result from the giving of such approval);
  • the owner of the land (provided that the land was contaminated before 1 January 1992 or when, at the time an owner purchases the land, the land was listed in the contaminated sites register or environmental management register or where contamination occurred after the land was purchased by the owner). Owner is defined under the Qld EPA to include a person who holds a lease, licence or permit over land. It should be noted that despite the fact that mortgagees fall within the definition of owner, the liability of lenders is limited under the Qld EPA.
Victoria

In Victoria, contaminated land issues are regulated under the Environment Protection Act 1970 (Vic) (the Vic EPA). Liability for site contamination under the Vic EPA rests mainly with the polluter or the occupier of premises.

In relation to the polluter, a notice requiring remediation of contaminated land may be issued to:

  • the person who caused or permitted the pollution;
  • any person who appears to have abandoned or dumped industrial waste or potentially hazardous substance; or
  • any person who handles industrial waste or a potentially hazardous substance in a manner which is likely to cause an environmental hazard.

In the usual course of events the occupier will be the easiest target for a notice to remediate. Occupier is defined broadly to include a person who is in occupation or control of the premises whether or not that person is the owner of the premises. The broad definition of occupier may result in persons being liable despite the fact that they may not have caused the contamination. In respect of pollution from or on any commercial or industrial premises, the occupier of the premises is presumed to have caused the pollution unless the contrary is established. An occupier ordered to remediate contaminated land may recover the costs of remediation from the actual polluter.

Western Australia

Western Australia currently does not have legislation specifically dealing with the management of contaminated sites. However, contaminated land management may be affected by the draft Contaminated Sites Bill 2000 (WA) (the Bill ).

Under the Bill, contaminated is defined to mean the presence of a substance in, on or under land, or in underground water, at a concentration that presents, or has the potential to present, a risk of harm to human health or any environmental value. However, a site is not contaminated merely because such a concentration is present in any surface water standing or running on the land.

As with the majority of Australian states, liability under the Bill is based on the polluter pays principle, with primary liability falling on the person who caused the contamination. However, a polluter will only be liable if the contamination occurred:

  • after the commencement of the Contaminated Sites Act (the Act); or
  • before the commencement of the Act by an unlawful act (ie, an act or omission that was an offence under the law of Western Australia when it occurred, whether or not it was the subject of a conviction).

In circumstances where the person responsible for causing the contamination cannot be identified or is insolvent, the owner of the land will be responsible for remediation.

Tasmania

In Tasmania the Environmental Management and Pollution Control Act 1994 (Tas) (the EMPCA) imposes liability for contaminated land on the person responsible for the contamination occurring. An environment protection notice requiring the remediation of land may be issued to the person responsible for an activity where environmental harm is being, or is likely to be caused or where remediation of that harm is required. Importantly, a notice may be registered on the title of the land requiring remediation. If registered, the notice acts as a charge on the land and will bind successive owners.

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South Australia

Unlike legislation in other States, the Environment Protection Act 1993 (SA) (the SA EPA) does not impose liability on persons other than the polluter. However, under the Public and Environmental Health Act 1987 (SA), occupiers and owners of land may be required to improve the condition of premises in an unsanitary condition.

A clean-up order may only be issued by the Environment Protection Authority under the SA EPA to a person who has contaminated land and only when the Authority is satisfied that that person has caused the contamination. However, the Authority may issue a clean-up authorisation permitting a public body or other persons to remediate a contaminated site where environmental harm has been caused by a contravention of the SA EPA or a repealed environmental law.

The cost of remediating contaminated land may be recovered by the Authority if the person issued with an order fails to comply with the order and the Authority undertakes the remediation. Similarly, the cost of remediation undertaken pursuant to an authorisation may be recovered from the person who caused the contamination. Such costs operate as a charge on the land the subject of the order or authorisation and are binding on successive owners of the land. The charge however is subject to other registered charges except those of an associate of the owner as defined in the SA EPA.

Australian Capital Territory

In the Australian Capital Territory (the ACT) the Environment Protection Act 1997 (ACT) (the ACT EPA) regulates the management of contaminated land. The ACT EPA also adopts the polluter pays principle, with liability for contaminated land resting with the person who caused the contamination. Under the ACT EPA, the Environment Protection Authority may issue an environment protection order to persons in breach of an environmental authorisation, or the ACT EPA, requiring those persons to prevent or mitigate environmental harm and to undertake appropriate remediation of the contaminated site.

As with South Australia and Tasmania, provision is not made under the ACT EPA for orders to be issued on persons other than those in breach of an environmental authorisation or the ACT EPA. Consequently, if an owner or occupier of a contaminated site is not responsible for the contamination occurring, there is no mechanism for allocating liability to that person. Nor, unlike South Australia, is there provision for the costs of the remediation work to operate as a charge on the land the subject of the environment protection order.

Northern Territory

The Waste Management and Pollution Control Act (1999) (WMPCA) deals with remediation of contaminated land. A Pollution Abatement Notice can be issued by an authorised officer within the meaning of the WMPCA, to clean up a contaminated site. Consistent with the polluter pays principle, unless the notice is revoked, the requirements continue to bind the person to whom it was issued where the person sells or ceases to occupy the land. Notification of the existence of a Pollution Abatement Notice will be recorded against the title of the land.

Comment

The polluter pays principle has been enshrined in contaminated land management legislation Australia wide. Whilst the principle affords a degree of protection to owners and occupiers of contaminated land, liability may flow to an owner or occupier who was not responsible for causing the contamination where the polluter cannot have liability ascribed to it. This liability, in certain jurisdictions, may result in charges being registered on title and in certain circumstances obligations being imposed upon a mortgagee in possession. The impact such liability may have upon the value of proprietary assets highlights the importance of due diligence investigations being conducted when purchasing land or acquiring an entity which holds property assets.

Where contamination is suspected, an environmental audit may provide a useful benchmark should it become necessary to determine and allocate liability. Environmental audits and the duty to report contamination will be discussed in part two of this commentary on liability arising from contaminated land.

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