Smith, an elder of Ngāpuhi and Ngāti Kahu and climate spokesperson for the Iwi Chairs Forum, is taking legal action against six of New Zealand’s biggest emitters - Fonterra, Genesis Energy, Dairy Holdings Limited, New Zealand Steel, Z Energy, and BT Mining Ltd - for their contribution to the adverse effects of climate change.

The case began in 2020, with the Supreme Court last year unanimously agreeing that the lawsuit could proceed in a major win for Smith.

The case is currently scheduled for a 15-week trial beginning in April 2027. By a considerable margin, it will be the longest and most complex climate change case in New Zealand legal history. It will also be the costliest. It is no surprise then, that as the parties prepare for battle, they are looking to position themselves advantageously both on substantive dimensions of the case, and their exposure to costs and costs awards, win, lose or draw.

Pre-trial skirmishes have already begun. In February, nine legal heavyweights acting for the now six defendants (Channel Infrastructure is no longer a named defendant) lined up against the four-strong legal team for Mike Smith in an early contest which included a dispute over whether the right entities are all before the court. Justice Peter Andrew is handling the ‘interlocutory’ phase of the case for now. The defendants argued that given their collective minute contribution to global emissions — and that in truth, Smith’s action is ‘a claim against the world’ — the better way to proceed would be to allow the joining of overseas commercial, government and non-profit emitters to the case. If they had convinced the judge of that course of action, it is doubtful whether the case could have proceeded. As the judge put it, ‘the complexity and uncertainty…would simply overwhelm [Smith] and effectively mean that there would never be a trial’. Perhaps that was the defendants’ intent. Justice Andrew declined that application.

On 29 April, the parties were back in court arguing over further pre-trial applications. One concerned the structure of the hearing: could a preliminary point of law be argued separately from the main trial? (Justice Andrew: no — the best way to deal with these interlinked issues is in one hearing). Another asked if the trial could be split into two phases. (Again, no, at least not at this stage.)

Costs and litigation funding challenges

There were competing applications on costs issues.

Perhaps not unreasonably anticipating that the final result could well go largely in their favour, the corporate defendants have a predictable interest in being able to recover at least some of their costs in the event that the ruling goes their way. The defendants have assets and ready access to funds. Smith's pockets, on the other hand, are not deep. Court rulings record his position as having no assets and a single source of income: government superannuation. He would be in no position to meet a costs order. Knowing that, at the April hearing, BT Mining asked the court for a direction that Smith provide security for costs in the ‘modest sum’ of $150,000.

These sorts of orders operate as financial disincentive against embarking on speculative or vexatious litigation. But they can also stop meritorious claims from going further, denying access to justice.

The courts are typically hesitant to allow security for costs to be used to discourage worthy litigants from bringing cases in the obvious public interest. Given the Supreme Court's endorsement of the tenability of Smith’s claims and explicit acknowledgement that testing these issues at trial is in the public interest, BT Mining's request was ambitious at best. In a decision released on 17 June, Justice Andrew dismissed it in relatively short order.

The next costs matter dealt with in the June decision concerned applications by Smith himself, asking for a ‘protective costs order’, or ‘PCO’. As noted, Smith has no capacity to meet a costs award. A protective costs order for him personally would allow him to bring his case to the court without the spectre of a potential costs award hanging over him.

More pressingly, Smith lacks the immediate wherewithal to fund his part of a 15-week trial. The only way he will be able to go ahead with the case is through continued pro bono legal and expert support, and/or by getting financial assistance from donors. But, Smith told the court, potential donors are reluctant to contribute to his legal costs. It is not because they don’t support his action. It’s because of fear of exposing themselves to litigation and costs awards.

Australian precedent

That fear is neither academic nor fanciful considering recent events involving public interest litigation across the Tasman. In 2024, a series of Australian Federal Court rulings known as the Munkara case sent shockwaves around the environmental activist community. It seems its ripples are now being felt in New Zealand. The Munkara case involved an unsuccessful attempt by indigenous litigants to halt an offshore pipeline project by the oil and gas exploration and production company Santos. After securing an interim injunction to temporarily halt the pipeline, the plaintiffs’ case collapsed when, among other things, it emerged that their legal team had manipulated information brought before the court, coached expert witnesses and ‘confected or constructed evidence’. Like Smith, the Munkara plaintiffs had no assets and could meet no costs award. In a rare move, a Federal Court made an over $9 million indemnity award of costs against the ‘activist’ law firm acting for the plaintiffs. It also allowed discovery orders to be made against the law firm and other parties to obtain documentary evidence of involvement of third-party funders. This was to enable Santos to establish whether it had a case for costs against charities and environmental organizations who had joined in common cause with the plaintiffs in opposing the activities of Santos.

Against this legal backdrop, in April Smith asked the Auckland High Court for a protective costs order that would not only protect him, but would also protect any third-party donor or funder from a costs order because of their financial support for his legal action.

Justice Andrew acknowledged Smith's position, agreeing that it would be in the interests of justice for him to be able to proceed to trial and argue his case with proper legal and expert support. However, the judge declined to make a protective costs order in either Smith's or third parties’ favour. There were two main reasons. First, Justice Andrew did not regard the Munkara cases as especially relevant to Smith’s circumstances. In Munkara, the judge had ruled that the plaintiffs' lawyers had acted entirely inappropriately. The implication — a fair one — is that Justice Andrew expects nothing of that kind in the conduct of Smith’s claims. Without definitively ruling on it, the judge observed that cost awards against third-party ‘pure funders’ would be ‘highly unlikely’ in the context of this case.

Second, the judge was not willing to make a protective costs order in the abstract, without knowing exactly what the nature and circumstances of any third-party funding might be for Smith's case. In other cases where protective costs orders have been at issue, courts have been anxious to know whether a third-party litigation funder might benefit financially from the outcome of the case. For Smith's claim, environmental organizations or charities who might support his objective of clarifying tort liability for emitters could not be said to benefit financially from a successful outcome. However, there might be other potential funders who conceivably might benefit financially from the establishment of liability on the part of emitters or emitter-adjacent entities —competing renewable energy companies, for example. Without information on specific funders, the judge was not prepared to make an open order. But he left the door open for a future protective costs order application if Smith wishes to bring forward a specific request.

Public interest

With two significant sets of interlocutory applications addressed, and around 22 months before the scheduled trial, the potential shape of this landmark proceeding is starting to emerge. A clear theme of pre-trial rulings is that the case should go to trial, unimpeded by onerous procedural limitations, whether proposed on behalf of the plaintiff or defendants. 

It remains to be seen whether Justice Andrew’s June ruling provides sufficient comfort to Smith’s potential donors in this jurisdiction, or whether the chill occasioned by Munkara will persist. If so, that would be unfortunate. As the judge observed, ‘If this proceeding is to continue, as the Supreme Court held it should, then it is essential, and very much in the public interest…that the plaintiff…be able to access the legal representation and expert witnesses that a complex and novel case, with all its implications, requires.’

Vernon Rive is an Associate Professor at Auckland Law School, where he teaches and researches public, environmental and climate change law.