Introduction
The Court of Appeal recently released its judgment in Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552. This was an appeal (and cross-appeal) against a decision of Wylie J in the High Court delivered in March 2020. Our previous update on this decision can be found here.
In the High Court, Wylie J had struck out two of three causes of action in a novel claim brought against corporate defendants in relation to climate change issues. His Honour was unwilling to strike-out the third cause of action, which raised a novel duty of care. The plaintiff appealed against the decision to strike out two of the three causes of action and the defendants cross appealed against the decision not to strike out the third cause of action. The Court of Appeal unanimously dismissed the appeal and upheld the cross-appeal.[1]
The decision of the Court of Appeal is notable for its discussion of what role (if any) tort law should play in the response to climate change. The Court was firm in its conclusion that "as a matter of principle and policy" tort law was not "an appropriate vehicle for addressing the problem of climate change", which it described as being "quintessentially a matter that calls for a sophisticated regulatory response at a national level supported by international co-ordination".[2]
Subject to any appeal to the Supreme Court, the Court of Appeal's decision will stand as authority against climate change-related claims being actionable in tort in New Zealand. More broadly, it also indicates that the courts are cognisant of the detailed regulatory regime that New Zealand has in place already and that they are content to leave to the Government the job of developing the country's emission reduction plans (with their role being to support and enforce the statutory scheme and to "hold the Government to account"). Whilst this caution will disappoint some, the certainty of position taken by the Court of Appeal will be welcomed by those focused on emissions mitigation and who were concerned about the potential for confusion had a "common law regulatory regime" been permitted to run in parallel with the statutory regime.
The claim
The claim was brought by Michael Smith, an elder of Ngāpuhi and Ngāti Kahu descent, against seven corporate defendants across a range of industries. Mr Smith raised three causes of action in tort in the High Court: public nuisance, negligence and a breach of a new (or "inchoate") duty of care.
Mr Smith claimed that that the defendants' activities release greenhouse gases which would cause damage (eg as a result of sea level rise) to land and other resources in Northland, in relation to which Mr Smith claimed an interest according to Māori custom and tikanga.
Court of Appeal Decision
The Court of Appeal considered that the key issue before it was: "What should be the response of tort law to climate change?".[3] Accordingly, the Court analysed whether, as a matter of principle and policy, common law tort claims were an appropriate vehicle for addressing the problem of climate change. The Court was firm in its conclusion that they were not. It described climate change as "a striking example of a polycentric issue that is not amenable to judicial resolution".
In reaching this conclusion, the Court made the following observations:
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none of the defendants, standing alone, materially contributed to climate change. Accordingly, if the Court was to accept that the emitting activities of the defendants amounted to a tort, it would follow that every entity (and individual) in New Zealand who made a net contribution to emissions would be committing the same tort;
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the activities of the defendants were lawful and would be permitted to continue (on the basis of Mr Smith's claim) if "off-setting" conditions were complied with (which would have to be calculated by the courts against a regulatory framework of their own devising). The Court of Appeal did not consider that this was the proper domain of tort law. Nor did it consider that the courts have the necessary expertise to design and supervise a regulatory regime in relation to such a complex issue as climate change;[4]
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bringing proceedings against sub-sets of emitters was an inherently inefficient and ad hoc method of addressing climate change, which was likely to result in arbitrary outcomes and significant litigation.[5]
In concluding that tort claims were not an appropriate vehicle for addressing climate change, the Court emphasised that this did not mean that the courts had no meaningful role to play in relation to climate change. It considered that they have a "very important role in supporting and enforcing the statutory scheme for climate change responses and in holding the Government to account"[6].
In relation to the causes of action relied upon by Mr Smith:
Public nuisance
The High Court had struck out Mr Smith's claim in nuisance on the basis, amongst other things, that it was untenable that he would be able to satisfy a court that he had suffered "special damage" (ie damage suffered in excess of the public generally), or establish that the defendants had caused or would cause the pleaded damage. Whilst the Court of Appeal disagreed with aspects of Wylie J's analysis on nuisance, they agreed with these key findings.
Negligence claim
The Court of Appeal disagreed with the High Court's conclusion that the climate change harm was unforeseeable but agreed with it on proximity and causation.
Amongst other things, to succeed in his claim, the Court of Appeal noted that Mr Smith would have to satisfy a court that the defendants' actions had caused the pleaded harm. This would not be possible on a "but for" test (the defendants' contributions not being material to climate change) and even if a "market share" (or aggregated) approach to liability was adopted, the prerequisite to liability would be that a substantial share of those who contributed to the harm were named as defendants in the action (which was an "insuperable" problem). The Court of Appeal also agreed with the High Court that the duty should not be recognised (on policy grounds) because it would mean that the defendants would face an indeterminate liability in relation to their activities.
Novel tort claim
As noted, Wylie J in the High Court had been unwilling to strike out Mr Smith's third cause of action which relied on a novel duty that "makes corporates responsible to the public for their emissions".[7]
The Court of Appeal was unconvinced that just because the duty being relied on by Mr Smith was novel, this was sufficient to withstand a strike out application. It stated that "the bare assertion of the existence of a new tort without any attempt to delineate its scope cannot of itself be sufficient to withstand strike out on the basis that science may evolve by the time the matter gets to trial."[8]
Observations
It remains to be seen whether Mr Smith will appeal to the Supreme Court, and, if so, what the outcome of this will be. As things stand, however, the Court of Appeal's decision is authority against climate change-related claims being actionable in tort in New Zealand.
In the long term, and as reflected in Wylie J's reasons for not striking out Mr Smith's novel duty, some commentators have posited whether tort law may be more amenable to climate change-related claims if climate change science means that individual contributions can be modelled accurately. If this happened, so the thinking goes, it could be possible to circumvent the "insuperable" problem of causation as regards climate change claims, by holding net emitters responsible for their "share" of the harm caused (ie without having to demonstrate that they caused the harm on a "but for" basis).
Clearly, the Court of Appeal did not consider that the science had progressed sufficiently to assist Mr Smith in his claim (at least to a level of accuracy and reliability as would satisfy a New Zealand court). Whether, if this changed, the courts would then be prepared to reassess the amenability of tort law to climate change-related claims remains to be seen. The Court of Appeal's decision suggests, however, that there would still be a range policy and "conceptual" difficulties to be grappled with.
In its judgment, the Court gave a clear direction that, as regards climate change, it sees the role of courts to be one of supporting and enforcing the statutory scheme. Public law actions (notably judicial review) are commonly used already, and in the last year alone high-profile judicial review applications have been pursued by Lawyers for Climate Action New Zealand in relation to the Mill Road infrastructure project in Auckland and challenging the Climate Change Commission's recommendations for New Zealand to meet its emission reduction commitments. The emphasis placed by the Court of Appeal on the important role of the courts in "holding the Government to account" in relation to the statutory scheme are likely to be welcomed by those who seek to use the courts in this way.
Finally, we note that the trend in climate change litigation internationally is for claims to be brought which explore or push the boundaries of the law and that some of these (for example, claims alleging breaches of directors' duties) remain untested in the New Zealand courts. Accordingly, whilst (ostensibly) the Court of Appeal has "shut the door" on climate change-related tort claims, novel claims can still be expected to be brought.
We await with interest what appetite the courts will have for these claims and whether they will seek to use them as a way of influencing the direction of travel on climate change issues.
FOOTNOTES
[1] Smith v Fonterra Co-operative Group Ltd [2020] NZHC 419 at [103]
[2] Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552 at [16]
[3] At [1]
[4] At [23]
[5] At [27]
[6] At [35]
[7] At [121]
[8] At [124]
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