|From:||McGaughey, Ewan <firstname.lastname@example.org>|
|To:||Samuel Beswick <email@example.com>|
|Neil Foster <firstname.lastname@example.org>|
|Geoff McLay <email@example.com>|
|Date:||19/08/2022 10:21:37 UTC|
|Subject:||RE: Hearing of Climate Change tort case in the NZ Supreme Court|
Folks, since the climate tort cases are coming up, here is analysis of the tort and climate litigation cases in NZ, Europe and the US in the last few years in my new book, Principles of Enterprise Law: https://www.cambridge.org/gb/academic/subjects/law/corporate-law/principles-enterprise-law-economic-constitution-and-human-rights?format=PB
This is from chapter 11, on natural resources regulation – hopefully the Dutch and German approaches are informative. Obviously this is much more than a technical tort problem, but to a great degree I wish the NZ Supreme Court would treat it as if it were.
Best wishes, Ewan
(c) The failure of tort and criminal law?
The most striking feature of the law on climate damage is the paucity in tort and criminal law to make negligent perpetrators compensate, and to punish those who recklessly or intentionally cause damage. It is a scientific consensus that burning coal, oil and gas causes global warming: the companies that extract fossil fuels and sell them cause it. However, both the common law of tort and crime have an exceptionally poor historical record in holding environmental polluters to account. For instance, oil spills into Sydney Harbour and a subsequent explosion was damage that was too ‘remote’.1 Chemical spills polluting Cambridge groundwater were also too ‘remote’ a consequence to have to compensate.2 The common law attitude differed when it came to strict liability for dangerous escapes from a reservoir flooding a coal mine.3 Today, the main paradigm for tort is negligence,4 but according to Professor Lee, ‘any action against emitters will face profound and extensive doctrinal challenges, at every step of the process.’5 Thus, it is necessary to identify the appropriate questions ‘at every step of the process.’
(i) Tort law
In the tort of negligence there are five main questions: is there damage, a duty of care, breach, and causation, that is not too remote? First, there are a growing number of climate damage events, ever more extreme: flooding in the UK, bushfires in Australia, hurricanes in America. This results in damage to property, personal injury, and death. Second, is there a duty of care? In the established categories of damage to property and person,6 this depends on whether harm is reasonably foreseeable, there is proximity, and it is fair, just and reasonable to impose a duty.7 As we have seen, climate damage was foreseen already in 1965, and fossil fuel companies like Exxon were doing extensive research on the issue from 1977. Third, is there a breach of a duty of care? If the reasonable person should know their action could cause harm, but acts anyway, there is a breach of duty.8
Fourth, does a fossil fuel company’s actions cause climate damage? Here it is clear that multiple parties pollute the atmosphere in different quantities, but as we have seen only 90 companies are responsible for 63% of all historic emissions.9 There is scientific uncertainty about the link between any given source of emissions and the resulting damage, because emissions in one place lead to uneven global patterns of warming. But in the face of such uncertainty, it was established in Fairchild v Glenhaven Funeral Services Ltd that a tortfeasor is responsible for the material increase in risk that they cause.10 The preferable principle appears to be that tortfeasors are jointly and severally liable, although an alternative theory is that they may have proportionate liability, a rule that matters where some companies have gone insolvent.11 The regularity and severity of these events is increasing, which means that a percentage likelihood that any event is caused by climate damage rises. The fifth question is whether the causal chain is too ‘remote’, to which the answer must be ‘no’, as climate damage from fossil fuels is expected and well understood.
The most likely step on which fossil fuel defendants will place their weight of argument will be causation. In the German state court for Essen, an ongoing case named Lliuya v RWE AG admitted that a major energy company, RWE AG could in be liable in principle for damage to a glacier in Peru. Mr Lliuya’s village, Huaraz, was near a melting mountain glacier, increasing the size of lake Palcacocha, and requiring flood defences. It was submitted that RWE had contributed to 0.47% of global carbon emissions, and should therefore be liable for 0.47% of the cost of flood protection. While the State Court dismissed the claim, arguing there was no ‘linear casual chain’, in November 2017 the Upper State Court admitted the claim to move to the evidential phase on the threat of mudslides, and RWE’s exact contribution, to be assessed by experts.12 Plainly, if one case establishes liability for one company for climate damage, every company under Germany’s jurisdiction could be sued for their contribution: this would probably make fossil fuel companies insolvent. A simple application of first principles in English law compels the same result.
