Foster, Caroline E.

English

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Tort Law and New Zealand’s CorporateGreenhouse Gas EmissionsCaroline E. Foster 2024-03-17T01:40:13In February 2024, the New Zealand Supreme Court overturned the previous strikeouts in the case of Michael John Smith in tort against seven major New Zealandcompanies in the dairy, energy, steel, mining and infrastructure sectors. MichaelSmith is of Nga#puhi and Nga#ti Kahu descent and serves as climate changespokesperson for the Ma#ori Iwi Chairs Forum “Pou Take #huarangi”. Smithestimates that the respondent companies’ operations together are associated withapproximately a third of New Zealand’s country’s greenhouse gas (GHG) emissions.He makes three claims: in negligence, nuisance and in a proposed new tort of harmto the climate system. In 2020, the High Court struck out the claims in negligenceand public nuisance. In 2022, the Court of Appeal upheld this decision and alsostruck out the remaining novel tort claim.All three tort claims have been revived by the New Zealand Supreme Court. Amongthe public responses to the Supreme Court decision are several suggesting that thisis unusual.  However, there are many respects in which this is in fact business asusual for the courts.  Smith asserts that the respondents are engaging in conductthat affects him and others, and has put them into legal connection with oneanother in ways that enable appropriate remedy. This is heartland common lawterritory.  Even though the climate change problems we are now grappling with maybe new ones, the centuries-old practices and traditions of the common law are apart of New Zealand’s constitutional heritage and structure.  Litigation is a legitimatevehicle for members of the population to engage the law in the face of harm orthreats to individuals’ rights and well-being.Further, the Courts can be expected to bring established modes of reasoning tobear in regard to Smith’s claims, albeit in new ways given that dealing with climatechange requires forward-looking action, including business planning and design,and capital developments. Smith seeks declaratory relief and also injunctive reliefrequiring the respondents either to reduce emissions by specified amounts over timeor immediately to cease emissions.  If Smith’s case is successful the courts can beexpected to consider the matter of remedies with particular attention.The claims and issuesMr. Smith’s three claims are more specifically: in negligence under a novel duty ofcare; in public nuisance; and under “a proposed new tort involving a duty, cognisableat law, to cease materially contributing to: damage to the climate system; dangerousanthropogenic interference with the climate system; and the adverse effects ofclimate change”. In  overturning the strike outs in all three of Smith’s claims the- 1 -Supreme Court observed that these tort claims all raise issues of relationship,proximity, causation, disproportionality and indeterminacy.In respect of the core issue of causality, there are of course multiple tortfeasors oremitters of global GHGS. Further, the absolute majority of emitters are not withinNew Zealand’s jurisdiction.  Smith submitted that the requirement for causality in thelaw on nuisance could be satisfied where a responding party’s material contributionto a state of affairs amounts to an unreasonable interference, while the respondentsubmitted that a direct and serious contribution to the relevant harm was necessary.The Court began by remarking that it is “beyond question that the respondents areeither very substantial emitters of greenhouse gases or are (or have been) verysubstantial suppliers of fossil fuels that release greenhouse gas emissions whenburned by others”. The Court went on to find previous cases suggested it wascertainly arguable that a defendant must take responsibility for its contribution toa common interference with public rights, which should not be contingent on theabsence of others’ co-contribution, nor in effect discharged by others’ equivalentacts.Scientific evidence on climate change will clearly be important at trial, but the subjectof causation and related matters will also demand sustained legal argument. Tortlawyers might be interested to consider by analogy the rules on responsibility inpublic international law where States committing wrongs are each individuallyresponsible. Responsibility is not attenuated in cases of “concurrent causes”.However, the International Law Commission’s commentary to its Articles on StateResponsibility indicates that reparation will not be due which is out of all proportionto the gravity of a breach of international legal obligations (reparation in internationallaw being understood as including restitution, compensation and/or satisfaction,which inter alia can take the form of a judicial declaration).New Zealand’s climate change mitigation interestsLet us make no mistake. The population of New Zealand has a strong interest inthe effective mitigation of climate change.  