Officers, financiers, shareholders and other related persons can now be personally liable for company breaches under the Environmental Protection Act 1994 (Qld) (‘Act’).
On 22 April 2016, the Queensland Government passed the Environmental Protection (Chain of Responsibility) Amendment Act 2016 to drastically broaden the application of the Act. These amendments have been triggered as a consequence of concerns that taxpayers may end up paying for the costs of environmental rectification works at the Queensland Nickel refinery near Townsville as a result of the operator of the refinery being placed in administration.
Before the amendments, the Department of Environment and Heritage Protection (‘Department’) could generally only issue an environmental protection order to companies or individuals who caused environmental harm or failed to comply with environmental conditions imposed by the Department under the Act.
Under the recent amendments, the Department can now issue an environmental protection order to related bodies corporate, executive officers, secured parties, mortgagees, financiers, shareholders, and ‘related persons’, such as holding companies and landowners.
This means that parties that had no involvement in causing the environmental harm or failing to comply with environmental obligations can now be required to comply with environmental protection orders. The costs in complying with these orders, such as rehabilitating affected land, can be significant.
As the Department can consider matters arising prior to 20 April 2016 in determining whether a person constitutes a related person, people who may be at risk should consider whether they have sufficient contractual protection under existing insurances, leases, sale contracts and joint ventures if environmental harm is caused.
At risk parties can minimise their exposure through appropriately drafted obligations in leases and other contractual arrangements.