Introduction

In Smith v Fonterra Co-operative Group Limited,⁽¹⁾ the NZ Court of Appeal struck out a claim which sought private law relief against seven companies alleged to be contributing to the climate change crisis.

The Court's decision is the first of its kind at appellate level in the Commonwealth, and it is an illustration of an individual attempting to use the law in a novel way to combat climate change, as anxiety intensifies worldwide on this issue.

Facts

The appellant, Mr Smith, was an elder of Ngāpuhi and Ngāti Kahu and the climate change spokesperson for the Iwi Chairs Forum. Having taken the view that too little was being done by the government to address the climate change crisis, he started proceedings against seven respondents.⁽²⁾ All of the respondents were either involved in industries that release greenhouse gases into the atmosphere or in the manufacture and supply of products that release greenhouse gases when burned. 

Smith alleged that the respondents' release of greenhouse gases was human activity that adversely affected the climate system. He also alleged that each respondent knew or reasonably should have known about the harm that their emissions would have on people in his position.

Three causes of action in tort were pleaded:

• public nuisance;
• negligence; and
• a new tort described as "breach of duty".

Remedies were sought in the form of declarations that the respondents had unlawfully caused or contributed to the effects of climate change and had breached the duties owed to Smith. Injunctions were also sought, requiring the respondents to produce or cause net zero emissions from their respective activities by 2030.

Smith also relied on a principle of tikanga Māori (Māori customary law) known as "kaitiakitanga", which incorporates concepts of guardianship, protection and stewardship of the natural environment.

The respondents applied to strike out the proceeding and contended that Smith's allegations were non-justiciable and beyond the Court's jurisdiction. This position was supported by undisputed affidavit evidence that each respondent was operating within all relevant statutory and regulatory requirements.

High Court

The High Court struck out the claims of public nuisance and negligence, but it refused to strike out the claim based on the alleged new tort of breach of duty.⁽³⁾

The Court struck out the public nuisance claim as it considered that the damage suffered by Smith was not sufficiently special so as to give him standing to sue as a private individual. The Court also noted that there was an insufficient relational or causal link between any of the defendants' activities and the claimed damage. The fact that the defendants were complying with all relevant statutory and regulatory requirements was fatal to the claim.

The Court struck out the negligence claim because the novel duty of care pleaded (ie, not to operate a business in a way that would cause Smith loss by contributing to dangerous anthropogenic interference with the climate system) did not satisfy the requisite proximity and policy considerations – the harm was not reasonably foreseeable, proximity was lacking and compelling policy reasons against recognising the duty existed.

The Court did not strike out the claim based on the new tort of breach of duty as it concluded that the novel claim advanced by Smith could result in the evolution of the law of torts to recognise it. The Court reached this view despite the alleged duty not being sufficiently analogous to any existing duty of care or an incremental extension of negligence liability.

Court of Appeal

Smith appealed against the High Court's decision in relation to nuisance and negligence; the respondents cross-appealed the Court's refusal to strike out the claim based on breach of duty. The Court dismissed the appeal and allowed the cross-appeal.

Were common law tort proceedings an appropriate response?

While Smith's counsel urged the Court to be bold, the Court considered that to allow Smith's appeal would be contrary to the common law tradition of incremental development rather than radical change. The climate change crisis would be more appropriately addressed through a "sophisticated regulatory response at a national level supported by international co-ordination".⁽⁴⁾ The Court relied on the following reasons:

• There have been no other recognised tort claims involving a scenario in which every person in New Zealand, and globally, was (to varying degrees) both responsible for, and a victim of, the relevant harm. If Smith's argument was accepted, every entity (and individual) that was responsible for net emissions would be acting unlawfully and could be restrained from doing so with sweeping social and economic consequences.
• Tort law is concerned with restraining unlawful activities. However, Smith's claim was outside the domain of tort law since it was implicit in the way it was framed that the respondents' activities may be lawful, and may continue, provided that their emissions were offset (eg, through planting trees or purchasing carbon credits).
• There is no remedy available in private civil proceedings that could meaningfully address the harm alleged. The injunctive relief sought was, in effect, a court-designed and court-supervised regulatory regime requiring institutional expertise, democratic participation and democratic accountability that the courts cannot achieve.
• Proceedings against subsets of emitters are an inherently inefficient and arbitrary way of addressing climate change. The allegations made were inconsistent with the policy goals and scheme of New Zealand's climate change legislation,⁽⁵⁾ particularly the goals of ensuring that the country's response to climate change is effective, efficient and just. Controlling climate change via regulatory means is consistent with the Treaty of Waitangi and kaitiakitanga.

The Court also added that similar claims had been advanced in the United States, but they had been refused for essentially the same reasons underpinning its conclusion to strike out the three tort claims in this case.⁽⁶⁾

Accordingly, the Court struck out the proceeding in its entirety.

