D a Kellian, R R Galvin, Island Bay v Minister of Fisheries
[2002] NZCA 263
•26 September 2002
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA150/02 |
| BETWEEN | D A KELLIAN, R R GALVIN, ISLAND BAY FISHING COMPANY LIMITED, M J WHITTAKER (TRADING AS WAIKANAE CRAB), EAST COAST CRABS LIMITED, K MIKAERE N R WAAKA |
| Appellants |
| AND | MINISTER OF FISHERIES |
| First Respondent |
| AND | CHIEF EXECUTIVE OF THE MINISTRY OF FISHERIES |
| Second Respondent |
| AND | GOVERNOR-GENERAL |
| Third Respondent |
| AND | P R MCKINNON, W M MCEWING, P H CROSBY, W H R PARROTT, I R STEED AND T L OLSEN |
| Fourth Respondents |
| Hearing: | 27 and 28 August 2002 |
| Coram: | Gault P Keith J Tipping J |
| Appearances: | F M R Cooke, C R Jurgeleit, and S J Grey for Appellants P A McCarthy and A Puata for 1st to 3rd Respondents A Ivory for 4th Respondents |
| Judgment: | 26 September 2002 |
| JUDGMENT OF THE COURT DELIVERED BY KEITH J |
Table of contents Para No.
The proceedings and the result.................................................................................. [1]
The process leading to the Minister’s decision.......................................................... [7]
The High Court Judgment........................................................................................ [21]
The issues................................................................................................................. [23]
The powers available under the Fisheries Act 1996................................................ [24]
Did the Minister consider he had no choice but to bring the stocks under QMS?.. [27]
Was the Minister’s decision reviewable for other reasons?..................................... [30]
(a) “ICE regimes are intended as a fisheries
management tool, not an allocative tool”......................................... [31]
(b) ICE should not be used to “subvert” the allocation
mechanisms contained in the 1996 Act............................................... [37]
(c) The failure to consider the impact on individual fishers....................... [43]
(d) The consideration of economic efficiency............................................. [46]
(e) The consideration of unfairness to potential new entrants................... [51]
(f) The need for agreement in the introduction of ICE and the
fear of judicial review...................................................................... [54](g) The perverse incentive to race for catch history................................. [57]
(h) The appellants must be taken to have known that quota
would be determined on the basis of the specified years................. [60]
Result....................................................................................................................... [64]
The proceedings and the result
The plaintiffs fish for pilchards (and anchovies as a by-catch), butterfish and paddle crabs. They hold commercial permits issued under the fisheries legislation. In October 2001, the Minister of Fisheries decided to introduce those fish into the Quota Management System (QMS) as from 1 October this year.
The plaintiffs challenged those decisions by applications for judicial review. Given the timing, the proceedings have been dealt with expeditiously. Following a hearing from 15 to 17 July 2002, Durie J on 22 July refused the applications. The plaintiffs’ appeal to this Court was heard a little over a month later.
The consequences for the plaintiffs of the Minister’s decision will, they say, be very serious since the quota (ITQ) to be allocated to them under the QMS will be determined on the basis of their catch history for the 1990-92 fishing years when their catches were either non existent or much lower than they are now. It was in 1996 that those years were fixed by Parliament as the base years for determining quota under the QMS. The plaintiffs claim that their fishing businesses would not be viable with the greatly reduced, if not zero, catch because they would not be able to afford to buy the quota which the Crown would have available for sale. The plaintiffs would prefer to have the stock first made subject to a regime involving individual catch entitlements (ICE) and only later come under the QMS. That process could mean a much larger ITQ for them when the stocks were bought under the QMS. That would be particularly the case were the ICE calculated on the basis of more recent catches. To give just one example, the catch of two of the pilchard fishers increased from 17 and 50 tonnes in the 1990/91 and 1991/92 qualifying years to about 1,000 tonnes in the 2000/01 year. But under the QMS based on the qualifying years they would receive a quota of only 73.82 tonnes. The very large surplus of the total allowable commercial catch (TACC) (which was predicted to be 2,000 tonnes), after deduction of the Maori share, would go to the Crown which would then be able to sell it. Durie J provides more information about the positions of the appellants and the potential impact on them.
The plaintiffs in their applications for judicial review contended that the defendants misinterpreted the fisheries legislation, considered irrelevant matters, failed to consider or properly address mandatory relevant considerations and exercised their powers for improper purposes.
On one view of it, the major questions are whether the Minister’s decisions were in fact based on the view that it was not open to him to consider as a matter of law the introduction of ICE regimes for those fisheries and whether in law such a view would be correct. The appellants also challenge the Minister’s decisions on the basis that he had been erroneously advised that to use the ICE method would “subvert” the allocation mechanisms in the Act and that other errors of law invalidated the decisions.
Our answers to those questions are that the Minister did not in fact make his decisions on that confined basis, that the law does not confine him in that way and that in other material respects the advice was lawful and did not give rise to reviewable errors. Accordingly, although for different reasons, we agree with the decision of Durie J to dismiss the applications for judicial review.
