Petromont Holdings Limited v Director-General of the Ministry for Primary Industries
[2024] NZCA 580
•11 November 2024 at 3 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA48/2024 [2024] NZCA 580 |
| BETWEEN | PETROMONT HOLDINGS LIMITED |
| AND | DIRECTOR-GENERAL OF THE MINISTRY FOR PRIMARY INDUSTRIES |
| Hearing: | 5 September 2024 |
Court: | Collins, Whata and Grice JJ |
Counsel: | D A Laurenson KC and D W Grove for Appellant |
Judgment: | 11 November 2024 at 3 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Collins J)
Introduction
Petromont Holdings Limited (Petromont) owns scampi quota shares allocated under the Fisheries Amendment Act (No 2) 2004 (the 2004 Amendment Act). Since 1993, Petromont has been engaged in disputes and litigation with the Ministry of Agriculture and Fisheries and the government departments which succeeded that Ministry.[1]
[1]In July 1995, the functions of the Ministry of Agriculture and Fisheries were taken over by the Ministry of Fisheries and the Ministry of Agriculture. In 2011, the Ministry of Fisheries merged with the Ministry of Agriculture and Forestry, which was renamed the Ministry for Primary Industries in 2012.
Petromont now appeals a decision of Isac J dated 6 December 2023, in which its most recent application for judicial review was struck out on the basis that it is both untenable and an abuse of process.[2]
[2]Petromont Holdings Ltd v Director-General of the Ministry for Primary Industries [2023] NZHC 3535 [judgment under appeal] at [47].
In its notice of appeal, Petromont contends:
(a)that the High Court erred when it struck out Petromont’s third amended statement of claim based upon substantive legitimate expectation; and
(b)that Petromont should now be permitted to amend its statement of claim to include procedural legitimate expectation as a further ground of judicial review.
In his submissions, Mr Laurenson KC did not pursue the first ground of appeal. Instead, the focus of Petromont’s appeal was upon the second ground we have summarised at [3](b)]. Notwithstanding the absence of reliance on the first ground of appeal, we will briefly explain at [43]–[44] why the first ground of appeal could never have succeeded.
Background
Under the Fisheries Act 1983 (the 1983 Act), the Ministry of Agriculture and Fisheries used a Quota Management System (QMS) to manage fish stocks, excluding scampi. In 1990, the QMS was changed so that commercial fishers were entitled to catch up to a specified portion of their annual catch levels for each species set by the Minister of Fisheries. Permits issued to commercial fishers enabled them to fish within specified geographical areas referred to as Quota Management Areas (QMAs). As we shall explain, scampi were added to the QMS on 1 October 2004.[3]
[3]Fisheries Act 1996, s 369N(1); and Fisheries Amendment Act (No 2) 2004, cl 5.
Prior to 1 October 2004, the commercial fishing of scampi was regulated by the issuing of permits under ss 63 and 64 of the 1983 Act. Those permits contained conditions designed to manage scampi stocks.
Petromont was first issued with a permit to catch scampi on 1 April 1992, pursuant to s 63 of the 1983 Act. That allocation was for the balance of the 1991/1992 fishing year.[4]
[4]Ending 30 September 1992.
On 25 May 1993, the Director-General of Agriculture and Fisheries imposed conditions on scampi permit holders and revoked Petromont’s permit in all areas other than area 6. Petromont judicially reviewed the Director-General’s decision.[5] Petromont challenged the differences amongst permit holder’s conditions in respect of individual limits and the decision of the Director-General to revoke Petromont’s permits in respect of areas 1–3, 5, 7 and 9. The High Court found in favour of Petromont.[6]
[5]Petromont Holdings Ltd v Director-General of Agriculture & Fisheries HC Auckland M986/93, 7 September 1993.
[6]At 13.
Following Petromont’s success in the High Court, the Director-General reconsidered his decision and on 15 September 1993 issued Petromont permits under s 63(6) of the 1983 Act adopting the same restrictions previously imposed. As a consequence, catch limits were imposed upon Petromont for the balance of 1992/93 fishing season in respect of areas 1, 2, 4 and 6A. Petromont could fish in other “competitive” areas until notified that the prescribed limited for scampi had been caught and no further scampi could be taken.
