Supreme Court surprise in climate change case

Roger Partridge
NZ Herald
15 February, 2024

‘Hard cases make bad law’ is a common legal adage. It means the more worthy a cause, the more tempting it will be for a court to stretch the law to make it fit.

Whether the expansion of the law is “bad” is a question on which views will vary, including the views of particular courts and judges.

The Supreme Court’s decision in the Smith case, handed down last week on more or less the Supreme Court’s 20th anniversary, is a new touchstone for this debate.

Understanding why requires a bit of background.

The plaintiff, Mr Smith, is an elder of Ngāpuhi and Ngāti Kahu and a climate change spokesperson for the Iwi Chairs Forum.

In 2019, he brought proceedings against seven of New Zealand’s largest companies, claiming an injunction to stop them from contributing materially to climate change. The seven include household names like Fonterra, Genesis Energy, New Zealand Steel and Z Energy.

Mr Smith claims the defendants have materially contributed to the climate crisis. And he says they have “damaged, and will continue to damage, his whenua and moana, including places of customary, cultural, historical, nutritional and spiritual significance to him and his whanau.”

His proceedings allege three causes of action: public nuisance, negligence and a proposed new tort (meaning a civil wrong harming a plaintiff) involving “damage to the climate system.” Mr Smith also claims that tikanga Māori should inform the reach and content of his causes of action.

His claim seeks declarations that the seven companies have caused him harm. He also seeks orders restraining them from continued unlawful activity. Oddly, the main focus of the restraining orders is not to halt the defendants' allegedly harmful activities – merely that they ensure the activities “peak” by 2025 and then reduce linearly to net zero by 2050.

Mr Smith’s case presents as a veritable battle between David and Goliath. It also invites the judiciary to play a lead role in a global cause celebre.

Of course, no one should doubt the world is warming because of human activity, nor that the warming will have serious consequences.

But when New Zealand’s total emissions comprise an infinitesimal proportion of global emissions (0.17 of one per cent, or 17 parts in ten thousand), can anything done by a single New Zealand company – or even seven of them – plausibly have caused Mr Smith (or anyone else) any measurable harm?

And if the individual companies face potential liability, why not every company? Indeed, why stop there? Why not anyone farming animals, or driving fossil-fuel-powered cars, or eating meat, or even breathing out? All of those things involve the emission of greenhouse gases.

The restraining orders Mr Smith seeks from the Court also raise a flag for the courts. Capping the extent of a defendants’ allegedly harmful activities is not a normal remedy for a civil wrong. Regulating ongoing activities is more typically a task for Parliament than for the courts.

Indeed, Parliament has introduced emissions regulations – the emissions trading scheme (ETS) – to mitigate greenhouse gas emissions in New Zealand.

Under the ETS, companies like Genesis Energy must surrender carbon credits or “units” to cover their emissions. The number of units issued is capped by the Government. Consequently, if the courts forced Genesis to abate its emissions more quickly than it had planned, this would free up units within the cap for use by other emitters. It would not reduce New Zealand’s overall net emissions. The existence of the ETS therefore raises an obvious question about the effectiveness of claims like Mr Smith’s, even if conduct causing harm can be made out.

After being served with the proceedings, the seven companies applied to the Court to ‘strike them out.’

The court system is notoriously clogged up. ‘Strike out’ applications help ensure hopeless cases do not consume scarce judicial resources. A defendant seeking a strike-out must establish that a claim should not be allowed to proceed to a trial because it is ‘bound to fail.’

This test sets a high hurdle for a defendant to reach. It also means that a court motivated to entertain an apparently worthy but legally questionable case can decline to strike it out without making a final decision on its merits. 

With the defendants facing both a highly charged claim and a high hurdle, the stage was set for judicial intervention. Or so you might have thought.

But until the case knocked on the Supreme Court’s door, expectations for a landmark climate change trial had been dashed.

In the High Court, Wylie J struck out the public nuisance and negligence claims, holding they were ‘not reasonably arguable.’ He declined, however, to strike out the novel cause of action proposing a ‘climate system damage tort,’ leaving that for the appellate courts to contend with.

On appeal, the Court of Appeal unanimously struck out the whole shooting match. The Appeal Court concluded the causes of action in nuisance and negligence could not be made out. The lack of any material causation between the alleged harm and each defendant’s actions was fatally missing. As for the proposed ‘climate system damage’ cause of action, the Court held it was simply too speculative and uncertain to warrant further court time.

The Court observed that “… the magnitude of the crisis, which is climate change simply cannot be appropriately or adequately addressed by common law court claims pursued through the courts. It is quintessentially a matter that calls for a sophisticated regulatory response at a national level supported by international coordination.”

Appealing to the Supreme Court is not a matter of right. The Court only hears cases it wants to. So, when it granted Mr Smith leave to appeal in March 2022, the early signs were that the Supreme Court did not share the Court of Appeal’s judicial restraint.

Any trepidation the seven defendants might have felt when their lawyers fronted up for the appeal hearing has proven well-founded. In last week’s judgment, the Court unanimously overturned the Court of Appeal’s decision and reinstated all of Mr Smith’s claims.

The Court acknowledged that a defendant can only be liable if harm allegedly suffered by a claimant was “a reasonably foreseeable consequence of the defendant’s conduct.” To be liable, the defendant’s actions must “amount to a substantial and unreasonable interference with public rights.”

The Court was willing to acknowledge the absurdity of ordinary everyday activities being actionable because of their negligible effect on climate change. “Patently,” the court held, “ordinary domestic activities involving individuals travelling, warming their houses and cooking food, will not [amount to a substantial interference with public rights].”

But, unlike the lower courts, the Supreme Court refused to apply the same logic to the emissions of the seven companies. Yet, while they may be large companies in New Zealand, all are but a rounding error in the context of global greenhouse gas emissions.

The outcome will see months of court time and millions of dollars in legal fees consumed in a symbolic trial, with the Supreme Court substituting the judiciary into a role the defendants will argue is more suited to Parliament.

Roger Partridge is chair of the New Zealand Initiative.

While the New Zealand Initiative’s membership includes some of the named defendants, the views expressed are those of the author alone.

To read the article on the NZ Herald website, click here.

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