Sajo Oyang Corporation v Ministry for Primary Industries

[2012] NZHC 3044

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-2347 [2012] NZHC 3044

UNDER  the Judicature Amendment Act 1972

BETWEEN  SAJO OYANG CORPORATION First Applicant

SOUTHERN STORM FISHING (2007) LIMITED

Second Applicant

ANDTHE MINISTRY FOR PRIMARY INDUSTRIES

First Respondent

THE DISTRICT COURT AT CHRISTCHURCH

Second Respondent

THE DIRECTOR-GENERAL OF THE MINISTRY FOR PRIMARY INDUSTRIES

Third Respondent

Hearing:         14 November 2012

Counsel:         R B Squire QC and M S Sullivan for applicants

M J Lillico and K G Stephen for first and third respondents

Judgment:      15 November 2012

RESERVED JUDGMENT OF DOBSON J (Contested application for interim order)

[1]      These judicial review proceedings have been brought by the first and second applicants as the owners and charterers of a fishing vessel called “Oyang 75”, to challenge the lawfulness of decisions made in the District Court at Christchurch by

Judge D J L Saunders, in respect of steps in prosecutions before him under the

SAJO OYANG CORPORATION v THE MINISTRY FOR PRIMARY INDUSTRIES HC CHCH CIV-2012-409-

2347 [15 November 2012]

Fisheries Act 1996 (the Act).   The prosecutions are against the then captain and members of the crew of the Oyang 75 for offences under the Act involving (as the Judge has found) dumping of fish and falsified returns in New Zealand fisheries waters in 2011.

[2]      The  default  position  is  that  forfeiture  of  the  Oyang  75  would  occur  by operation of provisions in the Act, on the entry of convictions for the offending. Although none of the individuals charged had defended the charges against them, solicitors for the applicants indicated to prosecuting counsel that they would want to be heard on an application that special reasons existed for not forfeiting the vessel (a special reasons application), provision for which is made in the relevant part of the Act.   The solicitors contemplated that any such applications would be determined before the entry of any convictions.  Solicitors for the applicants asked prosecuting counsel to indicate their interest in this respect to the Judge, to support a request that the Court defer entering convictions until the special reasons applications could be determined.

[3]      Prosecuting  counsel  omitted  to  so  advise  the  Court.    Convictions  were initially entered against all five defendants on 22 June 2012.   Solicitors for the applicants filed and served a special reasons application on 29 June 2012.  That was done on the misapprehension that Judge Saunders’ reserved decision on the formal proof hearing on 22 June 2012 had not extended to entry of convictions when in fact that step, together with an order forfeiting the Oyang 75, had indeed been ordered on

22 June 2012.

[4]      The solicitors for the applicants moved promptly for a re-hearing as to the appropriateness of entering convictions.  That application was consented to by the prosecution and solicitors were advised that Judge Saunders had granted a re-hearing on the entry of convictions on 13 July 2012.  Thereafter, solicitors for the applicants perceived the solicitor conducting prosecutions for the Ministry had changed his view on the law, and now took the view that convictions could be entered and sentences imposed, notwithstanding an outstanding special reasons application.

[5]      Before  the  next  scheduled  hearing  on  21 September  2012,  solicitors  for owners and charterers received instructions to apply on behalf of one of the defendants, Jo Tay Wan (Mr Jo) for a special reasons application.  The Court was advised of that development on 17 September 2012.   The District Court gave the solicitors  for  the  applicants  the  impression  that  Judge  Saunders  would  only  be dealing with matters of mitigation at the sentence hearing on 21 September 2012, and that forfeiture issues were matters for a separate hearing on another date.

[6]      In a minute of 19 September 2012, Judge Saunders declined solicitors for the applicants leave to appear “at the penalty phase as they do not represent the defendants who are for sentence”. That minute continued:

I will not be focusing on the application for forfeiture or relief from this at the penalty phase and it is my considered opinion, for reasons which will follow, that the company Southern Storm Fishing (2007) Ltd will have an opportunity to argue the special reasons application at a subsequent hearing when the question of relief from forfeiture is the issue for the Court.

[7]      At the 21 September 2012 hearing, convictions in respect of the other four defendants were entered, but sentencing of Mr Jo was adjourned without entering convictions.   The District Court has set down Mr Jo’s application for hearing on

20 November 2012.

[8]      The  applicants  have  commenced  these  proceedings  seeking  to  judicially review the decision of Judge Saunders that they did not have standing to participate at the hearing of a special reasons application.

[9]      The parties to the judicial review proceedings have agreed on the terms of

certain interim orders intended to preserve the applicants’ position pending determination of the substantive judicial review, to the following effect:

that the Ministry take no further action consequent upon the forfeiture of the  Oyang 75 pending the judgment on the substantive judicial review

proceeding;

that  if  the  owners  are,  after  the  judgment  in  the  substantive  judicial review proceedings, required to return the Oyang 75 to the custody of the

Ministry within three calendar months, then that time is to start running

from the date of the judgment in the substantive judicial review; and

that pending judgment in the substantive judicial review proceedings, the

Ministry take no steps to enforce the bond it holds in respect of the

Oyang 75.

