Challenger Scallop Enhancement Company Ltd v Director-General of the Ministry of Primary Industries
[2016] NZHC 3201
•23 December 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-549 [2016] NZHC 3201
UNDER the Judicature Amendment Act 1972 and
Part 30 of the High Court Rules
IN THE MATTER OF
an application for judicial review
BETWEEN
CHALLENGER SCALLOP ENHANCEMENT COMPANY LTD Applicant
AND
THE DIRECTOR-GENERAL OF THE MINISTRY OF PRIMARY INDUSTRIES First Respondent
TASMAN DISTRICT COUNCIL Second Respondent
MARLBOROUGH AQUACULTURE LIMITED
Third Respondent
S M W CONSORTIUM (GOLDEN BAY) LIMITED
Fourth Respondent
SANFORD LIMITED Fifth Respondent
GOLDEN BAY MARINE FARMERS CONSORTIUM LIMITED
Sixth Respondent
TE OHU KAI MOANA TRUSTEE LIMITED
Seventh Respondent
CHALLENGER SCALLOP ENHANCEMENT COMPANY LTD v THE DIRECTOR-GENERAL OF THE MINISTRY OF PRIMARY INDUSTRIES [2016] NZHC 3201 [23 December 2016]
Hearing: 2-3 May 2016 Counsel:
P J Radich QC and G M Richards for Plaintiff
J Prebble and S Eccles for First Respondent
C Thomsen and J C Ironside for Second Respondent
D J Cark for Third Respondent
J K MacRae for Fourth Respondent
A Kraack for Fifth Respondent
G Downing for Sixth Respondent
J Inns for Seventh RespondentJudgment:
23 December 2016
JUDGMENT OF ELLIS J
I direct that the delivery time of this judgment is
2.30 pm on the 23rd day of December 2016
Table of Contents
The statutory regime ..............................................................................................[4] The first (2008) decision ......................................................................................[16] The challenge in the High Court ..........................................................................[19] The Court of Appeal .............................................................................................[28] The D-G’s reconsideration and the second aquaculture decision ........................[29]
Section 40(a): the effect of the IAMA on biological diversity, the productivity and biological abundance of fisheries resources and
habitats of known significance for fisheries management ...............................[42]
Section 40(b): the location of the interim aquaculture management
area in relation to areas in which fishing is carried out ...................................[44]
Section 40(c): the effect of the interim aquaculture management area on fishing of any fishery, including the proportion of any fishery
likely to become affected .................................................................................[45]
Section 40(d): the degree to which aquaculture activities within the
interim aquaculture management area will lead to the exclusion of fishing....[46]
Section 40(e): the extent to which fishing for a species in the interim
aquaculture management area can be carried out in other areas ......................[47]
Section 40(f): the extent to which the interim aquaculture management
area will increase the cost of fishing ...............................................................[48]
Section 40(g): the cumulative effect on fishing of any previous
aquaculture activities........................................................................................[49] The D-G’s evidence..............................................................................................[52] The present application for review.......................................................................[53]
Too much reliance on past catch, Scallop Model and five per cent UAE
threshold ...............................................................................................................[55] Failure to consider quota rights and likelihood of recovery ................................[63] The alleged failure to (re)consider s 40(a) ...........................................................[69] Breach of s 38: delay............................................................................................[75] Conclusion............................................................................................................[81]
[1] In recent times, the southern scallop fishery, also known as SCA7,1 has been in decline. The decline has been most acute in Golden and Tasman Bays.2 There has been no commercial scallop fishing in the Bays for five years now. But the holders of SCA7 scallop quotas remain hopeful that the fishery will rally. They oppose the
use of the space occupied by the fishery by mussel farmers and say that farming will damage the fishery, and the value of their quota, even further.
[2] Challenger Scallop Enhancement Company Ltd (Challenger) represents scallop fishers who have quota in SCA7. In these proceedings they challenge a decision by the Director-General (the D-G) of the Ministry of Primary Industries (MPI) effectively to permit mussel farming in certain areas within SCA7. Challenger says that the D-G has failed properly to assess the negative impact of mussel farming on the fishery and seeks an order setting his decision aside.
[3] Before turning to consider the impugned decision and Challenger’s criticisms of it, it is first necessary to say something about the legislative framework within which the D-G’s decision was made, and the successful challenge that was made to an earlier decision in relation to the same issues.
The statutory regime
[4] Prior to the enactment of the Aquaculture Reform (Repeals and Transitional Provisions) Act 2004 (the Transitional Act), mussel farming required both coastal permits under s 87(c) of the Resource Management Act 1991 (the RMA) and marine farming permits under s 67J of the Fisheries Act 1983 (the FA83).
[5] The uncertainty about the relationship between these two statutory regimes, and the competing interests of proposed marine farmers both between themselves and with existing fishers, resulted in a considerable backlog of applications around the country. Ultimately this led to the imposition of a moratorium on the consideration of coastal permit applications under the RMA, commencing in
March 2002. The moratorium ended on 1 January 2005 when the Transitional Act
1 SCA7 is a quota management area which is geographically defined in Sch 1 to the Fisheries
Act 1996. It is an area which includes Golden Bay, Tasman Bay and the Marlborough Sounds.
2 All SCA7 catch in recent times has come from the Marlborough Sounds.
came into force. In essence, the new regime substituted a single planning process controlled by the relevant regional council under the RMA.
[6] The Transitional Act introduced the concept of Aquaculture Management Areas (AMAs) as a planning tool in regional coastal plans. New marine farms are only able to be authorised within an AMA. The Transitional Act created two classes of AMA: deemed AMAs and interim AMAs (IAMAs).3 An IAMA is created by Order in Council made on the recommendation of the Minister of Conservation, at the request of the relevant regional council.4
[7] In order for an IAMA to become operative for marine farming purposes, the D-G must first make an “aquaculture decision”.5 Such decisions are, again, made at the request of the relevant regional council.6 There are two types of aquaculture decision under the Transitional Act:7
(a) a “determination”, which is a decision by the D-G that he or she is satisfied that the IAMA will not have an undue adverse effect (UAE) on fishing or on the sustainability of fisheries resources; and
(b)a “reservation” which is a decision by the D-G that he or she is not satisfied that the IAMA will not have a UAE on fishing or on the sustainability of fisheries resources.