A sixth issue can be added: should judges decide profoundly political issues? War and nuclear holocaust aside, no issue is as important as the future of life on Earth. This raises the question of ‘justiciability’. In negligence, it arises under whether it is ‘fair, just and reasonable’ to impose a duty of care for climate damage.13 It could be argued that the Paris Agreement 2015, or the Climate Change Act 2008, should displace tort law in application to greenhouse gas emissions. In the US, a similar argument found success. In 2007, the US Supreme Court held by a 5 to 4 decision its Environmental Protection Agency had a duty to regulate greenhouse gas emissions under the Clean Air Act of 1963.14 This apparent victory was short lived, as American Electric Power Co v Connecticut held by 8 to 0 that given the EPA’s jurisdiction, federal tort law, and public nuisance,15 was pre-empted.16 For the US Supreme Court, the fact that statute ‘speak[s] directly to [the] question’ displaced the claim against the five largest power companies, emitting 650 million tonnes of CO2 a year, for contributing to global warming.17 This uniquely broad approach to pre-emption ignored the objective of the Clean Air Act, which like all environmental law, sets minimum standards for ‘clean air’ or ‘air pollution prevention’. It does not set a fixed standard and a fixed licence to pollute.18 English law should not replicate this reasoning: in environmental matters there should be no pre-emption of tort at any level, without explicit words in statute.19 The US Supreme Court majority, did suggest that state tort law might not be pre-empted,20 but in subsequent cases courts may conclude that, as the issue crosses state boundaries, state law is pre-empted as well.21 Executive action therefore is currently needed in the US to control federal pollution, a position that is incompatible with an effective system of justice.22
It is increasingly accepted that common law and equity must interpreted in light of human rights, particularly under the European Convention on Human Rights,23 and in international law,24 as in the International Covenant on Economic, Social and Cultural Rights. For this reason, the Dutch Supreme Court’s decision in Urgenda v State of Netherlands could be influential. It held the Dutch government had to reduce greenhouse gas emissions by 25% before 2020, a standard taken from the UN Framework Convention on Climate Change, Annex I, and a report of the IPCC in 2007. This lists developed countries which must reduce emissions between 25% and 40% by the end of 2020 to stay below 2 degrees of climate damage.25 The Dutch Supreme Court held failure to meet even the lower end of this target violated both the right to life in ECHR article 2, and the right to private and family life in ECHR article 8.26 In a similar Klimaschutz or Climate Change case in 2021, the German Constitutional Court held that the government had a duty to speed up its climate protection measures, as part of its constitutional duty to protect the rights to life, and the environment under the Grundgesetz 1949, articles 2 and 20a.27 The significance of a decision on these grounds is that, if followed by other courts around Europe, UK courts have strong grounds to interpret common law norms, including the tort of negligence, so as to be compatible with protection of the right to life and privacy.
It is likely that the same issues come before the UK courts, as they already have to the courts in New Zealand, and again in the Netherlands.28 There is then a choice to make about whether tort law plays a positive role: either it helps end the ecosphere, or it helps end fossil fuel damage. In Smith v Fonterra Co-Operative Group Ltd, the New Zealand Court of Appeal refused a claim of Mr Smith over damage to coastal property. He argued the damage was contributed to by a subsidiary of Bathurst Resources group (the largest coal miner in New Zealand), an oil refinery (owned mainly by ExxonMobil, BP, and Z Energy), a power station owned by Genesis Energy LP (in turn held mainly by US asset managers such as Invesco, ALPS Advisors, JP Morgan, and Chickasaw29) 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. In the High Court Wylie J held that climate damage would occur anyway, that the ‘defendants’ collective emissions are miniscule’ (without evidence of what they were), and that ‘reasonable persons in the shoes of the defendants could not have foreseen the damage’. Such damage was (apparently) ‘an unlikely or distant result of the defendants’ emissions’.30 This exceptionally callous reasoning is false, since one of the defendants, ExxonMobil, actually did foresee climate damage in 1977.31 On the contrary, if companies know, or turn a blind eye to damage, in Rookes v Barnard, the House of Lords established that exemplary damages are available where conduct is ‘calculated to make a profit’. ‘Where a Defendant with a cynical disregard for a Plaintiff's rights’, said Lord Devlin, ‘has calculated that the money to be made out of his wrong-doing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity.’32 However the Court of Appeal upheld the decision. French J reasoned that although ‘reasonable foreseeability of harm is arguably a trial issue and not of itself a ground for striking out’ in this case, there was no ‘proximity’. By this it asserted, bizarrely, that there was no ‘physical or temporal proximity’, as if the case law and limits on psychiatric harm could be likened to the scientifically undoubted connections between fossil fuels and climate damage. Furthermore, it rejected there was an adequate causation connection in law, because not every potential plaintiff was before the court: it asserted, quite wrongly, that in cases on material increase in risk, ‘one or more of [the defendants] was responsible for all the harm suffered’. This is false: an essential point of the material increase of risk test is that there may be liability when potential co-defendants are insolvent. Then, instead of serious engagement with the issues, the Court of Appeal retreated into floodgates platitudes, that defendants were ‘virtually limitless’, that being unable to find every one was ‘an insuperable problem’ and they were unprepared to ‘abolish the [so called] relational underpinnings that are fundamental to tort law.’33