[10]     However, the applicants are concerned that these orders are not sufficient to protect their interests, given the intention of the District Court to proceed with a hearing of Mr Jo’s special reasons application on 20 November 2012. The applicants consider that if they are successful in their judicial review, they would be entitled to appear at the hearing of the special reasons application to argue in support of it. Accordingly, the applicants have sought a further interim order that would prevent the District Court proceeding with the hearing on 20 November 2012, and until substantive determination of their judicial review.

[11]     This further order is opposed by the respondents on the ground that it is not necessary to preserve the applicants’ position pending determination of the judicial review.

[12]     It was argued for the Ministry that the forfeiture of a vessel, which operates as a consequence of entry of a conviction for relevant offending, is not thereafter irreversible, and that the Court retains jurisdiction to make a finding on the existence of special reasons why forfeiture ought not to occur, even although forfeiture will initially have occurred on the entry of convictions against one or more defendants involved in the offending in which the vessel was used.

[13]     Having consented to the extent of restraint reflected in the interim orders already made (as cited in [9] above), Mr Lillico argued that a case could not be made for any additional constraint.   The Ministry contemplates that the special reasons hearing on Mr Jo’s application can proceed without argument being advanced for the applicants.  If Mr Jo succeeds in making out special reasons, then the Court would have jurisdiction to order the reversal of the forfeiture that has occurred on entry of convictions against others of the defendants.  In that event, there would be no need

for the applicants to pursue their own special reasons application, in the event that their judicial review results in a finding that they did indeed have standing to argue for that.

[14]     Conversely,  on  the  Ministry’s  analysis,  if  Mr Jo  does  not  make  out entitlement to special reasons for not forfeiting the vessel, then the existing interim orders are sufficient to prevent any further steps in relation to forfeiture, until the substantive judicial review has been determined.  In the event that the applicants are held to have had standing to appear on special reasons applications, then they could still pursue their own application of that type in the District Court, with that Court still having jurisdiction to reverse the forfeiture in the event that special reasons are made out.

[15]     Mr Squire  QC  rejected  the  assurances  of  protection  of  the  owners’ and charterers’ position inherent in this stance on behalf of the Ministry.  He argued that the Ministry has changed its position about the legal process once already in these proceedings, and that if a stance adopted by the Ministry represents any form of concession from what is the position at law, then that concession is not lawfully made and the Ministry could not be held to it.  He argued that on a proper analysis of the process provided for under the Act, there is no power to “unforfeit” a vessel once forfeiture  has  occurred  as  a  consequence  of  the  entry of  a  relevant  conviction. Mr Squire argued that both the Ministry and the District Court have approached that process wrongly, and the jurisdiction to assess whether special reasons exist to avoid forfeiture is, on his argument, only able to be determined before a conviction which would trigger forfeiture is entered.

[16]     On  Mr Squire’s  analysis,  the  hearing  of  Mr Jo’s  application  should  not proceed until the present judicial review proceedings clarify whether the applicants have standing to be parties to such an application.   He submitted that, unless restrained, the District Court hearing presently scheduled for 20 November 2012 could result in a finding that special reasons do not exist, the entry of convictions against Mr Jo triggering, by operation of law, further convictions in reliance on which the forfeiture of the Oyang 75 would occur.

[17]     To  retrieve  the  position  in  relation  to  forfeiture  following  the  earlier convictions of the other defendants, the substantive relief sought in the judicial review proceedings includes an application that the Court set aside the convictions of the other crew members, as a consequence of which the Oyang 75 was forfeited to the Crown, pending determination of all special reasons applications.

[18]     As to the arguments to be advanced in the judicial review, Mr Lillico fairly acknowledged that there is a tenable argument that parties in the position of the applicants do have standing to bring or support special reasons applications.  There has apparently been a practice of allowing such interests to be represented when hearings of the relevant type occur in the District Court.  Mr Lillico acknowledged that objections to the applicants having standing have only recently been taken on behalf of the Ministry.

[19]     I am satisfied that there is a tenable argument that the procedure under Part

13 of the Act for steps in relation to forfeiture of a vessel or property does require all special  reasons  applications  to  be  determined  before  any  triggering  conviction occurs.    This  would  have  the  corollary  that  once  a  triggering  conviction  has occurred, there is no power for the Court thereafter to “unforfeit” a vessel. Consequently, the steps required to occur within time limits specified in the Act after a vessel is forfeited mandatorily apply and cannot be waived or varied.

[20]     Mr Squire’s  analysis  began  with  the  terms  of  s 255C  that  provides  for forfeiture on convictions being entered for specified categories of offence.  Section

255C(2) begins:

The following are forfeit to the Crown unless the Court for special reasons relating to the offence orders otherwise:

The categories of property include:

(c)       any property used in the commission of the offence;

[21]     Subsection 255C(1) is cast in terms that the operative provision in subs (2) for forfeiture of assets arises “on conviction” for qualifying offences.   Combining that  with  the  terms  of  subs (2)  means  that  the  types  of  assets  specified  in  the

subparagraphs of s 255C(2) are, on conviction for offences of the types specified in subs (1), forfeit to the Crown unless special reasons are made out.