[8] The concept of “adverse effect” in a fishing context has a meaning that is consistent with the use of that term in s 186C of the Fisheries Act 1996, namely an
3 Deemed AMAs are those proposed AMAs for which a licence under the MFA, or a marine farming permit or spat catching permit under the Fisheries Act 1983, had been granted prior to the 2004 legislation coming into effect on 1 January 2005. Interim AMAs are those proposed AMAs for which no application for a coastal permit for aquaculture had been processed and determined, as at 1 January 2005. This judgment is concerned only with IAMAs.
4 Transitional Act, s 36.
5 The other precondition is that 20 per cent of any resulting space must be allocated to iwi.
6 Section 37. As originally enacted, these decisions were made by the Chief Executive of the then Ministry of Fisheries. This changed following the merger of that Ministry with the Ministry of Agriculture and Forestry and the New Zealand Food Safety Authority on 30 April 2012. The new entity created by the merger was MPI.
7 Section 38.
effect which restricts access to, or displaces, fishing.8 And “fishing” includes the harvesting of scallops.
[9] If a determination is made, a regional council can then grant an authorisation to an intending marine farmer which confers the right to apply for a coastal permit. A coastal permit allows the holder of it to occupy space within an IAMA for the purposes of aquaculture activities.
[10] If a reservation is made on the basis that the D-G is not satisfied that the IAMA will not have a UAE on commercial fishing for stock that is subject to the quota management system, such an authorisation can only be given by the regional council to persons who have entered into aquaculture agreements with the affected fishers.9 Such agreements provide for compensation to be paid to the quota holder by the marine farmer for the UAE on the fishery. If the reservation relates to effects on recreational fishing or effects on fisheries resources the reservation amounts to a final decision that the area may not become an IAMA.
[11] The type of aquaculture decision made therefore determines whether existing fishers receive any compensation for the loss of space in which they can fish. If a determination is made, they do not receive any compensation because an aquaculture agreement is not required. That is because (by definition) the impact on the fishery concerned is not regarded as being sufficiently undue or significant.
[12] Before making an aquaculture decision the D-G is required to consult and consider any resulting submissions.10 An aquaculture decision must be made within six months after having received the relevant request.11 But the time during which further information is sought from and provided by interested persons is excluded
from this six month period.12
8 The significance of the adjectival addition “undue” was the subject of consideration in the earlier
litigation and will be discussed later in that context.
9 Transitional Act, s 44(3).
10 Section 38(4).
11 Section 38(1).
12 Section 38(3).
[13] In deciding whether to make a determination or a reservation the D-G is permitted only to have regard to the matters listed in s 40 of the Transitional Act, namely:
(a) the effect of the interim aquaculture management area on—
(i) the biological diversity of the aquatic environment:
(ii) the productivity and biological abundance of fisheries resources:
(iii) habitats of known significance for fisheries management:
(b) the location of the interim aquaculture management area in relation to areas in which fishing is carried out:
(c) the effect of the interim aquaculture management area on fishing of any fishery, including the proportion of any fishery likely to become affected:
(d) the degree to which aquaculture activities within the interim aquaculture management area will lead to the exclusion of fishing:
(e) the extent to which fishing for a species in the interim aquaculture management area can be carried out in other areas:
(f) the extent to which the interim aquaculture management area will increase the cost of fishing:
(g) the cumulative effect on fishing of any previous aquaculture activities.
[14] It may be observed that, in terms of the overarching question that s 40 is designed to resolve, namely whether or not a proposed IAMA will have a UAE “on fishing or on the sustainability of fisheries resources”:
(a) the matters referred to in s 40(a) relate to the effect of the IAMA on the sustainability of fisheries resources; but
(b) the matters referred to in s 40(b) – (g) are concerned with the effect on
fishing (the word “fishing” is used in each of the paragraphs).
[15] Section 41 requires an aquaculture decision to be in writing and that reasons are given.
The first (2008) decision
[16] In 2005, the Tasman District Council (the TDC) applied to the Minister of Conservation to have three areas within SCA7 declared as IAMAs, pursuant to s 36 of the Transitional Act. On 21 November 2005, the relevant Order in Council was promulgated, declaring that nine subzones within those three areas were to be IAMAs.13 The total area measures 2,109 hectares. Eight subzones are within AMA 1 and AMA 2 in Golden Bay and there is one subzone in AMA 3 in Tasman Bay.
[17] On 20 January 2006, and at the behest of Marlborough Aquaculture Ltd (Marlborough), Sanford Ltd (Sanford), SMW Consortium (Golden Bay) Ltd (SMW) and Golden Bay Marine Farmers Consortium Ltd (Golden Bay), the TDC applied for an aquaculture decision in relation to the three IAMAs. In December 2008, following the statutory consultation and information gathering processes, the Chief Executive of the Ministry of Fisheries (MoF) made a combination of determinations and reservations in respect of the nine subzones. More particularly the Chief Executive:
(a) made determinations in relation to:
(i) 200 ha of the 405 ha within IAMA l(a) and 1(b);
(ii) IAMAs 2(n) and 2(o), which also comprise 250 ha each;
(iii) IAMA 3(l), which comprises 150 ha (this is the only IAMA in
Tasman Bay);
(b) made reservations in relation to:
(i)another 108 ha of the 405 ha within IAMA l(a) and 1(b) because of effects on fisheries resources (plankton and the seabirds at a site nearby on Farewell Spit); and
13 Aquaculture Reform (Repeals and Transitional Provisions) (Golden Bay and Tasman Bay
Interim Aquaculture Management Areas) Order 2005.
(ii)the other 97 ha of the 405 ha within IAMA l(a) and 1(b) because of effects on the local commercial southern scallop fishery;
(iii)IAMAs 1(c) and 1(d), which comprise 257 ha and 297 ha respectively, because of effects on the SCA7 fishery; and
(iv)IAMAs 2(l) and 2(m), which comprise 250 ha each, because of effects on the SCA7 fishery.
[18] The effect of this decision was that three of the five new areas sought for mussel farming by SMW, and the one new area sought for mussel farming by Golden Bay were approved. The areas sought to be farmed by Marlborough and Sanford were declined.
The challenge in the High Court
[19] The decision was then challenged in the High Court by way of appeal and judicial review brought by the unsuccessful applicants (Marlborough and Sanford) and also by Challenger.14 As I have said, Challenger represents SCA7 scallop fishers who are opposed to the approval of any new areas for mussel farming.