The process leading to the Minister’s decisions
On 6 August 2001 the Ministry of Fisheries distributed a consultation document proposing the introduction of 13 stocks or species into the QMS. Following the consultations, the Ministry on 3 October, in a final advice paper to the Minister, recommended the introduction of all but one of them into the QMS. The paper included the initial consultation document, summarised the submissions, set out the Ministry’s views on the issues raised in the submissions and made recommendations to the Minister. It began in this way:
Purpose
3 MFish has as a key business objective the introduction of new species or stocks into the QMS. In order for species or stocks to be introduced into the QMS you are required to issue a “declaration notice” … . In order that specific legislative obligations are met, a process was undertaken to:
a)identify appropriate species or stocks for introduction and determine the initial group of species or stocks to be introduced into the QMS;
b)develop and apply a cost and benefit methodology relating to the introduction of new species or stocks into the QMS; and
c)consult with stakeholders about the initial list of species or stocks, information derived from the assessment of costs and benefits of introduction, and proposed quota management areas for the species or stocks on introduction.
The Ministry then discussed the legislation and canvassed, over 30 pages, important generic issues raised in the submissions. It is particularly that generic discussion that is challenged by the appellants. The paper then considered and made QMS recommendations in respect of each of the species. The annexes concern the process to determine species for introduction, costs and benefits methodology and principles used to propose QMAs. In this judgment we consider passages of this paper in some detail, but its significance is lessened by the facts, first, that the Minister has provided an affidavit setting out the course he followed on receiving the paper, second, that in response to his reservations the Ministry prepared a further paper (called the mitigation paper), third, that it was following the receipt of that paper that he made the decisions which are attacked and, fourth, that we have the Minister’s statement in his affidavit of his reasons for those decisions. This Court has long stressed the value of the actual decision makers explaining their reasons when their decisions are challenged (eg New Zealand Fishing Industry Association Inc v Minister of Agriculture and Fisheries [1988] 1 NZLR 544, 554, 561-562 and 568; see also s23 of the Official Information Act 1982). When they do that we should plainly give the explanations real weight. That is not to say of course that we should not also look closely at the two advice papers before the Minister in this case. In reviewing his actions, we are not restricted to the Minister’s view of what he did.
The Minister in his affidavit testified that, from earlier discussions with his officials, he was aware before October 2001 that they were intending to propose various species for introduction into the QMS. On reading the 3 October paper he had some reservations and therefore did not immediately approve the paper. He noted that the paper included a discussion of differing views whether it was preferable for any declaration that these species should enter the QMS to be deferred so that ICE could be allocated in respect of the relevant fisheries.
Without repeating those discussions in detail, he highlighted several aspects of them. Under the heading “Assessment of costs and benefits” he said this:
11 MFish did not accept the criticisms of the weighting of factors in its analysis, but accepted that the analysis was conducted at a species level if information was not available at the stock level. It also acknowledged that an economic impact on fishers would occur if the “total bundle of rights” that they received through introduction of a fishery into the QMS was worth less to them than the catch taken in the most recent fishing year.
Under the immediately following critical heading “ICE/Quota allocation” he stated:
13 MFish advised that the introduction of the relevant species to the QMS should not be delayed so that ICE regimes could be imposed. I understand this to be MFish’s view from a fisheries management perspective, and not legal advice that ICE could not be imposed at all, or legal advice that ICE could not be imposed in the absence of agreement between all affected fishes.
14 MFish’s view was that allocation of quota based on the catch history years was preferable to allocation based on ICE for several reasons, which were broadly:
14.1ICE were better used to remove incentives to “race for fish” in fisheries that were subject to a competitive catch limit than as a tool for allocating quota. If ICE were used to provide a different allocation from the catch history years, that would be an incentive to “race for catch history”.
14.2MFish also noted that the creation and management of ICE regimes would divert its resources away from introduction of species into the QMS and management within that regime; and that quota allocation based on catch history provided greater economic efficiency and fairness, because it provided access to the fisheries for new entrants.
The Minister went on to refer to the Ministry’s concern about timing, including the impact on access by Maori to the fisheries, and the submissions on proposed ICE regimes. He continued:
18 Apart from this summary of submissions, I did not have (and so did not take into account) information about the specific circumstances of individual fishers – such things as their catch histories over the years; their success or failure in finding fishing grounds; changes in gear that they used; losses of and damage to equipment and breakdowns of vessels that they suffered; problems with the weather and their target fish stocks; the success or failure of their marketing and investment decisions and whether or not their business partners were honest and able; encouragement and/or cooperation that they had or had not received from MFish staff; any problems that they had had in obtaining permits promptly or at all; choices that they had made from time to time between fishing for these stocks and fishing for other stocks; or temporarily taking up other business ventures altogether. Nor do I think it would be realistically possible for the decision whether a stock should enter the QMS to be based on an examination of the individual circumstances of each fisher who might be affected. I was, however, aware of the changing level of catches of some stocks since 1990-92 and that the level of participation of many fishers would have changed since then; and was so aware that introduction of those stocks into the QMS would impact on some of the existing fishers so that their ability to fish might be constrained in a way that it was not previously.
19 MFish acknowledged that the introduction to the Quota Management System with Quota Allocation based on the catch history years might adversely impact on some individual fishers, because of the changes in their levels of catch since then. Nevertheless, MFish did not consider that this factor outweighed its concerns about the use of ICE as an allocation tool. In this discussion, MFish referred specifically to the Paddle Crab and Pilchard industries. It provided figures for the Pilchard 1 fishery: a total catch of 50-60 tonnes in 1990-92 increasing to 1248 tonnes in 1999/00. It acknowledged that there would be clear benefits to these Pilchard fishers from implementation of an ICE regime, but set out counterveiling factors relating to the circumstances in which that development occurred.
