The supreme court has given activist Mike Smith the go-ahead to sue seven New Zealand companies for climate change-related damage.
In a unanimous ruling on Wednesday, the court refused to strike out Smith’s claims, as had been sought by respondents Fonterra, Genesis Energy, Dairy Holdings, NZ Steel, Z Energy, Channel Infrastructure and BT Mining.
Smith is an elder of Ngāpuhi and Ngāti Kahu and a climate change spokesperson for the Iwi Chairs Forum.
In 2019, Smith made three claims under tort law, which seeks compensation for harm caused by a wrongful act. He sought remedy for public nuisance, negligence and the more novel claim of breach of duty of care through climate change.
The duty of care claim argues that the companies had to stop materially contributing to damage from climate change.
The companies argued that the case related to complex policy matters that were being addressed by parliament, which was the best place to do that.
An order to reduce emissions
Taking his cue from Intergovernmental Panel on Climate Change (IPCC) reports, Smith is seeking court injunctions requiring the companies to reach peak emissions by 2025 and reach net zero emissions by 2050.
Smith's case is that such reductions can't be achieved without the contribution of non-state actors, including the respondents.
In his claim, Smith alleges that the seven companies had failed to credibly commit to reducing their emissions enough and had actively lobbied against regulatory measures requiring emissions reductions.
He is also arguing that the emissions of several of the companies are effectively unconstrained by current regulations.
Agricultural emissions were not part of the emissions trading scheme (ETS), while BT Mining exported coal to countries without any credible regulation of emissions. Some companies had also received free units under the ETS.
Legislation versus tort law
The supreme court hearing from Aug 15-17, 2022, was whether Smith’s claim should be struck out or allowed to go ahead to trial.
By refusing to strike out Smith’s claim of public nuisance, the court declined to strike out the other two causes on principle.
It differed from the court of appeal, which ruled his claim was bound to fail. That was after the high court ruled that the first two claims of public nuisance and negligence were not reasonably arguable and struck them out but refused to strike out the third claim over the duty of care.
Before addressing the claim of public nuisance, the supreme court looked at whether the existence of the Climate Change Response Act (CCRA) displaced the use of tort law for climate change.
While the CCRA had provisions for fines and other sanctions, it didn't give any agency the power to forbid anyone from releasing emissions because of a lack of ETS units. The Resource Management Act (RMA) allowed people to resort to tort actions over adverse environmental effects.
"There is, therefore, no basis to conclude that parliament has displaced the law of torts in the realm of climate change in NZ."
Disproportionate burden
Smith claims that in 2020-21 the seven companies were together responsible for more than a third of NZ's total reported greenhouse gas emissions, contributing to warming the Earth.
The adverse effects of climate change would put a disproportionate burden on poor and minority communities. Smith, his whānau, descendants and others would bear the cost of dealing with the harms to which the companies’ emissions contributed.
That included damage to land and fisheries from rising sea levels and warming temperatures.
One aspect of Smith's claim is that tikanga Māori should direct his case. He argues that breaching tikanga created a hara or take (issue or cause) requiring utu (compensatory action) to restore ea (a state of harmony or balance).
That stance went with the proposition that tikanga should guide NZ common law more generally. The judges wrote that Smith’s ultimate prospects at trial would depend, in part, on the quality of the evidence, including that in relation to tikanga Māori.
Justices Susan Glazebrook, Ellen France, Helen Winkelmann, Joe Williams and Stephen Kós made no order on costs.
Delight and disappointment
Genesis Energy said it was disappointed by the supreme court’s ruling.
A full trial would consume extensive time and resources that could be channelled into building more renewable generations.
“The supreme court has, in effect, disregarded the fact that all the defendants have complied with their climate change obligations under the laws of NZ.”
Genesis did not believe the lawsuit would accelerate the measures or the commitments of the seven companies supporting NZ’s transition to a low-carbon future.
Smith said he was delighted with the decision and described it as a vital step in holding climate polluters to account.
The companies were actively contributing to climate change and had no immediate plans to stop emitting greenhouse gas emissions, he claimed. “They are profit ahead of the billions of people all over the world who are already suffering the effects of climate change.”
Smith is also suing the government for failing to take effective action on climate change. That case is waiting on a judgment from the court of appeal after a hearing in October last year.
Several of the companies taken to court by Smith expressed their disappointment in the ruling and said they were already working to reduce their emissions.
Genesis Energy said a full trial would consume extensive time and resources that could be channelled into building more renewable generation. The gentailer was investing $1.1b into such renewable generation and batteries by 2030, it said.
“The supreme court has, in effect, disregarded the fact that all the defendants have complied with their climate change obligations under the laws of NZ.”
Genesis did not believe the lawsuit would accelerate the measures or the commitments of the seven companies supporting NZ’s transition to a low-carbon future.
Fonterra, which has previously said it aimed to reduce its emissions intensity by 30% by 2030, stated that Smith hadn't yet had to present any evidence to support his claims. The co-operative would be defending itself against Smith's claims in the high court.
Fonterra had set its emissions reduction targets based on the international Science Based Targets Initiative (SBTi), meaning they were designed to limit warming to within 1.5C of pre-industrial temperatures.
Channel Infrastructure said it believed that parliament, not the courts, was the proper place to set public policy on matters of significant public interest, such as climate change.
Among other initiatives, the former refining company turned import terminal operator was looking into the possible establishment of a green hydrogen plant to produce sustainable aviation fuel (eSAF) at Marsden Pt.
This story updates an earlier article with reactions from several parties in the case.