Tort Law and New Zealand’s Corporate Greenhouse Gas Emissions

In February 2024, the New Zealand Supreme Court overturned the previous strike outs in the case of Michael John Smith in tort against seven major New Zealand companies in the dairy, energy, steel, mining and infrastructure sectors. Michael Smith is of Ngāpuhi and Ngāti Kahu descent and serves as climate change spokesperson for the Māori Iwi Chairs Forum “Pou Take Āhuarangi”. Smith estimates that the respondent companies’ operations together are associated with approximately a third of New Zealand’s country’s greenhouse gas (GHG) emissions. He makes three claims: in negligence, nuisance and in a proposed new tort of harm to the climate system. In 2020, the High Court struck out the claims in negligence and public nuisance. In 2022, the Court of Appeal upheld this decision and also struck out the remaining novel tort claim.

All three tort claims have been revived by the New Zealand Supreme Court. Among the public responses to the Supreme Court decision are several suggesting that this is unusual.  However, there are many respects in which this is in fact business as usual for the courts.  Smith asserts that the respondents are engaging in conduct that affects him and others, and has put them into legal connection with one another in ways that enable appropriate remedy. This is heartland common law territory.  Even though the climate change problems we are now grappling with may be new ones, the centuries-old practices and traditions of the common law are a part of New Zealand’s constitutional heritage and structure.  Litigation is a legitimate vehicle for members of the population to engage the law in the face of harm or threats to individuals’ rights and well-being.

Further, the Courts can be expected to bring established modes of reasoning to bear in regard to Smith’s claims, albeit in new ways given that dealing with climate change requires forward-looking action, including business planning and design, and capital developments. Smith seeks declaratory relief and also injunctive relief requiring the respondents either to reduce emissions by specified amounts over time or immediately to cease emissions.  If Smith’s case is successful the courts can be expected to consider the matter of remedies with particular attention.

The claims and issues

Mr. Smith’s three claims are more specifically: in negligence under a novel duty of care; in public nuisance; and under “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”. In  overturning the strike outs in all three of Smith’s claims the Supreme Court observed that these tort claims all raise issues of relationship, proximity, causation, disproportionality and indeterminacy.

In respect of the core issue of causality, there are of course multiple tortfeasors or emitters of global GHGS. Further, the absolute majority of emitters are not within New Zealand’s jurisdiction.  Smith submitted that the requirement for causality in the law on nuisance could be satisfied where a responding party’s material contribution to a state of affairs amounts to an unreasonable interference, while the respondent submitted that a direct and serious contribution to the relevant harm was necessary. The Court began by remarking that it is “beyond question that the respondents are either very substantial emitters of greenhouse gases or are (or have been) very substantial suppliers of fossil fuels that release greenhouse gas emissions when burned by others”. The Court went on to find previous cases suggested it was certainly arguable that a defendant must take responsibility for its contribution to a common interference with public rights, which should not be contingent on the absence of others’ co-contribution, nor in effect discharged by others’ equivalent acts.

Scientific evidence on climate change will clearly be important at trial, but the subject of causation and related matters will also demand sustained legal argument. Tort lawyers might be interested to consider by analogy the rules on responsibility in public international law where States committing wrongs are each individually responsible. Responsibility is not attenuated in cases of “concurrent causes”. However, the International Law Commission’s commentary to its Articles on State Responsibility indicates that reparation will not be due which is out of all proportion to the gravity of a breach of international legal obligations (reparation in international law being understood as including restitution, compensation and/or satisfaction, which inter alia can take the form of a judicial declaration).

New Zealand’s climate change mitigation interests

Let us make no mistake. The population of New Zealand has a strong interest in the effective mitigation of climate change.  Like people in other countries, New Zealanders can expect to experience physical effects of climate change including  natural disasters.  There is also a concern for regional vulnerabilities to severe weather events, and loss of physical territory, including in the Pacific Islands, with which a significant number of New Zealanders have important family, personal and cultural ties.   In addition, New Zealanders’ wellbeing depends on a global future of greater rather than lesser environmental, economic and strategic stability, and rule of law. Given the country’s size and profile these factors will be important determinants in New Zealanders’ future quality of life. Relationships between greenhouse gas emitting entities and individuals may be easier to grasp at the level of local, physical harm, as largely envisaged in the Smith v Fonterra proceedings to date.  However a collective failure by all actors to play an appropriate part in climate change mitigation is likely to contribute to harming New Zealanders by damaging their prospects in these various far-reaching ways.

New Zealand’s situation

Complicating the case politically, though, is the fact that the drive to net zero and beyond poses different economic and commercial challenges in New Zealand’s particular national circumstances to those faced by almost all other countries, with the most notable exception perhaps of Ireland.  This is particularly the case in respect to the dairy industry.  Pastoral farming is a core economic driver, and yet the methane and nitrous oxide produced make up around half the country’s  greenhouse gas emissions. Compounding the situation, New Zealand already relies primarily on renewable energy, and has done so historically leaving less scope for carbon savings through energy conversion schemes.  Despite these circumstances, cross-party commitment to climate change mitigation produced the Climate Change Response (Zero Carbon) Amendment Act 2019. The Act sets a domestic legal target of net zero emissions by 2050 of all greenhouse gases except biogenic methane, for which the target is 24–47 % below 2017 levels by 2050.  Governments have set about the implementation of the Act drawing on the advice of the independent Climate Change Commission that it established. The New Zealand Emissions Trading Scheme (ETS) has been their primary tool.  The extent of progress remains to be seen. New Zealand’s Greenhouse Gas Inventory 1990–2019 revealed that since 1990 the country’s gross emissions had increased by 26.4% since 1990. In New Zealand’s more recent Greenhouse Gas Inventory, covering the full period from 1990–2021, gross emissions had increased by 19% over 1990 levels.  Decreased emissions from road transport during COVID-19 lockdowns had contributed positively, as well as a 0.7 decrease in gross agricultural emissions in 2021 as compared with 2020.