The Minister then mentioned the information provided by the paper on individual species and stocks and a meeting with representatives of the New Zealand Seafood Industry Council, the Treaty of Waitangi Fisheries Commission/Te Ohu Kai Moana (TOKM) and the Ministry on 11 October (the day on which relevant judgments of this Court were given; Official Assignee v Chief Executive of the Ministry of Fisheries [2002] 2 NZLR 722 (the Scampi case) and WesthavenShellfish Ltd v Chief Executive of Ministry of Fisheries[2002] 2 NZLR 158).
22 … We discussed the introduction of new species into the QMS, in particular which species were going into the QMS and which Quota Management Areas should be used for them, the setting of TACCs [total allowable commercial catches] (which was still some way off into the future), “rent seeking” behaviour, or the “race for fish”, the possibility of delaying introduction into the QMS in order to establish ICE regimes, and the reluctance of MFish to use ICE for anything other than ensuring sustainability of developed fisheries. We also discussed some issues about communication between MFish and the fishing industry.
23 I remained concerned at the likely impact on some small scale fishers of introduction of these species into the QMS. I asked for further advice about any options to mitigate the impact of introduction.
The mitigation paper was accordingly prepared. It began by recalling that the Minister had requested an evaluation of options to mitigate the impact on the small-scale fishers from the introduction of species or stocks into the QMS. The impact would be related to an estimate of maximum possible provisional catch history (PCH) based on catch taken during the catch history years (1990-92) and preliminary TACCs. The Ministry said that it did not support recognition of development or changes in catch distribution between permit holders subsequent to the catch history years for reasons it outlined in this paper. However, should the Minister wish to consider ways to mitigate any potential impact that catch history year based allocations would have on existing fishers, the Ministry advised that he had two options:
a) Implementation of ICE regimes; or,
b)Preferential tendering of quota following the introduction of a species or stock into the QMS.
Under the heading “ICE regimes”, in a passage which was at the centre of the argument before us and which in its lettered subparagraphs repeated the critical part of the earlier paper, the Ministry said this:
21 Implementation of an ICE regime may enable fishers to shift away from the catch history years specified in the 1996 Act as the basis for quota allocation. Details of the application of ICE regimes in the non-QMS environment are detailed … [in] the MFish Final Advice paper to you on introduction of new species into the QMS. As noted in that paper, MFish does not support the use of ICE as a tool to subvert the allocation mechanisms contained in the 1996 Act for a number of reasons. In summary these reasons are:
a)ICE regimes are intended as a fisheries management tool, not an allocative tool. There are no fisheries management reasons to implement ICE immediately prior to the introduction of species or stocks into the QMS since the benefits of ICE are also presented under QMS management;
b)ICE regimes require the setting of a Commercial Catch Limit (CCL). Setting CCLs outside the QMS as a precursor to ICE regimes will shift MFish resources into non-QMS management rather than development of regimes for the species or stock following introduction into the QMS;
c)Government has previously stated, and the 1996 Act ensures in the way that it allocates quota as a proportion of the TACC, that fishers can have no legitimate expectation that they will receive full translation of their existing annual permit right into ITQ issued in perpetuity;
d)Use of ICE, other than as an interim mechanism based on the 1990-92 catch history years, would subvert the allocation mechanism for quota set out in the 1996 Act, which prescribes the use of catch history years for calculation of entitlements; and,
e)Use of ICE, based on allocations other than those for the catch history years, as an allocation tool will provide perverse incentives for fishers to maximise their share of the final allocation. It is expected that such incentives will stimulate “race for catch” behaviour with associated over-capitalisation and sustainability concerns in the affected fisheries. (emphasis added)
The appellants challenge this reasoning (particularly the emphasised words), and the related passage in the generic part of the earlier paper, particularly the following:
91 Regulations provide for the Chief Executive to allocate ICE to persons for a species or a stock. MFish has allocated ICE in a number of fisheries (scampi, jack mackerel, southern blue whiting, cardinal fish, Coromandel scallops, Foveaux Strait oysters and cockles in FMAs 3 and 7).
92 Under an ICE regime each permit holder is allocated a proportion of the annual catch limit (the Commercial Catch Limit (CCL)). ICE regimes have generally been based on an agreed allocation schedule and implemented in fisheries that are recognised as fully developed. There is no guidance in the 1996 Act or regulations concerning when an ICE regime should be implemented nor the allocation framework for entitlements. Accordingly, in the absence of agreement to allocations by way of ICE, there is no protection for the Chief Executive from judicial review.
93 The purpose of ICE regimes has generally been to facilitate the rational economic fishing of a fully developed stock and to avoid over-capitalisation and the resulting race for catch under competitive catch limits. ICE regimes have been implemented in a number of fisheries where catch limits were required to ensure sustainability. Without allocation of ICE the imposition of a catch limit creates a competitive environment where there are incentives to race for fish, thereby lowering harvesting efficiency and creating the risk of increased environmental impacts through increased and avoidable fishing effort. In this situation the allocation of ICE provides a more stable framework for fishers as their individual share of the fishery is guaranteed.
