Judicial Power, Democratic Accountability, and the Smith Case

Supreme Court lacks democratic responsibility and accountability: its excesses demand clearer leadership from the legal profession.

The Climate Change Response (Tort Liability) Amendment Bill received its third reading on 18 August and has now passed into law. It amends the Climate Change Response Act 2002 to bar tort liability for emissions‑related climate change effects, including for cases already before the courts. This directly affects the Smith v Fonterra litigation, preventing the tort claims from proceeding. A Law Association submission when the Bill was before the Select Committee was critical of some aspects of the Bill. That submission was subjected to careful examination by Peter Watts KC in an article published in the Association’s LawNews.

The thrust of Watts’ article is that contrary to suggestions in the Law Association’s submission, the government was perfectly entitled to ask parliament to stop Smith’s litigation and any other litigation intruding into an area engaging quintessentially political issues. The Court of Appeal knew it was not a matter for the courts to get involved in. It confirmed that Smith’s claims should be struck out. Yet the Supreme Court in another example of a ‘tin-ear’ approach to its constitutional position, reinstated Smith’s claims.

Watts is an Emeritus Professor of Law at the University of Auckland where he taught law for more than 30 years. Since 2017 he has also been a Visiting Professor of law at Oxford University. He is an internationally renowned expert in the law of agency. He has advised on the common law of agency in court proceedings and arbitrations in many jurisdictions, including England and Wales, New York, Australia, and Denmark. He also has a broad domestic practice in New Zealand in banking law, insolvency law, company law, equity and trusts, the law of restitution, and the law of contract. His qualifications and experience earn respect for his views and the reasons for them.

Just a few days before the publication of Watts’ article, new-since-April Attorney-General Chris Bishop had addressed the Law Association about the respective roles of parliament and the courts. In doing so, he identified the matters raised in Smith v Fonterra as “the kind of public policy that should be made by the legislature.”

Today’s LawNews published my article, Judicial Power, Democratic Accountability, and the Smith Case, in which I add some additional reasons for supporting Watts and Bishop. That article follows.

I wish to add to Peter Watts KC’s perspicacious critique in Terminating Smith v Fonterra Co-operative Group Ltd and its ilk: a response to The Law Association submission on the Climate Change Response (Tort Liability) Amendment Bill).

As it is also most relevant, I take the opportunity to applaud Attorney-General Chris Bishop for his Speech to the Law Association, reported in LawNews under Attorney-General Chris Bishop tells judiciary to leave policy to Parliament.

Back in March 2024, I referred to Smith v Fonterra in On judicial imperialism: why judges must ‘stay in their lane’. In the course of that LawNews article, I said:

Deference must be accorded to judicial decisions and proper respect shown to the decision-makers because the judiciary is one of the bulwarks against anarchy and tyranny. Nevertheless, judges too have responsibilities. They must not overstep the proper boundaries of their office, and they ought to remember that genuine respect is accorded only to those who earn it. They lose respect, undermine the office they hold and threaten the courts’ constitutional place in the system of government, when they make judicial pronouncements based on “their own judicial moral sensibilities”.

It is most welcome, therefore, that Bishop has explained in the measured words befitting his high office why judges must stay in their lane. His full speech is required reading for those who care about New Zealand’s continuance as a constitutional democracy committed to the rule of law and the sovereignty of parliament.

Implicit in Watts KC’s opinion piece is that it is the Supreme Court, not Parliament, that is straining the constitution. That conclusion also follows from Bishop’s speech: if the judiciary must continually be corrected by Parliament, public respect for the institution is inevitably diminished. A judiciary that diminishes respect for itself weakens its constitutional position as one of the three branches of government. The legal profession and its representative bodies should say so clearly.

This makes the Law Association’s role extremely important. Unlike the New Zealand Law Society, which has become a repository for sectional interest groups seeking to advance their own causes and interests and should be reformed, the Association’s governing officials are directly elected by its membership, making it more likely to be representative of the profession’s rank and file.

Parliament and the government have great public power. That power is conferred by the people. The people confer the power by electing members of parliament. If the people don’t like what their representatives are doing, they can throw them out of office.

The judiciary, as the third branch of government, also exercises great public power. For good reasons, judges cannot be thrown out of office. The fetter on the judges’ exercise of public power is two-fold: self-imposed restraint, and Parliament’s ability to exercise its sovereign power to overrule aberrant exercises of judicial power. The failure of judges, especially Supreme Court judges, to exercise restraint — of which the Supreme Court’s treatment of Smith’s claim is one recent example — has led to the need for the government to ask Parliament to legislate.

Judges are drawn from the legal profession. Because of that and because members of our profession have a special role as experts in the field of law, obligated to uphold the rule of law, we should speak out — be outspoken where need be — in support of judicial restraint and against political activism within the judiciary.

There have always been activist judges, those who are more ready than others to extend a legal principle beyond its current scope. Lord Denning comes to mind. He was the central architect of modern estoppel in the common law. His judgments transformed estoppel from a narrow rule about misrepresentations of fact into a broad equitable doctrine capable of preventing parties from going back on promises — most famously through promissory estoppel. This may fairly be described as judicial activism.

Climate change and the policy conundrums associated with it raise issues with which governments around the world and international bodies are grappling. These are political issues, not legal issues. Judges who step into that arena risk becoming political actors, a position inconsistent with their constitutional role.

The Court of Appeal’s conclusions in Smith ([2022] 2 NZLR 284, |[2021] NZCA 552) included:

[26] In effect, Mr Smith is seeking a court-designed and court-supervised regulatory regime. The design of such a system requires a level of institutional expertise, democratic participation and democratic accountability that cannot be achieved through a court process. Courts do not have the expertise to address the social, economic and distributional implications of different regulatory design choices. The court process does not provide all affected stakeholders with an opportunity to be heard and have their views taken into account. Climate change provides a striking example of a polycentric issue that is not amenable to judicial resolution.

The observation that Smith was seeking a court-designed and court-supervised regulatory regime stemmed from the relief he sought: “declarations that each of the respondents has unlawfully caused or contributed to the effects of climate change or breached duties said to be owed to Mr Smith, [and] injunctions requiring each respondent to produce or cause zero net emissions from their respective activities by 2030” ([6]).

Watts explained that shutting down all carbon and methane emitters is the necessary implication of the relief Smith sought. That means, among other things, no Fonterra and no farmers. No Fonterra and no farmers mean a crippled economy.

What Smith was seeking engaged the organization of New Zealand society and the national economy. It involved asking the courts to take sides in matters of national and international controversy. It went well beyond the resolution of a dispute between private individuals or between a private individual and organs of government. By any measure, he was asking the courts to take a political position. The Supreme Court was prepared to endorse that possibility in the face of the Court of Appeal’s so clearly explained reasons why the matter was outside the judicial remit.

Of more importance from a constitutional perspective is the Supreme Court’s failure to appreciate the need for restraint imposed by the lack of “democratic participation and democratic accountability” in the institution which is the judicial branch and the closely connected absence of opportunity for all affected stakeholders to be heard. The implications of both were explained by the Court of Appeal, yet the Supreme Court seems to lack insight that as the repository of great public power uncircumscribed by democratic participation and accountability, self-restraint must be exercised if it is to maintain its standing as an effective and trusted pillar of the constitutional establishment.