Section 329 of the Fisheries Act 1996 (the Act) came into force on 1 October 1996. It is sufficient for us to summarise two aspects of that section, namely:
(a)Section 329(2) validated all decisions made by the chief executive or the Director-General of Agriculture and Fisheries concerning, amongst other matters, the variation or cancellation of permits under s 63 of the 1983 Act that were made after 1 October 1992 and before 1 October 1996; and
(b)Section 329(4) exempted from the validation provisions of s 329(2):
(i)decisions that were the subject of court proceedings commenced before 1 October 1996; or
(ii)cases which were the subject of an application to the chief executive requesting a review of the decision in issue, provided such application was filed with the chief executive before 1 October 1997.
On 1 October 1997, Petromont notified the Ministry that it would be requesting “a review of decisions and purported decisions of the Director‑General of Agriculture and Fisheries” but did not specify which decisions it was seeking to review. The Ministry responded in May 1998, suggesting it would prefer to defer Petromont’s review until the High Court had determined the ongoing proceedings relevant to Petromont’s complaint; Vautier Shelf Company No 14 Ltd v Chief Executive of the Ministry of Fisheries.[7]
[7]Vautier Shelf Company No 14 Limited v Chief Executive of Ministry of Fisheries HC Wellington CP20/97, 24 July 2000; rev’d Official Assignee v Chief Executive of the Ministry of Fisheries [2002] 2 NZLR 722 (CA).
Following the delivery of that decision, Petromont advised it wished to proceed with its request for a review under s 329 of the Act. Further delays occurred when Petromont agreed with the Ministry to defer its s 329 review until the Court of Appeal delivered its decision in Official Assignee v Chief Executive of the Ministry of Fisheries,[8] which concerned an appeal from Vautier Shelf Company No 14 Ltd.
[8]Official Assignee v Chief Executive of the Ministry of Fisheries, above n 7.
The appeal was allowed by all members of the Court.[9] Writing separately, Thomas J said the Ministry had been too willing to build on errors and injustices committed in previous years.[10] The Judge criticised the decision made in relation to Petromont when the Ministry simply reimposed the same conditions on Petromont’s quota permit following its successful judicial review in 1993.[11]
[9]At [100] per Thomas J, and [111] per Keith and McGrath JJ.
[10]At [86].
[11]At [45]–[46].
Petromont then attempted to expand the scope of its proposed review to include decisions made before 1 October 1992. The Ministry of Fisheries took issue with Petromont’s attempt to expand the scope of its proposed review.
In late 2002, Petromont agreed with the Ministry of Fisheries to defer its review pending two reports:
(a)a report by Parliament’s Primary Production Committee (the Committee);[12] and
(b)a States Services Commission Report.[13]
[12]Primary Production Committee Inquiry into the administration and management of the scampi fishery (December 2003).
[13]Helen Cull QC and David Smythe Report for the State Services Commissioner of an Inquiry into Fisheries Management of the Scampi Fishery (State Services Commission | Te Komihana O Ngā Tari Kāwanatanga, May 2004).
The Committee’s report was released on 2 December 2003. The Committee examined the management of scampi fisheries. Petromont was involved in the inquiry. The Committee said that the Ministry had been “consistently inconsistent” when assessing scampi catch histories and had “made individual allocations when the timeframe for fishers to establish catch history had been extremely short”.[14] The Committee recommended:
(a)that scampi be introduced into the QMS as from 1 October 2004 using catch history as the basis of quota allocations;[15] and
(b)that seven commercial fishers who had justified grievances concerning the management of scampi permits receive ex gratia payments from the Ministry of Fisheries.[16] Petromont was not among the seven fishers who were recommend to receive ex gratia payments.
[14]Primary Production Committee, above n 12, at 7.
[15]At 12.
[16]At 12–13.
