Talleys Fisheries Limited v Cullen HC Wellington CP287/00 - [2002] NZHC 29

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY CP287/00

IN THE MATTER of the Judicature Amendment Act 1972 and the Declaratory Judgments Act 1908

AND

IN THE MATTER of the Overseas Investment Act 1973 and the Fisheries Acts of 1983 and 1996

BETWEEN TALLEYS FISHERIES LIMITED
Plaintiff

AND MICHAEL JOHN CULLEN AND PETER COLIN HODGSON
First Defendants

AND THE OVERSEAS INVESTMENT COMMISSION
Second Defendant

AND THE MINISTRY OF FISHERIES
Third Defendant

AND MARUHA (NZ) INCORPORATED LIMITED
Fourth Defendant

Hearing: 19-23 November 2001

Counsel: J E Hodder, G P Malone, D R Kalderimis for Plaintiff
R J Ellis, K C Millard for First and Third Defendants
G Palmer and B Hale for Second Defendant
J Miles QC and Z Kennedy for Fourth Defendant

Judgment: 31 January 2002

RESERVED JUDGMENT OF RONALD YOUNG J

Solicitors:
Fletcher Vautier Moore, Wellington, for Plaintiff
Crown Law, Wellington, for First and Third Defendant
Chen Palmer & Partners, Wellington, for Second Defendant
Buddle Findlay, Wellington, for Fourth Defendant

Table of Contents Page No

FACTUAL BACKGROUND 3
FIRST CAUSE OF ACTION 6
FEBRUARY AND MARCH PERMISSIONS 7
THE S 28Z ARGUMENT 10
THE ULTRA VIRES ARGUMENT 12
PERMISSION IN PRINCIPLE ARGUMENT 14
THE NZ-ISATION ARGUMENT 16
AS TO THE 1996 ACT 18
THE IRRELEVANT CONSIDERATIONS ARGUMENT 22
THE MERITS ARGUMENT 27
THE NOVEMBER PERMISSION 28
BACKGROUND 28
THE SECOND CAUSE OF ACTION: MINISTERS GRANTING OF CEEBAY APPLICATION TO CONTINUE TO HOLD QUOTA 31
THE S 28Z ARGUMENT 31
RELEVANT FACTS 31
PROCEDURAL UNFAIRNESS 33
INADEQUATE INVESTIGATION 39
FAILURE TO GIVE REASONS 42
NZ-ISATION/S 57(4) 43
LEGITIMATE EXPECTATION 44
THE SEALORD APPLICATION AND DECISION 44
THE LAW 47
THE IRRATIONALITY ARGUMENT 50
RELEVANT CONSIDERATIONS ARGUMENT 51
IRRELEVANT CONSIDERATIONS 55
MERITS ARGUMENT 59
28Z FISHERIES ACT 63
RELEVANT CONSIDERATIONS ARGUMENT 71
IRRELEVANT CONSIDERATIONS ARGUMENT 72

In these proceedings the Plaintiff seeks judicial review of certain decisions made under the Fisheries Act 1983 and the Fisheries Act 1996 relating to the ownership of fishing quota by an overseas company.

Factual background

This case concerns 8500 tonnes of Hoki fishing quota registered in the name of Ceebay Holdings Limited (“Ceebay”). Ceebay is a quota leasing company with two shareholders; Maruha (NZ) Corporation Limited (“Maruha”), Maruha in turn is wholly owned by the Maruha Corporation of Japan and Amaltal Corporation Limited (“Amaltal”) owned in equal shares by Talley Fisheries Ltd (the Plaintiff) and Amalgamated Corporation Limited (Amalgamated).

The Plaintiff challenges decisions made by the Overseas Investment Commission (OIC), the Ministry of Fisheries, the Minister of Overseas Investment and the Minister of Fisheries variously granting permission for Ceebay and Maruha to hold or lease fishing quota.

In 1985 a joint venture company was formed between Amaltal Corporation and Taiyo Fishing Company called Amaltal Taiyo. Taiyo Fishing Company is now known as Maruha.

Amaltal owned 75.1% of the shares and Taiyo 24.9%. The joint venture company successfully tendered for 40,000 tonnes of Hoki quota.

In 1991/1992 the parties agreed to separate their interests in the joint venture company. Maruha was entitled to 24.9% of the quota held by the joint venture company or approximately 8500 tonnes. Amaltal was entitled to the rest and took its 75.1 % share. Maruha set up Ceebay as a means of holding its quota without breaching the 1986 amendments to the 1983 Fisheries Act. Amaltal owned 75.1 and Maruha 24.9% of the shares in Ceebay. The shareholders’ agreement, management agreement and company constitution governed the operation of Ceebay and included the following provisions:

1. All dealings with the quota were undertaken by Amalgamated.

2. Maruha had a preferential right to introduce lessees for the quota and to set prices for the quota lease.

3. Maruha had the right to 99% of the dividends paid by the company.

4. Ceebay had four Directors, two appointed by Amalgamated for Amaltal and two appointed by Maruha.

5. Amaltal’s financial interests in Ceebay were primarily its pre-emptive purchase rights in the event of a sale of the quota held by Ceebay.

It is proper to keep in mind throughout that the Ceebay quota was Maruha’s share of the Amaltal/Taiyo (Maruha) joint venture company.

The 1986 Fisheries Amendment Act introduced a fishing quota system into New Zealand. Section 28Z of that Act prohibited quota from being held by a company that was wholly or significantly controlled from outside New Zealand. Included within the definition of significantly controlled was the situation described in s 28Z(3) as follows:

“(3) For the purposes of subsection (1)(b) of this section, a body corporate shall be deemed to be wholly or significantly controlled from outside New Zealand if 25 percent or more of the voting power in relation to the body corporate is-

(a) Held or may be exercised by or on behalf of one or more individuals who are not ordinarily resident in New Zealand; or

(b) Held by a body or bodies corporate of which 25 percent or more of the voting power is held or may be exercised by or on behalf of an individual or individuals who is or are not ordinarily resident in New Zealand or a body or bodies corporate that, by virtue of this provision, is or are wholly or significantly controlled from outside New Zealand, or a combination of such individuals and bodies corporate.”