[20] One of the principal focuses during the High Court hearing was on the use by the Chief Executive of what was known as “the Scallop Model” in order to assess the existence of any UAE. The origins and operation of the Scallop Model was described by Clifford J, in what he termed his “Interim Judgment”, as follows:15
The SCA 7 quota management fishery has for some time been actively managed by Challenger on behalf of the scallop fishers. That management involves Challenger determining where and to what extent the fishery will be fished, including to reflect scallop spat seeding activities designed to promote scallop biomass and, therefore, scallop catch in the fishery. Challenger annually surveys the scallop biomass on the seabed throughout
14 At this time, the Transitional Act enabled both judicial review and a substantive appeal of an aquaculture decision. That is no longer the case; only judicial review is possible of the decision on whether to reserve or determine areas within the IAMAs.
15 Marlborough Aquaculture Ltd v Chief Executive of the Ministry of Fisheries HC Wellington
CIV-2009-485-500, CIV-2009-485-497, CIV-2009-485-506, CIV-2009-485-514, CIV-2009-485-
519, 13 June 2011 at [41] and [42].
the fishery, by reference to areas known as cells. Challenger also measures annually the scallop catch by reference to much larger areas known as sectors. The Scallop Model uses those measurements of scallop seabed biomass density and scallop catch to calculate a predicted “loss” which would result from a given area being turned over to mussel farming and thus “removed” from the area that scallop fishers may seed and trawl through.
The Chief Executive used outputs from the Scallop Model to:
(a) measure the effect existing aquaculture activities (mussel farming and spat catching) had had on the SCA7 fishery;
(b) determine whether and to what extent the interim AMAs in question, ie the subzones, would have an additional adverse effect on that fishery; and
(c) rank, as between themselves and in terms of an ascending order of adverse effect, each of those subzones.
[21] As Clifford J went on to record, however, part way during the hearing an agreement was reached that:16
(a) the Scallop Model was an appropriate tool for quantifying the impact of the total loss of space on commercial scallop fishing; but
(b)the results produced by the Scallop Model were too approximate to be used to rank the effect of each IAMA on commercial scallop fishing.
[22] As a result, the parties also agreed that, to the extent that the 2008 aquaculture decision related to the impacts of the IAMAs on scallop fishing, it needed to be remade. But the parties also asked the Court to consider other specific issues relating to the interpretation of the Transitional Act.17 So the Court went on to
make a number of findings relevant to the present case.18
[23] First, in terms of the required assessment of whether the IAMA would or would not have any UAE on existing fisheries, the Court said:19
As is clear, therefore, the Chief Executive approached his assessment of undue adverse effect in terms first of the effect of the approval of interim AMAs as reflected in catch loss. Overall, he considered that a 5 per cent
16 At [49].
17 At [54].
18 At [65].
19 At [78].
average reduction in weight of scallop meat taken was significant, that it was inappropriate to impose on scallop fishers a cost of more than 5 per cent of the annual catch for the benefit of intending marine farmers and, accordingly, he tended towards “that 5% threshold as the undue level”. After that level, intending marine farmers would need to negotiate aquaculture agreements with scallop fishers.
[24] The Judge went on specifically to record that “Sanford and Challenger were generally supportive of that approach”.20
[25] The Court went on to give its own endorsement of the five per cent (predicted fishing displacement) threshold for the UAE analysis.21 Clifford J said:22
… I do not think - as submitted by SMW - that the five per cent threshold is arbitrary or lacking in logic. That threshold addresses directly the concept of adverse effect - namely that of restricting access for fishing, or displacing fishing. Further the Scallop Model provides - as all the experts accepted - a logical way of measuring that restrictive or displacement effect.
The Chief Executive himself recognised that his selection of five percent was not a necessarily scientific one, but was rather based on his judgement. I was not persuaded by the appellants who argued that that judgement … was wrong. In that, I was - as I have said - particularly mindful that the undue adverse effects test threshold is part of a statutory regime which allows for existing property rights, namely those of commercial fishers, to be reduced in value potentially without compensation.
[26] The Court said that if, on the information before the Chief Executive, he “continued to have substantial doubts about whether the adverse effect on fishing would be undue, he could not be “satisfied” that it was not undue”.23 But:24
Having said that, there will always, to an extent, be uncertainty about future events. I do not think it would be appropriate for the Chief Executive to conclude, merely by reason to such inevitable uncertainties alone, that he could not be satisfied about the absence of an undue adverse effect, and for that reason to decline to make a determination. Nor, in my view, would the Chief Executive be acting lawfully if he undertook an inadequate investigation into adverse effect, and by reference to the inadequacies of his investigation conclude that he was not satisfied.
20 At [79]. Other of the parties were not, at that point, so supportive.
21 At [95].
22 At [93] and [94].
23 At [103].
24 At [104].
[27] Later (in October 2011), the Court issued a Minute formally allowing the appeals by the marine farming interests to the extent that the Chief Executive had made reservations and determinations as regards the possible effect of aquaculture activities on scallop fishing in SCA7 within subzones (a), (b), (c) and (d) of AMA1, (1), (m), (n) and (0) of AMA2 and (1) of AMA3.25 Clifford J then said:
I direct that the Chief Executive remake the Aquaculture Decision, to the extent required by the Interim Judgment … on the basis of the best available information at the time of the decision.
…
I note for the record, that:
(a) The Interim Judgment does not affect other aspects of the
Aquaculture Decision.
The Court of Appeal
[28] The Court of Appeal upheld the High Court’s decision in April 2013.26 For present purposes, key findings from the Court of Appeal are that:
(a) the purpose of the UAE test is to provide protection for existing property rights of commercial, customary and recreational fishers. An interpretation which provides protection for existing property rights is consistent with the well-established principle that clear statutory language will be required before the court will permit property to be taken, especially without compensation;27
(b) the High Court’s analysis of the “satisfaction” threshold was correct.
In order for the Chief Executive to be satisfied or not satisfied, as the case may be, he needs to consider whether the information before him is sufficient to meet the UAE test, and if not or if uncertainties remain
then he or she could not be so satisfied;28
25 Marlborough Aquaculture Ltd v Chief Executive of the Ministry of Fisheries HC Wellington CIV-
2009-485-500, 10 October 2011 (Minute No.4). The Court granted the judicial review applications to the same extent.