[22]     Section 255E (General provisions relating to forfeiture) includes:

(3)       At the time of conviction of any offence against this Act, the Court must determine what, if any, of the following is forfeit under any of sections 255A to 255D:

...

(c)      property used in the commission of the offence:

...

[23]     Section  256  (Provisions  relating  to  forfeit  property)  requires  the  Chief Executive of the Ministry within 10 working days after the date of the forfeiture to publicly notify the details of the forfeit property and the right of any person to apply to the Court for relief from the effects of forfeiture.   Under subs (3), any person claiming an interest in any forfeit property may, within 35 working days after the date of the forfeiture, or within such further period before the property is disposed of as the Court may allow, apply to the Court for relief from the effect of forfeiture on that interest.

[24]     Under s 256(8), an order for relief against forfeiture can only be made if it is necessary “to avoid manifest injustice” or to protect claims for unpaid wages or costs incurred  to  provide  support  and  repatriation  of  foreign  crew.    It  is  generally recognised that this onus is a substantially more difficult one to discharge than making out special reasons for non-forfeiture, which does still require reasons that are out of the ordinary.

[25]     The Ministry’s  interpretation  of s 255C(2)  is  more liberal  in  that,  in  the absence  of  any  express  temporal  constraint,  it  would  argue  that  the  finding  of requisite special reasons might occur either before or after the default application of s 255C(1) and (2) had operated to render a particular asset forfeited to the Crown. Further, that disruption to the steps required to be taken within defined times after forfeiture occurs is not a reason to deprive the statutory process of a more flexible application.

[26]    There are deficiencies in the smooth working of the process, whichever approach to interpretation of the relevant provisions is adopted.   The more liberal approach urged for the Ministry introduces uncertainty, and the prospect of a greater number of Court proceedings.

[27]     On the other hand, the confined interpretation urged by Mr Squire would appear to impose a supervisory obligation on the Court to ensure that all prospects of special reasons applications have been signalled, and are then dealt with, before convictions of any defendants that would trigger forfeiture are entered.   Such an obligation would be somewhat unusual.   However cautious an approach the Court adopted to  these sequencing  considerations,  there would  be outlier situations  in which the Court considered it appropriate to move to enter conviction for one defendant, when there remained outstanding the prospect of valid, if nonetheless much delayed, special reasons applications on behalf of other defendants whose offending rendered the same vessel vulnerable to forfeiture.  It seems unlikely that the legislature intended that the Court should have such an ill-defined responsibility without  it  being  addressed  in  the  statute,  and  also  that  the  Court  should  be constrained from prompt resolution against one of a number of defendants who wanted the matter promptly resolved, because of the conceptual prospect of special reasons applications subsequently to be made.

[28]     At this stage of the judicial review proceeding, it is sufficient to recognise as tenable  that  the  procedure  for  forfeiture  has  to  proceed  within  the  temporal constraints Mr Squire argues for.   In that event, there is a genuine interest to be preserved for the applicants, pending substantive resolution of this and other issues within the judicial review.  Putting that concern in its bleakest form, if Mr Squire is correct that there is no jurisdiction for the District Court to “unforfeit” a vessel after that step has occurred, then the interim orders previously made by consent do not preserve the applicants’ position against the contingency that further convictions might be entered against Mr Jo.  This would compound the procedural obstructions to the applicants retrieving their positions if it transpires that they do have standing to join argument on special reasons applications, and such arguments are successful.

[29]     I am reluctant to disrupt the scheduling of matters in the District Court. Judge Saunders has committed considerable time to the matter already and he would understandably have an interest in finalising the remaining issues arising out of the prosecutions.   There is thus far no finding that he has erred at any stage, and the applicants have entered the fray at a late stage after none of the individuals charged took an active part in defending the charges brought against them.

[30]     As  against  that,  the  District  Court  is  on  notice  that  the  applicants  are challenging their exclusion from those parts of the prosecutions that relate to forfeiture of the vessel.  There is a prospect that the hearing presently scheduled for

20 November 2012 may not raise all that there is to be said in support of special reasons for non-forfeiture, if owners’ and charterers’ entitlement to argue for such a finding is subsequently upheld.  Reflecting on the quality of the final outcome, and the efficiency of reaching it, the prospect of two hearings instead of a combined single hearing is undesirable.  In addition, the Ministry has no interest in achieving finality when the existing interim orders it has consented to will prevent progressing the forfeiture until the substantive judicial review is resolved.

[31]     In these circumstances, I am satisfied that the case has been made out for the additional interim order sought on behalf of the applicants.   The terms of order sought on their behalf is appropriate and I accordingly make that order, namely that the second respondent not proceed with the hearing of any outstanding applications for special reasons for non-forfeiture in respect of the vessel before the hearing and judgment on the substantive judicial review proceedings.

[32]     Costs are reserved.

Dobson J

Solicitors:

Oceanlaw New Zealand, Nelson for applicants

Crown Law, Wellington for first and third respondents