- The Ontario Superior Court of Justice recently handed down Canada’s largest environmental class action against a mining company.
- In Australia, mining companies could be subject to damages claims in nuisance and negligence and under environmental statutes brought by affected neighbours.
- Compliance with a development consent or an environmental protection licence may not prevent an action in tort.
- Even where emitted pollutants are not necessarily noxious, damages may be awarded where a pollutant (such as dust) has the potential to devalue nearby properties.
- Representative proceedings by groups of affected plaintiffs are possible in most state and federal courts. However, this form of action generally requires the plaintiffs to have the ‘same interest’ in the litigation.
- The Federal Court of Australia and the Victorian courts have specific procedures to accommodate class action lawsuits. It is currently proposed that amendments to the New South Wales Civil Procedure Rules will provide for distinct and clear rules for class actions in New South Wales.
Environmental class action litigation has dominated the civil litigation scene in the United States for years. In the 1990s, a class action involving contaminated water was made famous by the Hollywood film Erin Brockovich. The claim against power company, Pacific Gas, secured damages of $333 million—one of the biggest settlements in US history.
More recently, BP has found itself in deep water as a result of the oil spill in the Gulf of Mexico. Many thousands of individuals have mounted claims against BP for financial losses. This includes hundreds of distinct class actions brought on behalf of fishermen, restaurateurs and those in the tourism industry which have been drastically affected by the spill resulting from an explosion on the Deepwater Horizon oil rig.
Further north, the Ontario Superior Court of Justice recently handed down Canada’s largest ever environmental class action based on pollution.
This article considers the Canadian decision of Smith v Inco and explores whether similar actions may be brought in Australia, including possible implications for the mining industry.
Canada’s largest environmental class action based on pollution
The groundbreaking Canadian environmental class action resulted in a $36 million compensation payout against mining giant Vale (formerly Inco Limited). The Ontario Superior Court of Justice awarded compensation to approximately 7,000 local residents on the basis that certain pollutants disseminated from Inco’s nickel refinery resulted in the devaluation of their properties.
The class action was ultimately successful based on the Rylands v Fletcher strict liability doctrine. The refinery was found to be liable (regardless of intention to cause harm) as a result of its non-natural use of the land and the escape from its land of something likely to do mischief. The court also found that Inco’s conduct constituted a private nuisance. Justice Henderson found that the residents sustained material physical damage to their properties which resulted from conduct arising from Inco’s refinery.
Justice Henderson determined that merely because there was a lawful commercial purpose carried out in accordance with environmental regulations does not absolve the refinery from liability. Also, even though the pollutants in question were not necessarily poisonous, it was the potential of these minerals to devalue nearby properties that resulted in the award of damages.
Inco has since lodged an appeal from this decision.
Position in Australia
Mining companies in Australia may not be as susceptible to liability for the release of noxious substances as our common law counterparts in Canada.
The Rylands v Fletcher doctrine, the basis of the Canadian class action, has been absorbed into the law of negligence in Australia due to a landmark 1994 High Court decision (Burnie Port Authority v General Jones Pty Ltd). In other words, to bring a similar class action in Australia, the claimants would need to prove all the elements of negligence, such as a duty of care, and breach causing foreseeable harm.
Mining companies in Australia might be most vulnerable to a claim in private nuisance, particularly since the law has for a long time recognised claims relating to the emission of smells, dust particles, noise and other pollutants. Potential liability is not limited merely to those who created the nuisance, but also to those who have adopted it, negligently permitted or failed to remedy the nuisance.
To be successful, the claimant must show that the defendant’s conduct substantially or materially interfered with some proprietary interest it held in land. A court will consider the reasonableness of such conduct; having regard to such matters as the locality of the land and the practical means available to avoid harm. This will depend on the circumstances of each case. In addition to seeking damages, a claimant may seek orders for the abatement of the nuisance.
A major limitation of pursuing an action in private nuisance is that recoverability is restricted to proprietary damages, rather than those for adverse health effects. Any claim for physical injury or adverse health effects caused by the emission of a pollutant will need to be brought in negligence.
A defence may be available if the nuisance is permitted by a statutory authorisation. However, a development consent or an environment protection licence will not provide such a defence.
Class actions in Australia
Grouping claims in respect of similar rights is generally available in all Australian courts as a matter of procedure. Whilst this may allow few claims to be brought simultaneously, it does not strictly allow for class actions (potentially involving hundreds of litigants). Currently, only the Federal Court of Australia and the Victorian court system have implemented particular procedures accommodating class action lawsuits. New South Wales may soon follow, as a parliamentary bill is presently seeking approval to amend the Civil Procedure Rules to outline distinct and clear rules for class actions. The purpose of the bill is to ensure that clear guidelines are set for class actions which ensure that those with legitimate claims are no longer discouraged from litigation. Given the recent momentum towards uniform civil procedures across all Australian jurisdictions, it is likely that the other states may follow suit.
A derivative issue of class action lawsuits is the concept of litigation funding. Whilst traditionally seen as against public interest, a recent shift in emphasis towards access to justice has seen modification to the Corporations Act 2001 (Cth) to allow ASIC to grant licences to authorised litigation funders. This power has only been exercised on one occasion, resulting in the only Australian licence being granted to IMF. However, it is likely that as class action procedures become more uniform and consistent across Australia, further licences may be granted to accommodate this change.
Trend towards environmental class actions in Australia
ICI Australia was the subject of a class action in the late 1990s as a result of claims that cattle were contaminated with a certain chemical substance (a pesticide residue) found in cotton which had been eaten by the cattle. The class consisted of 470 members. The court ultimately found that the class had satisfied the requirements of the Federal Court rules and they were successful in their claims for damages.
In 2000, a class action arose against lead smelters, Pasminco, as South Australian residents claimed damages for injury to their health allegedly caused by noxious emissions. The claim against Pasminco was brought in nuisance, negligence and under the Trade Practices Act 1974 (Cth) (Trade Practices Act). The Federal Court essentially found that the residents were merely using the federal jurisdiction to take advantage of the class action rules, which do not exist in South Australia. The court ruled that the cause of action founded on the Trade Practices Act was untenable and as a result the court did not have jurisdiction to entertain the claim. It was also found that, in order to appropriately mount a class action, each complainant must have related claims against the same defendant(s).
A more recent example may be developing in Mount Isa, Queensland, where residents claim that lead poisoning from a local mine has caused adverse health effects on local children. Whilst the mining company claims that lead air emissions have always been within approved limits, it is interesting to note that the Ontario Superior Court of Justice in the Inco litigation found that carrying out activities in accordance with environmental regulations does not absolve liability.
A final word
It is early days for environmental class actions in Australia. It remains to be seen whether the proposed civil procedure reforms in New South Wales and other jurisdictions will cause Australia to follow the example in the United States and Canada.
As this area of law develops, parliament may enact specific legislation to provide a statutory defence for the emission of pollutants. For example, in New South Wales, the Luna Park Site Act 1990 provides a complete statutory defence to any claim relating to noise.
Here are a few tips which Australian mining companies may wish to consider:
- Keep abreast of civil procedure reforms in Australian courts relating to class actions.
- Look proactively at environmental approvals and management systems.
- Continually implement better controls to improve environmental compliance.
- Keep abreast of technical developments internationally. This will assist the company in demonstrating that it complies with best practice.
- Recognise that planning approvals and environment protection licences may not protect against claims in tort.