Amaltal and Maruha jointly set up the Ceebay structure. They both considered that it lawfully avoided the s 28Z prohibition. Maruha held only 24.9% to the voting power in Ceebay thus the belief that Maruha (as an overseas company) did not significantly control Ceebay.

After the introduction of s 28Z the Ceebay structure continued to operate apparently satisfactorily. With the Court of Appeal decision in Director-General of Agriculture & Fisheries v Saragossa (CA 4-94, 4 December 1994) the first doubts about the lawfulness of the Ceebay structure surfaced.

In August 1996 the Fisheries Act 1996 was passed. Section 56-58 dealing with foreign ownership of quota was to come into effect by date fixed by Order in Council. These sections came into effect on 1 October 1999. Accompanying these sections was s 333A of the Act which provided transitional provisions for foreign owners of quota. The broad thrust of ss 56-58 was to:

(1) prohibit overseas persons from holding or owning quota (s 56) unless

(2) permit overseas companies to apply to Ministers to hold or purchase quota (s 57) and

(3) forfeit quota to the Crown unless lawfully owned by the overseas person (s 58)

The transitional provisions (s 333A) allowed an overseas person.

(a) 12 months to make an application for and obtain permission to hold quota under s 57 and

(b) if unsuccessful 2 years to sell the quota.

Maruha was anxious to ensure Ceebay applied (s 57) to obtain ministerial permission for it to continue to hold its hoki quota. After a dispute within Ceebay and subsequent litigation the following applications and grants were made:

(1)(a) On 20 January 2000 an application by Maruha for permission to acquire all quota held by Ceebay if Maruha acquired up to 100% of the shares in Ceebay.

(b) On 25 February 2000 permission (in principle) granted by OIC.

(c) On 28 March 2000 Maruha applied to amend the February permission to allow it to take leases of Ceebay’s quota or other quota.

(d) On 31 March 2000 the amended permission (in principle) granted by the OIC.

(e) On 28 November 2000 the permission in principle in (a) and (c) above was confirmed by the OIC subject to conditions.

(2)(a) On 26 May 2000 Ceebay applied to the Ministers for permission to continue to hold quota and

(b) On 22 September 2000 permission for Ceebay to continue to hold quota was granted.

In the meantime a question had arisen about whether the Ceebay structure was caught by s 28Z. The transitional (s 333A) provisions appeared to apply only to those who were not prevented from owning quota under s 28Z of the 1983 Fisheries Act. It was suggested Maruha did have significant control over Ceebay (and thus breach s 28Z). To avoid the feared effect the Ministry of Fisheries and Ceebay entered into a Deed whereby the Ministry of Fisheries agreed to retransfer to Ceebay any quota that may have been forfeited by virtue of s 28Z.

The Plaintiff in these proceedings says that the various permissions granted to Maruha and Ceebay under s 57 to hold or obtain quota or lease quota and the deed are invalid, unlawful of no effect and should be quashed.

First Cause of Action

This cause of action concerns Maruha’s applications on 20 January 2000 and 28 March 2000 and the OIC/Minister’s decisions of 28 February 2000, 31 March and 28 November 2000.

This part of the judgment can be divided into the permissions of February and March and the November permission.

February and March permissions

The “in principle” permissions granted by the OIC in February and March allowed

(a) Maruha to acquire Ceebay’s quota if it acquired 100% of Ceebay and for Ceebay to continue to hold quota if Maruha acquired up to 100% of the shares in Ceebay and

(b) Maruha to acquire an interest in quota held by Ceebay.

This permitted Maruha to take leases of Ceebay’s quota should it wish to do so. The two decisions were made by the OIC from a Ministerial delegation of 19 November 1999 provided shortly after s 57 of the Fisheries Act came into force (1 November 1999). Section 57 allowed for the Minister of Fisheries and the Minister of the Overseas Investments to give permission for overseas owners of quota to hold or acquire quota. The statutory scheme permitting delegation was:

“57A Administration of sections 56 and 57

(1) Sections 56 and 57 are administered by the Overseas Investment Commission constituted by the Overseas Investment Act 1973.]

(2) For the purposes of this section and sections 56 and 57, the provisions of the Overseas Investment Act 1973 (other than section 14A) and any regulations made under that Act apply in respect of applications to which sections 56 and 57 apply-

(a) as if this section and sections 56 and 57 were part of that Act and references to regulations made under that Act included this section and sections 56 and 57; and

(b) as if references in that Act to the Minister of Lands were references to the Minister as defined in section 2(1) of this Act; and

Section 16(1) of the Overseas Investment Act allowed Ministers to delegate to the OIC their decision-making under s 57 and entitled the Ministers to give the OIC directions as to Government policies as they thought fit.

The Ministerial letter of delegation of 19 November 1999 delegated to the OIC the authority to determine applications pursuant to s 56/57 of the Fisheries Act 1996 (s 9(2) and s 16(1) Overseas Investment Act). It also gave notice to the commission that it wished to convey to it general policy of the Government to inform the OIC’s exercise of its s 56/57 function as follows:

“GENERAL POLICY APPROACH

2. Section 9(2) of the Overseas Investment Act 1973 (the Act) requires the Commission to “comply with the general policy of the Government . . . transmitted in writing . . . by . . . the Minister (Treasurer) and the Minister of Lands”. We wish to convey the following general policy of the Government in relation to the exercise of the Commission’s functions, powers, and duties including in relation to the administration of sections 56 and57 of the Fisheries Act 1996:

(a) The Government recognises the need for overseas capital and welcomes and encourages investment. Our policy reflects the need to develop strong international linkages and that the inflow of investment typically provides a net benefit to the New Zealand economy.

