Max Barber is a Solicitor with Franks Ogilvie. He joined the firm in early 2023 and was admitted as a barrister and solicitor in March 2023.
Max joined the firm from BNZ where he spent seven years working across client relations and personal banking. He gained his Bachelor of Laws from Victoria University of Wellington.
Summary
An iwi leader successfully appealed a decision striking out his climate-change based tort claims against several major greenhouse gas emitters.
Background
The appellant in the case was Michael Smith, an elder of Ngāpuhi and Ngāti Kahu, and a climate change spokesperson for the Iwi Chairs Forum, a national forum of tribal leaders.
In 2019, Mr Smith filed proceedings in the High Court against several companies that he alleged were major greenhouse gas (“GHG”) emitters, or suppliers of raw materials that, when burned, resulted in significant GHG emissions (“Respondents”).
Mr Smith alleged that the ongoing GHG emissions contributed to climate change, in breach of duties the Respondents owed under tort law, including public nuisance, negligence, and a common law duty to cease materially contributing to the climate change crisis. Mr Smith sought a declaration that the duties had been breached as well as an injunction requiring the Respondents to gradually phase out their net GHG emissions (or in the alternative, stop them immediately).
The Respondents applied to strike out the proceedings on the basis that they disclosed no reasonably arguable cause of action. The High Court struck out the nuisance and negligence claims but refused to strike out the climate duty. On appeal, the Court of Appeal struck out all three claims.
Mr Smith appealed to the Supreme Court.
The case
Strike out principles
The court affirmed existing principles of determining strikeout applications, namely:
· All pleaded facts were assumed to be proven unless wholly without foundation.
· A claim would only be struck out if it clearly could not succeed on the basis of those facts.
· A court would be cautious to strike out a claim in a novel or developing area of law.
The court placed significant emphasis on the third point on the basis that development of the law was best done with the discipline introduced by evidence and detailed argument.
The court emphasised that declining to strike out a claim did not suggest that the claim was likely to succeed at trial.
Climate change legislation
The court noted that the preliminary issue was whether the claims were excluded by the operation of legislation. In the case of climate change, the relevant legislation was the Climate Change Response Act 2002 (“CCRA”) and the Resource Management Act1991 (“RMA”).
The emissions trading scheme (“ETS”) under the CCRA is the primary mechanism in the government response to climate change. Under that scheme, businesses in certain industries are required to register as participants and surrender ‘emissions units’ to the Crown proportionate to their annual GHG emissions. The Crown only issues a certain number of units per year, which can be purchased directly at carbon auctions as well as on private markets. Businesses that fail to accurately report annual emissions or surrender sufficient units to cover their emissions liability may be liable for pecuniary penalties.
The Respondents argued that Parliament’s intent in enacting the ETS was that it act as the sole means of accountability for otherwise lawful GHG emissions. The court rejected this argument.
They noted that the CCRA said nothing about concurrent tort liability, contrasting with other legislation such as the Accident Compensation Act 2001 (which expressly ousted personal injury claims where cover was available under the Act). Additionally, the CCRA said nothing about the legality of GHG emissions themselves. While the ETS was designed to indirectly incentivise emissions reductions, direct legal accountability for emissions themselves (if any) existed only under the RMA. The latter Act specifically provided that tort claims remained available.
Accordingly, the court held that the Parliamentary intent behind the CCRA and the RMA (described as ‘companion legislation) did not oust liability for emissions under tort law.
The public nuisance claim
Mr Smith argued that various harms arose from climate change caused by GHG emissions (temperature and sea level rises, ocean acidification, geopolitical instability, and others). The Respondents’ contribution to these harms amounted to a substantial and unreasonable interference with the rights of the public,and accordingly the Respondents’ emissions amounted to a public nuisance.
The court accepted that the harm pleaded by Mr Smith was capable of amounting to a substantial and unreasonable interference, and that the issue of whether a nuisance was established should be assessed at trial. The court rejected the argument that GHG emissions had to be independently unlawful before they could amount to a nuisance. Additionally, they cast doubt on whether Mr Smith (as a private plaintiff) had to have suffered ‘special damage’ before he had standing to sue in public nuisance, although it left a final decision on this point for trial. In any event, they held that it was arguable that Mr Smith had suffered special damage by virtue of his dual legal and tikanga-based interests in the land.
The most important aspect of the court’s decision on the nuisance claim was on the issue of causation. The significant difficulties of attributing harm arising from climate change to the Respondents was ‘fatal’ to the claim in the Court of Appeal.
The Supreme Court departed from the Court of Appeal on this point. While they acknowledged that the emissions of the respondents were miniscule in global terms (meaning that the claimed relief would not stop the harm from occurring), this was not an insurmountable barrier to success.
The court noted that earlier public nuisance cases involving the discharge of sewage into public waterways had resulted in liability for individual materially contributing to the pollution even where they had not independently caused it. It would be possible for a trial court to find that the climate change crisis differed only in magnitude, and not in principle, from this line of cases.