Appellant's three causes of action in tort

Although the Court struck out the proceeding on the basis that tort law was unavailable to address the issues raised by Smith, it nevertheless considered the three causes of action in more detail.

Public nuisance claim

The Court surveyed the history of the tort, defined its limits and found that, while it did not agree with all of the reasons relied on by the High Court or the respondents for striking out Smith's claim, no special damage⁽⁷⁾ could be shown since the harm suffered by Smith⁽⁸⁾ did not sufficiently exceed the degree of harm suffered by many others in New Zealand and worldwide. For the purposes of considering the strike-out application, the Court accepted the proposition that a defendant would not be exempted from liability on the basis that they were simply one of many causing nuisance. However, unlike in the present case, all of the cases in which that principle was successfully invoked involved a finite number of known contributors to the harm, all of whom were before the Court. Therefore, the Court of Appeal agreed with the High Court that the public nuisance claim should be struck out.

Negligence claim

The Court found that the claim also failed because the requisite proximity and policy considerations did not support the novel duty of care pleaded. In relation to proximity, the Court concluded that the class of possible tortfeasors was virtually limitless, and it could not be said, on any view, that Smith would not have been injured but for the negligence of only the named respondents. In relation to policy, the Court held that the balance of policy considerations militated against recognising a duty, including the limitless classes of potential plaintiffs and defendants as well as the fact that the common law duty of care sought by Smith would cut across existing international obligations and legislation addressing climate change.

Breach of duty

The Court agreed with the respondents that the High Court's decision not to strike out this claim was irreconcilable with its reasoning in relation to the public nuisance and negligence claims. The bare assertion of the new tort in the pleading without any attempt to define its scope was insufficient to save the claim from being struck out.

Comment

As the Court acknowledged at the outset of its judgment, climate change is commonly described as the biggest challenge facing humanity in modern times. Its impact is widely recognised and scientists predict that if greenhouse gas emissions continue to increase, humanity will cause the Earth to reach a point of no return.⁽⁹⁾

This case raises the interesting question of what can be done to address such an existential issue, when those responsible for governing are not perceived to be acting fast enough. Smith's bold attempt to use tort law to take action in these circumstances is perhaps understandable. The problem is that many consider that the "sophisticated regulatory response at a national level supported by international co-ordination" called for by the Court of Appeal is simply not happening at the pace required to materially address the crisis. The urgency of the situation was highlighted at the recent COP26 conference in Glasgow, in which the United Kingdom, as the host nation, set the ambitious goal of creating a roadmap to cut global greenhouse gas emissions by 45% by 2030, and thereby capping global temperature rises at 1.5C above pre-industrial levels. Beyond this, the impacts of the crisis are likely to become catastrophic and irreversible.

New Zealand has pledged to halve net greenhouse gas emissions by 2030, but how this will practically be achieved remains to be seen. Some experts have criticised the commitment as not ambitious enough and too reliant on carbon offsets. New Zealand's share of global greenhouse emissions is relatively small, but its gross emissions per capita is high and the country is one of the worst performers on emission increases. Emissions rose by 57% between 1990 and 2018, which was the second-greatest increase of all industrialised
countries.

While Smith's case is the first, it is unlikely to be the last occasion where the courts will be presented with novel attempts to address the climate crisis as temperatures soar, extreme weather events occur more frequently and the pressure on governments to take urgent action builds. While tort law may not be the appropriate vehicle to address the crisis, courts can and do find novel ways to apply the law to drive change where parliaments fail to do so through legislation. It is difficult to rule out the possibility of courts doing so in the climate change context. It has been reported that leave is to be sought to appeal to the Supreme Court.

For further information on this topic please contact Shan Pearson at Wilson Harle by telephone (+64 9 915 5700) or email ([email protected]).

Endnotes

(1) Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552.
(2) The respondents were:

• Fonterra Co-operative Group Ltd;
• Genesis Energy Ltd;
• Dairy Holdings Ltd;
• New Zealand Steel Ltd;
• Z Energy Ltd;
• New Refinery Company Ltd; and
• BT Mining Ltd.

(3) Smith v Fonterra Co-operative Group Ltd [2020] NZHC 419.
(4) Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552 at [16]. Also see [28] to [32].
(5) In New Zealand, the key regulatory instrument is the Climate Change Response Act 2002, at [30].
(6) Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552 at [36].
(7) Id at [87]. The appellant invited the Court to abolish the special damage rule but the Court found that it was unnecessary to decide whether to do so.
(8) Id at [55]. Smith alleged that the respondents' interference with public rights had caused him special damage because of his interest according to custom and tikanga in land located on the coast of Wainui Bay, including customary sites and resources of significance to Smith.
(9) Id at [2].