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SANFORD (SI) v MOYLE COURT CASE


Court Case

This is a transcript of the High Court case of Sanford (South Island) Ltd vs the Minister of Fisheries Moyle.

High Court, Wellington (CP3/96)

9-10 November

10 November 1989
McGechan J


Restriction on fishing under quota —

  • Whether reg 4B Fisheries (South East Area Commercial Fishing) Regulations 1986 was ultra vires the regulating power in s 89(1)(a) Fisheries Act 1983
  • Whether plaintiffs entitled to compensation under s 28D Fisheries Act 1983


The plaintiffs were commercial fishing companies. They held quota for a variety of species, red cod and barracuda being the most relevant to this proceeding. The plaintiffs fished for these species in the waters off Banks Peninsula. Between December and February each year the same waters contained concentrations of salmon retuning to spawn in East Coast rivers. There was expert evidence that the three species of fish tended to run together. The plaintiffs' trawlers were catching many tonnes of salmon. Concern grew over the rate of extraction of the salmon stock. The Fisheries (South East Area Commercial Fishing) Regulations 1986 were passed pursuant s 89 Fisheries Act 1983 banning trawling by vessels in excess of 23 metres and 250 kilowatts motive power in certain areas off Banks Peninsula between December and February.


The plaintiffs sought declarations stating reg 4B of the Regulations was ultra vires the Fisheries Act 1983 or otherwise unlawful or invalid, or alternatively that reg 4B reduced the plaintiffs' total allowable catch, requiring the Minister to pay compensation under s 28D of the Fisheries Act 1983.
Held, dismissing the proceeding:

  1. It is clear, despite the elaborate and protected nature of the quota management scheme, with its scheme for total allowable catch and individual transferable quota, rights under the scheme by way of ITQ are subject at least to some extent to permit conditions and regulation. Amongst such are likely to be conditions and regulations designed to promote conservation of marine life. The property element inherent in the ITQ is to be given proper recognition, but subject to that the s 89 regulation making power can go as far as is necessary for proper marine conservation purposes.
  2. Regulation 4B did not reduce the total allowable catch. The regulation prohibited fishing over a relatively small area, and for a limited period only. The regulation prohibited fishing by large boats only. These prohibitions would cause some degree of loss to the various plaintiffs. But the imposition of the regulations would not render the plaintiffs rights under the ITQ system ineffective. The effects of the regulations would not be of such significance as to fall outside the regulating authority conferred by s 89(1)(a).Whether plaintiffs entitled to compensation under s 28D Fisheries Act 1983.
  3. As the Regulations were valid under s 89(1)(a), there was no entitlement to compensation under s 28D Fisheries Act 1983.

Obiter, the plaintiffs faced possible losses without legal rights to compensation under the legislation. This seemed against the spirit of the QMS scheme and its intended commercial certainties.

Nothing in this judgment should be interpreted as endorsing that apparent unfairness.

Statutes Referred to
Fisheries Act 1983, ss 28B, 28C, 28O, 28ZA, 28D, 89
Fisheries (South East Area Commercial Fishing) Regulations 1986, reg 4B

Proceeding
Application for declarations that reg 4B of the Fisheries (South East Area Commercial Fishing) Regulations 1986 was ultra vires the Fisheries Act 1983 or otherwise unlawful or invalid, or alternatively that reg 4B reduced the plaintiffs' total allowable catch, requiring the Minister to pay compensation under s 28D of the Fisheries Act 1983.


Declarations refused; proceeding dismissed


TJ Castle and BA Scott for plaintiffs
S Kenderdine, A Kerr and TG Pearson for defendants
Reported by Reported by James Tuckey

Decsion of McGechan J

This is a judgment which ordinarily I would have reserved. It is a matter of some importance, both present and overall in relation to the integrity of the QMS scheme. However, due to circuit requirements if it is not delivered now it will not be delivered for more than three weeks and that delay is unacceptable. Accordingly, I express the views which I have reached at this stage. It will mean that I cannot canvass in any full way the evidence or arguments which I have heard. No discourtesy is intended to either party.


The claim is one brought by four commercial fishing companies against the Minister of Fisheries and others, seeking certain declarations. These refer to s 4B of the Fisheries (South East Area Commercial Fishing) Regulations 1986 as inserted by Amendment No 3 to those regulations passed in late 1988.