(b) The Government is committed to an open and facilitate investment regime. Accordingly:

(i) The investment criteria applications must meet should be interpreted in a manner that facilitates rather than impedes investment;

(ii) Proposals that satisfy the investment criteria should be approved unless good reason exists to refuse them; and

(iii) Any legislation administered by the Commission should be applied in a clear, consistent and efficient manner.

. . .

7. The Treasurer and the Minister for Food, Fibre, Biosecurity and Border Control, as Minister of Fisheries, also fully delegate to the Commission and its staff, so long as the Ministry of Fisheries concurs with the decision in each case, their powers to consider and determine applications under section 56(2) and 57(3) of the Fisheries Act 1996. Where the Ministry of Fisheries does not concur, the Ministers will determine the application.”

And under “criteria” it stated:

“CRITERIA

8. In considering any applications under the Overseas Investment Act 1973 under delegation the Commission and its staff must take into account the matters provided for under section 14A of the Overseas Investment Act 1973. In considering any applications under section 57(3) of the Fisheries Act 1996 under delegation the Commission and its staff must take into account the matters provided for under section 57(4) of the Fisheries Act 1996.”

Shortly after this delegation was communicated to the OIC the 1999 general election changed the government of New Zealand. The OIC in its post-election briefing papers to the two relevant Ministers (the First Defendants in this case) pointed out the existence of the delegation which continued until revoked. Thus the OIC was the proper body to consider Maruha’s applications of January and March given no revocation of the delegations had occurred by those dates.

The OIC’s decision on 25 February followed the form of Maruha’s application and granted its application. No extensive reasons were given. Permission was said to be “in principle”. At paragraph 5 of its decision it said:

“5. Should the Applicant need to act upon the above permission in principle, please provide the Commission with details of:

(a) the proposed purchasing structure;

(d) the consideration payable; and

(e) such other matters as may inform the Commission as to how the proposal will proceed

to enable the necessary formal consent(s) to be granted prior to the settlement of any transaction of the kind outlined in paragraph 4.”

On 31 March the variation sought by Maruha was approved in similar form.

The s 28Z argument

The Plaintiff says the OIC had no jurisdiction to consider these applications because Ceebay’s quota had already been forfeited to the Crown in July 1993 by virtue of s 28Z of the 1983 Act (as amended 1986). Thus they say the transitional provision in the 1996 Act did not apply to Ceebay because the quota was already forfeit to the Crown.

The OIC says in reply

(i) the OIC did not need to resolve the s 28Z argument to make a decision on Maruha’s application, and

(ii) the s 57 applications by Maruha were not dependent upon transitional provisions. They were applications to hold quota in the future rather than continue to hold quota which might be subject to s 28Z challenge.

The s 28Z argument will occur in other contexts in this case (especially the second and third cause of actions involving Ceebay and the deed) and is dealt with in relation to the Deed at paragraphs 192-213 of this judgment.

Section 333A(1) of the 1996 Act provides as follows:

“333A Transitional provisions relating to foreign ownership

(1) This section applies to persons who are prevented from owning provisional catch history, quota, or annual catch entitlement under section 56, but who [would not be prevented from owning quota under section 28Z of the Fisheries Act 1983 if that section were still in force.”

and s 56(1) provides:

“56 Quota or annual catch entitlement not to be allocated to overseas persons

(1) No provisional catch history, quota, or annual catch entitlement shall be allocated to any overseas person and no overseas person may purchase or own any provisional catch history, quota, or annual catch entitlement, or any interest in any provisional catch history, quota, or annual catch entitlement (whether recognised by this Act or not) unless the overseas person-

a) Is a company named in a Gazette notice given by the Minister [and the Minister for the time being responsible for the administration of the Overseas Investment Act 1973] under subsection (2) of this section; or

(b) Has obtained, under section 57 of this Act, the permission of the Minister [and the Minister for the time being responsible for the administration of the Overseas Investment Act 1973] to own the provisional catch history, quota, annual catch entitlement, or the interest in quota.”

and s 57(3) provides:

“57 Minister may permit acquisition or continued holding of quota by persons to whom section 56 applies

(3) The Minister and the Minister for the time being responsible for the administration of the Overseas Investment Act 1973 may, on receipt of an application in the approved form (if any) accompanied by the prescribed fee (if any) but subject to subsection (4) of this section, permit the acquisition or continued holding by any overseas person who is an incorporated body of any-

(a) Quota or interest in quota; or

(b) Annual catch entitlement; or

Provisional catch history.”

At the time of the application by Maruha it held no quota in its own name. It was simply a shareholder in Ceebay which owned quota. Thus its two applications were to the OIC for it to acquire 100% of the shares in Ceebay and thus to acquire the quota and to lease this quota. Both of these events were to be in the future. They were not applications relating to any existing quota rights whether of ownership or leasing. The question of whether Ceebay’s quota was forfeited to the Crown was irrelevant to this application. If the quota was forfeited then any OIC permission for Maruha would be of no effect because there would be no quota to acquire or lease. If the quota was not forfeited then permission would have substance. Thus Maruha’s application was a “fresh” application pursuant to s 57. It was not dependent on the transitional provisions (s 333A) because it held no quota to transfer. It was a new application for a new applicant to hold quota. I therefore accept the OIC’s argument that s 333A and s 28Z were irrelevant to Maruha’s application. The OIC could consider Maruha’s application without the need to consider s 28Z at all.

The Ultra Vires Argument

The Plaintiff argues the delegation of the Minister of 19 November was ultra vires, the 1996 Act. Thus the OIC in acting in accordance with this delegation in granting permission acted ultra vires.

I have detailed the November 1999 delegation and the statutory authority (s 16(1) OI Act) under which the delegation and direction was given. The Plaintiff says the presumption in favour of approval of applications under s 57 was ultra vires in that it was inconsistent with the words and scheme of the 1996 Act. I have set out the policy direction in paragraph 20 of this judgment.

Some concern was expressed about the vires of this delegation/direction during the early part of 2000. A Crown Law opinion was obtained (dated 5 May 2000) The Plaintiff says this opinion supports their contention that the delegation was ultra vires. The Plaintiff now adopts the Crown Law opinion and conclusions.