Like people in other countries, NewZealanders can expect to experience physical effects of climate change including  natural disasters.  There is also a concern for regional vulnerabilities to severeweather events, and loss of physical territory, including in the Pacific Islands, withwhich a significant number of New Zealanders have important family, personal andcultural ties.   In addition, New Zealanders’ wellbeing depends on a global future ofgreater rather than lesser environmental, economic and strategic stability, and rule oflaw. Given the country’s size and profile these factors will be important determinantsin New Zealanders’ future quality of life. Relationships between greenhouse gasemitting entities and individuals may be easier to grasp at the level of local, physicalharm, as largely envisaged in the Smith v Fonterra proceedings to date.  However acollective failure by all actors to play an appropriate part in climate change mitigationis likely to contribute to harming New Zealanders by damaging their prospects inthese various far-reaching ways.- 2 -New Zealand’s situationComplicating the case politically, though, is the fact that the drive to net zero andbeyond poses different economic and commercial challenges in New Zealand’sparticular national circumstances to those faced by almost all other countries,with the most notable exception perhaps of Ireland.  This is particularly the casein respect to the dairy industry.  Pastoral farming is a core economic driver, andyet the methane and nitrous oxide produced make up around half the country’s greenhouse gas emissions. Compounding the situation, New Zealand alreadyrelies primarily on renewable energy, and has done so historically leaving lessscope for carbon savings through energy conversion schemes.  Despite thesecircumstances, cross-party commitment to climate change mitigation producedthe Climate Change Response (Zero Carbon) Amendment Act 2019. The Act sets adomestic legal target of net zero emissions by 2050 of all greenhouse gases exceptbiogenic methane, for which the target is 24–47 % below 2017 levels by 2050. Governments have set about the implementation of the Act drawing on the advice ofthe independent Climate Change Commission that it established. The New ZealandEmissions Trading Scheme (ETS) has been their primary tool.  The extent ofprogress remains to be seen. New Zealand’s Greenhouse Gas Inventory 1990–2019revealed that since 1990 the country’s gross emissions had increased by 26.4%since 1990. In New Zealand’s more recent Greenhouse Gas Inventory, coveringthe full period from 1990–2021, gross emissions had increased by 19% over 1990levels.  Decreased emissions from road transport during COVID-19 lockdowns hadcontributed positively, as well as a 0.7 decrease in gross agricultural emissions in2021 as compared with 2020.Drop in the oceanPublic discussion of the Smith v Fonterra case has also raised the question ofthe small percentage the respondent New Zealand businesses are contributing toglobal atmospheric greenhouse gas concentrations.  There are various estimatesof New Zealand’s contribution, according to probably the largest of which NewZealand is estimated to produce up to 0.2 percent of the world’s greenhouse gasemissions.  Such “drop in the ocean” style arguments deflate the dialogue andenergy required among all actors to address and engage effectively in the socialand political processes that are necessary for coordinated change.  And addressingclimate change requires action in a dynamic global matrix of interconnected political,economic and social developments where businesses and governments alikeare all key players, centrally including both commercial and financial actors. Businesses’ independent responsibilities are highlighted in the UN Guiding Principleson Business and Human Rights and associated Information Note on Climate Changeand the Guiding Principles on Business and Human Rights of June 2023 as well asin corporate sustainability due diligence laws increasingly contemplated and adoptedin various jurisdictions. New Zealand does not have such corporate due diligencelegislation, although the Financial Sector (Climate-related Disclosures and OtherMatters) Amendment Act 2021 requires climate-related disclosures to the FinancialMarkets Authority (FMA) from about 200 large financial institutions.- 3 -Constitutional mattersExecutive governments and the legislature obviously do have a core role to playin confronting the global need to mitigate climate change.  