The State Services Commission Report was released on 25 May 2004. One of the matters dealt with in the report concerned delays in registering the fishing vessels of some scampi fishers. The report referred to delays in licensing Petromont’s vessel and said the Ministry’s “permitting and management of the scampi vessels was grossly inadequate, inappropriate and unreasonable, resulting in unevenhanded treatment among the scampi fishers”.[17] The report endorsed the criticisms of the Ministry of Fisheries made by Thomas J in Official Assignee,[18] and recommended that consideration be given to Petromont obtaining the allocation of scampi quota shares or compensation.
[17]Cull and Smythe, above n 13, at 194.
[18]See 198–199 and 438–439.
One of the recommendations the Committee made was:[19]
If the legislation, policy and process for the allocation of scampi quota finally adopted allows administrative discretion, then the reviewers recommend that to the extent such discretion allows, those exercising it consider, when coming to an overall view of the relevant public interest, the exercise of the discretion be informed by the findings of this Inquiry. Such an approach would assist in meeting the public expectation of fairness and impartiality in the administration of fisheries and also meet the requirements of the Public Service Code of Conduct.
[19]At 11.
The Fisheries Amendment Bill (No 4) 2004,[20] which formed the basis of the 2004 Amendment Act:
(a)introduced scampi into the QMS;
(b)set out the provisional catch history (PCH) for scampi fishers, including Petromont, based on the fishers catch history for the qualifying fishing seasons (1990/91 and 1991/92 years);[21]
(c)the PCHs then became the basis for scampi quota allocations, including for Petromont; and
(d)once quota shares had been allocated, the remaining quota shares and stock that had not been allocated were automatically allocated to the Crown.[22]
[20]Fisheries Amendment Bill (No 4) 2004 (109-2A).
[21]Schedule 14.
[22]Clause 49.
Petromont endeavoured to persuade the Committee to include catch histories for the 1992/1993 season in respect of areas 3 and 6B. Petromont also urged upon the Committee that it accept recommendations in the State Services Commission Report that Petromont be compensated by way of scampi share allocations. The Committee elected however not to recommend changes to the Bill that would have accommodated Petromont’s concerns. The explanatory note to the Bill stated:
The committee considered a number of quota allocation options to address the recognised grievances. By majority, we concluded there was no practical way, given the mechanistic nature of the Fisheries Act 1996 for allocating quota.
The Committee recorded the National Party’s view that it agreed fishers should be given a right of first refusal in relation to surplus ground quota.[23] It also recorded the view of Labour and New Zealand First members of Parliament that the ex gratia payments recommended by the inquiry already enabled aggrieved fishers to purchase quota should it be tendered.[24]
[23]Fisheries Amendment Bill (No 4) (commentary) at 3.
[24]At 4.
Parliament passed the 2004 Amendment Act containing the changes to the principal Act, as noted at [19]. Section 47 of the Act sets out the method of allocating quota based on a fisher’s provisional catch history. Under s 49, quota not allocated under ss 44[25] and 47 are allocated to the Crown.[26]
[25]Fisheries Act, s 44 governs the allocation of 20 per cent of new quota to Te Ohu Kai Moana Trustee Ltd. It is not relevant to Petromont’s claim.
[26]Section 49(1).
Section 50(1)(b) is also relevant:
50 Rights of Crown in relation to quota
(1)Without limiting any other provision of this Act, the chief executive may, on behalf of the Crown,—
…
(b)hold any quota allocated or acquired, or any provisional catch history, without being obliged to offer it to any person:
…
As a consequence, Petromont received quota shares for QMAs 3 and 6B based on its catch history in the 1991/1992 fishing year.
Petromont then sought to appeal the PCH allocations, including allocations to other fishers. That appeal was brought under s 369R of the Act which permits limited rights of appeal to the Catch History Review Committee. However, in Simunovich Fisheries Limited v Executive of the Ministry of Fisheries, the High Court ruled that fishers could not challenge under s 369R, PCH allocations made to other fishers.[27] On 16 September 2005, Petromont wrote to the Ministry of Fisheries withdrawing its appeal under s 369R of the Act in respect of its allocations.
