Claim against corporate emitters for climate-related harm: New Zealand Supreme Court allows novel tort case to proceed

In February 2024, New Zealand’s highest court unanimously refused to strike out the first New Zealand case seeking to hold corporates liable in tort for damage caused by climate change (Smith v Fonterra). 

As well as claims in public nuisance and negligence, the Claimant pleaded a novel cause of action: the proposed tort of climate system damage. The Supreme Court held that the Claimant’s case is not bound to fail (overturning lower court decisions to the contrary), and allowed it to proceed to trial.

The decision is significant in that it leaves the door open for corporates to be held liable in tort for damage caused by greenhouse gas emissions produced by their activities. 

Whilst the common law of New Zealand has some distinctive features, and may be influenced by indigenous tikanga (Māori customary law), in refusing to strike out the claim in public nuisance, the Supreme Court drew on authorities from other jurisdictions, including English cases from the 19^th century on causation. 

This case will therefore be relevant not just to corporates in New Zealand, but to corporates considering climate litigation risk in other common law jurisdictions.

Three torts alleged by the Claimant: public nuisance, negligence, and new climate system damage tort

The Claimant, Mr Smith, is a Māori (indigenous) elder and climate change spokesperson for a national forum of tribal leaders. The Defendants, seven of New Zealand’s biggest companies, are said to be responsible for more than one-third of New Zealand’s greenhouse gas emissions. The Claimant alleges they are liable to him and his whānau (familial group) in three tortious causes of action: 

(i) public nuisance; 

(ii) negligence; and 

(iii) a new climate system damage tort (alleging the Defendants have a duty to cease materially contributing to damage to the climate system). 

The Claimant argues that the greenhouse gas emissions from the Defendants’ activities have, or will continue to, contribute to “dangerous anthropogenic interference with the climate system and to the adverse effects of climate change.” He argues that this will, in turn, cause harm and damage to coastal land and other resources in which he claims an interest.

One of the bases on which the Defendants sought to strike out the claim was that New Zealand’s statutory framework on climate change (including an emissions trading scheme and statutory carbon budgets) precludes the possibility of private tortious liability. However, the Supreme Court rejected this argument and held that Parliament had left a pathway open for the common law to operate, develop and evolve (if that is thought to be required in this case) amidst the climate change statutory landscape.

The Court held that the Claimant’s public nuisance claim was not bound to fail, and did not examine the other two causes of action

In reversing the Court of Appeal’s earlier decision to strike out the claim, the Court observed 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]). Although there are limits to the inferences which can be drawn from a strike-out decision, the Court may be willing to consider relaxing rules of standing and causation in the context of climate change claims brought in public nuisance.

Notably, the Court observed that causation issues arising in a climate change context have some parallels with the issues arising out of public nuisance cases precipitated by the Industrial Revolution: 

“As a consequence of the long, global industrial revolution, the common law had to deal with new, widespread risk and damage caused by air and water pollution and the escape of biohazards” (at [157]). It went on to observe that: “how the law of torts should respond to cumulative causation in a public nuisance case involving newer technologies and newer harms ([greenhouse gases], rather than sewage and other water pollution) is a matter that should not be answered pre-emptively, without evidence and policy analysis exceeding that available on a strike out application” (at [166]).

The Court also held that the “special damage” rule (which requires a claimant to have suffered different harm compared to other community members generally) required “review in the context of full evidence” (at [151]). Further, a trial court would need to consider the potential effect of tikanga on (amongst other things) the special damage rule (at [182]), given that the Claimant purports to bring his claim as an individual as well as kaitiaki (guardian) for the whenua (land), wai (water or river), and moana (sea or ocean). In any case, the Court found it was tenable that the Claimant satisfied the special damage rule on the basis of his pleaded legal and tikanga interest in coastal land affected by climate change-related damage (at [152]).

The Court also made some interesting observations around the utility of declaratory relief for tortious wrongs, regardless of the obstacles to the Claimant obtaining injunctive relief against the Defendants (at [171]).

Having found that the public nuisance claim was tenable, the Court found that striking out the remaining claims would be unlikely to produce a material saving in hearing time or other court resources, and thus reinstated all three claims (at [175]). This leaves open the possibility of tort-based liability in negligence and/or a new tort of climate system damage, even though the Court did not comment on the tenability of these claims.

Key takeaways

• This decision does not mean the claims will be successful at trial. At this stage, the Court has only held that the public nuisance claim is not “bound to fail”. It has not substantively commented on the other two claims, and it is for the trial court to determine whether any of the claims could give rise to liability. 
• Corporates should continue to consider their exposure to litigation risk as the climate litigation landscape expands. Even unsuccessful claims or the threat of litigation can cause significant financial and reputational damage. Climate litigants and NGOs are also increasingly bringing more creative and novel claims against private entities for their role in contributing to climate change (e.g. the recent unsuccessful derivative action brought in the UK by ClientEarth against Shell’s directors).
• Similar claims may be brought in other common law jurisdictions. While there are differences between the common law in New Zealand and in other common law jurisdictions such as England and Wales (e.g. the impact of indigenous tikanga), this decision is of broader significance given the common heritage of authorities it draws upon and the potential for private tortious liability for climate-related damage. Corporates in and outside of New Zealand would be wise to follow this case as it unfolds and any “copycat” actions which it may inspire.

If you would like to discuss the implications of this case further or have any questions, please get in touch with our  team.