The Crown Law opinion as relevant states:

“144. . . . As stated, the OIA itself is on the whole neutral as to whether overseas investment should be encouraged or not. A pro or anti-investment stance will come from the Government’s policy directives provided for under s 9(2) and (3).

While the directive to encourage and facilitate overseas investment is therefore within the contemplation of the Act generally, the directives to approve applications are unless there are sound reasons for rejecting them and to take applicants’ bona fides at face value unless there is good reason to doubt them, may go beyond the scope of the Act, and in particular s 57(4), as incorporated into the OIA.”

The Second Defendant says that the opinion does not clearly conclude that the delegation was ultra vires and in any event the opinion is based on a misapprehension as to what the actual delegation was.

Clearly this is correct. The Crown Law opinion seems to consider the Minister gave a direction to the OIC to approve applications unless there were sound reasons for rejecting. The Minister did not do this. The Ministerial discretion said that if a proposal satisfied the investment criteria they should be approved unless there were good reasons to refuse them. They reminded the Overseas Investment Commission of the need to consider the s 57(4) criteria. Section 57(4) states:

“(4) The Minister [and the Minister for the time being responsible for the administration of the Overseas Investment Act 1973] may grant permission under subsection (3) of this section only if satisfied that-

(a) The individuals controlling the applicant are of good character and no such person is a person of the kind referred to in section 7(1) of the Immigration Act 1987; and

(b) The granting of the permission is in the national interest, having regard to one or more of the following:

(i) Whether the granting of the permission will or is likely to result in-

(A) The creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost:

(B) The introduction into New Zealand of new technology or business skills:

(D) Added market competition, greater efficiency or productivity, or enhanced domestic services, in New Zealand:

(E) The introduction into New Zealand of additional investment for purposes of significant development:

(F) Increased processing in New Zealand of fish, aquatic life, or seaweed:

(ii) Such matters as may be prescribed by regulations made under this Act:

(iii) Such other matters as the Minister, [and the Minister for the time being responsible for the administration of the Overseas Investment Act 1973] having regard to the circumstances and the nature of the application, [think] fit.”

I read the “investment criteria” as referring to the matters set out in s 57(4) and especially (b)(i). Certainly all of those matters referred to in paragraph (b)(i) could broadly be considered investment criteria. The second part of the direction is that if the (b)(i) aspects are positive then the application should be granted unless there are good reasons not to do so. This seems unobjectionable. This question could be seen as coming within s 57(4)(b)(iii). The direction therefore relates only effectively to (b)(iii) category of factors. These are “other matters”. Ministerial direction here seems to be exactly as contemplated by s 16(1) OIA. The Ministers are able to say to the Overseas Investment Commission when considering (b)(iii) matters if the investment matters are all favourable grant the application unless there are good reasons to the contrary. The addition of the condition makes the discretion even less objectionable. The OIC is encouraged to take into account relevant matters to the contrary in making its decision. Or as the direction said “unless good reasons exist to refuse them” And there was a final check on the decision.

The OIC needed Ministry of Fisheries’ concurrence before it could confirm its own decision. The commission is obliged to comply with general or specific direction of the Government as transmitted in writing (s 9(2) and (3) OIA). This was recognised by Mr Stephen Dawe of the OIC who filed an affidavit in this matter. He illustrated in his affidavit how the OIC complied with these directions and went about considering Maruha’s applcation in detail.

I conclude therefore the direction of November 1999 by the Ministers were not ultra vires the 1996 Act and was within the Minister’s authority under the OIA.

Permission in principle argument

The Plaintiff says that permissions in principle (given by the OIC in February and March 2000) are not authorised by the Fisheries Act. This system of permission granting it says is objectionable because:

(a) It is conditional and not absolute and the statute does not authorise this type of permission

(b) The permission in principle is not based on facts existing when the application is finally granted.

The Second Defendant says that permissions in principle are authorised in law and properly part of the OIC’s function and good administrative practice. I accept the submission of the Second Defendant that permission in principle or conditional permission is contemplated by the statutory regime and sensible administrative practice. I see nothing in what the OIC did here which is objectionable in a review sense.

Section 57(6) provides:

“(6) The Minister and the Minister for the time being responsible for the administration of the Overseas Investment Act 1973 may grant a permission under subsection (3) of this section in whole or in part and either unconditionally or subject to such conditions as they think.”

This is a very wide power. And it is accompanied by the OIA and Regulations regime which also contemplates the granting of permission subject to conditions. Section 19(2) OIA (1999 Amendment) incorporates s 56 and s 57 into the OIA (other than s 14A) and the 1995 regulations. Regulation 14(1)(b) of the 1995 regulations provides:

“14. Granting or refusal of consent -

(1) Any consent for the purposes of these regulations may--

. . .

(b) Be granted wholly or partly and either unconditionally or subject to such conditions as the Minister, or the Minister and the Minister of Lands, as the case may be, think fit: . . .”

At the “in principle” stage the OIC considers whether the applicant comes within the s 57(4) criteria. If it considers the application should be granted as coming within this criteria and within its residual discretion then it grants consent subject to the transaction actually proceeding and subject to any other conditions it may wish to impose.

This approach complies with the Act, Regulations and good administrative practice. It would create an absurd barrier to overseas investment applications if the transaction which required permission was required to proceed before the result of the application to the Overseas Investment Commission was known.

I make the obvious observation that to avoid confusion in the future the OIC may be better to call the grant what it is; conditional permission/consent etc. The Plaintiff also complained about the possibility of a change in circumstances between the conditional consent and the final consent. That is always possible. But the commission has the power at any time to revoke the consent and could do so if the facts change such that a new decision was effectively required.

I therefore reject the Plaintiff’s complaints that the conditional decisions of February and March were improperly given or an inappropriate fetter on the OIC.

The NZ-isation argument

Here the Plaintiff complains that the Second Defendant in making their decision failed to have regard to and apply the “NZ-isation policy of the Act and thereby acted ultra vires the 1996 statute”.