In fact, Smith’s caseis one of two climate cases he presently has underway. The Court of Appeal’sjudgment remains pending in Smith’s appeal against another strike out in theparallel public law proceedings against the government in the case of Smith vAttorney General heard in November 2023. In Smith v Attorney General Smithseeks declarations that the Crown’s approach to climate change has breached oris breaching fundamental rights protected under the New Zealand Bill of Rights Act1990, under the common law and in the Treaty of Waitangi.  But at the same timeit bears remembering that no State is comprised of its central executive alone, oreven the central executive and legislative branches. State apparatus includes forinstance the electorate, local government and the civil service at all levels, as wellas the courts, who are responsible for the judicial administration of the law.  Indeed,constitutional arrangements in many jurisdictions do not equip the legislative andexecutive branches of government well to institute the necessary steps for theprevention of harm on the scale associated with climate change.  The IPCC in 2022alluded to how existing societal structures and power dynamics may be insufficientfor and may undermine such efforts. Short term domestic politics may hold back notonly the formulation of domestic climate policy but also States’ international policiesfor engagement in essential spheres. Taking just one example, if governments couldwork around the impediments toward harnessing international trade law in waysfacilitating progress in mitigation this would have major potential to incentivise furthershifts in business conduct.Tikanga M#oriOf  interest to readers is also perhaps the part that may be played in the Smith vFonterra case by tikanga M#ori (the University of Otago offers the definition, “societallore within M#ori culture… …behavioural guidelines for living and interacting withothers”). In pleading his case, Mr. Smith invokes the interests of his wh#nau (family)and descendants in coastal land at Wainui Bay in the province of Northland.  Asthe Court describes it, Smith claims, in accordance with tikanga, “a whakapapa(genealogical) and whanaungatanga (kinship) connection to the subject whenua(land), wai (fresh water) and moana (sea)”. In the strike out decision, the SupremeCourt considered Mr Smith had a tenable claim to standing under the law on publicnuisance on the basis of both legal interests and tikanga interests in respect of thiscoastal land. At the same time, the Court considered that the special damage ruleof standing in public nuisance requires reconsideration in the 21st-century context.The effects of tikanga in relation to the law of tort in other respects, including in thecontext of Smith’s novel tort claim, remain to be considered as the case progresses.The Treaty of Waitangi, te Tiriti o Waitangi, and international law on indigenouspeoples’ rights will also be relevant.Mr Smith has recently commented that “The bottom line is that it’s about ourtamariki (children) and our mokopuna (grandchildren) and, in te ao M#ori especially,- 4 -everything we do is for the security and the wellbeing of our wh#nau.”  Tikanga’sresonance with international law’s concern for intergenerational equity is strong.The International Court of Justice’s Advisory Opinion on the Obligations of Statesin respect of Climate Change is likely to come down before Smith v Fonterra isultimately determined. It is to be hoped that the Advisory Opinion might insist that allState actors, whether executive, legislative or judicial, are obliged to perform theirroles consistently with due regard for both present and future generations.ConclusionThe New Zealand courts can now be expected diligently to work through the issuesin Smith v Fonterra. The merits of Smith’s case will be heard initially in the HighCourt, with appeal likely to the Court of Appeal and eventually the Supreme Court.In assessing whether this can be considered business as usual for the courts, it isimportant to view the common law and the role of the courts in proper perspectiveacross time. Extraordinary changes have taken place in recent decades, and humanactivity has become a geological force affecting earth systems. The 1950s areestimated to have marked the beginning of a new geological era characterised bythis phenomenon (Report of Anthropocene Working Group, operating under theauspices of the International Commission on Stratigraphy, May 2019). This meansthat human conduct has potential to affect other human beings via new pathwaysand in new ways. The Supreme Court has made the correct decision. Complicatingfactors including the participation of multiple tortfeasors and the existence of multiplepotential claimants were not a sufficient reason to disallow consideration of Smith’scase ab initio.- 5 -

Tort Law and New Zealand’s Corporate Greenhouse Gas Emissions

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Tort Law and New Zealand’s Corporate Greenhouse Gas Emissions

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