The Court of Appeal’s recent decision in the high profile ‘Lawyers for Climate Action’ judicial review has reaffirmed the important role of the High Court in ensuring key statutory powers are exercised lawfully, even where those powers are framed as advisory. 

The Court of Appeal upheld the decision of the High Court dismissing an application for judicial review of advice provided by the Climate Change Commission (the Commission) to the Minister of Climate Change, and consequent decisions made by the Minister. 

Why is the decision important?

While set in the context of complicated aspects of climate change accounting and reporting which makes it highly topical, the real value of the Court of Appeal’s decision for anyone engaging in public sector decision making – whether as advisor, decision-maker or participant – comes from the Court’s clear guidance on the scope of judicial review, the correct interpretation of statutory powers and constraints, and the scope for new evidence to be introduced during the judicial review process (rather than putting it before the decision maker at the time the statutory power is exercised).

Key takeaways of the decision: 

The Court’s decision is a lengthy and sometimes technical read. For those interested in the climate change subject-matter, we traverse some of that detail below, and the decision itself is well worth a read. But the key lessons for sound public law decision making are relatively straightforward. The decision emphasises:

• The High Court’s powers of judicial review have a wide ambit – in principle all exercises of public power are judicially reviewable, and “statutory power of decision” is an expansively defined phrase and should be given a liberal interpretation. But in exercising those powers the Court’s role remains orthodox: has the decision-maker acted within the legal constraints set out in its statute, and in a matter consistent with its statutory purpose? It is appropriate for the Court to defer to the expertise and discretion of the other branches of Government in making their decisions, so long as they have taken appropriate decision-making steps. It is noteworthy to see this emphasis on restraint even in a case of high topical interest and importance, such as meeting New Zealand’s climate change targets. 

• Advice provided by a Government entity, in this case the Commission, can be amenable to judicial review where it is a clear exercise of a statutory power. Such advice is likely to fall within that ambit where it is mandated by statute and plays a critical role in decision-making and delivering against a statutory purpose. Advice will not be immune simply because a Minister (or other decision maker) can decide whether to accept the advice or not.

• Applications for judicial review will, for the most part, be decided on the evidence before the original decision-maker. This is consistent with the purpose of a review, which is to scrutinise the lawfulness of a decision not its merits. Additional evidence will only be considered during an application for review in limited circumstances. This emphasises the importance (for all interested parties, including advisors and those affected) of ensuring all relevant evidence is before the decision-maker at the time the advice is provided / decision is made. It will be rare for additional evidence to be admitted during the Court process, and there may be cost consequences for seeking to do so.

• A statutory purpose section is unlikely to be determined by the courts to have created a “bottom line” requirement unless it is cast in absolute or clearly defined terms, or where it has prescribed a clear framework or parameters for assessing against whether it has been met.

• While the standard of review for unreasonableness remains “unsettled” and “controversial”, it is unlikely to turn on the nature and importance of the decision under review. The courts have so far been reluctant to recognise different standards of review, but they have not ruled this out altogether. In this context, it would be prudent for decision-makers and those who advise and interact with decision-makers to act as if the Court will take a hard look at their decisions, especially when the stakes are high. 

• An assessment of unreasonableness ultimately comes down to whether the decision was not reasonably open to the decision-maker, such that no reasonable decision-maker would have made the same decision. The Court expressed reservations regarding the approach adopted by the High Court that a decision may be likely to be unreasonable where it cannot be “fully justified”, as this approach arguably crosses over into a review of the merits.

Overarching all its analysis, the Court comes back to fundamental principles and strongly emphasises throughout the judgment that, in reviewing the exercise of statutory powers, the statutory purpose, context, overall scheme, legislative history, and those matters not expressly addressed (but instead left open for the discretion of the decision-maker) are all important tools. This emphasises the importance of making use of these tools in any contribution to, interactions with, or advice to decision-makers, particularly in the context of high-profile, topical or potentially controversial decisions. Our team of expert advisors are available to help. 

We outline the background and details of the decision of the Court, below. 

Background

1. advice on whether New Zealand’s then current nationally determined contribution (NDC) was compatible with contributing to the global effort under the Paris Agreement to limited global average temperature increase to 1.5 degrees °Celsius above pre-industrial levels (NDC Advice); and
2. advice to enable the Minister to set three emissions budgets under the Climate Change Response Act 2002 (the CCRA) (the Budgets Advice).

1. The NDC Advice was based on a logical or mathematical error, as the Commission compared the level of New Zealand’s international commitment (using gross-net accounting) with modelling carried out by the Inter Governmental Panel on Climate Change (IPCC) in a 2018 report. 
2. The Budgets Advice: 
   1. Had misinterpreted the statutory purpose as it did not meaningfully consider what was required to meet the 1.5 degree °Celsius goal and to recommend budgets that are consistent with it and mischaracterised mandatory statutory considerations. 
   2. Was required by the CCRA to utilise the land-based, or Greenhouse Gas Inventory (GHGI), accounting methodology for recommending emissions budgets and measuring performance against them, when they in fact employed the “modified activity-based” (MAB) accounting methodology.
   3. Was irrational and unreasonable as the budgets set on the basis of the advice will see emissions increasing such that net emissions in the period 2021-2030 will be higher than in any of the previous three decades.

In contrast, the Commission supported the decision of the High Court on other grounds, submitting in turn that the Commission’s advice is not amenable to judicial review, or, in the alternative, that the scope of judicial review is narrow. In addition, the Commission submitted that the extensive evidence filed by LCANZI should have been excluded, and a more exacting standard of review than Wednesbury unreasonableness should not have been applied by the High Court. 

The Court’s approach

After outlining the relevant statutory context, the Court methodically addressed each issue in turn. 

