In what might be described as a milestone appeal decision in the context of climate change and accountability, the Supreme Court of New Zealand has allowed an appeal of a decision of the Court of Appeal striking out a claim in tort relating to damage caused by climate change.
Whilst the judgment handed down early this month, Smith v Fonterra & Ors [2024] NZSC 5, relates to the position in New Zealand and was made according to New Zealand laws, the observations of the Court of Appeal are of interest more broadly where individuals and activists are increasingly agitating claims around the world against corporates for their alleged contribution to climate change.
Of particular relevance to other proceedings will be the Court's observations on the 'indisputable' points on climate change which set the background for the legal analysis.
Background to the claim
In August 2019, Mr Smith (the Plaintiff), an elder of Ngāpuhi and Ngāti Kahu, brought a claim against seven New-Zealand based companies. Each of the respondent corporations were involved in an industry that either emits greenhouse gases (GHGs) or supplies products which release GHGs when burned. Mr Smith alleges that the defendants' activities have, and will continue to contribute to, 'dangerous anthropogenic interference with the climate system and adverse effects of climate change'.1
Mr Smith, sought to pursue three causes of action:
- public nuisance;
- negligence; and
- 'a proposed new tort involving a duty, cognisable at law, to cease materially contributing to: damage to the climate system; dangerous anthropogenic interference with the climate system; and the adverse effects of climate change.'2
The Court observed that:
'A distinctive aspect of the proceeding in this Court is that Mr Smith pleads that tikanga Māori should inform the reach and content of his causes of action, this in accordance with the general proposition that tikanga should inform the common law of New Zealand generally. He does not allege that the respondents directly owed, or violated, any obligations under tikanga Māori.'3
'tikanga Māori' refers to Māori customary practices and behaviours.4
The respondents sought to strike out all three causes of action. The High Court struck out the claims in public nuisance and negligence, and the Court of Appeal struck out all three claims on appeal.
Amongst other submissions, the respondents submitted before the Supreme Court that:
'… climate change raises insurmountable problems for liability—particularly ones of standing and causation—where everyone both contributes to, and is adversely affected by, GHG emissions, and where it is not possible to link, evidentially, emissions to the harm suffered by plaintiffs. They say that for the law to evolve in the way advanced by Mr Smith would introduce open-ended liability for defendants and dramatically disrupt economies. They also say the courts are ill-suited to deal with a systemic problem of this nature with all the complexity entailed. Instead, it is best left to Parliament; indeed, Parliament can be seen already to have addressed the situation and settled upon a detailed and coherent legislative response.'5
Climate change
The starting point for the Supreme Court were what it described as 'indisputable' points6, including that:
- 'Climate change threatens human well-being and planetary health';
- 'The evidence is "unequivocal" that humans have warmed the atmosphere, ocean and land …';
- 'Human-caused climate change is already "affecting" climate and weather extremes in every region in the world" and "… has caused widespread adverse impacts, losses and damage to nature and people";
- 'Limiting human-caused global warming requires net zero CO² emissions combined with strong reductions in other GHG emissions'; and
- 'All global modelled pathways that involve limiting warming to 1.5°C with no or only limited overshoot, and those that involve limiting warming to 2°C, involve "rapid and deep and, in most cases, immediate greenhouse gas emissions reductions in all sectors in this decade".'
The Court observed further that the respondents 'emphasise that responding to climate change requires profound societal transformation.'7
Statutory response to climate change
With these opening observations, the Court looked at the statutory response to climate change. As noted above, this is a New Zealand decision concerned with the law of New Zealand, but the statutory response involves application of international instruments. The Court therefore discussed the United Nations Framework Convention on Climate Change, the Kyoto Protocol to the Convention and the Paris Agreement. It then observed that in New Zealand, the Parliament had passed a motion in December 2020 'declaring a climate emergency in New Zealand'8 and that:
'Parliament, through legislation, has put in place measures which seek to regulate New Zealand's GHG emissions. The essential purpose of this legislation is to limit GHG emissions in order to contribute to the global effort to limit global temperature increase to 1.5°C above pre-industrial levels',9
moving to a discussion of the New Zealand Climate Change Response Act 2002 (which is 'part of a broader regulatory structure').