The declarations sought are:

  1. a declaration that regulation 4B is ultra vires the Act and otherwise unlawful or invalid and of no legal effect, or alternatively, and second,
  2. that in the event that the Court determines that regulation 4B is intra vires and otherwise valid and of full legal effect, then a declaration pursuant to the Declaratory Judgments Act 1908 that regulation 4B amounts to and has the effect of and/or is as a matter of law a reduction in TAC in QM area 3, as envisaged by s 28D of the Act, thereby requiring the first defendant Minister to pay compensation to the plaintiffs in accordance with the provisions of s 28D of the Act.


The brief facts of the matter are as follows -

The plaintiff commercial fishing companies all held ITQ in respect of various commercial species notably for present purposes red cod and barracuda in QMA3. Within that area are the waters off Banks Peninsula. Traditionally at certain times of the year there are good concentrations of red cod and barracuda in those waters off Banks Peninsula. There is some dispute in the affidavit evidence over the predictability or otherwise of the appearance, particularly of red cod, in those waters on a regular basis, but I am satisfied it is recognised as a good fishing ground or potential fishing ground for both species, particularly in the summer months from December to February and it is valued by the plaintiffs as such.

These same waters also hold prime concentrations of returning sea run salmon over the same summer months from December to February These comprise salmon originating both from hatcheries and from the wild. They include three to four year old fish returning to spawn in the East Coast rivers They are much more concentrated it appears in the waters off Banks Peninsula at that time than in the remainder of the Canterbury Bight area. The Banks Peninsula waters concerned are a quite small proportion of the total QMA waters, let alone of the Canterbury Bight waters, but have yielded some 69 to 95% of the salmon tags returned.

Inevitably, with those three concentrations of fish, plaintiffs and others have been fishing for red cod and barracuda as they are lawfully entitled to do under the QMS scheme and the ITA held, and for which privilege they pay significant resource rentals, and they have trawled up salmon. Indeed there is expert evidence that the species, salmon, red cod and barracuda tend to run together, perhaps after the same food stocks.

Some 67% of the salmon which have been so caught have been caught by trawlers over 23 metres in length, which, being larger, tow a faster trawl from which the salmon are thought to be less able to escape. Prior to the 1984 and 1985 summer no figures are known, but since then under landing schemes allowed some tonnages of salmon so caught have been landed.

To indicate the dimension of the problem as seen I will give some figures:
1984/1985 12.2 tonnes
1985/1986 40.5 tonnes
1986/1987 68.6 tonnes (That is said to be equivalent to 19000 fish, amounting to one third of the fish it is believed would be returning that summer).
1987/1988 46.0 tonnes (Amounting to some 1100 fish and a similar or slightly higher percentage) and
1988/1989 15 tonnes

There is some evidence that some 70% of the fish so caught are of hatchery origin.

Salmon are of both recreational and potential commercial value. They are not presently subject to the QMS. Scientific concern has grown as to the effects upon the salmon stock of those rates of extraction. This has been backed by recreational fishermen who allege targeting and a decline in recreational fishing, but some allowances must be made for the position from which such views are expressed.

A so called Salmon By-catch Committee was constituted in 1984 and while it did some worthwhile work, and is not criticised, it was unable ultimately to find an agreed solution. Accordingly in mid 1988 the Minister announced, and at the end of 1988 introduced a ban on trawling by trawlers in excess of 23 metres and 250 kilowatts motive power off specified areas of Banks Peninsula from mid December to the end of February. The regulations have been passed without a terminating date, but it is understood that they may be an experimental or temporary situation. Such cannot yet be predicted with certainty. The effect of this ban was to inhibit trawling operations by the plaintiffs who are owners of large trawlers caught by the ban; in particular, any intended trawling for red cod and barracuda. The plaintiffs have been forced to fish elsewhere and claim large and controversial losses arising. At least on the information before me no exact figures are possible. It may well be that the plaintiffs over the fishing year concerned did not in the end catch quota of red cod and barracuda.

I will accept as a matter of commonsense that it was a significant inroad into the plaintiffs red cod and barracuda fishing practices and catch prospects. The waters concerned were a prime spot. It was a prime time of the year; and their large boats were banned from it. In such a situation some losses seem probable and I cannot escape a feeling that the Ministry may have underrated these. I will return to that.

Against that factual background, the plaintiff brings these proceedings. The grounds upon which the declarations outlined are sought are as follows. It is said that in coming to their decisions and promulgating regulations the first and third defendant:

  1. Acted unlawfully in that regulation 4B is ultra vires the Act as s 89 of the Act contains no power to make such a regulation.
  2. Acted contrary to law insofar as the effect of regulation 4B is to exclude the area from a quota management area which cannot pursuant to 28B(5) be lawfully be done by regulation.
  3. Acted contrary to law insofar as the effect of regulation 4B is and will be to reduce the TAC in QM area 3 which may only be done by recourse to the provisions of 28D of the Amendment Act in which event compensation is payable to the plaintiffs pursuant to its terms.
  4. Acted in complete disregard of the plaintiffs rights as ITQ holders and in disregard of the fact that the fisheries waters affected by regulation 48 are within an area governed by a QMS as provided in Part IIA of the Amendment Act.


