SMITH V FONTERRA: PAVING THE WAY FOR CLIMATE CHANGE LITIGATION IN NEW ZEALAND

Posted by Bella Bycroft, Brydie Godsiff And Kalev Crossland on February 27 2024 in News

The recent Supreme Court decision of Smith v Fonterra Co-Operative Group Limited [2024] NZSC 5 significantly advances the climate change and environmental law space. The Court ruled in favour of climate activist Mike Smith (Ngāpuhi and Ngāti Kahu), granting him the opportunity to sue major energy users and fuel distributors, including Fonterra, Genesis Energy and Z Energy. With the earlier procedural strikeouts of Smith's bid for civil redress now overturned, a new pathway for addressing climate change-related harm through tort and the common law has been marked out.

Background of the case

Mike Smith, a prominent climate activist and spokesperson for the Iwi Chairs Forum, initiated legal action in 2019 against seven New Zealand companies. He alleged that they each have contributed materially to the climate crisis and have damaged, and will continue to damage, his whenua and moana.

Smith pleads three causes of action: public nuisance, negligence, and a proposed new tort referred to by the Supreme Court as the “proposed climate system damage tort”. He also claims that tikanga Māori (Māori customary values) should inform the reach and content of his three causes of action. This accords with the proposition that tikanga should inform the common law of New Zealand generally.

In 2020, the High Court struck out the case without the need for a full trial. In October 2021, the Court of Appeal affirmed that climate change could not be appropriately or adequately addressed via tort claims. The Court of Appeal said Parliament should deal with it.

However, the Supreme Court had the final say and held that Mr Smith’s public nuisance was viable. Judges do have jurisdiction. With the Supreme Court ruling that this main cause of action was not “bound to fail”, the other two causes of action are retained, and Mr Smith is free to pursue his case at a trial.

Supreme Court’s key findings

In their unanimous 70-page decision, Chief Justice Helen Winkelmann, and Justices Susan Glazebrook, Ellen France, Joe Williams, and Stephen Kós clarified several critical points:

• The Climate Change Response Act 2002 and the Resource Management Act 1991 are not comprehensive or exclusive responses to climate change. As such, common law claims and remedies have a legitimate function.
   
• The Court expressed caution against prematurely dismissing claims involving serious and arguable non-trivial harm, asserting the need for careful consideration in cases of widespread environmental challenges.
   
• The Court found that Smith’s pleaded rights, encompassing public health, safety, comfort, convenience and peace align with established legal principles.
   
• Disagreeing with the Court of Appeal, the Court emphasised the need to reconsider the special damage rule in the context of 21st-century challenges, such as climate change.
   
• The Court upheld Smith’s claims related to tikanga. It acknowledged that tikanga would play a role in the trial, particularly in assessing harm that is not purely physical or economic.

Implications and future proceedings

The decision does not guarantee success for Smith. But it marks a significant step forward in allowing his claim to proceed to trial. The Court recognised the complexity of issues related to causation, cumulative causation, and the appropriate remedies. It thus held that these matters must be addressed through a full trial rather than a pre-emptive strikeout.

The Justices acknowledged potential obstacles in obtaining remedies, including injunctions, but affirmed the importance of considering other remedies, such as the declaratory remedy (formal statement by a court as to a legal/factual conclusion without specific order as to action) in addition to compensatory damages.

Conclusion

Smith v Fonterra is noteworthy as the first appellate judgment in the common law world permitting the potential use of tort law to combat corporate greenhouse gas emitters. New Zealand joins the Netherlands, a civil code jurisdiction (where Shell was ordered to reduce CO2 emissions by 2030), in breaking new ground in climate change law.

This Supreme Court decision opens a new chapter in climate change litigation in New Zealand, demonstrating that there may be a role for the common law in addressing the pressing challenges posed by human-induced climate change. The outcome of this case will likely shape future environmental litigation and contribute to the ongoing global conversation on legal responses to climate-related harms.

Kalev Crossland | Partner | kalev.crossland@shieffangland.co.nz

Brydie Godsiff | Solicitor| brydie.godsiff@shieffangland.co.nz

Bella Bycroft | Solicitor | bella.bycroft@shieffangland.co.nz