94 In some cases, the implementation of an ICE regime has also provided a vehicle to address the Crown’s obligation to provide access to Maori in advance of the introduction of a species or stock into the QMS. Again, this has occurred only when agreement has been reached among the existing participants in the fishery (southern blue whiting, Foveaux Strait oysters and jack mackerel).
95 ICE regimes can also have an impact on the quota allocation a fisher will receive following introduction of a species or stock into the QMS. The 1996 Act contains two mechanisms for calculating the quota fishers receive. The first mechanism uses PCH calculated from the best twelve months of catch taken by a fisher during the period 1 October 1990 to 30 September 1992. Where PCH is less than the TACC and 20% of the TACC has been allocated to Te Ohu Kai Moana, the Crown receives the unallocated quota. It is MFish policy that any quota received as a result of this process is tendered at full market value.
96 The second mechanism calculates quota based on the ICE held by fishers at the date you declare a species or stock will be introduced into the QMS. ICE regimes are, by their nature, fully allocated fisheries (ie the amount of ICE allocated equates to the CCL). Under an ICE regime the Crown would not receive any quota unless the TACC is greater than the CCL plus 20% to be allocated to TOKM (assuming TOKM do not have an allocation within the ICE regime).
97 An ICE regime can provide fishers with the opportunity to shift the basis of allocation away from the 1990-92 catch history years specified in the 1996 Act. Potentially, an ICE regime enables a portion of any increase in catch resulting from development of the fishery after 1990-92 to be taken into account in any allocation of quota. However, the extent of the benefits resulting from an ICE regime will be mitigated by the level of the CCL set prior to introduction into the QMS and the level of the TACC following introduction.
The Ministry then developed its position of not supporting the use of ICE as an interim step prior to introduction into the QMS under a series of headings: ICE regimes are not intended for use as an allocative tool, use of ICE would create perverse allocation incentives, use of ICE would subvert the intent of the 1996 allocation mechanisms, use of ICE may result in delay to introduction of species into the QMS and socio-economic impacts not sufficient justification.
Under that final heading the Ministry referred to the greatest difference between current catch and catch taken during the catch history years for species proposed for introduction in 2002 as being in the pilchard fishery (see para 19 of the Minister’s affidavit in para [11] above). It commented:
119 Regardless of the impact, MFish notes that the investment decisions made by industry were made in full knowledge of the provisions of the 1996 Act. The Crown has been clear that any development of non-QMS fisheries does not guarantee future access rights or development opportunity in the fishery. Government has made it clear in consideration of the 1996 Act, and latterly when considering compensation for introduction of species listed on the Fourth Schedule, that fishers cannot expect to receive a direct translation of an annual permit right into fully transferable quota issued in perpetuity. Introduction of species into the QMS in 1998 further clarified the 1996 Act allocation mechanisms. In addition, investment took place in an environment where existing fishers were protected from new, and possibly more efficient, entrants in the fishery. MFish also notes that any impact is mitigated by the allocation of a valuable transferable property right following introduction of the species or stocks into the QMS.
It then concluded in respect of ICE:
120 While you do not have legislative responsibility for authorising management of a fishery under ICE, nor allocation of entitlements, consideration of ICE regimes for species or stocks proposed for introduction on 1 October 2002 may result in delay to their introduction to the QMS. This would create downstream implications for the proposed introduction of species in 2003-04. MFish is seeking your views on whether ICE regimes should be considered for these species.
121 The key benefit of ICE regimes is that they potentially allow existing fishers to receive more quota than would be possible if allocation was based on catch history years outlined in the 1996 Act. This enables the quota allocation to reflect current effort in the fishery. ICE regimes are also less expensive to introduce into the QMS because individual entitlements are already calculated, and as such the timeframe and resources required for appeals and development of catch history are reduced.
Next it set out its five reasons for not using ICE regimes for species or stocks prior to introduction into the QMS. As noted, it repeated them in the mitigation paper (para [14] above).
The mitigation paper next discussed the option of preferential tendering and concluded in respect of the two options:
26 … MFish does not support the implementation of the ICE regimes because of the perverse incentives they create. There is also a risk that such incentives will be present if you adopt a preferential tender process. Both these mechanisms give rise to the risk of judicial review in absence of any legislative support framework to determine who should receive ICE or “right in preference”.
We return to the Minister’s account of his actions:
25 The paper explained so far as possible the likely impact on fishers and the likely amount of quota that would be allocated to the Crown by default if the current species entered the QMS without any additional stocks being made subject to ICE regimes. This discussion included a stock by stock analysis of estimated provisional catch history, current catch levels, an indicative total allowable commercial catch, 20% allocation to Maori, allocation to the Crown and an estimated value of the allocation to the Crown. I should emphasise that I did not understand the inclusion of the estimated value of the Crown allocation (about $7.2m) to be a suggestion that the allocation of quota should be treated as a revenue gathering exercise.
26 MFish reiterated why it considered there should be no departure from quota allocation from the catch history years. It noted that the 1996 Fisheries Act had moved away from allocation of quota based on “commitment and dependence” of fishers. The objections that it had to the use of ICE regimes to alter quota allocations applied equally to preferential tendering – for example, it advised me that I would need to determine criteria for assessing who should receive preferred tender status, and that this approach could then start a race for catch to obtain “rights in preference”.