26 SMW Consortium (Golden Bay) Ltd v Chief Executive of the Ministry of Fisheries [2013] NZCA 95.
27 At [30] and [31].
28 At [39] and [40].
(c) in terms of the five per cent/UAE threshold, the Court noted that:
(i)the qualifying adjective “undue” takes its ordinary meaning, namely “going beyond what is appropriate, warranted or natural”. The Court agreed with the Crown that in this context, “undue” means “serious” or “significant”;29
(ii)given that the purpose of the legislation is to allow marine farming, some effect on fishing is to be expected. Minimal or insignificant effects on fishers will therefore not be undue;30
(iii)it is relevant that the UAE threshold forms part of a statutory regime which allows the existing property rights of commercial fishers to be reduced in value potentially without compensation;31 and
(iv)on its face, a predicted five per cent loss of catch is sufficiently significant to warrant a reservation with compensation through an aquaculture agreement rather than a determination without any compensation.32 The Court said:33
Finally, it was open to the Chief Executive to adopt the threshold of five per cent in the context of the present legislation, where Parliament has left the assessment of the threshold to the judgment of the Chief Executive. Apart from submitting that the threshold was not “supportable”, SMW in accepting that the figure might be between five and 20 per cent, did not identify any specific alternative. It was a quibble about where the figure was pitched. Like Clifford J, we were not persuaded that the Chief Executive’s judgment was wrong.
29 At [54].
30 At [54].
31 At [55].
32 At [55].
33 At [57].
The D-G’s reconsideration and the second aquaculture decision
[29] Following the release of the Court of Appeal’s decision, MPI embarked on a consultation and information gathering process on behalf of the D-G in order that he could remake the decision in accordance with the remittal back.34 The outcome was recorded in a consultation document, which set out MPI’s preliminary view that determinations could be made in relation to all nine of the subzones within the IAMAs, without an undue adverse effect on the SCA7 fishery. On 29 October 2014 the consultation document was sent to interested parties (including Challenger) inviting them to provide further information on the effect that the IAMAs would have on scallop fishing.35
[30] On 5 June 2015 the D-G advised all interested parties that he would make determinations for all subzones. He said that he had considered different scenarios regarding possible futures for the SCA7 fishery, and that under some of them the IAMAs would have an effect on commercial scallop fishing, but that none suggested an effect that was unduly adverse.
[31] The D-G’s decision was based upon, and accorded with, the recommendations contained in a document prepared by MPI officials and entitled “Tasman Interim Aquaculture Management Areas: Decision Document” (the Decision Document). The Decision Document had annexed to it the Consultation Document and the submissions received in response to it.
[32] The Decision Document begins by referring to the earlier (2008) aquaculture decision and the pertinent parts of the earlier litigation about that. It records:36
No parties sought leave to appeal the Court of Appeal Judgment to the Supreme Court. The Judgments therefore stand, with the decisions remitted back to the Chief Executive to be re-made, based on updated information. The new decisions will only consider the effects of the Interim AMAs on
34 The transfer of responsibility for aquaculture decisions from the Chief Executive of MoF to the D-G of MPI has been noted at footnote 6 above. The D-G’s power to make aquaculture decisions was delegated to the Deputy D-G, Mr Gallacher. All reference in this judgment to the D-G as decision maker are therefore to Mr Gallacher.
35 Challenger’s submissions largely focused on the areas that were subject to past scallop fishing
and the potential recovery of the fishery and the degree of overlap with the IAMAs.
36 Ministry for Primary Industries Tasman Interim Aquaculture Management Areas: Decision
Document (May 2015) at [28] and [29].
commercial scallop fishing because of all other aspects of the aquaculture decisions have been resolved.
…
The parts of the 2008 aquaculture decisions that are unaffected by the
Judgments are:
·The 108 ha area in subzones (a) and (b) of Interim AMA 1 that was subject to a reservation because of undue adverse effects on the sustainability of fisheries resources;
·The determinations made for all other subzones because there was no undue adverse effect on the sustainability of fisheries resources;
·The determinations made for all Interim AMAs because there was no undue adverse effect on customary fishing and recreational fishing; and
·The determinations made for all Interim AMAs because there was no undue adverse effect on commercial fishing for all stocks except commercial scallop fishing in SCA7.
[33] Then, the Decision Document notes, by way of background: (a) the high natural variability of scallop biomass;
(b)that SCA7 was presently at a very low level of abundance and that scallop fishing had declined across the fishery, including in the IAMAs (there having been no scallop fishing in Tasman and Golden Bays for four to five years);
(c) that although no one cause of the decline had been identified there had been negative changes (increased sedimentation and turbidity) in the benthic (seabed) environment, and the habitat was now low.
[34] In terms of the possibility of the fishery’s recovery, the Decision Document notes that submissions had been made by the aquaculture interests that this was unlikely. It also recorded that:37
CSEC [Challenger] submits that the SCA7 fishery is variable showing fluctuations in volume and location like a number of other New Zealand fisheries that have been subject to cyclical failure and recovery. CSEC notes
37 At [80]. No issue was taken by Challenger as to the accuracy of this summary.
MPI’s comments that it has yet to be established whether the current decline is long term and that MPI recognises Golden Bay has supported a significant proportion of the commercial fishery in the past and is important for the recovery of the fishery. The fishery has been responsive to intense enhancement before.
CSEC further submits that MPI should not or cannot make a decision until it has the relevant information concerning the future of the fishery. CSEC notes that AES does not discount a return of a scallop fishery if the benthic environment improves through catchment management and changing weather patterns and other physical processes.38
[35] In terms of predicting the future recovery of the fishery, the Decision Document then refers to the annual biomass surveys undertaken annually in SCA7 on behalf of Challenger by NIWA. The object of these surveys is to assess the quantity and location of scallops within the fishery. They involve dredging the seabed and are intended to yield an estimate of the actual number of scallops in the water at any given time.39
[36] Based on a review of these surveys going back to 1994, MPI’s conclusion was that scallop biomass in Golden and Tasman Bays “might rebuild if environmental conditions improve and industry recommits to management regimes such as rotational fishing and extensive reseeding”.40
[37] In terms of UAE, the Decision Document then records that following the earlier litigation, MPI had carried out further work on the Scallop Model, in consultation with the parties. Biomass and catch data from the years following the High Court decision were fed into it. This work was reviewed by the Aquatic Environment Working Group (AEWG), a forum designed to ensure that research and scientific information used for decision-making in the fisheries sector has been
subjected to critical peer review. Although there was one dissenting voice within the
38 AES stands for Aquatic Environmental Sciences, who prepared a report for Sanford on the state of the scallop fishery in Golden Bay, the reasons for its decline and the likely effects on it of mussel farming.