On this issue, the court also emphasised that the common law had not always developed slowly and incrementally – that in times of major social upheaval (such as the Industrial Revolution), legal development occurred quickly in relation to new social problems, citing the landmark Donoghue v Stevenson negligence case as an example. They noted that these developments were not always successful, but that it was open for Parliament to intervene in such cases by enacting corrective legislation.
Accordingly, the court was not prepared to halt development of the law in this area at a preliminary stage notwithstanding the significant difficulties involved in attributing blame. Until the matter was heard at trial, it was not possible to say that it was beyond the capability of tort law to respond to the complex issues raised by climate change.
The other claims
The negligence and climate duty claims were reinstated on the basis that they were based on overlapping facts to the nuisance claim and that inclusion of the claims would not materially add to cost and delay of proceedings.
Relevance of tikanga
The Supreme Court, contrary to the Court of Appeal, held that tikanga evidence was relevant to determining the development of the torts proposed in the claim. As Mr Smith was suing in the capacity of a kaitiaki of the whenua of his iwi, tikanga evidence was likely to be relevant to establishing the nature of the harm and meeting the special damage requirement (if one existed).
Result
Mr Smith’s appeal was allowed and all three causes of action were reinstated. The case now falls to be determined by the High Court with full evidence and argument, including evidence of tikanga.
The decision is a landmark tort law and climate change case. Depending on the outcome at trial, businesses in certain industry sectors could be subject to enormous legal risk in respect of their carbon emissions.
Whatever happens at trial, the court’s decision is likely to set an international precedent, emboldening further climate change litigation in countries beyond New Zealand.
For further information on this case or similar issues, please contact Director, Brigitte Morten.
Last year the government made changes to the Charities Act. The most important changes introduced by the Amendment Act that are already in force are:
· A requirement for charities to review their governance procedures at least once every three years
· An expanded definition of ‘officer’
From 5 July 2024, there are expanded objection and appeal rights for certain decisions of the Charities Registration Board (“Board”) and Charities Services.
Charities Services will have the power to exempt certain small charities from financial reporting requirements under the Act, however regulations need to be enacted before this power can be exercised.
Duty to review governance procedures
Registered charities are now required to review their governance procedures once every three years, with the first review due no later than 5 October 2026.‘ Governance procedure’ is not defined in the Act, but Charities Services guidelines suggest it is likely to include a charity’s primary governing document (usually a constitution or trust deed depending on the entity type) Any significant internal guidelines or policies should also be reviewed, particularly if they relate to financial management or conflicts of interest.
The review must consider whether the rules remain fit for purpose, and whether they continue to assist the charity to meet its charitable purpose and comply with the Act. Beyond this, the Act does not prescribe what must take place.
To ensure a bare minimum of compliance, charities should review at an appropriate meeting, which will vary depending on the type of entity. Incorporated societies should carry out the review at a members meeting, charitable companies at a shareholders meeting, and charitable trusts at a board meeting. This discussion must be minuted to demonstrate compliance with the Act.
Change in definition of ‘officer’
Officers are now defined to include “persons able to exercise significant influence over substantial decisions of the charity”. This is likely to include (among others) chief executives, treasurers, CFOs, and COOs. Such individuals are now subject to the minimum qualification requirements for charity officers, and can be disqualified for serious wrongdoing or significant breaches of the Act.
Entities wanting to register as charities must provide Charities Services with certifications of qualification from the expanded group of people included in the definition. Existing charities are required to notify Charities Services of appointments and resignations of key employees, compared to the prior position where this only applied to members of the charity’s governing body.
Exemption from financial reporting requirements
Charities Services will be able to exempt certain charities from the significant financial reporting requirements under the Act. Exempt entities will still be required to provide a minimum level of financial information, the specifics of which will be set in the same regulations. Drafting the regulations began in July 2023, but the date of any consultations (if they occur) or when the regulations are expected to be made is currently unknown.
This is a welcome change for small charities, which are the majority of registered charities. It was widely recognised prior to the amendments that the compliance difficulties for small charities were out of proportion to any transparency and accountability benefits that might arise from stringent reporting requirements.
Expanded objection procedure and appeal rights
From 5 July 2024, charities and some individuals can object to some decisions of Charities Services and all decisions of the Board by giving notice to the relevant decision-maker in accordance with the statutory procedure. Notice must be given within the timeframe stated in the preliminary notification of decision or within two months, whichever is earlier.
The grounds for objections are that the reasons for making the decision are unsatisfied, or that it is otherwise not in the public interest that the decision be made. The decision-maker is then bound by certain process obligations when dealing with the objection.
Additionally, the same decisions that are subject to objections may now be appealed to the Taxation Review Authority (“Authority”). There is no requirement to lodge an objection in respect of a decision before it can be appealed.
The procedure and powers of the Authority in respect of appeals is similar to a specialist statutory court – the process is clearly formal and adversarial, but the Authority has wide powers to regulate its own procedure and can relax evidential rules. Additionally, the Authority is empowered to determine appeals without hearing from the parties in person, provided that it consults with the parties before doing so.