27 In light of the incentive to race for quota that would be caused by departing from quota allocation based on the catch history years, on 17 October 2001 I agreed to introduction to the QMS on the basis outlined in the final advice paper and signed the necessary declaration.
The High Court Judgment
The Judge stated that the first essential and possibly determinative question was whether the Minister was wrongly informed when he was advised that it was not open to him to consider individual catch entitlements for those fisheries. He summarised relevant provisions of the legislation, set out the circumstances of the plaintiffs and of the fishers who were the fourth defendants, considered issues in the Ministry’s paper identified by the plaintiffs as constituting errors of law and discussed the purpose of individual catch entitlements. He concluded in this way:
[58] I think the inevitable conclusion in this case is that it was not open to the Ministry to allocate individual catch entitlements in respect of the subject fisheries. For one thing, there was no intention to maintain them as non-quota fisheries. The only question that could arise is whether they ought to have been set up under individual catch entitlements soon after the 1996 Act was passed. However, I was not referred to any evidence that that should have done. Instead, the evidence was rather of an intention to shift all but certain named species to quota management. These fisheries were not amongst those so named. As to the named species, there was in each case a special reason for keeping them under a non-quota regime. No equivalent reason was advanced for the instant fisheries.
[59] The position would appear to be that permit holders in these fisheries must be taken to have known that their quota entitlements would fall to be determined according to catch-histories in the specified years. Any investment on their part in the interim was at their own risk. I appreciate that this may work a hardship for the plaintiffs but I think the law is clear and that it was never held out to the plaintiffs that their quota entitlements might fall to be determined on other than their catch histories in the specified years.
He accordingly dismissed the applications for review.
The issues
The issues arising from the pleadings, the evidence (especially the material put to the Minister and his reasons) and the argument before us can be conveniently stated as follows and considered in this order:
(a)did the Minister or more broadly the Government have any power available to deal with the fisheries in issue in this case other than by way of the QMS?
(b)if they did, was the Minister advised that there was that choice and did he act on that basis?
(c)if the answer to both (a) and (b) was yes, were there reviewable errors of law in any of the factors or purposes to which the Minister referred or in his failure to consider relevant factors?
The powers available under the Fisheries Act 1996
In 1986, the QMS was introduced as a primary means of regulating the management and utilisation of New Zealand fisheries. But other methods were available before 1986, have continued since and have been added to. Since 1996 the Act has provided for “individual catch entitlements” (eg ss2 and 297(1)(b)). If a fishery which is subject to ICE is brought within the QMS, the ITQ is calculated on the basis of the ICE held by those engaged in the fishery, an entitlement which may well have been fixed by reference to much more recent catch history than 1990-92 (Fisheries Act s31). The definition of ICE in s2(1) of the Act contemplates that ICE as a catch limit may be set by a permit or by a licence or by regulations made, or an allocation notice given, under the Act or a combination of them, so long as the method apportions an annual amount of the stock that can be taken exclusively by that fisher. On the face of these provisions alone, the ICE methods appear plainly to be available as a matter of law to the Government.
We say “to the Government” since, as held in the Scampi case (para [12] above), in respect of one of the methods, the Act requires the Minister to make the initial step of setting a catch limit for any stock not in the QMS (s11) followed by the Governor-General in Council making regulations providing for the management and control of that stock and authorising the Director-General of Fisheries to allocate individual catch entitlements for that stock by Gazette notice (s297(1)(b)). The respondents in their written arguments made something of the absence of regulations and the lack of any power in the Court to require the making of them. (The absence of regulations was the result of the Scampi case, para [12] above, holding the existing ICE regulations to be invalid.) That argument which was not pursued orally appears to us to be unduly formal. The legal reality is that the Government does have the ICE regulation power available to it.
That indeed does not appear in the end to be in dispute in this case, at least as a general proposition. The Judge’s ruling about the non-availability of ICE appears to be limited to the particular fisheries in issue in this case (para 58 quoted in para [21] above). He appears to have had in mind that to introduce ICE for the purpose of affecting quota allocation on introduction into the QMS immediately thereafter would have been outside the statutory purpose for ICE. We reach our conclusions without the need to examine that point. And Mr McCarthy’s argument for the first to third respondents (which Mr Ivory, for the fourth respondent, supported) was essentially to the effect that QMS is the preferred method of fisheries management, but not the only one. What is in dispute is, first, whether the Minister acted on the basis that he had no choice but to bring the stocks under the QMS and, second, if not, whether the decision could nevertheless be reviewed on the grounds that the Minister had had regard to irrelevant factors or had failed to have regard to mandatory relevant factors.
Did the Minister consider he had no choice but to bring the stocks under QMS?
We have already seen that the Judge proceeded on the basis that the Minister was advised that it was not open to him to consider ICE for these fisheries (para [21] above) and that he held (apparently as a matter of law) that it was not open for the stocks in issue here to be the subject of ICE. With respect, we consider that it is plain that the Minister was advised that he did have a choice and that he proceeded on that basis. We recall the main points of the papers put to the Minister and the Minister’s affidavit.
