Environmental Law News Update

In this latest Environmental Law News Update, Róisín Finnegan discusses using private law to tackle climate change in light of the recent Supreme Court of New Zealand decision in Smith v Fonterra and others [2024] NZSC 5.

Using Private Law to Tackle Climate Change – Smith v Fonterra and others [2024] NZSC 5

A recent Supreme Court decision[1] in New Zealand marks an important step for litigants in common law jurisdictions seeking to address climate change through private law. The Supreme Court has allowed Mr Michael Smith’s claim, including a novel ‘climate system damage’ tort, to proceed to trial in what will be an unprecedented case in a common law jurisdiction.

Background

Mr Smith, a Māori leader, brings his claim against seven companies based in New Zealand said to be collectively responsible for more than one-third of New Zealand’s total Greenhouse Gas (“GHG”) emissions. Mr Smith raises three cause of actions in tort: public nuisance, negligence, and a novel ‘climate system damage’ tort. He alleges that the respondent companies have materially contributed to climate change and that he will suffer harm resulting from climate change impacts associated with rising sea levels, damage to customary fisheries, loss of cultural and spiritual land, and adverse health impacts.

Two remedies are sought: a declaration that the respondents have “unlawfully either breached a duty owed to him or caused or contributed to be a public nuisance, and have caused or will cause him loss through their activities” (at [4]), and an injunction requiring the respondents to reduce emissions.

While the High Court struck out two of the three causes of action, and the Court of Appeal struck out all three, the Supreme Court unanimously reinstated the claim in full.

Supreme Court Decision

The Court was solely concerned with whether Mr Smith’s claim should be allowed to proceed to trial, rather than its merits. In New Zealand, a court may strike out a pleading if it “discloses no reasonably arguable cause of action”.[2]

The respondents’ argument that common law actions over GHG emissions are excluded by statute was rejected, and the Court proceeded to consider whether the claim of nuisance was reasonably arguable. In doing so, the Court considered four questions.

First, the court analysed whether actionable public rights had been pleaded, and found that they had; namely, that the effects of climate change engage rights that provide a foundation for a public nuisance hearing.

Second, the Court considered that it was unnecessary for the nuisance complained of to be independently unlawful.

Third, the Court addressed the special damage rule; that is, whether the damage suffered by Mr Smith is different from that suffered by other members of the community. The Court reflected on whether the special damage rule “requires reconsideration in a 21^st century context, in which the implications of ubiquitous harms such as pollution (including from GHGs) are more evident and better understood”, and where class actions and better judicial case management are more equipped to counter fears of “oppressive multiplicity of actions” (at [151]). In any event, the Court decided that Mr Smith had a tenable claim to satisfying the special damage rule as a result of the distinct impact climate change has on him as a Māori coastal landowner.

Finally, the Court considered the thorny issue of causation in climate litigation. It was rejected that all defendants causing or contributing to a nuisance must be before the court (at [164]). Interestingly, analogies were drawn between climate change and the challenges posed by widespread risk and damage from air and water pollution during the Industrial Revolution. The Court observed that “climate change engages comparable complexities, albeit at a quantum leap scale enlargement” (at [157]) and highlighted the ability of the common law to adapt. Considering that evidence at trial will likely include climate change attribution science, the Court decided that the law relating to cumulative causation should be resolved by testing evidence at trial (at [166]-[167], [172]). Optimistically, the Court opined that:

“the principles governing public nuisance ought not to stand still in the face of massive environmental challenges attributable to human economic activity” (at [172]).

Having found that Mr Smith had established a reasonably arguable cause of action in nuisance, the Court allowed the two remaining causes of action to also proceed to trial.

Comment

This claim forms part of an increasing trend globally where litigants are turning to private law to advance climate action. The Dutch Supreme Court’s judgment in State of the Netherlands v Stichting Urgenda[3] renewed interest in using tort law to address climate change, where the Dutch government’s inadequate action on climate change was held to have violated a duty of care to its citizens. While in Milieudefensie v Royal Dutch Shell PLC,[4] the Hague District Court held that Shell owed Dutch citizens a duty of care to reduce emissions.

A particular challenge faced by litigants is the attribution question—when climate change is the result of contributions to GHG emissions over many years by millions of emitters, how can a claimant possibly attribute the harm they have suffered to the actions of one (or several) emitters? It was this failure to establish causation that led the German District Court of Essen to dismiss the claim of a Peruvian farmer against a German utility company in Lliuya v RWE AG.[5] However, the claim is now before the Higher Regional Court of Hamm who are considering climate attribution scientific evidence on this issue. Whether the evidentiary gap will be filled is unclear, although it seems likely that this science will be key to challenging the actions of large emitters.

Turning to the UK, private law has been used to confront climate change in the context of company law. In ClientEarth v Shell,[6] ClientEarth, a minority shareholder in Shell, sought to pursue a derivative action by Shell against its directors arguing that by failing to properly manage climate risk facing Shell, the Board had breached its obligations under the Companies Act 2006 (“CA 2006”). Although permission to proceed was refused, future litigants may yet have more success in challenging the actions of company directors through the CA 2006. In this vein, Lord Carnwath recently commented that the High Court’s dismissal of the claim represented a missed opportunity to examine the operation of the CA 2006 provisions.

Conclusion

The age old debate that permeates these cases is whether the courts are best placed to consider the complexities of the climate change crisis – is it solely a polycentric and political question, or can it fit the moulds of our contemporary legal system? As the New Zealand Supreme Court said, whether the common law develops is a question to be tried “in the fertile fields of trial, not on the barren rocks of a strike out application” (at [173]). While it remains to be seen how far the limits of the common law’s flexibility will be stretched, one thing seems certain: innovative climate litigation shows no signs of slowing down.

Róisín Finnegan
Pupil
roisin.finnegan@6pumpcourt.co.uk

[1] Published on 7 February 2024.

[2] Rule 15.1(1)(a) of the High Court Rules 2016.

[3] (20 December 2019) ECLI:NL:HR:2019:2006.

[4] (26 May 2021) ECLI:NL:RBDHA:2021:5337.

[5] (15 December 2016) 2 O 285/15. Link to unofficial English translation: https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2016/20161215_Case-No.-2-O-28515-Essen-Regional-Court_decision.pdf.

[6] [2023] EWHC 1897 (Ch).