39 The biomass data gained by these surveys are different from “catch” data because the biomass data are not affected by closures of parts of the fishery or decisions not to fish in a particular area.
40 Decision Document, above n 36, at [93]. Biomass surveys are conducted each year by NIWA on
behalf of Challenger. Their object is to assess the quantity and location of scallops within the SCA7 fishery. The surveys involve dredging the seabed and are intended to yield an estimate of the actual number of scallops in the water at any given time. The biomass data gained by these surveys is different from “catch” data because they are not affected by closures of parts of the fishery or decisions not to fish in a particular area.
AEWG, the Group’s conclusion was that the scallop model was “fit for purpose” and
“could serve as a basis for applying” the UAE.41
[38] But the Decision Document goes on to make it clear that MPI’s assessment of the future effects of establishing IAMAs on the SCA7 fishery was not just based on the scallop model. It records that other matters taken into account by MPI included:
(a) survey information;
(b)environmental information and reports submitted to MPI, including site specific surveys for the IAMA subzones, the AES report and an affidavit sworn by Mr Paul Gilespie in the earlier High Court proceedings;42
(c) enhancement information;
(d) information about the drivers of shellfish production in Golden and
Tasman Bays; and
(e) the views of submitters and experts on the past, current, and possible future status of the SCA7 fishery.
[39] The Decision Document then records that:43
MPI acknowledges that there are difficulties predicting the future of SCA7 based on past data, especially given the uncertainties around the reason for the current decline, changing and future environmental conditions, and future management investment decisions. It is for this reason that MPI is considering four different scenarios to capture different possible futures for the fishery reflecting the range of information provided by submitters. MPI has used the scallop model to illustrate those scenarios.
[40] The four scenarios are then set out in tabular form, a replica of which I annex to this judgment. Essentially the table considers combinations of a number of future
41 Decision Document, above n 36, at [33]. Challenger is represented on the AEWG. Challenger was not the dissenting voice.
42 Mr Gilespie was a marine scientist at the Cawthron Institute. His affidavit relevantly related to the declining scallop habitat in Golden and Tasman Bays.
43 Decision Document, above n 36, at [107].
variables, including environmental conditions, enhancement investment and harvesting activity. It also takes into account different periods of catch history, ranging between three and 17 years, with 17 years yielding the most positive result (because it includes the earlier years in which the catch was high). The table shows that MPI’s view was that scenario three (long term return to favourable environmental conditions and enhancement activity, catch estimates based on six years of catch history) was the most likely. Under that scenario, the Scallop Model indicated that the estimated median percentage of average annual catch from all IAMAs would be reduced by between 0.3 and 1.1 per cent, in the event that mussel farming was permitted.
[41] The Decision Document then addresses each of the specific mandatory s 40 factors. I summarise the conclusions in relation to each of them in turn.
Section 40(a): the effect of the IAMA on biological diversity, the productivity and biological abundance of fisheries resources and habitats of known significance for fisheries management
[42] As regards s 40(a), the Decision Document records that:44
The Chief Executive [sic] is aware of the requirement under section 40 to have regard to all matters in section 40, including subsection (a). In this case, section 40(a) has no bearing on the particular aquaculture decisions the Chief Executive is required to remake. Aspects of the December 2008 decisions relating to this matter were not challenged by any party. As a result there are no outstanding section 40(a) issues. As noted, the Courts have resolved all issues apart from the impact on the SCA7 commercial fishery regarding which the High Court directed a reconsideration of that issue.
[43] The Decision Document does not therefore consider s 40(a) further, although the final recommendations made (and accepted by the D-G) reflect the 2008 “fisheries resources” reservations noted at [17](b) above.
Section 40(b): the location of the interim aquaculture management area in relation to areas in which fishing is carried out
[44] The Decision Document begins its assessment of s 40(b) by acknowledging
Challenger’s submission that the IAMAs lie directly over the most productive beds
44 At [54].
in Tasman and Golden Bays. After recording other, competing submissions, MPI’s
analysis was that:
(a) because commercial scallop fishers record catch by sector it is not possible to know exactly where or how much scallop fishing occurs within the proposed IAMAs; but
(b)four sectors containing some of the historically most productive SCA7 fishing grounds are within the proposed IAMAs;
(c) the annual biomass surveys provide more detail about scallop distribution and abundance at a finer scale than catch (which is reported by sector). Those surveys have shown varying densities of scallops within all of the proposed IAMAs but show large areas of high scallop density outside the proposed IAMAs; and
(d)scallop density in Tasman and Golden Bays has changed significantly since biomass surveys began. Current density in all subzones is very low.
Section 40(c): the effect of the interim aquaculture management area on fishing of any fishery, including the proportion of any fishery likely to become affected
[45] This part of the Decision Document begins by noting Challenger’s submission that “granting the Interim AMAs represents a closure of the SCA7 fishery.”45 It goes on to acknowledge that the IAMAs are located in areas where scallop fishing has previously occurred but estimates that the median average annual catch taken from within the proposed IAMAs was only about 2.2 percent of the total SCA7 catch. MPI notes that:
(a) in order to assess likely future effects it is necessary to consider the best available historical information, namely biomass survey and catch data, although such a predictive exercise is incapable of
providing certainty as to future effects;
45 At [133].
(b)even on the most positive (pro-recovery) of the four scenarios set out in the table to which I have referred above, the average annual proportion of the SCA7 catch affected (across all subzones) would be between 1.7 and 2.7 per cent; and
(c) the biomass data show that scallop density is higher outside the proposed IAMAs than it is within them.