Drop in the ocean

Public discussion of the Smith v Fonterra case has also raised the question of the small percentage the respondent New Zealand businesses are contributing to global atmospheric greenhouse gas concentrations.  There are various estimates of New Zealand’s contribution, according to probably the largest of which New Zealand is estimated to produce up to 0.2 percent of the world’s greenhouse gas emissions.  Such “drop in the ocean” style arguments deflate the dialogue and energy required among all actors to address and engage effectively in the social and political processes that are necessary for coordinated change.  And addressing climate change requires action in a dynamic global matrix of interconnected political, economic and social developments where businesses and governments alike are all key players, centrally including both commercial and financial actors.  Businesses’ independent responsibilities are highlighted in the UN Guiding Principles on Business and Human Rights and associated Information Note on Climate Change and the Guiding Principles on Business and Human Rights of June 2023 as well as in corporate sustainability due diligence laws increasingly contemplated and adopted in various jurisdictions. New Zealand does not have such corporate due diligence legislation, although the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 requires climate-related disclosures to the Financial Markets Authority (FMA) from about 200 large financial institutions.

Constitutional matters

Executive governments and the legislature obviously do have a core role to play in confronting the global need to mitigate climate change.  In fact, Smith’s case is one of two climate cases he presently has underway. The Court of Appeal’s judgment remains pending in Smith’s appeal against another strike out in the parallel public law proceedings against the government in the case of Smith v Attorney General heard in November 2023. In Smith v Attorney General Smith seeks declarations that the Crown’s approach to climate change has breached or is breaching fundamental rights protected under the New Zealand Bill of Rights Act 1990, under the common law and in the Treaty of Waitangi.  But at the same time it bears remembering that no State is comprised of its central executive alone, or even the central executive and legislative branches. State apparatus includes for instance the electorate, local government and the civil service at all levels, as well as the courts, who are responsible for the judicial administration of the law.  Indeed, constitutional arrangements in many jurisdictions do not equip the legislative and executive branches of government well to institute the necessary steps for the prevention of harm on the scale associated with climate change.  The IPCC in 2022 alluded to how existing societal structures and power dynamics may be insufficient for and may undermine such efforts. Short term domestic politics may hold back not only the formulation of domestic climate policy but also States’ international policies for engagement in essential spheres. Taking just one example, if governments could work around the impediments toward harnessing international trade law in ways facilitating progress in mitigation this would have major potential to incentivise further shifts in business conduct.

Tikanga Māori

Of  interest to readers is also perhaps the part that may be played in the Smith v Fonterra case by tikanga Māori (the University of Otago offers the definition, “societal lore within Māori culture… …behavioural guidelines for living and interacting with others”). In pleading his case, Mr. Smith invokes the interests of his whānau (family) and descendants in coastal land at Wainui Bay in the province of Northland.  As the Court describes it, Smith claims, in accordance with tikanga, “a whakapapa (genealogical) and whanaungatanga (kinship) connection to the subject whenua (land), wai (fresh water) and moana (sea)”. In the strike out decision, the Supreme Court considered Mr Smith had a tenable claim to standing under the law on public nuisance on the basis of both legal interests and tikanga interests in respect of this coastal land. At the same time, the Court considered that the special damage rule of standing in public nuisance requires reconsideration in the 21st-century context. The effects of tikanga in relation to the law of tort in other respects, including in the context of Smith’s novel tort claim, remain to be considered as the case progresses. The Treaty of Waitangi, te Tiriti o Waitangi, and international law on indigenous peoples’ rights will also be relevant.

Mr Smith has recently commented that “The bottom line is that it’s about our tamariki (children) and our mokopuna (grandchildren) and, in te ao Māori especially, everything we do is for the security and the wellbeing of our whānau.”  Tikanga’s resonance with international law’s concern for intergenerational equity is strong. The International Court of Justice’s Advisory Opinion on the Obligations of States in respect of Climate Change is likely to come down before Smith v Fonterra is ultimately determined. It is to be hoped that the Advisory Opinion might insist that all State actors, whether executive, legislative or judicial, are obliged to perform their roles consistently with due regard for both present and future generations.

Conclusion

The New Zealand courts can now be expected diligently to work through the issues in Smith v Fonterra. The merits of Smith’s case will be heard initially in the High Court, with appeal likely to the Court of Appeal and eventually the Supreme Court. In assessing whether this can be considered business as usual for the courts, it is important to view the common law and the role of the courts in proper perspective across time. Extraordinary changes have taken place in recent decades, and human activity has become a geological force affecting earth systems. The 1950s are estimated to have marked the beginning of a new geological era characterised by this phenomenon (Report of Anthropocene Working Group, operating under the auspices of the International Commission on Stratigraphy, May 2019). This means that human conduct has potential to affect other human beings via new pathways and in new ways. The Supreme Court has made the correct decision. Complicating factors including the participation of multiple tortfeasors and the existence of multiple potential claimants were not a sufficient reason to disallow consideration of Smith’s case ab initio.