This submission by the Plaintiff that the 1996 Act and indeed previous Fisheries legislation since 1986 has been driven by a NZ-isation policy pervades the Plaintiff’s case. It says this policy should inform the interpretation of the Fisheries Act and should dominate the statutory decision-maker’s approach to their task under that Act. This policy, the Plaintiff says, requires s 56, s 57 to be interpreted as if there was a presumption against foreign ownership of quota.

The Second Defendant says there is no such policy of NZ-isation in the 1996 Act whatever it might be. They say the OIC applied the statutory criteria/test under s 57(4) which is whether the overseas investment is “in the national interest”.

I now consider the Plaintiff’s claim that this NZ-isation pervades the Fisheries Act and informs interpretation of the statute.

The Plaintiff’s submissions in this section begin with this paragraph:

“The Plaintiff’s claims are substantially founded on the NZ-isation policy incorporated in (currently) Part IV - especially ss 52-62 of the Act”.

The Plaintiff says the legislative policy of the 1996 Act requires:

(a) a strong presumption that overseas ownership of quota will not be in the national interest; and

(b) that overseas applicants must show the proposed benefits will enhance national interest in fact; and

This summarises the Plaintiff’s submissions as to the effect of its NZ-isation policy.

Some background to the fisheries legislation is helpful. The 1986 Act introduced a quota management system into New Zealand. In doing so it sought to restrict foreign ownership of quota. The formula used was to ban companies from owning quota that were wholly or significantly controlled from outside New Zealand (s 28Z). Section 28Z(9) allowed the Director-General of Fisheries to permit acquisition and holding of quota by overseas persons. Any by subsection (4) the Director-General could declare any company not wholly or significantly overseas controlled.

Significant control was defined as including overseas ownership of 25 percent or more of the voting shares of a company. Thus the State tried to control overseas ownership of quota by focusing on control of companies holding such quota.

The 1986 Fisheries Act therefore allowed limited participation in fishing by overseas companies. Control was exercised by a statutory prohibition of significant control of a quota-owning company. This scheme is said to illustrate a NZ-isation policy. I cannot see that it does any more or less than it appears to do. Clearly NZ ownership of quota is preferred but overseas participation is permitted in limited circumstances.

There was discussion of New Zealand ownership of quota reported in Hansard and publicly by members of the Government and Opposition during the 1986 amendments to the 1983 Fisheries Act which introduced the restrictions on foreign ownership. They are of no particular assistance in the interpretation of the statute. They are understandably little more than political rhetoric. I see no need nor any justification for any interpretative overlay to assist in ascertaining the meaning of the 1983 legislation and its amendments.

As to the 1996 Act

The Plaintiff says the 1996 Act strengthening the primary position that foreign ownership was prohibited. They submitted that the purpose of ss 56 and 57 was that in the absence of good reasons foreign quota ownership was not in the national interest. And thus they say the exemption power in s 57(4) cannot be used to thwart this legislative intent.

The foreign ownership provisions of the 1996 Fisheries Act provide a different regime to control foreign ownership of quota than the 1983 Act. Sections 56-58 were originally enacted in 1996 but did not come into effect until 1 October 1999. Before s 58 came into effect it was amended by deleting subsection (5) which read before amendment as follows:

“(5) No permission shall be granted under subsection (3) of this section if it will result in -

(a) Overseas persons having the right to exercise or control the exercise of 40 percent of the voting power at a meeting of the applicant; or

(b) Overseas persons being able to appoint or control the appointment of 40 percent of the board of directors (or other persons or body exercising powers of management, however described) of the applicant.”

The new subsection (5) deleted the old subsection (5) without any equivalent or similar replacement.

The new regime therefore avoided a percentage assessment of control of companies to define foreign involvement and focused on s 57(4) and “national interest” criteria. Foreign companies could own 100% o a quota owning company as long as it could convince the Ministers it came within s 57 criteria.

Again much political rhetoric accompanied the debate about the 1996 Act and the date of introduction of ss 56, 57 and 58. I have not found any of it helpful in interpreting the purpose of the sections.

In my view Parliament’s intention and purpose can be very clearly gleamed from the structure and words of the sections. Additional interpretative aids in this case are either unnecessary or unhelpful. They certainly will not make words phrases or sections or parts of the Act say something other than they clearly do. Sections 56 and 57 contain a simple straight-forward statutory regime designed to control foreign ownership of quota. Section 56 prohibits quota ownership by overseas companies unless they come within s 57. Section 57 allows the Minister to approve ownership of quota by a overseas company if it can bring itself within s 57(4) criteria. Section 58 provides for forfeiture of quota. Section 333A allows a transitional period for those overseas companies holding existing quota to apply under s 57 for an exception or a further period to sell the quota if their s 57 application is unsuccessful, or they choose not to make such an application.

There is no overt or implicit “NZ-isation” policy in these sections. Clearly overseas companies cannot own quota unless they bring themselves within s 57(4). And even then the Minister has a discretion. In that sense the Act prefers New Zealand ownership. New Zealand companies have no such hurdles to overcome in owning quota. The switch from 1986 to 1999 is a switch from control of overseas ownership by limiting control of quota owning companies to allowing 100 percent foreign overseas ownership as long as the overseas company can bring themselves within national interest criteria. Clearly Parliament could have prohibited overseas ownership absolutely. It did not do so. It switched the focus to the national interest test. While I imagine no Government would allow it to happen, all quota could be controlled by overseas companies if the s 57(4) criteria were the limit of the enquiry. The point is made to illustrate the proposition that the barriers now are not owner/control of companies but national interest.

In my view the Plaintiff’s have fallen into error in assuming NZ-isation equates with national interest. They effectively submit that New Zealand ownership of all quota no matter what the circumstances will automatically be in the national interest. This is misconceived. The OIC and the Ministers have far broader questions than the Plaintiff’s narrow focus on New Zealanders owning quota. Self-evidently national interest may not always equal New Zealand ownership of quota. One can readily understand why Parliament provided for Ministers to answer the questions under s 57(4). They are the very stuff that citizens expect Ministers to judge. They are elected to articulate and apply their view of national interest. And sensibly the Act is framed to allow Governments with different views on national interest to apply their views but remain within the statutory criteria.