Section 40(d): the degree to which aquaculture activities within the interim aquaculture management area will lead to the exclusion of fishing
[46] The Decision Document notes that based on the guidance from the earlier Court decisions, s 40(d) requires the D-G to make a realistic assessment of the degree to which aquaculture activities will in fact take place within the proposed IAMAs. After considering the information received from the applicants about the proposed scope of their aquaculture activities, MPI concludes that “fishing could be
excluded from the entire area of each of the Interim AMAs”.46
Section 40(e): the extent to which fishing for a species in the interim aquaculture management area can be carried out in other areas
[47] MPI begins by recording Challenger’s submission that access to the IAMAs is critical to the fishery and that “there are no other areas available for scallop fishing or enhancement in SCA7”.47 The Decision Document acknowledges that “the catch affected by the Interim AMAs is unlikely to be caught elsewhere” but concludes:48
… MPI does not accept that losing access to the Interim AMAs is critical to any recovery in the fishery … . MPI accepts that in some years the Interim AMAs have contributed a higher proportion of total catch than in other years. However ... the biomass density maps … clearly show large areas of high scallop density outside of the Interim AMAs …
46 At [159].
47 At [161]. As I understood it, Challenger does not maintain this position.
48 At [166].
Section 40(f): the extent to which the interim aquaculture management area will increase the cost of fishing
[48] MPI’s conclusion in relation to s 40(f) is that while the proposed IAMAs may lead to a small increase in the cost of fishing (due to changes in distance for transporting spat and fishing operations) in the wider SCA7 context, it does not consider the increase will be significant.
Section 40(g): the cumulative effect on fishing of any previous aquaculture activities
[49] The Decision Document notes the guidance on the meaning of “cumulative effects” given in the earlier High Court and Court of Appeal judgments and that consideration of the historical displacement of commercial scallop fishers by the incremental approval of marine farms across the SCA7 was required. MPI’s estimate was that “scallop farming has been displaced from around 3000 ha of the
total SCA7 fishery”. Then, the Decision Document notes:49
Based on the outputs of [the scallop] model the average annual proportion of commercial SCA7 catch affected by previous aquaculture activities is estimated at about 2.3% of the total average annual catch. The scallop model indicates with 95% certainty that the cumulative effect of previous aquaculture activities is likely to fall within a range of 1.8% to 3.0%. MPI considers the overall effect of the Interim AMAs on total SCA7 catch … added to the cumulative effect of previous aquaculture are very likely to be less than 5%.
[50] The Decision Document concludes by noting that even if the scallop population in Golden and Tasman Bays significantly increases, the five per cent “cumulative effects” threshold would not be exceeded.50 MPI therefore concludes that the IAMAs will not have an undue adverse effect on commercial scallop fishing.
[51] Subject only to the s 40(a) “fisheries resources” reservation made in 2008, the
Decision Document recommends making determinations across the IAMAs.
49 At [189].
50 As noted earlier, a five per cent threshold for assessing UAE was confirmed as appropriate by the High Court and the Court of Appeal in relation to the 2008 decision.
The D-G’s evidence
[52] Because the record of the impugned decision merely shows that the D-G made determinations in accordance with the recommendations made in the Decision Document, the D-G also swore an affidavit for the purpose of these proceedings. In his affidavit Mr Gallacher makes it clear that:
(a) the Scallop Model was used to enable an estimate of the potential displacement of SCA7, by marine farming activities;
(b)he considered the Scallop Model to be a sound statistical tool based on a peer review process by the AEWG;
(c) while the Scallop Model informed his decision, it was only one of a number of sources of information relied upon and did not play a determinative role;
(d)the Scallop Model was useful to help predict the future of the scallop fishery given it is presently in a serious state of decline and is not currently commercially viable. It indicated that even if catch data spanning 17 years were used (thus taking into account past periods of high productivity for scallop biomass) there would still be no UAE in terms of the five per cent threshold; and
(e) the best available information suggested that if there was a recovery (which is, itself, uncertain), it was likely to be within the 10-20m contour, and not precluded by the IAMAs. Although he was aware that Challenger took a contrary view (namely that the best beds were under the IAMAs) his view was based on science that indicated that recovery would most likely occur elsewhere.
The present application for review
[53] Challenger seeks judicial review of the D-G’s 2015 decision. Essentially the claim has four components (some of which overlap), namely:51
(a) an allegation that the analysis in the Decision Document wrongly attempted to predict future losses based on past catch which, in turn was wrongly based on biomass data, rather than the evidence of fishers;
(b) an allegation that the D-G failed to take account of:
(i) the property rights that Challenger’s shareholders have in the
quota they hold;
(ii) the fact that the scallop fishery may well recover;
(iii)the consequent entitlement that quota holders have to the benefit of that future recovery and to “have the continued enjoyment of the bundle of rights that accompany their quota”;
(iv)the fact that the mussel farms will be right on top of the key scallop beds in Golden Bay, meaning that there will not be an opportunity for those scallop beds to recover;
(c) an allegation that the D-G failed to reconsider s 40(a) of the Transitional Act which (it is said) should have included consideration of the effect on the scallop fishery/rights of quota holders; and
(d)an allegation that the time taken to make the 2015 decision is in breach of the six month period stipulated in the Transitional Act.
51 This summary is based on Mr Radich QC’s submissions to the Court rather than on the statement of claim as drafted. In correspondence exchanged prior to the hearing Challenger’s solicitor advised that its principal concerns, and the focus of its claim was (a) the importance of the scallop beds under the IAMAs in Golden Bay and (b) the potential for these scallop beds to recover and the effect of the IAMAs on that potential.
[54] Each ground of review will be considered in turn.
Too much reliance on past catch, Scallop Model and five per cent UAE
threshold
[55] Mr Radich, for Challenger, submitted that the “primary point” under this head is that past catch, however measured, is not in and of itself an accurate indicator of the losses that will be sustained by the scallop fishers. He said that the Scallop Model does not take sufficient account of high natural variability, biomass is not a proxy for catch and catch needs to be assessed by reference to evidence from fishers.
[56] The starting point is that, as Mr Prebble submitted, past catch is potentially relevant to:
(a) section 40(b) - the location of the IAMA in relation to areas in which fishing is carried out;
(b)section 40(c) – the effect of the IAMA on fishing, including the proportion of any fishery likely to be affected; and
(c) section 40(g) – the cumulative effect on fishing of previous aquaculture activities.
[57] The Decision Document makes it clear that past catch was taken into account in all three of these respects. Nor did I understand Mr Radich to really take issue with this, although his submissions did not focus squarely on the s 40 factors.
[58] But because past catch, the Scallop Model and the five per cent UAE threshold are relevant only to some of the s 40 factors, Challenger’s submission can necessarily only go to matters of weight. While I acknowledge that, as Mr Radich submitted, matters of weight can sometimes give rise to a reviewable error, the bar for intervention is a high one, and not easily met. And the decisions of this Court and the Court of Appeal have already emphasised that an assessment of the factors at issue involve questions of judgment that Parliament has deliberately left to the D-G.