The claim
It was against this background that the Court turned to the claim at hand, making, inter alia, the following observations on Mr Smith's statement of claim:
- Mr Smith 'claims customary interests in lands and other resources and sites situated in or around Mahinepua in Northland';10
- Mr Smith makes specific allegations against each of the respondents in relation to their operations (including burning coal, generating thermal power through the combustion of coal and natural gases, the operation of dairy farms (with cows releasing methane), steel manufacture (through combustion of coal), supply to customers of petroleum-related fuel products and operation of an oil refinery (causing the release of GHGs) and mining (producing coal where the miner 'knows that the burning of the coal it produces releases GHGs');
- Mr Smith alleges that:11
- (i) The respondents were responsible in 2020-2021 for more than one third of New Zealand's reported GHG emissions, with the release of GHGs into the atmosphere 'increas[ing] the natural greenhouse effect, and caus[ing], among other things, the warming of the planet'; and
- (ii) 'Climate change from the release of GHGs into the atmosphere from human activities […] will result in the additional warming of the Earth's surface and atmosphere, […] will adversely affect natural ecosystems and humankind' and 'will result in dangerous anthropogenic interference with the climate system and adverse risks';
- (iii) 'It is necessary to limit warming caused by climate change to 1.5℃ to avoid dangerous anthropogenic interference with the climate system and to minimise the long-term and irreversible adverse effects from climate change';
- Mr Smith pleads the science and its finding of what is necessary to avoid dangerous climate change; and
- Mr Smith pleads that it is possible for the respondents to reduce emissions 'to reflect these required reductions' and that each has failed to 'credibly commit to voluntary measures' and 'actively lobbied against regulatory measures' which would require them to reduce their emissions.12
Mr Smith's causes of action are based on the plea that:
'The consequence, in fact and law, of the [respondents’] actions is that Mr Smith, his wh[ā]nau, his descendants and others will bear the cost of dealing with harms contributed to by the [respondents’] historical, current and future [GHG] emissions.'13
And that:
'The orders sought in this proceeding will cause rapid sectoral change that will lead to other major New Zealand emitters taking similar steps to reduce their emissions in a manner that will materially mitigate the harm faced by Mr Smith, his wh[ā]nau and his descendants.'14
The Supreme Court decision
The Court discusses Mr Smith's causes of action, the specific pleading in relation to each and the relief sought (declarations and injunctions). This article does not examine the Court's discussion on this matter. It is, however, interesting to note the third cause of action, described by the Court as the 'novel, proposed climate change system damage tort.'15 The reason this is of interest is because it is almost inevitable that other individuals and activist groups will also seek to promote new and novel causes of action as climate change litigation progresses through the courts. The specific pleading in Mr Smith's statement of claim was that:
'The defendants owe a duty, cognisable at law, to cease materially contributing to damage to the climate system, dangerous anthropogenic interference with the climate system, and the [a]dverse [e]ffects of climate change through their emission of [GHGs] into the atmosphere (or their production or exportation of coal in the case of BT Mining; and their production and supply of [f]uel [p]roducts in the case of Channel and Z Energy).
The defendants have breached, and will continue to breach, the duty by [emitting GHGs] into the atmosphere (or [causing] the emission of [GHGs] through the sale of fossil fuel products) for their own profit and knowing that those emissions will contribute to damage to the climate system, dangerous anthropogenic interference with the climate system, the [a]dverse [e]ffects of climate change, and injury to the plaintiff and people like him.'16
The Court's analysis of the procedural basis on which the strike out application progressed is again particular to New Zealand law. This article does not consider this analysis. The Court, however, summed up its approach in the following three paragraphs:
'These authorities articulate what are long-established principles: a measured approach to strike out is appropriate where a claim—whether in negligence, nuisance or otherwise—is novel, but at least founded on seriously arguable non-trivial harm. That is so even if attribution to individual respondents remains difficult. In such a case the common law should lean towards receipt of the claim, and full evaluation based on evidence and argument at trial, over pre-emptive elimination.17
Such an approach is consistent with fully informed access to civil justice by those who have a tenable case that they have been harmed, and who will otherwise go without remedy based on a pre-emptive evaluation only. And, as was observed in Couch, a refusal to strike out a cause of action “says little about its eventual merit”. That is to say, it is not a commentary on whether or not the claim will ultimately succeed.18