There is no helpful presumption to be applied to s 57 applications beyond those overtly expressed in the words of the section. The legislation does not provide for any, nor is any necessary to give effect to the purpose of this part of the Act.

When Parliament gave the OIC the responsibility for overseeing and if delegated to decide s 57 applications it did so no doubt aware of the several decades of experience it had in considering overseas investment matters.

Parliament excluded s 14A of the OIA and introduced s 57(4) as the criteria for Ministers to consider in fishing quota applications. Section 14A provided that if the criteria for approval for an overseas person to acquire assets in New Zealand was met the application “shall” be granted.

It changed the “shall” in s 14A(1) to “may” in s 57(4). It could have specified a presumption against overseas ownership. It did not. In fisheries cases it widened the discretion available to Ministers. It is not for this Court to read into s 57(4) anything beyond the hurdles legislatively described.

And finally s 57(4) is properly read as a method by which overseas investment is allowed in New Zealand. The Minister may grant permission but only if satisfied that the individuals controlling the company are of good character and if in the national interest one or more of the listed criteria are likely to result. The Minister does not need to consider or be satisfied all criteria are met but in contrast to s 14A even if he is satisfied one criteria is established he is not obliged to grant permission.

The Plaintiff also maintains that the Minister’s focus must be on future activities of the applicant only. Clearly the focus of s 57(b)(i)A-F is on the future. The Minister/OIC may wish to know if the overseas company investment is likely to result in for example new jobs in New Zealand. However in (b)(iii) the Minister is not so limited. His focus can be broad while still obviously on the fact that this is an application for permission for an overseas company to hold quota and national interest matters dominate. Here the Minister could perfectly properly take into account the applicant’s past contributions to New Zealand fishing industry and for example the effect of refusing such an application on New Zealand’s credibility with its trading partners (more of this later). These are obviously national interest matters which the Minister is elected by the people of New Zealand to decide.

The information relevant to the application might reasonably be for, against or neutral. It will be for the Minister/OIC to identify the relevant evidence, assess it’s national interest effect and balance and weigh the for, against and neutral information in reaching a decision.

Nor in my view is a counterfactual assessment required by the Minister/OIC when considering s 57(4)(b) criteria. The use of a counterfactual analysis may or may not be appropriate depending upon the criteria being considered and the evidence by the applicant. However, the applicant is not required to establish on each (b)(i) criteria that a New Zealand company owning the quota could not achieve the same national interest results. Such an analysis may be relevant as I have mentioned but other factors may also be relevant in the national interest which do not lend themselves to a counterfactual analysis.

To return to the Plaintiff’s argument. It submitted that the OIC failed to apply the correct test to the Maruha applications and thus its decision was ultra vires the 1996 Act. For the reasons I have given the test the Plaintiff proposed the OIC should apply is wrong. I am satisfied the test the OIC did apply based on the 1999 delegation and s 57(4) of the Act was the correct test. There was no suggestion from the Plaintiff that if I rejected its proposition as to the test to be applied that in any event the OIC erred.

Mr Dawes’ evidence makes it clear a careful analysis of the Maruha application took place. Talleys were offered and took the opportunity to comment on the application. Maruha were asked to comment on Talleys’ comments and were asked for further information regarding the application. This was supplied. The proper process occurred and proper tests required under s 57(4) undertaken by the OIC.

I am satisfied the OIC applied the proper statutory criteria to their decision. I am satisfied there is no statutory overlay of NZ-isation required in interpreting this legislation.

The Irrelevant considerations argument

The thrust of the Plaintiff’s submission here is because the OIC gave no reasons for its February and March permission it must be assumed that each of Maruha’s arguments in support of its application were given some weight by the OIC. The Plaintiff then moves to a detailed criticism of the points raised by Maruha in support of its application. Paragraph 45(e)(iii) of the Plaintiff’s Statement of Claim details the allegations of irrelevant considerations which the Plaintiff says the OIC took into account. Before considering each of the allegations I make the observation that the Plaintiff’s case in this part is built on inadequate foundations. It is based on the assumption that each and every submission of Maruha was accepted by the OIC. The Plaintiff then chooses those Maruha submissions it considers vulnerable and attacks them. This is well short of establishing the OIC took into account irrelevant considerations. Nor can I see the rationale for assuming everything Maruha said OIC accepted. OIC are an organisation whose life is the processing (and deciding) applications by overseas entities to purchase or to hold assets in New Zealand. They will be well experienced in distinguishing rhetoric from fact. The OIC has a worksheet which contains a checklist of matters it considers when gathering information on applications. The checklist specifically deals with the s 57(4) criteria. The OIC’s evidence is that it used this checklist in the processing of Maruha’s application. Two particular matters of relevance:

(1) The OIC invited Talleys to make submissions on the application. They did so and their replies were passed on to Maruha who in turn responded.

(2) The OIC is required to consider s 57(4) criteria. It only has to be satisfied that one of the criteria were present and conclude it is in the national interest that the application be granted to grant the application.

I now consider each criticism in detail.

The application by Maruha was said to be deficient and thus the OIC permission deficient because (a) “the stated rationale for granting permission was to aid Maruha in its dispute with Amaltal”.

The evidential reference given for this assertion is PB2.188 para 6.1 (PB=Plaintiff’s bundle):

This document is a letter from Buddle Findlay on behalf of Maruha dated 20 January 2000 making the application to acquire fishing quota under s 57.

Paragraph 6.1 reads:

“6.1 As the Commission is aware from the earlier application, Maruha is in a dispute with Amaltal, the other shareholder of Ceebay. Maruha wants to be able to acquire the quota or purchase the shares in Ceebay that it does not own should an agreement to do so be reached. Obtaining permission in advance will facilitate the ways and means to resolve the dispute, as it will provide to the parties information as to what is possible under the new foreign ownership regime.”