Prominent in this is s 89 and the regulation making power it confers. I turn to s 89. The defendants assert that the current regulation is empowered under s 89(1)(a)(j) and (n). I regard paragraphs (j) and (n) largely as incidentals. The matters tends to stand or fall on s 89(1)(a). This reads with relevant introduction
“The Governor-General generally may from time to time by Order in Council make regulations for all or any of the following purposes.
(a) generally regulating fishing in New Zealand and New Zealand fisheries waters.”

There are some relevant statutory definitions. There are some difficulties with the word “regulating”. A power to regulate does not necessarily confer power to prohibit.

Questions of degree can be involved; but if there were nothing more to it than that I would regard regulation 4B as empowered by s 89(1)(a). What is done under regulation 4B is to impose a two and a half month ban, not a full year ban, on large vessels, not on all vessels, and in a confined area, not over all areas or over all recognised fishing locations. What is done is for the purpose of conservation of the salmon fishery. I would regard that limited activity as within the phrase “regulating” fishing. However, as argument has demonstrated there is rather more to it than that. In particular there are questions as to the reconciliation of such a regulation making power that the requirements of the statutory QMS scheme and whatever rights the latter confers upon fishermen ITQ Holders. So I turn to the statutory QMS scheme.

As an opening observation, the object behind this scheme seems clearly enough to create a stable regime under which stocks of commercial fish species are conserved and under which commercial fishermen have stable and recognised rights to fish on a basis on which they can plan and make the considerable financial commitments which this industry requires. It is not a scheme set up to be dismantled or tinkered with by a Minister as a matter of whim. It is not a scheme in which the Minister is to be given any considerable leeway for adjustment by regulation; but at the same time it is a scheme which is conservation-conscious. It is not likely that Parliament intended to facilitate the destruction of the marine environment, particularly where fish may have some recreational or commercial importance. As so often happens there are some potentially conflicting intentions which it is necessary to reconcile and to which the Courts must strive to give effect after reconciliation.

I turn from object to provisions. Under s 28B(1) the Minister may declare quota management areas and apply the QMS to species within those areas. That is a significant step. This is recognised by 28B(5) under which no such declaration may be revoked and no area may be excluded except by Act of Parliament. It was not really necessary to say “by Act of Parliament”. Anything in law can be done by Act of Parliament. The words are there to illustrate that this foundation to the scheme was not something which was to be adjusted in itself by regulations. 28C(1) takes the next step of providing for specification of a TAC by species within the QMA, and under 28C(2) that TAC can be by way of separate TAC's for separate parts of the QMA, and can be defined also by reference to methods or periods. Some flexibility is envisaged. To date the TAC presently relevant does not incorporate such flexibility. Under s 28(C)(6) and (7) the Minister may by notice vary the TAC from time to time, but except under 28D to which I will come shortly, may not reduce that TAC. Pausing, that illustrates the certainty concept underlying this legislation. As with the sacrosanct QMA area, fishermen are entitled to know from the TAC what pool of fish will be available, and that it will not be diminished over years to come subject to s 29D to which I now turn.

Section 29D does, however, allow reduction in a TAC where the species is under stress and controls on fishing will not suffice. I paraphrase it. This illustrates the “conservation” concept. The certainty of the TAC must at times give way to conservation requirements if the stock is endangered and importantly for present purposes, it admits of a situation where controls on fish may be imposed upon a TAC for conservation purposes. The TAC it appears is not to be inviolate in that respect, but illustrating the other aspect of private right in the event of such a reduction there is provision for compensation to ITA holders determined if necessary by arbitration.

