Smith v Fonterra

In Smith v Fonterra Co-Operative Group Ltd [2024] NZSC 5 the New Zealand Supreme Court ruled in favour of a remarkable climate case continuing to trial. The decision has significant implications for common law claims worldwide.

While it remains to be seen whether the case will ultimately succeed at trial, four features make it a momentous, landmark win for the climate that builds on other important wins globally in recent years. These four features are:

• the unanimous reasoning in the decision, which is measured and carefully crafted, key parts of which are likely to be attractive to other courts;
• the fact that it involved causes of action in tort, particularly public nuisance, applicable in all common law countries;
• the fact it kept the door wide open to develop new common law principles, and appears to be inviting lower court judges to step up to respond to “a crisis as all-embracing as climate change”; and
• its status as a unanimous decision of a top national appellate court.

These features mean its significance is not limited to New Zealand. As part of a growing body of case law globally, it is likely to be influential in other common law countries, particularly in the Pacific, and possibly including Australia.

The decision also has important implications for other common law countries where custom and traditional values remain an important part of the legal system, such as many Pacific and African common law countries.

Background

The appeal arose from a claim filed in 2019 by Michael Smith, a Maori elder of Ngāpuhi and Ngāti Kahu, and a climate change spokesperson for the Iwi Chairs Forum, a national forum of tribal leaders.

The Plaintiff (who was the Appellant before the Supreme Court) alleges seven defendants, each one of New Zealand’s largest climate polluters, are liable for three causes of actions in tort:

1. public nuisance by contributing to interference with public rights that is substantial, material and unreasonable;
2. negligence by breaching a duty to take reasonable care not to operate their business in a way that will cause the Plaintiff/Appellant loss by contributing to dangerous anthropogenic interference in the climate system; and
3. a proposed new tort involving breach of 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 through their emission of greenhouse gases into the atmosphere ….

The Plaintiff seeks declaratory and injunctive relief to restrain the harm caused by these torts.

The Draft Amended Statement of Claim, attached to the Plaintiff/Appellant’s written submissions in the appeal and dated 15 June 2022, sets out these causes of action and the relief sought. It alleges, for instance, at [85]-[86]:

[85] The defendants’ interference with public rights is substantial, material and unreasonable both as to the level of their contribution and the consequences of their contribution.

[86] The defendants knew, or ought reasonably have known, since at least the release of the IPCC’s Fourth Assessment Report in 2007, that their activities would contribut to dangerous anthropogenic interference in the climate system.

In 2020, a judge of the New Zealand High Court struck out the claims in public nuisance and negligence as not reasonably arguable but declined to strike out a third tort claim involving the novel climate duty.

In 2021, the New Zealand Court of Appeal struck out all three causes of action (public nuisance, negligence and a new climate duty).

Supreme Court’s reasoning

In Smith v Fonterra Co-Operative Group Ltd [2024] NZSC 5, five members of the NZ Supreme Court (Winkelmann CJ, Glazebrook, Ellen France, Williams and Kós JJ) unanimously allowed the appeal and reinstated all causes of action to proceed to trial.

At its core, the Supreme Court was not prepared to strike out the claims summarily and did not wish to prejudge issues such as, at [169], “whether the respondents’ actions amount to a substantial and unreasonable interference with public rights [which] remains a fundamental issue of fact for trial.”

This core approach led the Supreme Court to allow the case to proceed to trial, but also expressed confidence in the common law to develop to meet the challenge of the climate change as it has to other challenges in the past. For instance, the Court said, at [156]:

The common law has not previously grappled with a crisis as all-embracing as climate change. But in the 19th and early 20th centuries it had to deal with another existential crisis, albeit one of lesser scale, when the industrial revolution dramatically enlarged the risk of accidents through the mechanisation of factories, transportation and mining.

After considering past cases involving of multiple tortfeasors, the Court said, at [166]:

How the law of torts should respond to cumulative causation in a public nuisance case involving newer technologies and newer harms (GHGs, rather than sewage and other water pollution) is a matter that should not be answered pre-emptively, without evidence and policy analysis exceeding that available on a strike out application.

Reflecting a point made by the late Professor Mike Taggart, that “the cave of the common law still has dusty and forgotten treasures to uncover”, the Court said, at [172] about the common law:

The principles governing public nuisance ought not to stand still in the face of massive environmental challenges attributable to human economic activity. The common law, where it is not clearly excluded, responds to challenge and change in a considered way, through trials involving the testing of evidence.

While stressing it did not want to prejudge these issues, the Supreme Court has kept the door wide open to develop new principles, and appears to be inviting lower court judges to step up to respond to “a crisis as all-embracing as climate change.”

The influence of this decision in Australia remains to be seen. Climate litigation in tort must overcome to restrictive reasoning of the Full Federal Court in Minister for the Environment v Sharma [2022] FCAFC 35; (2022) 291 FCR 311 (the Sharma case), in which a statutory duty of care for climate under Australia’s national environmental laws was rejected by all members of the court. While the reasoning of the Full Court differed and involved a duty alleged to be imposed under a statute rather than the common law, Allsop CJ’s reasoning (in the minority on this point) that climate change is not a matter for the courts but a matter for Parliament was particularly troubling. The NZ Supreme Court has taken a very, very different view and this is likely to support future climate litigants in Australia and elsewhere.

The role of custom and traditional values

Another significant part of the decision is the Supreme Court’s reasoning, at [182]-[188], that tikanga (customs and traditional values, especially in a Maori context) is relevant in formulating a claim in tort in New Zealand. The Court held, at [187]:

… tikanga was the first law of New Zealand, and it will continue to influence New Zealand’s distinctive common law as appropriate according to the case and the extent appropriate in the case.

The Supreme Court’s view that tikanga is relevant to formulating a claim in tort in New Zealand will support similar approaches in other common law countries where customary law and traditional values remain an important part of culture. This is the case in many Pacific countries. For instance,  section 15 of the Constitution of Tuvalu 2023 states that:

… all laws, and all acts done under a law, must be reasonably justifiable in a democratic society that has a proper respect for human rights and dignity [and in determining this a court may have regard to] traditional standards, values and practices … of Tuvalu.

The Supreme Court’s reasoning that custom and traditional values are relevant to formulating common law claims in New Zealand supports a similar approach in many other common law countries globally. This is of general significance, not limited to climate change actions.