Where the New Zealand courts invented ‘insuperable’ problems, Dutch courts have surmounted them. In Friends of the Earth v Royal Dutch Shell plc, the Hague District Court held that under the Dutch Civil Code, Book 6, section 162(2), failure to abide by the Paris Agreement 2015 article 2(1) would be tortious: that is ‘what according to unwritten law has to be regarded as proper social conduct’. In interpreting this general tort law duty (which appears identical to open-textured norms, such as the ‘neighbour’ principle in common law) the Court took into account ECHR articles 2 and 8 on the rights to life and a private, family and home life, and the parallel provisions in the ICCPR articles 6 and 17. It noted that the ‘serious and irreversible consequences of dangerous climate change in the Netherlands... pose a threat to the human rights of Dutch residents’. It followed that Shell had a duty to cut its emissions in accordance with the Paris Agreement duties by 45% by 2030, whether those were generated directly by its corporate group (scope 1), indirectly from its purchases (scope 2), or indirectly from its value chain or the purchase and use of its products (scope 3). Moreover, Shell was required to take action immediately, and not wait for any appeal process.34 Following the case, Shell plc deleted ‘Royal Dutch’ from its name, and announced a relocation of its headquarters to London, presumably in the hope that it can escape judgment, although predictably its PR operations denied this. Enforcement and legal reasoning in English courts should follow the Dutch model, not the New Zealand model. Indeed, it is difficult to see why the New Zealand courts failed to have the presence of mind to reason in a similar way to the Dutch court, or perhaps they just do not care about the international human rights treaties that New Zealand has signed and ratified: an unforgiveable frivolity and failure of legal reasoning, worthy of the utmost condemnation.
4Strict liability, however, probably covers more accidents, because it is the norm for workplaces and products, and in road accidents (ch 15) there is no remoteness principle at play, and insurance.
11Barker v Corus (UK) plc  UKHL 20 which appears to follow the reasoning in H Hansmann and R Kraakman, ‘Toward unlimited shareholder liability for corporate torts’ (1991) 100 Yale Law Journal 1879 but see the Compensation Act 2006, where Parliament disapproved of this limitation. It may be prudent to distinguish joint liability of individuals (an original concern of Hansmann and Kraakman) from corporate entities, though Barker was in principle approved again in International Energy v Zurich  UKSC 33.
15While public nuisance was pleaded under US law, it would appear that negligence is the more appropriate tort in English law.
17564 US 410 (2011) per Ginsburg J. See also Native Village of Kivalina v ExxonMobil Corp 696 F 3d 849 (2012) certiorari (i.e. appeal) denied by Supreme Court (2013), claimed damages for sea level rise and future floods.
18cf 42 USC §7401(a)(3) referring to the ‘primary responsibility of States and local programs’, with (4) federal assistance. This does not refer to ‘exclusive responsibility’.
19Even if there are express words displacing tort claims, this may be incompatible with human rights, as below.
22cf E McGaughey, ‘Fascism-Lite in America (or the Social Ideal of Donald Trump)’ (2018) 7(2) British Journal of American Legal Studies 291, on the breakdown of democracy and justice, due to the US Supreme Court.
24Saad v Secretary of State for the Home Department  EWCA Civ 2008,  per Lord Phillips MR, and cf R (SG) v Secretary of State for Work and Pensions  UKSC 16, - per Lord Kerr (dissenting)
25UN Framework Convention on Climate Change 1992, Annex I, and recommendation from the IPCC Working Group III, Climate Change 2007: Mitigation of Climate Change (2007) Contribution to the Fourth Assessment Report, ch 13, 776, Box 13.7. Note that the Renewable Energy Directive 2009/28/EC Annex I target for the Netherlands was just 14%.
33 NZCA 552, -
34(26 May 2021) C/09/571932 / HA ZA 19-379, especially paras 4.4.9 and 4.4.10
School of Law, SW 2.15
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Dear Neil -- if of interest, here is the NZ Court of Appeal's judgment edited down for teaching purposes: https://www.canlii.org/en/commentary/doc/2021CanLIIDocs1859#_Smith_v._Fonterra. The Sharma summary and links to podcasts discussing both cases follow.
Geoff, a great episode of The Detail!
On Thu, 18 Aug 2022 at 16:50, Neil Foster <firstname.lastname@example.org> wrote:
Very helpful, thanks very much! We are about to discuss the Australian version of this sort of case, Minister for the Environment v Sharma  FCAFC 35 (15 March 2022), and I will pass on to our students the information about the NZ appeal.
