Why is contamination an issue?

Contaminated land is a major issue for developers and land owners because of the possible devaluation in the property and the potential that contamination could increase costs of development. The costs associated with contaminated land can be extraordinary and include the:

• cost of the main clean up works;

• investigation costs;

• long term monitoring costs;

• maintenance costs;

• management costs (including reputation issues);

• holding costs (eg until the cleanup has been completed) ;and

• legal costs.

Equally as important, finance can be difficult to obtain for contaminated land and is usually offered on terms that the bank withholds the estimated costs of remediation. Contamination is regulated by the states and territories and compliance requires a jurisdiction by jurisdiction review.

Unlike other jurisdictions in Australia, there is neither a contaminated land register nor is there legislation which specifically deals with contaminated land in the Northern Territory. Rather, there is legislation that deals with pollution, waste and environmental offences generally, eg the National Environment Protection (Assessment of Site Contamination) Measure.

What is contamination?

Contamination can be caused by activity conducted on the land or on adjoining/nearby land. From a Commonwealth perspective, the Environment Protection and Biodiversity Conservation Act 1999 (Cth) applies throughout Australia but this is more directed at issues with national impact or concerning nuclear issues.

The relevant state and territory legislation defines contamination within the particular jurisdictions.

Management of contaminated land

In each Australian jurisdiction, there are particular departments and/or bodies that manage contaminated land through such measures as preparing and reviewing environment protection policies, issuing notices and enforcing penalties.

Liability for contamination

The various state and territory legislation outlines the rules as to identifying the parties who are liable for contamination. In some jurisdictions, the legislation establishes a hierarchy of persons, which may be liable for contamination. The legislation of some jurisdictions also allows for the transferring and apportioning of liability for contamination.

Conveyancing Practice

The obligations of a vendor to disclose contamination issues both at common law and under statute are limited. From a purchaser's perspective, there is no public registry or public document, either separately or together, which will comprehensively and definitively set out the contamination status of a parcel of land. However, in some jurisdictions there are registers of contaminated land eg in New South Wales, the contaminated land register and in Queensland, the Environmental Management Register and the Contaminated Land Register. In each jurisdiction, there are steps that the parties can take to ensure the issue of contamination is dealt with in conveyancing transactions, so that the parties' contractual obligations are clear.

See the following Guidance Notes:

• New South Wales — Contaminated land

• Victoria — Contaminated land

• Western Australia — Contaminated land

• South Australia — Contaminated land

• Tasmania — Contaminated land

• Northern Territory — Contaminated land

• Australian Capital Territory — Contaminated land

Commercial Building Disclosure (CBD) program

The Commercial Building Disclosure (CBD) program was established by the Building Energy Efficiency Disclosure Act 2010 (Cth) (the Act). It came into effect on 1 July 2011. The program’s aim is to provide prospective purchasers and tenants of large commercial office space with access to energy efficiency information, which is both credible and meaningful.

Documentation and information

The disclosure regime is contained in the following:

• Building Energy Efficiency Disclosure Act 2010 (Cth);

• Building Energy Efficiency Disclosure Regulations 2010 (Cth);

• Building Energy Efficiency Disclosure Determination 2011; and

• Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2011.

The types of property to which the Building Energy Efficiency Disclosure Act 2010 (Cth) applies

The Act applies to an area or a building used or capable of being used as an office and of a kind determined by the Minister under a legislative instrument to be disclosure affected (currently 2000sqm or more): s 3 , Building Energy Efficiency Disclosure Act 2010 (Cth).

There are statutory exemptions.

Parties to which the Commercial Building Disclosure (CBD) applies

Commercial Building Disclosure (CBD) will affect:

• owners who offer/invite offers to sell Disclosure Affected Space; and

• landlords and tenants who offer/invite offers to lease Disclosure Affected Space.

The Act applies to corporations. However, an entity which is not a corporation can also be required to comply with the same obligations.

The disclosure requirements

If:

• an owner offers or invites offers to sell Disclosure Affected Space; or

• a landlord or tenant offers or invites offers to lease Disclosure Affected Space,

it must:

• obtain and register a Building Energy Efficiency Certificate (BEEC);

• provide the BEEC if requested to do so by a purchaser, landlord or tenant which is a corporation (whether or not the owner, landlord or tenant is a corporation); and

• include the BEEC energy efficiency star rating for the building in all advertisements must. The specifications of the disclosure are set out in the Building Energy Efficiency Disclosure Determination 2011.

NABERS is a performance based rating system derived from actual occupation and operations in a building over a 12-month period. It has a rating scale from one to six, where six is the best possible energy efficiency rating.

A BEEC will generally include a NABERS rating, an assessment of the tenancy lighting a CBD building (or part of) being sold or leased and general energy efficiency guidelines. The BEEC is required for commercial offices in excess of 2000sqm. It must be available when a building is advertised for sale, lease or sublease or a building is offered for sale, lease or sub-lease.

Penalties

The penalties for non-compliance under the Act are severe and include fines of up to $170,000 for each event of non-disclosure and $17,000 for each subsequent day of non-compliance. There is also a “name and shame” register published on a publicly accessible website.

What should be done?

Entities (including those that are not corporations) which own Disclosure Affected Space, should act now to ensure that they can comply with the disclosure obligations. Further, it is important that leases, contracts for sale and mortgages contain provisions to enable the entity bound by the Act to comply with the disclosure obligations.

See Mandatory disclosure — Commercial building energy efficiency.