It is true that the papers state a strong preference for the QMS over ICE – the word “subvert” recurs for instance. But that emphasis goes to the question whether the way in which the choice was approached was flawed – the matter next considered – and not to the very existence of the choice.
The Minister’s evidence is also explicit that he was exercising a genuine choice. So he said of the final advice paper that he understood the Ministry’s preference for introduction into the QMS not being delayed so that ICE regimes could be imposed arose from a fisheries management perspective and not from legal advice that ICE could not be imposed at all (para 13 quoted in para [10] above).
Was the Minister’s decision reviewable for other reasons?
Both in the High Court and in this the plaintiffs challenged passages in the advice and mitigation papers submitted to the Minister as wrong in law. In this Court some of the challenges were also directed at the High Court’s reasoning.
(a)“ICE regimes are intended as a fisheries management tool, not an allocative tool”
This proposition appears in both papers (para [14] above). Durie J appeared to adopt much the same position.
In these statements there may be some confusion between purpose (or intention) on the one side and effect on the other. There can be no doubt that the powers falling within the various ICE regimes are allocative in themselves and in their effects. The basic definition of ICE in s2(1) of the Act requires that the relevant permit, licence, regulation or notice set a catch limit that apportions an annual amount of any stock that can be taken by that fisher. That is, a total allowable catch has been set by one of the methods contemplated by the definition and then apportioned – or allocated – between the various fishers entitled to fish for that stock. The allocative character of the entitlement appears as well from the express exclusion, first, of a daily bag limit – which does not involve a total for all those with that entitlement – and, second, of a total catch limit for an entire stock – where there is no apportionment or allocation.
The allocative effect of ICE also appears plainly from ss31(a) and 40 of the Act. Under them, the provisional catch history is calculated in the case of stock controlled exclusively, at the date of the publication of the QMS notice, by means of ICE on the basis of the commercial fisher’s ICE for that stock for the fishing year in which the notice was published.
The statutory context also supports the allocative role of ICE and other management and control methods. As the appellants rightly say, the Act both in its own terms and by comparison with its 1983 predecessor emphasises utilisation of fisheries. The purpose of the Act, in terms of s8(1), is to provide for the utilisation of fisheries resources while ensuring sustainability; and most of the Act is directed at achieving that purpose. This Court made the point in the Westhaven case, para [12] above (paras [16] and [46]). Those provisions reflect the obligations in articles 61 and 62 of the UN Convention on the Law of the Sea to promote optimum use of the fishing resources of the exclusive economic zone without prejudice to their conservation (see also s5 of the Act).
There is accordingly force in the appellants’ criticism of the Ministry’s papers and the High Court judgment. But where does that take us? We return to the distinction between purpose (or intention) and effect. The Ministry plainly preferred that stocks where possible were allocated through the QMS rather than through ICE. The resulting entitlements were transferable; they were akin to property rights and could be leased and mortgaged; the QMS declaration could be reversed only by Parliament; new fishers, by buying quota either from owners or from the Crown in the event of it holding unallocated quota, could enter the fishery; and the transfer to TOKM required by the Deed of Settlement between the Crown and Maori could be more readily achieved. Management and control aimed at sustainability is of course also part of the QMS, but it does have those advantages at least over ICE in allocative terms. The Minister emphasises that matter in his affidavit (para 14.2 quoted in para [10] above). And it may well be that to use ICE for a short period simply for the purpose of avoiding the catch history years which Parliament fixed would thwart a purpose of the Act. We repeat that we need not decide that matter.
We accordingly see the Ministry’s proposition not as one of law but as one of the reasons available to it as a matter of fisheries administration for its preference for using QMS for allocation. It follows that we do not consider that reviewable error arises under this head. The next matter is closely connected.
(b)ICE should not be used to “subvert” the allocation mechanisms contained in the 1996 Act.
The word “subvert” recurs through the Ministry papers. The Judge does not adopt the same language, but he might be seen as adopting a somewhat similar position in his conclusion (para 58 quoted in para [21] above) that there was an intention to shift all but certain named species to QMS and the particular fisheries in issue in this case were not so named. For those that were named, there was a special reason, but no equivalent reason was advanced for the present fisheries. That reasoning may indicate that the Judge considered that as a matter of law the QMS was to be preferred over ICE as the primary means of allocation.
On its face the 1996 Act gives the Government (through the Governor-General in Council, the Minister or the Director-General and his delegates) a range of ways of achieving the purpose set out in s8. Does the legislation (going back to 1986 when the QMS was first introduced) demonstrate a preference for QMS over other means? The QMS certainly introduced a major change to the rights and privileges of fishers. Further, it has been progressively applied to more than 45 species, which provide over 85% of the commercial catch. The legislation has also been amended to provide for greater certainty in the introduction of species and stock into the QMS, particularly by the removal of the commitment and dependency grounds for the grant of quota (s28E(3) of the 1983 Act as enacted in 1986). While the Act itself might not make its preference manifest, we consider that the course of the development of the legislation and its administration over the past 15 or more years supports and is reflected in the following passages from the report of the Primary Production Committee of the House of Representatives on the Bill that became the 1996 Act. In that report the Committee emphasised that the QMS is the preferred management system for all commercial stocks:
Managing fisheries through the Quota Management System
It is Government policy to bring all commercially harvested species into the QMS. [The Minister made that plain when the Bill was introduced in 1994.] Generally, the basis for allocation will be catch history, subject to the transference of 20 percent of the quota of each species as it is introduced into the QMS, to the Treaty of Waitangi Fisheries Commission (the Commission). This allows the Government to deliver on its commitment to Maori under the Deed of Settlement. The Bill seeks to establish a clear procedure, based on past reported catch, for determining and allocating catch history.
