Background
In recent years, New South Wales has experienced various and severe climate related events. The 2019-2020 bushfires were, “…unprecedented in their extent and intensity, with fire grounds in New South Wales covering 5.5 million hectares (7% of the state)”. In the first three months of 2022, Sydney was hit with a year’s worth of rain and the Northern Rivers region suffered devastating floods. At the time, the Insurance Council of Australia stated that, “the cost of this year’s February-March floods has now reached more than $5.65 billion, surpassing the 1999 Sydney hailstorm in cost and making it the most expensive natural disaster in Australia’s history.”
These events show us that climate change is affecting the New South Wales environment and properties significantly. Higher temperatures, changes in rainfall patterns, and an increase in bushfire warnings has led to an increase in the frequency and severity of natural disasters. With this in mind, it is therefore integral that lawyers and conveyancers in New South Wales are equipped to recognise and advise on climate related risks and how they impact real property assets.
What are climate change risks?
There are three different types of climate change risks:
- Physical risks – these are the risks that climate change presents to the physical aspects of a property. This can include the physical destruction of property and increased building and maintenance costs. Physical damage can be caused by natural disasters like flooding, fires and severe storm events.
- Transition risks – these are risks which are characterised by how the wider community, like regulators and institutions, change their behaviour as a consequence of climate change. For example, it may become more difficult to develop a property for a particular use where consent authorities have changed planning controls in light of climate change. We note that these risks are not remote, with the NSW state government making an election promise to develop a new flood planning model for Western Sydney. It has been foreshadowed that this model may include different planning restrictions on flood-affected areas.
- Liability risks – these are risks which affect property professionals, such as lawyers and conveyancers. Specifically, a property professional will likely need to adequately advise their clients on the impacts of climate change on properties they may be considering purchasing. Failure to do so may result in the property professional facing litigation, reputational damage and/or difficulty obtaining professional indemnity insurance.
What falls within the scope of a lawyer/conveyancer’s obligation to advise their clients on the risks associated with climate change?
“In accordance with their professional obligations, individual lawyers will need to be alive to the unfolding legal implications of climate change and its consequences and ready to assist clients on climate change-related matters within their areas of skill and competence.”
- Law Council of Australia 2021
Lawyers owe a duty to their clients to warn of the risks associated with a property transaction, including any physical risks to the property which they are purchasing. The scope of this duty is not static and will continue to evolve as new and changing risks emerge. Elizabeth Wild, Partner at Norton Rose Fulbright Australia, has released a comprehensive legal opinion on this subject, available exclusively through InfoTrack and Groundsure. This opinion piece explores climate change risks for New South Wales property transactions, underlining important considerations for conveyancers and property lawyers on their duty of care and responsibility to warn clients.