As will be self-evident Maruha does not claim a special benefit. The paragraph is unobjectionable. Maruha does not suggest it is making the application to benefit itself in its dispute with Talleys. And it should be kept in mind this was Maruha’s quota from their joint venture with Amaltal. I reject the suggestion it is improper in any way.

(b) This point is a criticism of Maruha’s claim that it will generate investment, new technology and research and development information in support of its s 57 application.

The Plaintiff says these assertions were unsubstantiated unlikely to realise future benefits and were not linked to Maruha’s ownership of Ceebay quota.

The remaining assertions by the Plaintiff in this section are in a similar category. The Plaintiff says Maruha’s assertions about

(d) increased export markets

(e) further investment

are also unsubstantiated and unlikely to be realised.

The Plaintiff says in paragraphs (f), (g) and (h) that Maruha’s claims are based on past contributions dealt with existing benefits only and the benefits claimed are speculative.

This Court’s concern is to ensure the OIC had a proper process to consider Maruha’s claims, assess their benefit and reach a judgment. I am satisfied that the OIC did have a robust process to consider Maruha’s claims. The relevant aspects can be summarised as;

(1) Under s 57(4) the OIC in considering national interest only had to have “regard to one or more of the following”.

(2) I have rejected the Plaintiff’s proposed NZ-isation approach to interpretation of ss 56 and 57.

(3) I have rejected the proposition that because Maruha made an assertion in support of its application I should assume OIC accepted it.

(4) The process involved an exchange of information and claims by the applicant (Maruha) the OIC and Talleys.

(5) In particular the OIC had:

(a) a check sheet for statutory criteria

(b) overtly did not accept Maruha’s assertions at face value e.g. the OIC fax to Buddle Findlay of 11 February seeking information about the value of Hoki sent to Japan.

(c) accepted Talley’s comments on the application and passed them for comment to Maruha and summarised these exchanges. The detail of this is set out in Mr Dawe’s affidavit.

(d) long experience of applications for overseas investment permission.

(6) The OIC had a well developed and sensible processes for dealing with third party comments including non disclosure of the name of the third party where appropriate.

(7) It is clear from the OIC’s internal memoranda that in fact Talleys’ assertions were given proper consideration, firstly by referring them to Maruha for comment and, secondly independent analysis by the OIC or other party.

(8) I have already concluded that it was not essential for the OIC to undertake a counterfactual analysis although it clearly did so if it thought appropriate.

(9) Mr Dawe in his affidavit makes it clear that the Plaintiff’s assertions disputing Maruha’s claims were considered by the OIC and a conclusion reached.

The overall conclusion was:

“The third party [Talleys] has raised semantic technical issues that are technically correct but are not substantial nor directly relevant to the national interest consideration”.

(10) The Plaintiff complains that the information provided by Maruha was “historical”. I see nothing at all objectionable in this . The OIC could legitimately take this information into account when considering subsection 57(4)(b)(iii) matters. It was also relevant in assessing the credibility of its predictions about future benefits.

(11) Finally, the OIC assessed each claim from Talleys and each counterclaim, weighed the evidence, sought more information if required from Maruha or other sources and made a decision.

The OIC illustrated it had a robust process to consider such applications. There is nothing of substance in the Plaintiff’s complaint nor any evidence to support their fundamental assertion.

The merits argument

The Plaintiff alleges that the OIC believed Amaltal was trying to use the OIC’s procedures for an improper purpose and it believed the merits of the Amaltal (Talleys)/Maruha dispute lay with Maruha. The Plaintiff says the OIC illegitimately took these factors into account when it reached its decision on the Maruha application.

The Plaintiff suggests that the decision by the OIC to grant Maruha’s application “undoubtedly gave Maruha the upper hand in its commercial dispute with Amaltal as”:

“(a) they indicated, contrary to Amaltal and Talley’s briefs and position, that the new foreign ownership provisions were not restrictive; and

(b) they gave Maruha increased leverage in the dispute with Amaltal (see M Talley (I), para 71).”

Presumably whether Maruha’s application was granted or refused, one party was going to be seen as obtaining the upper hand in their dispute. This is no reason to decide the application either way. There is no evidence OIC took into account in making its decision the fact that one or other party would get the upper hand in its commercial dispute if it was “successful”.

As to (a) above, this is another reformulation of the NZ-isation policy. I reject it also.

As to (b) this is a reformulation of the basic submission that the decision gave Maruha the upper hand in its dispute with Amaltal. That as I have observed is a matter for the parties to judge. It is not relevant to the OIC. There is no evidence that OIC took it into account at all.

There is no evidence from the Plaintiff to justify the assertion that the OIC sided with Maruha in a dispute with Amaltal. References to Mr Dawe’s affidavit provided by the Plaintiff in support of these allegations do not relate to the February and March permission in any event. It is not objectionable for the OIC to make a note that an assertion by Talleys is inaccurate or that the OIC disagrees with or considers assertions by the Talleys irrelevant. This is the OIC’s function; to assess relevance and accuracy and to discard the irrelevant and the inaccurate. When it does so it does not show bias to either party. There is nothing in this complaint by the Plaintiff.

The November permission

The Plaintiff submits the November permission is invalid and of no lawful effect because of:

(a) the s 28Z argument

(b) The NZ-isation argument

(d) The revoked delegation argument

(e) The no reconsideration argument

I have already dealt with the NZ-isation argument. I will deal with the s 28Z argument at paragraphs 24-28 and paragraphs 192-213 of this judgment.

Background

On 30 October 2000 Buddle Findlay Solicitors acting for Maruha wrote to the OIC and asked that the previous March approval be formalised. Maruha wanted permission to acquire the leasehold interests of the quota from Ceebay.

