Smith v Fonterra Co-operative Group Ltd [2024] NZSC 5

The Supreme Court of New Zealand has allowed Mr Smith’s appeal against the decision of the Court of Appeal striking out his claim in tort relating to damage caused by climate change. Following the Supreme Court’s decision, Mr Smith’s claim is one of the first climate change tort claims to proceed to trial in a common law jurisdiction.

Background

Mr Smith is an elder of Ngāpuhi and Ngāti Kahu and a climate change spokesperson for the Iwi Chairs Forum, a national forum of tribal leaders. He claims customary interests in lands and other resources and sites in Northland and, in particular, an interest in a block of Māori freehold land situated on the coast of Wainui Bay. Each of the seven respondents is a New Zealand company said to be involved in an industry that either emits greenhouse gases (‘GHGs’) or supplies products that release GHGs when burned. Mr Smith alleges that in 2020–21, the respondents were together responsible for more than one-third of New Zealand’s total reported GHG emissions.

Mr Smith raises three causes of action in tort: public nuisance, negligence, and a proposed new climate system damage tort (involving a duty to cease materially contributing to damage to the climate system, dangerous anthropogenic interference with the climate system, and the adverse effects of climate change).

Mr Smith seeks a declaration that the respondents have, individually or collectively, either breached a duty owed to him or caused or contributed to a public nuisance and have caused, or will cause, him loss through their activities. He also seeks injunctions requiring the respondents to produce or cause a peaking of their emissions by 2025, a particularised reduction in their emissions by the ends of 2030 and 2040, and zero net emissions by 2050. Mr Smith does not seek damages.

The Supreme Court decision

The Supreme Court first held that there was no basis to conclude that New Zealand’s Parliament has displaced the law of torts in the realm of climate change: at [101]. Section 23 of the Resource Management Act 1991 (NZ) expressly preserves access to common law rights of action: at [96]. As to the Climate Change Response Act 2002 (NZ), while its Emissions Trading Scheme (‘ETS’) places obligations on participants who emit, it does not ‘permit’ emissions or create a ‘right to emit’: at [45]. The ETS neither authorises nor immunises GHG emissions: at [99].

The Supreme Court next determined whether the pleaded public nuisance claim was bound to fail, whatever the facts proved or the policy arguments advanced at trial: at [102]. The court (at [115]) determined this by considering the same four issues as the Court of Appeal:

1. whether actionable public rights were pleaded;
2. whether independent illegality was required;
3. whether the special damage rule was met or required; and
4. whether there was a ‘sufficient connection’ between the pleaded harm and the respondents’ activities.

The Court of Appeal had found for Mr Smith on the first two issues, but for the respondents on the last two.

On the first issue, the Supreme Court observed (at [145]) that the rights pleaded by Mr Smith – the rights to public health, public safety, public comfort, public convenience and public peace – fell tenably within, or bore sufficient relation to, the particular rights identified in the United Kingdom House of Lords decision in R v Rimmington [2006] 1 AC 459 as providing foundation for a public nuisance pleading: that is, public rights to life, health, property or comfort.

On the second issue, the Supreme Court concluded that in New Zealand there is no requirement of independent illegality: at [147]. It was not necessary for the act or omission to be, in itself, a legal wrong separate from the alleged nuisance. What mattered was that the act or omission causes common injury. The tort of public nuisance ‘can stand on its own two feet’.

The third issue concerned the ‘special damage rule’ – a rule of standing dating back to at least 1535 – that the damage suffered by the plaintiff must be different from that suffered by other members of the community. The court considered that this rule requires reconsideration in a 21^st-century context, in which the implications of ubiquitous harms such as pollution are more evident and better understood: at [151]. The court concluded that this reconsideration should not take place on the strike-out application but in the context of full evidence and associated argument. The court considered that in any event, Mr Smith had a tenable claim to meeting the present requirements of the special damage rule: at [152]. The pleaded effects of anthropogenic climate change, including inundation of coastal land and impacts on fishing and cultural interests, went beyond a wholly common interference with public rights.

On the fourth issue of sufficient connection or causation, the Supreme Court reminded itself that on the strike-out application, it was required to assume that the consequence of the emissions attributable to the respondents’ activities was harm to the land and other pleaded interests held by Mr Smith: at [167]. The Supreme Court concluded that it was arguable that in the case of public nuisance, a defendant must take responsibility for its contribution to a common interference with public rights and that its responsibility should not in effect be discharged by the equivalent acts of others: at [164]. Whether the respondents’ actions amounted to a substantial and unreasonable interference with public rights remained a fundamental issue of fact for trial: at [169]. On remedy, the court stated that as Mr Smith was seeking injunctive relief – an equitable remedy involving substantial discretion – a different approach to connection and causation may be available than would be if he were seeking common law compensatory damages: at [171].

Having reinstated the claim in public nuisance, the Supreme Court also reinstated the claims in negligence and in the proposed new climate system damage tort: at [174]–[176]. The court followed the approach that where the primary cause of action is not struck out, the remaining causes of action should not generally be struck out unless they both meet the criteria for striking out and are likely to add materially to costs, hearing time and deployment of other court resources. The court considered that striking out the remaining claims would be unlikely to produce a material saving in hearing time or other court resources. The court noted that the same facts were alleged, and were alleged to be relevant, in all three causes of action and that there were common issues of necessary relationship, proximity, causation, disproportionality and indeterminacy in all three.

Four comments

Firstly, the Supreme Court stated that it should take a ‘measured’ approach to strike out where a claim is novel but founded on seriously arguable non-trivial harm: at [83]. The court stated that in such a case, ‘the common law should lean towards receipt of the claim’. This accords with the approach taken in Australia that summary processes should not be used to stultify the development of the law (Spencer v The Commonwealth (2010) 241 CLR 118 (French CJ and Gummow J)).

Secondly, the authors of the current (11^th) edition of Fleming’s The Law of Torts cited the Court of Appeal’s decision in questioning ‘what would be lost if public nuisance as a tort were to disappear’: at [19.20]. The Supreme Court’s decision suggests that what may be lost is a tort that can respond to the unique challenges posed by climate change. In this regard, the court noted that the ‘but for’ causation reasoning that dominates the tort of negligence may not serve the same function in the tort of public nuisance: at [165].

Thirdly, the Supreme Court considered that the ‘special damage rule’ of standing for public nuisance tort claims requires reconsideration in the 21^st century: at [151]. The court stated that the development of class actions and of active judicial case management may meet fears of opening the gates to ‘an oppressive multiplicity of actions’. The court observed that the fact that the interests of many persons are affected ‘may say more about the gravity of the alleged tort than the propriety of entertaining it’: at [152].

Fourthly, the Court of Appeal had agreed with the respondents that courts are ill-equipped to address climate change tort claims, stating that climate change is ‘quintessentially’ a matter that calls for a national regulatory response supported by international co-ordination (Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552: at [16], [26], [116]). Chief Justice Allsop had shared that view in Minister for the Environment v Sharma (2022) 291 FCR 311. In contrast, the Supreme Court suggested that a different assessment might be made after trial, namely that although different in scale, climate change was ‘a consequence of a continuum of human activities’: at [155]. Throughout the industrial revolution, the common law had had to deal with harms caused by new sources of air and water pollution and by the escape of biohazards. The court stated that climate change ‘engages comparable complexities, albeit at a quantum leap scale enlargement’: at [157].