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.
