Smith v Fonterra - a significant win in the Supreme Court
“Mr Smith gets his day in Court” - Supreme Court releases its judgment in Smith v Fonterra
The Supreme Court has unanimously agreed not to strike out Mr Smith’s claims against seven of New Zealand’s largest emitting companies.
While the win is undoubtedly a significant victory for Mr Smith, it does not represent a radical change in the law. The threshold for strike-out is high and is only met if there is no reasonably arguable claim. In finding there was such a claim, the Supreme Court did not create a new right of action - but instead held Mr Smith had a reasonably arguable claim based on the long-standing (if rarely used) rules of public nuisance. These were developed during the Industrial Revolution to provide a remedy for pollution. Given the existence of a tenable claim, Mr Smith, like any other plaintiff, is entitled to his day in court.
What the case was about
The case centred on claims made by Mr Smith, an Iwi leader and elder of Ngāpuhi and Ngāti Kahu, who filed proceedings against Fonterra, Genesis Energy, Dairy Holdings Ltd, NZ Steel Ltd, Z Energy, Channel Infrastructure, and BT Mining alleging that their greenhouse gas emissions contribute to global heating and are thereby causing harm to him and his whānau, descendants and others. The harm Mr Smith alleges includes irrevocable damage to his family land from rising sea levels, impacts on customary fisheries he uses due to ocean warming and acidification, and adverse health effects from rising temperatures.
Mr Smith’s claim comprised three causes of action:
(1) Public nuisance;
(2) Negligence;
(3) A novel climate system damage tort, arguing that the respondents have breached, and will continue to breach, their duty to “cease materially contributing to damage to the climate system”
The respondents applied to strike out Mr Smith’s case on the basis that it raised no reasonably arguable cause of action.
In 2020, the High Court struck out the claims in public nuisance and negligence, but declined to strike out the claim based on the proposed new tort. The Court of Appeal went further and struck out all three causes of action. One of the key reasons the Court of Appeal struck out the claims was because it thought Mr Smith’s claims would cut across the existing legislative framework that governs climate change, and that climate change raises such complex issues that it is best left to Parliament rather than the common law.
The Supreme Court’s decision
The Supreme Court, however, was not prepared to find that the causes of action were untenable - allowing Mr Smith to get “his day in court”.
The Court emphasised the high threshold for a strike-out application, noting that “real caution is necessary before preemptively disposing of a claim where seriously arguably non-trivial harm is in issue”.
At the heart of the case was the Supreme Court’s finding that just because climate change presents complex issues, the common law should still be given the opportunity to develop and respond. And this was best done at trial, rather than at a strike-out stage. As the Court said, “the common law must develop, if at all, in the fertile fields of trial, not on the barren rocks of a strike out application”.
Much of the judgment focused on the first cause of action, which alleged public nuisance. The respondents had raised a number of issues about the prospects of this argument, including casting doubt on whether Mr Smith could show he faced any special harm or damage.
The Court found it significant that the law on public nuisance was not clear, and noted that New Zealand courts have “barely touched, let alone grappled with”, the law of public nuisance over the last 100 years. The Court found that just because there may be challenges with some of the limbs of the public nuisance test does not mean there is no tenable claim. In fact, the Court went so far as to suggest that “if the interests of many others, whether proprietary or tikanga, are likewise affected, that may say more about the gravity of the alleged tort than the propriety of entertaining it”.
Our Response
Lawyers for Climate Action New Zealand welcomes the Supreme Court’s decision.
It is significant that our highest court has now unanimously confirmed that the common law has the potential to hold major emitters accountable for acting in a way that threatens a safe and habitable climate system.
The case also confirms that the courts have an important role to play in the response to climate change, alongside regulation. The common law is able to evolve in harmony with the Climate Change Response Act - the CCRA does “not purport to cover the entire field”.
However, as noted above, this should not be seen as a radical or unorthodox result. As a general principle, those who cause harm should be held responsible for it. This is especially so when the harm infringes on fundamental rights, including both human and property rights such as those claimed by Mr Smith.
Just as the common law has responded to other new harms in the past (such as defective consumer goods and pollution) the common law should be given an opportunity to develop and respond to the challenges presented by the climate crisis. This can only happen if cases such as Mr Smith’s are allowed to proceed to a full trial at which the issues involved can be fully explored.
Lawyers for Climate Action, represented by Jenny Cooper KC, James Every-Palmer KC, and Jack Cundy, appeared in the Supreme Court as intervener, and supported Mr Smith’s claims. You can read our submissions here.