Was the Commission’s advice amenable to judicial review?

The Court clarified up front that the Commission’s advice is amenable to judicial review. The Court noted the starting point is that all exercises of public power are reviewable. The Judicial Review Procedure Act 2016 contains wide procedural provisions to facilitate the review of the exercise of a statutory power, and expansively defines statutory power to include:

… a power or right conferred by or under any Act … to make a decision deciding or prescribing or affecting – 

(a)    the rights, powers, privileges, immunities, duties, or liabilities of any person … 

The Commission’s advice to the Minister readily fell within the ambit of a statutory power of decision, both because it affects the powers and duties of the Minister and because the Commission’s role in providing its advice to the Minister is critical to achieving the purpose and objectives of the CCRA (and not just influential). The fact that the Minister may decide to take a different path than one recommended in the Commission’s advice did not immunise that advice from review.

Was LCANZI’s evidence admissible? 

While the evidence issue did not determine the ultimate outcome, the Court did find that much of the evidence LCANZI sought to rely on was inadmissible as it was not substantially helpful. The Court noted that judicial review applications have clear parameters for the addition of new evidence: 

• Generally, judicial review applications are decided on the basis of the material before the decision-maker. 

• Expert evidence will only be admissible where it is substantially helpful to the court in determining whether the decision under review is lawful. 

• Evidence may also be admitted for the purpose of illuminating an incontrovertible technical error. However, the error must be incontrovertible once explained. Evidence offering a different view on the merits of the underlying decision is not admissible. 

Was there a mathematical or logical error in the Commission’s advice? 

The Court determined there was no mathematical or logical error in the Commission’s advice. While LCANZI argued that the Commissions use of the net-net modelled reductions method was an error, the Court found otherwise, as the Commission had deliberately chosen the net-net modelled reductions method (and not to apply the modelling directly), and had clearly explained to the Minister why it had adopted this approach. Further, the Minister understood the Commission’s reasoning. There was nothing to suggest that a more ambitious NDC would have been set if the modelled reductions had been applied. 

Did the Commission fail to comply with a statutory requirement to meaningfully consider what is required to meet the 1.5 degree °Celsius goal and recommend budgets that are consistent with it?

While the emissions budgets clearly were intended to serve the dual purpose of the CCRA –to achieve the 2050 target and contribute to the 1.5 degree °Celsius goal – the CCRA’s purpose provision was not considered a substantive bottom line requirement. Unlike the purpose section of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (which the Supreme Court found did impose a bottom line in Trans-Tasman Resources v Taranaki-Whanganui Conservation Board [2021] NZSC 127, [2021] 1 NZLR 801), the purpose provision of the CCRA is not cast in absolute or clearly defined terms, and no framework or parameters are prescribed for assessing the adequacy of the envisaged contribution to the 1.5 degree °Celsius goal. Further, the Court considered that an increase in net emissions in a particular budget period does not mean the series of emissions budgets that follow will not have been set with a view to contribute to the 1.5 degree °Celsius goal, particularly given New Zealand’s emissions profile is subject to major swings at any given time anyway as a result of the impact of the forestry sector on emissions depending on the stage of the forestry cycle.

Did the Commission make an error of law in using the MAB accounting methodology? 

This was the most technical ground of appeal addressed by the Court. The issue ultimately came down to whether the Commission’s obligation to advise the Minister on matters relevant to seeing an emissions budget extended to advising the Minister on the accounting methodology employed. 

The Court noted, in addressing this question, that New Zealand had never set its targets on the basis of a land-based accounting method (the method advocated for by LCANZI). Further, activity based accounting (the MAB approach) is consistent with the analysis used to inform the 2050 target and the land-based accounting method is arguably ill-suited to setting and monitoring performance as it can obscure achieved emissions reductions. 

The 2050 target refers to “net accounting emissions,” and the Minister is obliged to ensure that “net accounting emissions do not exceed the emissions budget for the relevant emissions budget period”. The term “net accounting emissions” includes those methods “as reported in New Zealand’s Greenhouse Gas Inventory”. The Legislative history showed this expression was included to differentiate it from “net emissions” as used in the New Zealand Greenhouse Gas Inventory reporting, and to clarify that offshore mitigation could be considered. Further, activity-based accounting was used under the Kyoto Protocol and Paris Agreement, and data relating to accounting under those agreements is included in the New Zealand Greenhouse Gas Inventory. Therefore, the definition of “net accounting emissions” is wide enough to include the MAB accounting approach utilised by the Commission. 

The Court also considered that if Parliament had intended to mandate the use of land-based accounting, this would have been clearly stated. Instead, it appeared Parliament deliberately kept the definition of “net accounting emissions” wide to allow the Commission to utilise their expertise and advise on the most appropriate accounting methodology. Such an approach is unsurprising, and allows for the accounting methodology practices used to keep up with best practice. 

Was the Commission’s advice unreasonable? 

This ground largely relied on the other grounds put forward by LCANZI, and therefore this claim fell away when those other grounds failed. 

The Court did observe that it was not “particularly attracted” to the position adopted by the High Court that the level of scrutiny of the Court on a question of unreasonableness will depend on the nature and importance of the decision under review. However, the Court left wider questions around the required “standard of review” open to be decided in a case where it is a central issue.

The Court also found that distortions to emissions reporting created by the forestry sector needed to be considered in assessing the reasonableness of the budges. It was not unreasonable or irrational for the Commission to focus attention on emissions reductions achievable in budget periods through behavioural change driven by policy settings. In fact, the Court noted this was consistent with the purpose of the CCRA.

This article was co-authored by Michael O'Brien, Solicitor in our Litigation team.