Parties dissatisfied with a decision of the Authority have a right of general appeal to the High Court.
To understand more about this issue, please contact Director Brigitte Morten
A religious organisation was unsuccessful in excluding itself from the scope of the Royal Commission into historical abuse in state and faith-based care.
Royal Commissions are investigatory bodies established by the Governor-General (on the advice of Cabinet) under the residual royal prerogative power. This power is supplemented by the Inquiries Act 2013, which enables royal commissions to (among other things) compel parties to produce documents and give testimony under oath.
In 2018, the government established a Royal Commission whose terms of reference (“ToR”) required it to investigate historical abuse ‘in state care and in the care of faith-based institutions’.
The Christian Congregation of Jehovah’s Witnesses (Australasia) Ltd (“CCJWA”) are a corporate entity representing the Jehovah’s Witnesses faith in Australia and New Zealand.
The Commission notified CCJWA it was required to produce documents as part of the inquiry. CCJWA replied, stating that they did not fall within the scope of the inquiry as they did not provide ‘care’ in the relevant sense. This assertion was based on the tenets of the religion which emphasised parental autonomy and forbade church officials from providing childcare.
The Commission responded that it did not agree with this narrow interpretation of scope of the inquiry, and it reiterated this position later in two formal minutes. The Commission later emphasised in correspondence to CCJWA that it had received evidence of abuse by church officials that it considered brought CCJWA within the scope of the inquiry.
In 2023, CCJWA filed for judicial review arguing that the Commission’s actions were outside of the powers of the ToR, a breach of natural justice and legitimate expectation and predetermination (alleging the Commission should have consulted with CCJWA on matters of scope).
Subsequently the ToR were amended by the Governor-General on the advice of Cabinet (“Amendment Order”). The Amendment Order affirmed the Commission’s interpretation of the scope of the inquiry, and confirmed that ‘care’ could occur in the context of a trust-based relationship where the abuser is provided with authority by a religious institution.
CCJWA amended their statement of claim in response, arguing that the Amendment Order was also unlawful.
‘In the care of a faith-based institution’
Many of CCJWA’s judicial review grounds relating to pre-Amendment Order actions were based on the interpretation of ‘in the care of a faith-based institution’ in the ToR. They argued that ‘care’ had not been established, as CCJWA forbade its officials from engaging in childcare and emphasised parental autonomy. Accordingly, the assumption of responsibility by the institution necessary for a finding of care could not exist, and CCJWA was not within the scope of the inquiry.
The Court rejected this argument for two reasons.
First, the Court was not prepared to interfere with the Commission’s understanding of its scope, as it risked judicialising an investigatory process. The Court held that, in general, the scope of a Commission would be beyond judicial interference other than in obvious cases. This position applied even more so with this Royal Commission, which had a remedial rather than a fault-finding purpose (giving abuse survivors a platform), and where the ToR expressly required the Commission to avoid excessive formality and technicality.
Second, the fact that the church forbade officials from childcare did not immunise it from scrutiny. Complaints received by the Commission established the rules were not always followed. In doing so, the Commission drew on UK tort law cases, where the institution was liable for damages for abuse perpetrated by church officials clothed with authority by the church, even where the officials in question had acted outside of their official responsibilities and in breach of the institution’s rules. In this case, there was a tenable basis for finding an assumption of responsibility, and the Court was not prepared to second guess the Commission’s conclusions in this regard.
Accordingly, the majority of the pre-Amendment Order grounds were dismissed. The remainder were dismissed due to a general lack of merit.
The Amendment Order
While the interpretation of ‘care’ effectively decided the case, the Court went on to dismiss the claims in respect of the Amendment Order.
CCJWA argued the amendment of the ToR was invalid as it was made by the Governor-General on the advice of Cabinet rather than by a single Minister by a Gazette notice as is contemplated by section 7(5) of the Inquiries Act., The Court held that the power under the royal prerogative for the Governor-General to amend the ToR survived the passage of section 7(5). The Gazette notice power was intended to be supplementary to the prerogative.
CCJWA’s claims based on the alleged retrospective effect of the order were also dismissed. The Court held that the order was not retrospective – it merely clarified the Commission’s correct interpretation of ‘care’. Legislation is presumed not to act retrospectively under section 12 of the Legislation Act 2019.
Finally, CCJWA’s claim that the ToR unlawfully discriminated against their religion was dismissed. The ToR did not differentiate between Jehovah’s Witnesses and any other religion in terms of the scope of the inquiry.
The judicial review was dismissed.
The case establishes a precedent that, if followed, means that Royal Commission scoping decisions will be virtually immune from judicial scrutiny. In particular, litigants will be hard pressed to argue legal technicalities to extricate them from inquiries.
As the Court stated, “there is no fundamental right to be free from scrutiny”.
For further information on this case or similar issues, please contact Director, Brigitte Morten.
