| Smith v Fonterra Co-Operative Group Ltd | |
| Court: | Supreme Court of New Zealand |
| Citations: | [2024] NZSC 5, [2021] NZCA 552, [2020] NZHC 419 |
| Keywords: | Tort, climate damage |
Smith v Fonterra Co-Operative Group Ltd [2024] NZSC 5 is a landmark New Zealand tort law case, concerning liability of major fossil fuel polluters for climate damage. The NZ Supreme Court held that polluting companies could be liable in tort to pay damages from global warming and rising sea levels to people whose coastal property is damaged, overturning courts below.
Michael John Smith stated that he was of Ngāpuhi and Ngāti Kahu descent, and was the climate change spokesman for the Iwi Chairs’ Forum.[1] He claimed customary interests in lands and other resources situated in or around Mahinepua in Northland Region, and argued that various sites of customary, cultural, historical, nutritional and spiritual significance to him are close to the coast, on low-lying land or are in the sea. Smith brought suit against several defendants that operate facilities that emit greenhouse gas emissions, including dairy farms, a power station, and an oil refinery. Smith alleges that the defendants’ contributions to climate change constitute a public nuisance, negligence, and breach of a duty to cease contributing to climate change. He argued for the companies to produce zero net emissions by 2030. He argued the damage was contributed to by a subsidiary of Bathurst Resources Group (NZ's largest coal miner), an oil refinery (owned by ExxonMobil, BP and Z Energy), a power station owned by Genesis Energy LP (held by US asset managers such as Invesco, ALPS Advisors, J. P. Morgan and Chickasaw) and other emitters. Mr Smith did not attempt to bring evidence of these entities’ contribution to climate damage, or set about detailed quantification of loss to him.
The High Court of New Zealand Auckland Registry dismissed first two claims but not the third. It held that there was no case of public nuisance and no negligence, but potentially a duty to cease contributing to climate damage. Wylie J, giving judgment, stated that 'the defendants’ collective emissions are minuscule in the context of the global greenhouse gas emissions’, that ‘reasonable persons in the shoes of the defendants could not have foreseen the damage claimed by Mr Smith’, and it was ‘an unlikely or distant result of the defendants’ emissions’. This was a matter for legislation, because it "would require the Courts to engage in complex polycentric issues, which are more appropriately left to Parliament" and the "matters are well outside the normal realms of civil litigation."[2]
The Court of Appeal held that common law requires incremental development, not a radical response. Mr Smith could not identify why the defendants should be singled out. It was accepted none had materially contributed to climate change – and if their contribution were actionable, it would apply to every individual and business: all would have to achieve net zero emissions. It would be a surprising result if every person and business in New Zealand could be brought before the courts for contributing to climate change and therefore restrained from doing so — such a situation would have tremendous social and economic consequences. Additionally, such restraint would have to be enforced and monitored by the courts which would require some sort of emissions offset and trading regime parallel to the statutory regime. Actions would have to be brought on an ad hoc basis which would be inherently inefficient and unjust. Climate change cannot be effectively addressed through tort law. It should only be addressed by the legislature.
According to the court:
The Supreme Court, overturning the Court of Appeal and High Court, held that Smith had standing to pursue the defendants for damage to his property from climate change at trial, and held that there would be no strike out of the various tort actions. It ruled that the claim of public nuisance would not be struck out, and that given the essential element of causation was provable, it was correct to also not strike out the claims in private nuisance and negligence. [3] [4]