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Lender Liability - Environmental Penalties and Remediation
The implementation of appropriate legislation for the protection of the environment across Australia continues. The work of government has been at two levels: the development of legislation with respect to remediation of contaminated sites and the development of modern pollution control laws. All governments have now consulted on the development of new laws for contaminated land. Representations made by AELA have focused on the lender liability issue. Of particular concern is the potential for financiers to be made liable for the remediation of contaminated sites and for the clean-up and abatement of polluting activities not caused by them. AELA has been most active over the years in the development of appropriate lender liability provisions and Queensland, NSW, ACT, Victoria and, most recently, SA. All now have legislation dealing with land contamination that includes significant protections for ‘passive financiers’ and lenders which enforce their security over the land for the purposes of debt recovery but are not involved in its day-to-day management. These developments are most welcome. The relevant legislation in WA and Tasmania exempts mortgagees-in-possession from liability in relation to contamination but does not provide the same degree of protection for passive lenders as does the law in the other jurisdictions. NT continues to develop its law. Overall, these effectively national developments are generally in the right direction. AELA continues to monitor government activity in this and related areas, with the objective of ensuring coincident enactment and maintenance of the passive lender exemption.
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