I can refer only briefly to 28E and onwards which create the ITQ scheme. ITQ are effectively a private property right, valuable and traceable, entitling holders to fish. They involve the holder in payment of significant resource rentals, whether fish are caught pursuant to that right or not. However, once again that property right is subject to the possibility of other requirements. Under 28O(5) holders of ITQ must have a fishing permit issued under s 63. Such permits as s 63 makes clear can be conditional. Indirectly, fishing under an ITQ may be subject to conditions. Likewise, and perhaps more directly, under 28ZA(2) ITQ rights to fish are subject to stated matters. Fishing is to be in accordance with the conditions of an appropriate fishing permit, the conditions and limitations imposed by or under the Act, any regulations or notice made under the Act, and any applicable fishery management plan. I note particularly, in passing, that fishing rights under ITQ are expressed to be subject to regulations made under the Act. It seems clear, therefore, that despite the elaborate and protected nature of the QMS, with its scheme for TAC and ITQ, rights under the QMS by way of ITQ are subject at least to some extent to permit conditions and regulation. Amongst such are likely to be conditions and regulations designed to promote conservation of marine life. Regulations can be made for that purpose and are to have effect. The question of course is how far they can go.

Clearly in my view, regulations cannot be made under s 89 which goes so far as to render ineffective rights enjoyed under the QMS by ITQ holders Parliament did not intend to give and with the one hand, and then take away with the other. The property element inherent in the ITQ is to be given proper recognition, but subject to that the s 89 regulation making power can go as far as may be necessary for proper marine conservation purposes, both of ITQ and non ITQ species. That in my view broadly stated is the legislative scheme. It becomes, therefore, a question of degree, or if one prefers the phrase, of line drawing, in circumstances of particular cases, determining whether or not the Order in Council in the processes of s 89(1)(a) “regulating” has gone too far. In this case has regulation 4B rendered ineffective ITQ rights of the plaintiffs? There are certain things which the regulation does not do (and these findings in way dispose of certain of the grounds of claim). First, they do not revoke a portion of the QMA or cut the Banks Peninsula area out of the QMA. There is not a word said about boundaries of the overall QMA. Formal steps would be involved and those have not been taken. Nor in my view has it been done by effect or by stealth through the degree of action taken, a matter to which I turn shortly.

Second the regulation does not reduce the TAC. There is not a word said about reduction. The TAC tonnage still is available (if it exits at all) within the Banks Peninsula waters over the remaining nine and a half months, but also in the remainder of QMA 3 over the standard 12 month period. Formal steps would be required. None have been taken. What the regulation does do, might well be put under three headings It is in this area it particularly falls for assessment.

First it prohibits fishing over a relatively small area. There are other waters including waters in the Canterbury Bight where fishing for the species concerned can take place.

Second, it prohibits fishing over a limited period only, between the middle of December and the end of February in each area. That is a peak period, but there is it appears another peak, perhaps somewhat lesser, over the April/May period which follows.

Third, it prohibits fishing by large boats only. They are those exceeding 23 metres and 250 kilowatts motive power. It is still possible to fish in smaller boats. There is some evidence that at least one of the plaintiffs has done so. There is a great deal of evidence before the Court, much of it in terms of raw data and much controversial.

Sifting it as best I can, I have no doubt that these particular prohibitions will cause some degree of loss to the various plaintiffs. This is a significant fishing area. It has a high point in the season and the plaintiffs will lose a chance of fishing under optimum conditions and the results which might be hoped for from that. I cannot escape a feeling that the Ministry may rather have underrated possible losses which the plaintiffs may incur. These cannot be dismissed on some hopeful basis that because they cannot be proved exactly they cannot exist. However, on the evidence which I have, I cannot find that the imposition of the regulations again from 15 December 1989 will render the plaintiffs rights under the QMS system ineffective. I am not persuaded on what happened last season that I can say with any degree of assurance it will happen this time. After the prohibitions were permanent in time for a full 12 months, or if it related to all boats or if it related to all worthwhile fishing areas in QMA 3 perhaps that could be said, or perhaps a Court could be so persuaded on quite meagre evidence. On the present facts given the limited category of the controls I am not persuaded the effects will be of such significance as to fall outside the regulating authority conferred by 89(1)(a).


On that basis the claim must be, and in a moment will be, dismissed. Before I do that I am minded to say something about compensation. The way this result has been achieved the plaintiffs face possible losses without legal rights to compensation under the legislation. That does seem rather against the spirit of the QMS scheme and its intended commercial certainties. It is exacerbated by the fact that recreational fishermen and to some extent perhaps the tourist industry which support them and salmon hatcheries, bear no losses but reap all the gains, if any. Nothing in this judgment should be interpreted as endorsing that apparent unfairness. The problem is not one which can be dismissed by some hopeful view that there will be no loss. Some is possible and I draw this matter to the Minister's attention. It is a matter within his powers and responsibility, not those of this Court. Some proper inquiry might be thought appropriate.


The formal order of the Court is that the proceedings are dismissed.
I treat this as a test case in which the plaintiffs carry a genuine sense of grievance. There will be no order as to costs.

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