…
The QMS is the preferred management regime for all stocks and, through the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992, is the means by which the Crown will settle Maori commercial fisheries claims.
…
The permit moratorium
The introduction of the QMS came as a result of the previous permit, licence and input control system’s inability to control fishing within a sustainable framework. It is intended to introduce stocks into the QMS as soon as practicable to enable sustainable utilisation. The continuation of the permit moratorium prevents uncontrolled development until this can happen.
The Minister in his speech on the consideration of the Committee’s report to the House also emphasised the central role of the QMS:
To summarise, the Bill provides a thorough rewrite of the current Fisheries Act, building and refining the core components of the quota management system, and adding features that I suspect will carry fisheries management in New Zealand well into the 21st century. The Bill will enable us to move all fisheries into one integrated system and allow the Crown to meet its obligation to Maori. Importantly, the Bill brings into fisheries law higher standards for the sustainable utilisation of the fisheries and their interaction with the marine ecosystem.
The Committee in addition commented on the choice of 1990-92 as the catch history years for the QMS. (Those years had appeared in the Bill when it was introduced in 1994.)
Catch history years
The catch history qualifying years were of particular concern to fishers. We heard evidence from tuna fishers who argued that the catch history years in the Bill were inappropriate for the tuna fishery. The FIB [Fishing Industry Board] submitted that the qualifying years should not apply to tuna as it is still an open access fishery. Other submissioners requested different catch history years for particular fisheries, such as the Nelson Dredge Oyster Fishery. The FIB noted that, whatever the years were chosen, some inequities would result. In the case of stocks managed by ICE, the FIB supported the qualifying year being the year in which the notice declaring the stock subject to the QMS is Gazetted.
We agree that the catch history years in the Bill are not appropriate for the tuna fishery. We recommend that the Minister have the power to set appropriate years for the tuna fishery by notice in the Gazette. We do not recommend any change to the main qualifying years. Some inequities may result from allocating catch history from catch in the main 1990-92 years. However, it is imperative that the qualifying years be in the past to prevent the disastrous effects of allowing people to fish to obtain catch history.
The parties referred us to other background material to the 1994 Bill including official and Cabinet papers. As a result, there was some discussion of the limits on, and possible uses of, extrinsic material in the process of interpreting statutes. In the circumstances, we do not enter into those wider issues and confine ourselves to the material set out above.
We also need not decide whether the Act is to be interpreted as requiring as a matter of law a preference for QMS over other methods of management and control. Such a reading might lead to unnecessary difficulties in administration. What we can certainly say however is that it is open to the Minister and the Ministry to have a policy strongly supporting the introduction of stock and species into the QMS. While the word “subvert” might at first surprise with its frankness and directness, we can see no objection to it in law as a clear indication of such a policy.
(c) The failure to consider the impact on individual fishers
The Minister makes it quite clear in his affidavit (para 18 quoted in para [11] above) that apart from the summary of submissions he did not have and so did not take into account information about the specific circumstances of individual fishers. Durie J on this matter refers to the repeal of s28E of the 1983 Act – the commitment and dependence provision – and quotes Crown counsel’s submissions to the effect that its omission from the 1996 Act said more than words could say. He does not expressly rule on the matter.
Counsel for the appellants submits, by reference to the information principle set out in s10 of the Act as applied by Ronald Young J in Northern Inshore Fisheries Co Ltd v Minister of Fisheries (Wellington Registry CP235/01, 4 March 2002), that this failure to consider the impact on individual fishers is reviewable error. Section 10 requires all those exercising powers under the Act to take into account the principle that decisions should be based on the best available information. The information must of course be relevant to the power in question. The power here is to introduce the stocks or species into the QMS under s18. Section 19(7) requires the Minister to consult persons or organisations considered by the Minister to be representative of those classes of persons having an interest in the matters set out in s19(1):
19 Matters to be included in notice under section 18
(1) Any notice given under section 18 of this Act shall—
(a)Define the quota management area to which the notice relates by reference to an area or areas defined in the Schedule 1 to this Act or in any other manner:
(b)State the fishing year in respect of the stock, which year shall be a 12-month period commencing on either the 1st day of April or the 1st day of October:
(c)State whether, for the stock concerned, the total allowable commercial catch is, and annual catch entitlements are, to be expressed in meatweight or greenweight:
(d)Make provision for such other matters as may be contemplated by this Act.
In addition, under s19(8) the Minister is required to have regard to the costs and benefits of introducing the stock into the QMS, a matter which had some prominence in the first paper. The matters referred to in s19(1) and (8) are limited and do not include the circumstances of individual fishers. The major change from the 1983 regime to the 1996 one effected by the repeal of s28E and the removal of the associated procedural and appellate protections also emphasises that the particular circumstances of individuals are not to be considered. It will be recalled that the select committee fully understood that inequities could result from the unqualified application of the catch history years. That toughening of the system and the limiting of it to more general matters was deliberate. The situation considered by Young J was a much more specific and clearly distinguishable one, relating to a particular fishing method in a particular area. Accordingly, we find no error of law under this head.