Ancillary proceedings
[27]Simunovich Fisheries Ltd v Executive of the Ministry of Fisheries HC Wellington CIV-2004-485-1987, 10 November 2004 at [27].
As we have noted at [11], on 1 October 1997, Petromont gave notice of its intention to seek a review under s 329 of the Act. The scope of that review was, following a very prolonged history, the subject of a judicial review proceeding brought by Petromont which culminated in a decision of this Court delivered in 2018.[28] In that case, it was held that because Petromont was seeking to challenge decisions of the Director‑General, rather than his delegate, it failed to satisfy the criteria for review under s 329(4) of the Act.[29] As noted by Isac J in the judgment under appeal, “[t]his appears to have brought an end to the first judicial review challenge to the Ministry’s view of the scope of the right of administrative—or internal—review”.[30]
Current proceeding
[28]Petromont Fishing Company Ltd v Director-General of the Ministry of Primary Industries [2018] NZCA 422.
[29]At [6]
[30]Judgment under appeal, above n 2, at [21].
The current proceeding was commenced in 2019. The first iteration of the proceeding was partially struck out by Gwyn J, who dismissed Petromont’s claim based upon legitimate expectation.[31] Petromont had claimed that, prior to the Court of Appeal’s decision in the first judicial review proceeding, the parties had proceeded on the mistaken understanding that s 329(4) of the Act continued a right of review of decisions made by the Director-General personally. Petromont had argued that but for this assumption, it would have sought judicial review of the decision on or before 1 October 1996.[32] Gwyn J found that the key difficulty for Petromont was that the alleged legitimate expectation was inconsistent with the legislation.[33] This Court confirmed that decision:[34]
[36] … the insuperable difficulty for Petromont is that by s 329 Parliament validated the 15 September 1993 decision. Consequently any Court proceeding in respect of that decision had to be commenced before 1 October 1996. It was not. The Director-General’s decision was not amenable to administrative review because, as this Court has held, such reviews derived from s 63(11) of the 1983 Act and only applied to delegated decisions. The 15 September 1993 decision was not such a decision.
[31]Petromont Holdings Ltd v Director-General of the Ministry of Primary Industries [2020] NZHC 3242.
[32]At [54].
[33]At [65].
[34]Petromont Holdings Ltd v Director-General of the Ministry for Primary Industries [2021] NZCA 567.
Petromont’s response was to amend its pleading including a new substantive legitimate expectation claim. By the time Isac J came to consider the second strike out application, Petromont had filed a third amended statement of claim.
Third amended statement of claim
The gravamen of Petromont’s third amended statement of claim is that the PCH allocations set out in sch 14 of the Act for areas 3 and 6B should have been based on catch histories for the 1992/93 fishing year, and that it is now entitled to allocations of scampi quota shares held by the Crown in order to compensate it for its alleged under‑allocations.
Petromont pleaded four causes of action in the third amended statement of claim:
(a)breach of a substantive legitimate expectation;
(b)substantive unfairness or unreasonableness;
(c)disproportionate outcome; and
(d)irrationality.
The breach of substantive legitimate expectation cause of action was based on Petromont’s claim that areas 3 and 6B were “fully developed” in the 1992/93 fishing year and that had the catch history for that season been used to allocate catch entitlements, the allocations in respect of new areas 3 and 6A, would have been consistent with allocations in other areas. The third amended statement of claim pleaded:
[T]he plaintiff had a legitimate expectation that following the passing of the [2004] Amendment Act, including the amendment to the fishing areas, the plaintiff would subsequently receive a fair proportion of [quota] in new Areas 3 and 6A that are calculated based upon its 1992/1993 catch history in old Areas 3 and 6B.
The second cause of action alleged that the decisions and conduct of the Director‑General “were unreasonable, inconsistent and/or substantively unfair to the plaintiff”.
The third cause of action alleged the plaintiff suffered “a disproportionate outcome in that [its] quota allocation has been disproportionally reduced with a resulting benefit to other fishers, principally Suminovich”.
The fourth cause of action appears to have alleged irrationality on the part of decision-makers, because the Director-General’s reliance on catch histories for 1990‑1992 was inconsistent to its approach in respect of other designated areas.
