CONTAMINATION: The key legal risks

SPECIALIST environment and planning lawyer, Gabrielle Guthrie, of Guthrie Legal, recommends that Australian Conveyancer readers consider the need for environmental due diligence when handling property sales and purchases due to the risks associated with contamination.

Contamination risks can expose a party to significant costs, legal risks and requirements. These include:

1. Costs associated with compliance with a statutory notice issued by an environmental regulator to investigate, manage and/or remediate contamination. Whilst notices are usually issued to a polluter consistent with the “polluter pays” principle, they have the potential to be issued (depending on jurisdiction) to an owner or occupier that is not the polluter in order to ensure that risks to human health and and the environment are appropriately managed. This means that innocent parties (non-polluters) can be exposed to the cost and compliance burden of compliance with notices, which can be considerable; 

2. A legal requirement to notify environmental regulators of contamination and the potential for a site to be listed on a public contaminated land register with consequent risk of property devaluation;

3. The risk of potential legal claims or embroilment in claims arising from contamination. This includes civil claims in relation to recovery of costs of compliance with notices from another party, as well as potential risk of claims from third parties (such as neighbours) in relation to contamination that has spread offsite;

4. Additional costs and risks associated with development of contaminated sites, such as constraints to site development plans, delay in the development process and remediation costs; and 

5. Difficulties selling or leasing contaminated sites, particularly in light of increasing requirements for vendor and lessor disclosures.