(d) The consideration of economic efficiency
The appellants point to passages in both Ministry papers under this head. That in the mitigation paper is as follows:
12 MFish notes that the quota allocation mechanism in the 1996 Act was designed to provide a balance between the rights of existing fishers and allocation of rights based on efficiency. For this reason quota allocation is based on catch history in recognition of existing participants, and tendering (of any unallocated quota) to provide opportunity for new entrants and allocation of catch rights to the most efficient users (ie those that are likely to value the fishery more and therefore pay more in any tender process).
The appellants say that this is an irrelevant consideration. They call attention to the fact that Ministry legal advisors told it to remove from the advice any reference to the Crown receiving the proceeds of tendering as a reason why the Minister should act as proposed. That thinking, they say, nevertheless remains.
Against that, the Minister in his affidavit emphasised that he did not understand the inclusion of the estimated value of the Crown allocation to be a suggestion that the allocation of quota should be treated as a revenue gathering exercise (para 25 quoted in para [20] above).
The ability of the Crown to sell unallocated quota when a stock or species is brought directly under the QMS is, we understand, a common consequence of that step. It cannot be seen of itself as invalidating the use of that power. In other respects the argument has been considered under (b) above.
This alleged error of law has accordingly not been made out.
(e) The consideration of unfairness to potential new entrants
This ground is based on the contention of the Ministry in its advice that the use of the ICE regime is not an appropriate mechanism to provide for widespread allocation of quota because it substantially benefits existing participants over new entrants. The allocation mechanism in the 1996 Act provides a balance, according to the Ministry, between the efficiency arguments and equity issues. Again this argument is to be related to that already considered under heading (b) and also heading (d).
The Judge comments only that Parliament governs and not the Ministry, and that Parliament had set the policy in the Act, which the Ministry is to administer.
The appellants contend that the advancing of the theory is tantamount to advice that Parliament got it wrong when in 1992 it introduced the permit moratorium : only those already licensed to fish a particular species could continue to do so. That limit was continued in 1996 on a permanent basis. The short answer is of course that the moratorium does not apply to stocks brought within the QMS since the relevant quota can be traded (by the Crown in the case of unallocated quota). That has been so from the beginning of the QMS in 1986. There is no reviewable error under this heading.
(f)The need for agreement in the introduction of ICE and the fear of judicial review
The advice paper several times indicates that ICE is to be introduced on the basis of the agreement of the relevant fishers (paras 92 and 94 in para [15] above). As Durie J and the appellants say, that is plainly not the law.
The critical point is that the Minister did not consider that he had been given legal advice to that effect (para 13 quoted in para [10] above). Also important is that the point did not appear in the list of reasons given by the Ministry for its strong preference for the use of the QMS. Had it considered the requirement existed as a matter of law, its advice would have been very differently structured.
This ground also fails.
g)The perverse incentive to race for catch history
The Minister and the Ministry in both its papers emphasised their concerns about the race for catch history (para 27 of the Minister’s affidavit para [20] above and para 21(e) of the Mitigation Paper, para [14] above).
The Judge said this:
7.Once more Mr Cooke must be correct in objecting to this opinion. If Parliament has provided for individual catch entitlements, then it is not for the Ministry to prevent that from happening for policy reasons of its own. It cannot put itself above Parliament. It has rather to reach conclusions on the scope and application of individual catch entitlements on the basis of statutory interpretation.
We see the concern about a race for catch history as entirely proper. The deliberate fixing of the 1990-92 years, the repeal of the commitment and dependence grounds and the commentary of the Select Committee make that clear. This was a matter that the Minister could properly weigh. This ground fails.
(h)The appellants must be taken to have known that quota would be determined on the basis of the specified years.
The appellants finally attack the finding made by the High Court that permit holders in the fisheries in issue must have been taken to have known that their quota would be determined according to the catch history years. Any investment was at their own risk (see para 59 set out in para [21] above).
If that is a finding on the law, the appellants disagree with it, and so do we for the reasons we have already given (paras [24]- [26]).
The appellants next contend that if the finding is one of fact there was evidence before the Court which showed the appellants were advised by the Ministry that ICE was an alternative to the application of the catch history years. The course of the Minister’s decision making also shows that a direct introduction into the QMS was not inevitable – however likely it may have been. The appellants do not however plead legitimate expectations. They may well have hoped that they would escape the direct application of the QMS. But that course was always a possibility, to put it at the lowest.
This particular finding by the Judge, while conforming neither with the law nor the facts, does not affect the lawfulness of the Minister’s decision.
Result
It follows that the appeal is dismissed. The appellants must pay the first to third respondents $10,000 costs and the fourth respondents $5,000 plus, in each case, reasonable disbursements including travel and accommodation costs of counsel to be fixed by the Registrar if the parties cannot agree.
Costs were reserved in the High Court. If necessary they are to be determined there in the light of this judgment.
Solicitors
Oceanlaw New Zealand, Nelson for the Appellants
Crown Law Office, Wellington for the 1st to 3rd Respondents
Craig Griffin & Lord, Auckland for the 4th Respondents
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