The third amended statement of claim sought, amongst other relief, declarations that the respondent allocate quota or part of the quota held by the Crown in area 3 to Petromont or in the alternative, damages to compensate for the monetary value of the quota not allocated and damages for economic loss arising from the respondent’s “unlawful, unfair and prejudicial decisions”.
High Court judgment
In striking out the substantive legitimate expectation cause of action, Isac J reached three key conclusions.
First, the pleaded statements and conduct attributed to the respondent did not amount to a clear promise or unambiguous and established practice capable of supporting a substantive legitimate expectation. The Judge said:[35]
[40] … given Petromont’s involvement in the Parliamentary process that resulted in the 2004 Amendment Act, and the legislative prescription of qualifying catch histories, Petromont could not have any expectation, legitimate or otherwise, that a catch history or quota would be allocated to it on any basis other than that set out in the legislation as the qualifying years. Petromont argued for different allocations in its submission to the Select Committee, but the relevant Bill was not changed.
[35]Judgment under appeal, above n 2.
Second, the Crown was not obliged to allocate scampi quota to Petromont on a basis inconsistent with the 2004 Amendment Act:[36]
[41] … A claim of legitimate expectation cannot now be invoked to compel public authorities to act contrary to law. It is the 2004 Amendment Act itself which provides for the relevant catch history allocations for each fisher in each management area, based on their catch history in the qualifying years. The qualifying years were themselves defined by Parliament.
[36]Footnote omitted.
Third, the substantive legitimate expectation cause of action constituted an impermissible challenge to the 2004 Amendment Act and was therefore an attack on Parliamentary sovereignty:[37]
[42] … the latest pleaded claims are a direct challenge to the 2004 Amendment Act now masquerading as an application for judicial review of actions or omissions of the respondent subsequent to the 2004 Amendment Act. It is an impermissible attack through judicial review on Parliamentary sovereignty. …
[37]Footnote omitted.
The Judge accordingly concluded that the substantive legitimate expectation cause of action was to be struck out.[38]
[38]Judgment under appeal, above n 2, at [42].
In striking out the remaining three causes of action, Isac J said:[39]
[44] … the remaining causes of action are a challenge to the 2004 Amendment Act or, alternatively, a challenge to the exercise of the prerogative power. In arguing that the respondent has acted unreasonably each claim is predicated on a contention that, in passing the 2004 Amendment Act, Parliament failed to act fairly in both its redefining of the quota management areas and the selection of qualifying years for identification of the relevant catch history. The relief sought—in each case mandatory orders requiring the allocation of significant amounts of quota, or damages in the alternative—leaves no room for doubt that Petromont is again seeking to unravel a political and commercial compromise that was settled by Parliament almost two decades ago.
First ground of appeal
[39]Footnote omitted.
As we have noted at [3], the notice of appeal challenges the decision striking out the claim based on substantive legitimate expectation. There is no challenge to the part of the High Court judgment striking out the other three causes of action.
Mr Laurenson was not counsel in the High Court. It is understandable why he elected not to make submissions concerning the decision striking out the substantive legitimate expectation cause of action. That claim was untenable because no matter how it was framed, it challenged the way Parliament directed how scampi quota were to be allocated when it passed the 2004 Amendment Act. As Isac J explained, the challenge to Petromont’s scampi quota allocations was a direct attack upon the 2004 Amendment Act and an assault upon Parliamentary sovereignty.[40]
[40]Judgment under appeal, above n 2, at [42].
As this cause of action has not been the subject of any submissions in this Court, it is sufficient for us to dismiss the first ground of appeal on the basis that we endorse the reasons articulated by Isac J.
Second ground of appeal
Petromont has not provided a draft pleading explaining the proposed procedural legitimate expectation cause of action. It says it wishes to pursue discovery before finalising its proposed pleadings. In the meantime, in his submissions, Mr Laurenson refers to five matters which he says lays the foundation for a procedural legitimate expectation cause of action.