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Some of you may be interested in this account of the 3 day hearing in Smith v Fonterra , the attempt in NZ to sue 7 of our largest emitters in negligence, public nuisance , and an innominate tort of uncertain elements ( Fonterra is the massive New Zealand diary company that is one of the largest diary exporters in the world, other defendants including a chain on petrol stations, a refinery - that said it no longer refines , and a coal miner that exports to China). The submissions are also available on the Courts of NZ website as well https://www.courtsofnz.govt.nz/cases/michael-john-smith-v-fonterra-co-operative-group-limited-genesis-energy-limited-dairy-holdings-limited-new-zealand-steel-limited-z-energy-limited-new-zealand-refining-company-limited-and-bt-mining-limited.
There was a lot of tort theory in the defendants' argument that was focused around there being insufficient connection between the emitters and Mr Smith. The plaintiff’s case in public nuisance is based around a very long analysis of the C19 century industrial revolution cases .The biggest thing in the case is probably the interaction of Tikanga Māori ( Māori customary law) with tort law - Mr Smith represents people from the largest Iwi ( tribe) in New Zealand
The Radio New Zealand account is https://www.rnz.co.nz/programmes/the-detail/story/2018854137/catching-climate-change-through-the-courts… there is a 25 minute professionally produced podcast that might give you a flavour of what was going on
With kind regards to everyone
It's not every day that you see one person suing a group of massive corporates worth tens of billions of dollars.
But that's exactly what's happened this week.
Mike Smith (Ngāpuhi, Ngāti Kahu) is an iwi leader and climate change activist. He's taking seven of New Zealand's biggest greenhouse gas emitters to court - among them, big hitters like Fonterra and Genesis Energy - on the grounds that these big corporates have breached a duty of care to New Zealanders by materially contributing to climate change.
He's arguing on some fine, fairly novel points of law. The courts have never before recognised any sort of duty not to contribute to climate change. If Smith wins, he'll have changed the way New Zealand fights climate change - but that's a pretty big if.
Smith's bid has made it all the way to the Supreme Court after the lower courts declined to hear Smith's case. They say the outcome Smith wants represents a serious shift in our national climate change policy, and that our democratically-elected parliament should be the ones to make that call, not the courts.
But Smith's legal team are urging the courts to be bold.
"Perhaps the most important question, if courts aren't going to do this, what are they going to do?" says Victoria University law professor Geoff McLay.
"What're you here for, if you're not here for the biggest crisis of our time? And the lawyers on the other side have really been struggling to answer that basic question. I think the judges are really engaged with what their role is and what they ought to be doing about this existential crisis we all face."
Today on The Detail, Emile Donovan speaks to Geoff McLay and BusinessDesk journalist Victoria Young about the unprecedented 'David and Goliath' battle being waged in our courts, pulling legal strings in an attempt to force an intervention on climate change.
The big seven emitters Smith is taking to court have been technically acting within their powers - they're not breaking any written law passed by parliament. Smith's case is calling on New Zealand's common law system - judge-made law that appeals to broader principles of fairness and common sense - to show that the big emitters are causing harm, and shouldn't be allowed to continue with business as usual.
Specifically, Smith is calling on torts. McLay describes torts as the common law concerning civil wrongs, and Smith is arguing for liability under three different torts.
"The first negligence, which is the common or garden all-pervasive tort of our times," says McLay.
"This is where you make a mistake: you're riding a bike, you're not paying attention, you slam into a rich person's car: you're liable in negligence to them in common law."
They're also arguing public nuisance - behaviour interfering with public life and enjoyment - and, if all else fails, the creation of a new tort to cover climate harm.
"It's kind of like a Hail Mary pleading. It might not fit negligence, it might not fit public nuisance, but there must be something out there that it fits, and it's very much an invitation for the judges to invent perhaps a more environmentally-focused tort or a climate change tort in its own right."
Victoria Young has been at the hearing at the Supreme Court this week, and describes the mood in the room.
Chief Justice Helen Winkelmann. Photo: Stuff Limited / Robert Kitchin
"The first part of the hearing which I watched on Monday was a lot about who are the defendants - I mean, who are you going to get for the damage caused to you by climate change?"
The Chief Justice Helen Winkelmann remarked to the room that everyone is an emitter. Another member of the Supreme Court, Justice Stephen Kós, pointed out that he drives a high-emissions car.
"He said, 'Well, I've got a Land Rover. Sue me! Why don't you sue me?'"
"How big do you want to go? This is the thing: can courts draw lines around this massive issue?" says Young.
She says another one of the case's issues is whether the harm caused by big emitters is direct or visible enough to sustain a claim.
"People know that [climate change] is happening, but not necessarily enough to change their behaviours about it. In a way, it's not a visible threat."