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Aust govt faces second climate court fight

Karen SweeneyAAP
An investor is suing the federal government over climate risks connected to government bonds.
Camera IconAn investor is suing the federal government over climate risks connected to government bonds. Credit: AAP

An investor accusing the federal government of failing to disclose climate risks connected to government bonds risks devaluing the investment, lawyers have argued.

Kathleen "Katta" O'Donnell is suing the Commonwealth, accusing it of failing to disclose any information about Australia's climate risks to investors who acquire government bonds.

The class action alleges climate change and its associated risks will likely have a material impact on Australia's standing as an issuer of sovereign bonds and on the market value of those bonds.

Ms O'Donnell wants climate change associated risks disclosed to retail investors like herself.

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She is seeking a declaration by the court that the Commonwealth breached its duties of disclosure in financial legislation, including the ASIC Act.

If that's granted, she wants an injunction restraining the Commonwealth from promoting bonds until it complies with the duty of disclosure.

Michael Hodges, representing the Commonwealth, said Ms O'Donnell's case involved "reams of allegations about how terrible Australia is" but made no claims about the terms of the bonds she owns.

He said the inference was she acquired the bonds as a trigger for the court proceedings.

"And so she doesn't have any interest in relation to the outcome or the declaration, other than seeking to bring this pseudo-climate change class action," he said.

Mr Hodges said the risk for anyone else joining the case was that their holdings could be devalued as a result of their own actions.

He's asked Justice Bernard Murphy to strike out parts of Ms O'Donnell's application in the Federal Court, arguing it's deficient.

Ms O'Donnell's lawyers argue the Commonwealth is uniquely positioned to assess the risk.

Mr Hodges said if she wants to argue there was a material risk that was not disclosed, she needs to identify that material risk.

"It's not enough to say 'it's inconceivable Australia hasn't considered this'," he said.

Otherwise, he said, the case put by her barrister Ron Merkel QC implies there's an obligation to identity to investors every conceivable thing over the entire maturity period of the bond which might affect the price.

Ms O'Donnell's lawyers have put forward five versions of their case so far, and Justice Murphy advised on Wednesday that a sixth might be in order.

"I'd have a closer look and see whether there's any improvement you sensibly think can be made," he said, noting some of Mr Hodges' arguments had struck a chord with him.

This is the second climate related case against the Commonwealth of late, with another Federal Court judge ruling this month that Environment Minister Sussan Ley has a duty of care to protect children from future personal injury caused by climate change.

Ms Ley is appealing that decision.

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