First, as part of the allocation of scampi quota under the 2004 Amendment Act, Mr Laurenson submits:
[T]he Crown took the unprecedented step of allocating itself a significant amount of quota on a PITQ (provisional) basis in the main area to which the [State Services Commission] report had found Petromont (among others) had been unjustly treated – ie, area 3.
Petromont relies on a statement in an affidavit of Mr McCarthy, a lawyer for the Crown, in which he said the quota in area 3 had been retained by the Crown “[o]ut of an abundance of caution … as a contingency for current litigation”. Mr Peterson, the director of Petromont, has said in his affidavit that as Petromont is the only entity in litigation with the Crown, the reason for the Crown’s retention of the quota in area 3 is to address Petromont’s grievances.
Secondly, Mr Laurenson points to the statements made in the reports of the Committee and the State Services Commission that were critical of the Ministry’s approach, and the recommendations of the State Services Commission which we have set out at [18].
Thirdly, Mr Laurenson relies on the agreement reached by Petromont and the Ministry of Fisheries to defer Petromont’s request for a review under s 329 of the Act pending the release of the report of the State Services Commission.
Fourthly, he points to the ability of the Director-General to exercise discretion when dealing with the quota holds.
Fifthly, Petromont relies on its “position throughout this dispute of seeking compensation by way of quota”.
Strike-out principles
The principles governing strike out of a proceeding are well established and include that a claim should only be struck out under r 15.1(a) of the High Court Rules 2016 where the cause of action cannot succeed. In Couchv Attorney-General, Elias CJ and Anderson J said “it is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed” and that “[p]articular care is required in areas where the law is confused or developing”.[41] These principles must also apply to a proposed unpleaded cause of action.
Procedural legitimate expectation
[41]Couchv Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
The principles governing all forms of legitimate expectation was summarised by this Court in Comptroller of Customs v Terminals (NZ) Ltd:[42]
[123] Establishing a legitimate expectation in administrative law is not dependent on the existence of a legal right to the benefit or relief sought. The expectation might be engendered by promises that a particular authority will act in a certain way or by the adoption of a settled practice or policy which the claimant can reasonably expect to continue. A promise of the kind alleged may be express or implied.
[124] Legitimate expectation is to be distinguished from a mere hope that a cause of action will be pursued or a particular outcome gained. To amount to a legitimate expectation, it must, in the circumstances (including the nature of the decision-making power and of the affected interest) be reasonable for the affected person to rely on the expectation.
[125] Where legitimate expectation is raised, the inquiry generally has three steps. The first is to establish the nature of the commitment made by the public authority whether by a promise or settled practice or policy. This is a question of fact to be determined by reference to all the surrounding circumstances. A promise or practice that is ambiguous in nature is unlikely to be treated as giving rise to a legitimate expectation in administrative law terms.
[126] The second is to determine whether the plaintiff’s reliance on the promise or practice in question is legitimate. This involves an inquiry as to whether any such reliance was reasonable in the context in which it was given.
[127] The third, and often most difficult part of the inquiry, is to decide what remedy, if any, should be provided if a legitimate expectation is established.
Analysis
[42]Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598, [2014] 2 NZLR 137 (footnotes omitted).
As explained in Comptroller of Customs, in order to advance a claim based on any form of legitimate expectation, Petromont must identify a commitment made to it by the Ministry of Fisheries or another authorised representative of the Crown to allocate to Petromont some or more of the scampi quota now held by the Crown.[43]
[43]At [125].
As we have noted at [19]–[20], the formula for allocating quota shares prescribed in s 49(1) of the Act was that after quota had been allocated in accordance with either ss 44 or 47 of the Act “all of the remaining quota shares in a stock that [had] not been allocated under those sections [was to] be automatically allocated to the Crown”. This provision is complemented by s 50(1)(b) which provides that the Crown may hold quota without being obliged to transfer that quota to any person. Thus, the quota shares the Crown holds in respect of area 3 are held pursuant to s 49 of the Act. To that extent, it is not a “unprecedented step” of retaining quota in a developed fishery. It was a consequence of an Act of Parliament.