Pre-emptive elimination is only appropriate where it can be said that whatever the facts proved, or arguments and policy considerations advanced at trial, a case is bound to fail.'19
One of the questions before the court was whether, as the respondents contended, the statutory scheme displaced the operation of the common law. After consideration of the relevant statutory scheme, the Court found that there was 'no basis to conclude that Parliament has displaced the law of torts in the realm of climate change in New Zealand. Rather, it has left a pathway open for the common law to operate, develop and evolve.'20
As to the public nuisance claim, the Supreme Court endorsed the approach of the Court of Appeal, but was not satisfied that the Court of Appeal reached the right outcome. It did not 'consider the obstacles are so overwhelming as to meet the standard for strike out.'21 Relevantly, for the purpose of this article, the Court concluded:
'Ultimately, the Court of Appeal considered that “climate change simply cannot be appropriately or adequately addressed by common law tort claims”. It was, it said, “quintessentially a matter that calls for a sophisticated regulatory response at a national level supported by international co-ordination”. It may indeed be beyond the capacity of the common law to resolve climate change in fact, but we are not presently convinced, at this stage of the proceeding, addressing only strike out, that the common law is incapable of addressing tortious aspects of climate change.' 22 […]
The Court observed that '[t]he common law has not previously grappled with a crisis as all-embracing as climate change', but drew an analogy with the development of the common law consequent upon the industrial revolution. It noted that:
'How the law of torts should respond to cumulative causation in a public nuisance case involving newer technologies and newer harms (GHGs, rather than sewage and other water pollution) is a matter that should not be answered pre-emptively, without evidence and policy analysis exceeding that available on a strike out application. Accordingly, suppliers of fuels producing GHGs—here the fifth, sixth and seventh respondents, who supply retail and commercial customers with fuel products; operate a shipping terminal, storage tanks and a pipeline that carries fuel; and who mine coal principally for export, respectively— should not in our view be eliminated as parties until these difficult but fact- and policy-driven questions have been resolved by full trial and (potential) appeal.'23
Having decided that there was no basis to strike out the nuisance claim, the Court did not consider it necessary or appropriate (based on the authorities) to assess the second and third claim as 'the authorities generally discourage striking out any remaining causes of action as a point of principle, unless it can be said they both meet the criteria for striking out and are likely to add materially to costs, hearing time and deployment of other court resources.'24
The Court also stated that:
'… although each cause of action has its own doctrinal underpinning, the deeper questions of necessary relationship, proximity, causation, disproportionality and indeterminacy raise issues common to all. Any added burden the respondents may be required to bear in confronting two additional causes of action will not be significant. Counsel for the respondents did not suggest otherwise.'25
The final issue addressed by the Court was the question of whether tikanga could inform the formulation of tort claims. The Court's analysis of this question is specific to New Zealand law and for that reason is not discussed in this article.
Concluding observations
Whilst this decision is concerned with the question of strike out under New Zealand law and civil procedure, the progress of the substantive proceeding in which the appeals were brought will no doubt be watched globally with keen interest.
What will be of particular relevance to other proceedings will be the Court's observations on the 'indisputable' points on climate change which set the background for the legal analysis.
Amongst other things, the judgment confirms, at least for the New Zealand courts, the significance of the work of the Intergovernmental Panel on Climate Change with the Panel's publications comprehensively cited by the Supreme Court.
The Panel's Sixth Assessment Synthesis Report was published in March 2023, reporting, as at the date of its publication, on 'the state of knowledge of climate change, its widespread impacts and risks, and climate change mitigation and adaption.'26
The Court's assessment of the IPCC's report as supporting matters which are 'indisputable' or represent 'common ground' not only reinforces climate change (including the law applicable to climate change issues) as a global concern, but will be positive news for other potential litigants.
Footnotes
1At [71].
2At [4].
3At [5].
4Victoria University of Wellington, <https://www.wgtn.ac.nz/maori-hub/rauemi/tikanga-tips#:~:text=Generally%20speaking%2C%20tikanga%20are%20M%C4%81ori,is%20culturally%20proper%20or%20appropriate > (accessed on 8 February 2024).
5At [11].
6At [14] to [26], inclusive (omitting footnotes).
7At [25].
8At [30].
9At [31].
10At [50].
11At [51] – [52].
12At [54].
13Quoted by the Court at [58].
14Quoted by the Court at [59].
15At [71].
16At [71].
17At [83].
18At [84].
19At [85].
20At [101].
21At [173].
22At [154].
23At [166].
24At [174].
25At [175].
26Climate Change Synthesis Report 2023, Summary for Policy Makers, p 9. Read the report here.