[59] Even if that were not the case I would not be inclined to entertain this ground of review. Challenger had previously been involved in the development of and, as Clifford J noted, supported the use of, the Scallop Model. Nor does Challenger now say that there was some other, better, method of assessing the fishery likely to be lost from the removal of space that was ignored by the D-G.52 Challenger’s submission that the “evidence of fishers” should have been taken into account, but was not, is belied by the fact that, as the body which represented those fishers, Challenger was consulted at length. As far as the “high natural variability” of scallops is concerned
the Decision Document shows that MPI (and therefore the D-G) was well aware of that fact.
[60] And lastly, the expert evidence is that, contrary to the views of Challenger’s witnesses (who did not purport to be “experts” in the formal sense), biomass is the best and only reliable method of predicting catch within season at the appropriate scale. As I have said, Challenger formerly agreed with that proposition.
[61] Lastly, the proposition that the five per cent UAE threshold was not appropriate is problematic, given the earlier endorsement of that threshold by both this Court and the Court of Appeal. Those judgments make clear that while the five per cent threshold has never been regarded as a bright line it is an appropriate analytical tool and its use is a matter of judgment for the D-G.
[62] This ground of review cannot succeed.
Failure to consider quota rights and likelihood of recovery
[63] It is not disputed that quota rights do not feature in the Decision Document. But that is most certainly because quota rights are not expressly referred to anywhere in s 40. And in making an aquaculture decision, the D-G is not permitted to consider
anything not referred to in that section.
52 Mr Mitchell accepted in his reply evidence that there was no better or more detailed information presently available.
[64] That said, however, quota rights are implicitly recognised in the relevant statutory provisions and, in particular, in the operation of the UAE test. To repeat Clifford J’s words (which were endorsed on appeal):53
… the undue adverse effects test threshold is part of a statutory regime which allows for existing property rights, namely those of commercial fishers, to be reduced in value potentially without compensation.
[65] And in the event that the D-G makes a reservation because he is not satisfied that the adverse effects of a proposed IAMA on commercial fishing will not be undue, then the D-G is required to negotiate an aquaculture agreement with affected quota holders and to pay them compensation. Thus the operation of the Act acknowledges quota rights and their value in a very real, but not absolute, way.
[66] To the extent that this aspect of Challenger’s case is that, in order to protect scallop fishers’ quota/property rights, the D-G was required to assume that the fishery would recover, I am unable to accept that submission. Although there is (as the Decision Document recognises) an element of uncertainty inherent in any predictive exercise, the D-G’s assessment of UAE must be made on the basis of the best available evidence; it cannot be predicated on speculation, let alone uninformed hope. In my view the Decision Document responsibly and properly did consider the possibility of recovery but found:
(a) that, based on the evidence such recovery was more likely outside the
IAMAs;54 and
(b)that even adopting the best case “recovery” scenario (the first scenario in the annexed table), the UAE arising from the IAMAs would have
been less than five per cent.55
53 SMW Consortium (Golden Bay) Ltd v Chief Executive of the Ministry of Fisheries, above n 26, at [55] citing Marlborough Aquaculture Ltd v Chief Executive of the Ministry of Fisheries, above n 15, at [94].
54 That evidence included biomass survey data, biomass density maps, and site specific surveys within IAMA1.
55 I also record that to the extent that Challenger’s position on recovery in Golden Bay is based on biomass evidence that suggests that Tasman Bay has already recovered, that is strongly and coherently disputed. I do not, however, need to go into the detail of the debate here.
[67] And similarly, I reject the related contention that the existence of quota rights requires the D-G to “pause” and to permit time for recovery (or time to see if recovery will occur). Such a requirement would undermine the whole statutory scheme and would be unworkable. No determination could ever be made because it might have an adverse effect on future rights, even where there is no sound, present- day, evidential basis for concluding that the IAMA would have an undue adverse effect on those rights.
[68] This ground of review must also fail.
The alleged failure to (re)consider s 40(a)
[69] It is not disputed that neither the Decision Document nor the D-G canvassed s 40(a) in relation to the 2015 decision. Nor is it disputed that the reason for this was because of Clifford J’s minute dated 10 October 2011. This is made clear in the passages I have quoted from the Decision Document at [32] above.
[70] But Challenger says that this was an error. More particularly, it is submitted that the effect of the proposed IAMAs on the sustainability of the scallop fishery should have been considered under s 40(a) as part of the overall analysis, on the basis of updated information. As I understand it, Challenger rejects the proposition that there can be any relevant bright line between paragraph (a) and paragraphs (b) to (g), notwithstanding the clear difference in their respective focuses (effect on sustainability as opposed to effect on fishing).
[71] While there is some superficial logic to this argument, I am unable to agree with it, for the reasons which follow.
[72] My own reading of Clifford J’s minute accords with that of the respondents and with the interpretation recorded in the Decision Document. Moreover, that view is confirmed by his earlier interim judgment in which he made it clear that Challenger’s attack on those parts of the 2008 decision relating to the UAE on
fisheries resources, was not ultimately pursued. First, the Judge noted:56
56 Marlborough Aquaculture Ltd v Chief Executive of the Ministry of Fisheries, above n 15, at [58].
The one aspect of these proceedings which is disposed of, however, is the Challenger appeals and judicial review applications to the extent that they seek reservations for fin fish (snapper) and fisheries resources. Mr Stallard confirmed that he was not pursuing those matters and that, on that basis, this Court would dismiss those appeals and judicial review applications.
[73] And shortly afterwards, in a footnote, the Judge said:57
Under the Transitional Act, the Chief Executive must also consider whether or not an interim AMA would have an undue adverse effect on the sustainability of fisheries resources. As noted, that aspect of the Aquaculture Decision is not challenged and no further reference is made to it.
[74] Thus it was only those parts of the 2008 decision that related to UAE on
(commercial scallop) fishing that was referred back for reconsideration.
Breach of s 38: delay
[75] The basis for this ground of review is s 38 of the Transitional Act, which provides that an aquaculture decision must be made within six months from the date of receiving a request from a regional council. In the present case, the original request was made on 20 January 2006 and the second decision was made on 5 June
2015.