Mr McCarthy’s comments that the Crown has retained its quota out of an abundance of caution and as a contingency for litigation cannot be interpreted as a commitment to Petromont that the Crown will transfer part or all of the Crown’s quota shares in respect of area 3 or any other area. It is one matter for the Crown to hold quota as a contingency for Petromont’s litigation. It is a wholly different matter to conclude that precautionary measure constitutes a commitment to transfer all or some of the Crown’s quota to Petromont.
The passages in the reports made by the Primary Production Committee and the State Services Commission relied upon by Petromont comprise either findings that were critical of the way Petromont was treated or recommendations as to how officials should administer the quota scheme.
Even when we apply a meaning to those passages that is generous to Petromont, we find ourselves in complete agreement with Isac J when he said that none of the statements in those reports “amounts to a clear promise or unambiguous and established practice capable of supporting a substantive legitimate expectation”.[44] Nor do these passages support a claim for procedural legitimate expectation.
[44]Judgment under appeal, above n 2, at [40].
It is significant that the recommendations in the State Services Commission Report concerning the possible allocation of scampi quota to Petromont to compensate for earlier failings by the Crown were considered by the Committee, which considered the Bill that became the 2004 Amendment Act. The recommendation that Petromont relies upon was explicitly rejected by the Committee. As a consequence, the formula for the allocation of scampi quota set out in the Bill was enacted by Parliament. The formula did not provide for discretion on the part of the Ministry of Fisheries as to how to allocate scampi quota. Rather, Parliament directed that quota be allocated on the basis of catch history for the 1990/91 and 1991/92 years and allowed for grievances to be resolved by ex gratia payments.
While Petromont may have hoped that additional quota shares in respect of area 3 and possibly other areas would be transferred to it, its participation in the process that led to the 2004 Amendment Act and the text and purpose of ss 47 and 49 of the Act mean Petromont could not have expected to receive quota contrary to that set out in the legislation.
We also see no merit in the argument that a claim for procedural legitimate expectation can be founded upon the agreement reached in 2002 whereby Petromont’s request for a review under s 329 of the Act was deferred until after the State Services Commission Report was released. That agreement did not contain any basis of a commitment that the Ministry of Fisheries would respond affirmatively to Petromont’s grievances by allocating it additional scampi quota.
Any expectation that Petromont had that the Crown would answer its grievances by allocating it Crown scampi quota would have been completely at odds with both the Committee’s decision to reject the State Service Commission’s recommendation regarding quota allocation, and the formula for allocating quota shares set out in the 2004 Amendment Act.
Mr Laurenson is correct when he submits that the Crown has a discretion as to how it deals with its scampi quota. That however is of no assistance to Petromont because Parliament has determined how quota for scampi are to be allocated and, through the legislative process, rejected suggestions that quota be allocated to address Petromont’s grievances. Rather, grievances were to be remedied through ex gratia payments. While Petromont can assert that the Crown is obliged to transfer to it part or all of the Crown’s scampi quota, there is no factual or legal basis for that assertion. On the contrary, s 50(1)(b) of the Act provides the answer to Petromont’s assertions because the Crown can hold quota “without being obliged to offer it to any person”.
Finally, the fact Petromont has consistently maintained that it is entitled to compensation by way of quota does not create a procedural legitimate expectation that its wishes will be honoured.
We do not accept that discovery could possibly assist in salvaging the proposed further amendment to Petromont’s claims. If Petromont has a legitimate expectation then it must identify the basis of that claim. Petromont cannot rely on something that it is unaware of.
We accordingly conclude the proposed cause of action based on procedural legitimate expectation is just as untenable as the claim based upon substantive legitimate expectation.
By way of a closing comment, we record that in his evidence, Mr McCarthy said that the Crown has twice attempted to negotiate an ex gratia payment with Petromont as a consequence of the Committee’s findings. According to Mr McCarthy, Petromont has either rejected or ignored those offers. It would be desirable if this protracted litigation could be resolved by the parties agreeing to an ex gratia payment.
Result
The appeal is dismissed.
The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Foy & Halse, Auckland for Appellant
Te Tari Ture o te Karauna | Crown Law Office, Wellington for Respondent
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