CASE SUMMARY: MICHAEL JOHN SMITH V. FONTERRA COOPERATIVE GROUP LIMITED & OTHERS [2024] NZSC 5

In a landmark judgment that has sent reverberations across global environmental jurisprudence, the Supreme Court of New Zealand in Michael John Smith v. Fonterra Co-operative Group Ltd & Ors [2024] NZSC 5 unanimously reinstated a climate change lawsuit brought by an indigenous Māori leader against New Zealand’s largest corporate greenhouse gas (GHG) emitters.

Reversing decisions of both the High Court and the Court of Appeal, the Supreme Court ruled that climate change claims rooted in common law torts cannot be summarily struck out and must proceed to a full trial, establishing a crucial precedent for environmental litigation worldwide.

Background & The Three Causes of Action in Tort

The appellant, Michael John Smith—a prominent climate advocate and elder of the Ngāpuhi and Ngāti Kahu iwi—filed proceedings in 2019 against seven corporate defendants, including dairy giant Fonterra, electricity generator Genesis Energy, New Zealand Steel, Z Energy, Dairy Holdings, Channel Infrastructure, and BT Mining. Together, these entities are responsible for approximately one-third of New Zealand’s total greenhouse gas emissions.

Smith asserted that the respondents’ emissions directly contributed to global warming, inflicting catastrophic damage on customary coastal lands, fisheries, and sacred cultural sites (*wāhi tapu*). His claim was structured upon three tortious causes of action:

1. Public Nuisance: That the defendants’ emissions constitute an unreasonable and substantial interference with common public rights, including the right to a safe climate system;
2. Negligence: That the defendants breached a common law duty of care owed to the public and future generations to avoid causing foreseeable climate harm; and
3. A Novel Climate System Damage Tort: Calling for the judicial recognition of a new, incremental tort that imposes civil liability on entities that materially contribute to the degradation of the Earth’s climate system.

The Supreme Court’s Landmark Analysis

The Supreme Court addressed two central questions of law:

1. Are Common Law Tort Claims Displaced by Environmental Statutes?

The corporate defendants argued that New Zealand’s statutory framework—specifically the Climate Change Response Act 2002 (CCRA) and Emissions Trading Scheme—comprehensively regulated emissions, thereby precluding common law liability.

The Supreme Court rejected this defense, holding that while Parliament has established regulatory targets, the statute does not expressly or impliedly extinguish private common law remedies. Regulatory compliance does not confer blanket immunity on commercial polluters.

2. Can Novel Climate Claims Proceed to Full Trial?

The Court reiterated the foundational common law principle that claims should only be struck out if they are manifestly hopeless or unsustainable. The evolution of the common law must not be stifled at an interlocutory stage when confronting unprecedented challenges.

Comparative Legal Perspective: Relevance to Malaysia

The decision in Smith v. Fonterra provides critical insights for the developing environmental jurisprudence in Malaysia:

• The Forthcoming Climate Change Act: While Malaysia currently regulates environmental impacts under the Environmental Quality Act 1974 (EQA 1974), the Ministry of Natural Resources and Environmental Sustainability (NRES) is currently drafting Malaysia’s first dedicated National Climate Change Act to mandate emissions reporting and transition toward Net-Zero by 2050.
• Public Nuisance & Negligence in Malaysia: In Malaysia, public nuisance is recognized both at common law and under Section 268 of the Penal Code. Applying public nuisance or establishing a corporate duty of care in negligence for climate emissions represents a compelling frontier for Malaysian public-interest litigants and indigenous Orang Asli/Asal communities.
• Judicial Innovation in Environmental Law: Malaysian courts have historically adapted Commonwealth common law jurisprudence to address evolving socio-economic conditions. The New Zealand Supreme Court’s willingness to allow complex climate torts to be ventilated at trial offers a persuasive model for Malaysian courts facing novel ESG disputes.

Conclusion

Michael John Smith v. Fonterra demonstrates that corporations can no longer treat climate liability solely as a public relations or regulatory issue. The common law is evolving to hold major emitters directly accountable for systemic environmental harm. As Malaysia prepares to enact its Climate Change Act, corporations, directors, and institutional investors must proactively integrate climate risk into their governance frameworks to withstand emerging tortious exposure.

Disclaimer: This case summary is for informational purposes only and does not constitute formal legal advice. If you require legal counsel regarding ESG compliance, environmental liabilities, or sustainability regulations, please contact Hasrina Hakimi Advocates & Solicitors directly.