[76] The respondents’ positions on this issue were that:
(a) section 38 could not directly apply at all in circumstances where the relevant aquaculture decision had been required to be remade as a result of court processes;
(b)if s 38 did somehow directly apply, the time limit could not be mandatory because:
(i)once a request for a decision is received from a regional council, the D-G is required to make either a determination or a reservation;
(ii) no consequences for failing to meet the deadline are specified;
57 Footnote 4 at [60].
(iii)there is no basis for implying that if time runs out, the D-G should simply make a reservation (which is Challenger’s position);
(c) if s 38 does not directly apply but can be applied by analogy, time should not start to run until the expiry of the date for appealing the Court of Appeal’s decision, in which case (and excluding those periods in which information was being gathered) the time limit was complied with;
(d)at least part of any delay was caused by Challenger seeking more time to respond to various matters; and
(e) to the extent that, notwithstanding all of the above, a breach of s 38 is made out, the Court should exercise its remedial discretion against the grant of relief.
[77] Notwithstanding that these submissions were necessarily made in the alternative it is tempting simply to say that any and all of them are strongly arguable. But the short and non-contradictory point is that it simply cannot be correct that the
2015 determinations made by the D-G could be rendered invalid by virtue of s 38. Notwithstanding that there was a legislative concern to ensure, insofar as possible, that aquaculture decisions were made in a timely way, I do not accept that time is of the essence. The very fact (for example) that the time spent gathering relevant information is excluded from the calculation suggests that the quality of the information base is regarded as more important than expedition.
[78] And here, of course, it is not a matter of the D-G dragging the chain. It seems to me to be quite plain that the s 38 time limit cannot apply directly or on its face in a context where the relevant decision has had to be remade following lengthy
first instance and appellate litigation.58
58 Neither the High Court nor the Court of Appeal addressed the possible operation of s 38.
[79] In the end, therefore, it seems to me that the most that can be said is that s 38 might apply by analogy. If that is so then I agree with the respondents that the most logical starting point is the date on which the time for applying for leave to appeal to the Supreme Court had passed. It was only then that there would really be any point in the D-G turning his mind again to the decision that had been remitted back. For example, had leave to appeal been sought and granted and the Supreme Court had then found some difficulty with the five per cent UAE threshold or the interpretation of s 40(g) then any reconsideration by the D-G would have been a very different exercise.
[80] Once that point is reached, then I also accept the respondent’s submission that, when the information gathering phases have been taken out of the equation, the decision was made within time.59 And even if it was not, and a technical breach of s 38 occurred, I would exercise my discretion against granting relief. As I have said, if s 38 is read in context it is difficult to conclude that conformity with s 38 is mandatory, in the sense that non-compliance must lead to invalidity.
Conclusion
[81] For the reasons I have given, none of the alleged errors in the D-G’s aquaculture decision are made out. The application for review is dismissed accordingly.
[82] If costs cannot be agreed, memoranda should be submitted. Counsel’s
attention is drawn to r 14.15.
“Rebecca Ellis J”
59 I do not propose to set out the relevant chronology here.
Solicitors: Stallard Law Ltd, Nelson, for Applicant
Counsel Instructed: P J Radich QC Crown Law, Wellington, for First Respondent
Fletcher Vautier Moore, Nelson, for Second Respondent
Wisheart Macnab & Partners, Blenheim, for Third Respondent
DLA Piper, Auckland, for Fourth Respondent
Counsel Instructed: J K MacRae
Chapman Tripp, Wellington, for Fifth Respondent
McFadden McMeeken Phillips, Nelson, for Sixth Respondent
Oceanlaw New Zealand, Nelson, for Seventh Respondent
APPENDIX 1
Table 1: Possible future scenarios for the SCA7 fishery
| Description | Scenario Assumptions | Catch History Period | Relative Certainty of Scenario | Comments | Estimated Median % of average annual catch from all Interim AMAs (95% interval) | |||
| Environmental Conditions | Enhancement Investment | Harvesting Activity | ||||||
| Scenario 1 | Tasman and Golden Bays scallop fishery returns to high scallop numbers. | A rapid return to favourable environmental conditions. | Ongoing high investment in scallop enhancement and other management regimes such as rotational fishing. | A return to previously high scallop numbers and harvesting levels in the near term. | 17 year catch history period, the longest time series of data available. Captures past highs in biomass, investment in enhancement, and rotational harvesting. | Low | Requires a rapid improvement of environmental conditions in the Bays coupled with a large investment in scallop enhancement. Based on best available information, this scenario is the least likely. | 2.2% (1.7-2.7%) |
| Scenario 2 | Tasman and Golden Bays scallop fishery begins to show a recovery of biomass in the medium term. | A slower return to favourable environmental conditions | Decline in both enhancement investment and a true rotational fishing regime across sectors. | A slower return to previous highs in harvesting levels in Golden and Tasman Bays. The Sounds remains important to the fishery. | 9 year catch history period; based on 3 rotational fishing cycles. Captures years when most of SCA7 was harvested from Golden Bay but recognises lower levels of biomass and enhancement | High/Medium | Requires a medium term return to favourable environmental conditions with increased enhancement investment. Best available information shows no indication of a medium term return to favourable environmental conditions. | 1.0% (0.7-1.4%) |
| Scenario 3 | Tasman and Golden Bays scallop fishery remains at currently low biomass levels in the medium term. | Environmental conditions could improve in the foreseeable future, albeit very slowly. | Enhancement investment continues at relatively low levels. | Harvest levels in Golden and Tasman Bays are slow to rebuild. The fishery is still largely reliant on the Marlborough Sounds. | 6 year catch history period based on 2 rotational cycles. Captures a more recent biomass, enhancement and harvesting situation in the Bays. | High | The long term return to favourable environmental conditions and enhancement make this the most likely scenario as it reflects the current harvest levels in the Bays but leaves open the possibility of a slow rebuild of the fishery. | 0.6% (0.3-1.1%) |
| Scenario 4 | Tasman and Golden Bays scallop fishery remains at very low biomass levels for the foreseeable future | Environmental conditions have reached a tipping point and remain unfavourable to scallops for the foreseeable future. | No enhancement investment. | No harvesting activity in Golden or Tasman Bays in the foreseeable future. | 3 year catch history period. This catch history period represents the most recent biomass, enhancement and harvesting situation in Golden and Tasman Bays. | Medium/Low | This scenario reflects the long term continuation of present conditions. It does not allow for any future rebuild of the scallop fishery. | (0.0% (0.1-0.1%) |
0
1
0