Contaminated land

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.

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, however Commonwealth legislation is more directed at issues with national impact or concerning nuclear issues.

The relevant state and territory legislation define 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 outline the procedure to identify the parties who are liable for contamination. In some jurisdictions, the legislation establishes a hierarchy of persons who 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 comprehensively and definitively sets 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 parties can take to ensure the issue of contamination is dealt with in conveyancing transactions, so that the parties' contractual obligations can be made 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

Mandatory disclosure — Commercial building energy efficiency

Commercial Building Disclosure (CBD) program

The Commercial Building Disclosure (CBD) program is a regulatory program established by the Building Energy Efficiency Disclosure Act 2010 (Cth) (the Act). It came into effect on 1 July 2011 and is managed by the Australian Government Department of the Environment and Energy. The Commercial Building Disclosure (CBD) program requires the mandatory disclosure of a building’s energy efficiency information to the market when commercial office space above a certain size is offered for sale or lease.

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 2016; and
• • Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2016.

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

The CBD Program requires most sellers and lessors of office space of 1000 sqm or more to obtain a Building Energy Efficiency Certificate (BEEC) before the building goes on the market for sale, lease or sublease.

BEECs are valid for up to 12 months and include:

• • the building's National Australian Built Environment Rating System (NABERS) energy for offices star rating; and
• • a tenancy lighting assessment of the relevant area of the building.

Standard energy efficiency guidance information previously included on the last six pages of the BEEC is now provided online. This includes information on how building owners and tenants might improve a building's energy efficiency and allow the CBD team to provide relevant and targeted energy efficiency information to building owners.

Only CBD accredited assessors can apply for BEECs on behalf of building owners or lessors. For more details about BEECs. See Get and use a rating.

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 1000 sqm or more): s 3, Building Energy Efficiency Disclosure Act 2010 (Cth).

s 3, Building Energy Efficiency Disclosure Act 2010 (Cth)

There are statutory exemptions.

Parties to which the Commercial Building Disclosure (CBD) applies

From 1 July 2017, CBD will apply to:

• • a building owner who is selling or leasing office space with a net lettable area of 1000 sqm or more;
• • a tenant who is subleasing part of your tenancy with a net lettable area of 1000 sqm or more;
• • a real estate agent who is advertising office space with a net lettable area of 1000 sqm or more; and
• • a CBD accredited assessor who must comply with the conditions of accreditation, conduct of assessments and use of information gathered from building owners and tenants.

The kinds of buildings and areas of buildings that are disclosure affected are identified in the Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2016 (Cth).

The following kinds of buildings are exempt from the disclosure requirements:

• • new buildings where a certificate of occupancy (or equivalent) has either not yet been issued or was issued less than 2 years earlier;
• • buildings that have completed a major refurbishment for which a certificate of occupancy (or equivalent) was issued less than 2 years earlier. Note: for a major refurbishment where no certificate of occupancy was issued, you need to apply for an exemption;
• • strata-titled buildings; and
• • mixed use buildings where total office space comprises less than 75 % of the building by net lettable area (or gross lettable area if net lettable area is unavailable).

See Who is affected?

See Exceptions and Exemptions.

The disclosure requirements

After 1 July 2017, disclosure affected buildings or tenancies of 1000 sqm or more that are offered for sale or lease will require a Building Energy Efficiency Certificate (BEEC). BEECs are issued by the Department of the Environment and Energy before the building or tenancy is put to market.

The BEEC includes:

• • a National Australian Built Environment Rating System (NABERS) energy star rating for the building; and
• • a Tenancy Lighting Assessment for the relevant areas of the building.

BEECs are valid for up to 12 months and are publicly accessible on the online Building Energy Efficiency Register.

An accredited assessor will need to be engaged to undertake the assessments and lodge the application for a BEEC. The accredited assessor will ask for the previous year’s electricity and gas bills for the building.

See Find a CBD accredited assessor.

See Overview of the process.

See How to get a BEEC.

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. The NABERS Energy star rating must appear on all forms of advertising material for the building.

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.