The OIC took the view that the March permission was a conditional permission for Maruha to acquire the leasehold. I have concluded that this is correct. The OIC therefore took the view that it was for it to confirm, if appropriate, the conditional consent. In the meantime the Ministers had revoked the delegation of November 1999 and resolved (8 July 2000) to decide any new fishing quota applications themselves. And the Ministers on 8 May 2000 refused applications by foreign companies to purchase BIL’s shareholding in Sealords a large quota owning company. This was the background to a 22 November 2000 memorandum from the OIC to the Ministers. The relevant aspects of the memorandum were:

(1) a summary of the March application

(2) a summary of the reasons why the OIC proposed to confirm the March application

(3) a summary of the changes to the policy framework as mentioned above (revocation of delegation and general policy direction).

(4) advice that the Ministers could revoke the March 2000 permission.

As to (4) above it is clear from the Overseas Investment Act that either the OIC or the Minister could revoke conditional permission at any time. The Ministers decided the OIC could formalise the March 2000 permission.

I have already found the February and March permissions were validly given as conditional permission authorised by the Overseas Investment Act and the Fisheries Act. The OIC does have statutory power to grant conditional permission as it did here. Once permission is granted the substantive decision is made. The substance only needs to be reconsidered if circumstances change sufficiently to require it. Here the Ministerial power was effectively one of veto. It could reverse the decision of March 2000 because either the OIC or the Minister could veto the decision at any time. But if the Ministers did not wish to veto then they could as they did step aside and let the OIC confirm its decision if appropriate. The OIC were confirming a decision already reached subject only to the conditions. Thus the process followed by the OIC confirming the conditional consent was properly undertaken.

My conclusions are:

(1) The November 1999 delegation was valid

(2) The revocation of the OIC’s November 1999 authority did not directly affect its March 2000 conditional consent

(3) The original conditional permission was valid

(4) The OIC properly invited the Ministers to consider revoking the March decision if they wished and as they were empowered to do.

(5) In the absence of such revocation the OIC confirmed the conditional permission.

To return to the Plaintiff’s arguments. The tainted decision argument. The Plaintiff claims that because the February and March permission were considered and determined under the alleged ultra vires November 1999 delegation the November 2000 permission is accordingly tainted. I have already considered that the November 1999 delegation was not ultra vires. There is therefore no tainting of the November 2000 decision.

The revoked decision argument. The Plaintiff says for two reasons the decisions in November 2000 were the Ministers and not the OIC’s. Firstly they say OIC cannot grant permission in principle. I have already dealt with and rejected this argument. Secondly, the Plaintiff submits from 6 July 2000 when the November 1999 delegation was revoked only the Ministers could make the decision. This assertion as I have observed misapprehends the February and March permissions which were conditional permissions. They were the OIC’s to confirm or the Ministers to veto.

The no reconsideration argument. The Plaintiff alleges the Ministers were required to fully consider as at November 2000 Maruha’s application and complains it did not do so. For the reasons I have given the November decision was for the OIC to make or for the Ministers to veto by cancelling the conditional consent. Thus the Minister was not required to reconsider the February and March permissions in November 2000.

There is therefore nothing objectionable about the November confirmation of the March conditional permission.

The second cause of action: Ministers granting of Ceebay application to continue to hold quota

On 22 September 2000 the Ministers granted Ceebay’s application under s 57(4) of the Fisheries Act 1986 as an overseas company to continue to hold fishing quota. The Plaintiff now says the decision by the Ministers was flawed in seven particular ways. I consider each in turn.

The s 28Z argument

This is dealt with at the end of this judgment at paragraphs 192-213.

Relevant Facts

In November 1999 the then Government delegated authority to the OIC to decide s 57 applications. Early in 2000 the new Government was faced with the Sealord applications. Brierly Investments owned a significant percentage of Sealords. It wished to sell its shareholding. A number of overseas companies applied to the OIC for permission pursuant to s 57(4) to acquire “quota” through the purchase of Brierly’s shares in Sealords. Sealords held a significant percent of the Hoki quota available in New Zealand. The OIC prepared an analysis on the various applications for s 57(4) permission and consistent with the November 1999 delegation it expressed a view of the various applications. The report followed s 57(4) and the directions contained in the November 1999 delegation. The new Ministers of the OIC and Fisheries revoked the November 1999 delegation as far as the Sealord decision was concerned and after seeking further evidence from the OIC refused all the applications under s 57(4) by overseas companies to buy Brierly Investment shares in Sealords.

On 6 July 2000 the Ministers revoked the delegation and directions of November 1999. They advised the OIC the Ministers would decide all s 57(4) applications in the future.

The OIC was therefore to be the investigative body as far as fishing quota applications were concerned. It would continue to, receive the applications, carry out the inquiries, and obtain the necessary information on which the Ministers could base their decision.

The letter of 6 July 2000

(a) revoked the November 1999 delegation

(b) advised all fishing quota applications would be dealt with by the Ministers

(d) noted the OIC’s responsibility for gathering information which was to be exercised in a “neutral” manner

(e) pursuant to s 9(2) of the Overseas Investment Act advised the general policy of the Government:

“(a) The Government recognises the need for overseas capital and welcomes and encourages investment which meets the tests set out in the legislation.

(b) The Commission’s operating procedures should be consistent with the Government’s intention to facilitate positive investment.

(f) Perform its functions and administer the legislation it has responsibility for a timely, consistent and efficient manner;

(ii) Seek to minimise the compliance and transactions costs to the private sector of the investment regime;

(iii) Seek sufficient information from applicants for it to be assured about the accuracy of the information supplied;

(iv) Seek sufficient evidence from applicants for it to be able to judge whether any national interest benefits claimed by them are likely to eventuate;

(v) When it considers it necessary to verify that information or that evidence, seek input from government agencies or others it considers have particular competence in relation to that application.

(vi) Seek to recover its operating costs, through fees that must be approved by the Treasurer, from persons who use its services”.

In 2000 Ceebay applied under s 57(4) to continue to hold the quota owned by it. The OIC prepared a report for the Ministers. The Ministers granted the application.

The Plaintiff claims that the decision to grant permission by the Ministers was fatally flawed because the OIC’s report on which the decision was based was inadequate and procedurally unfair.

Procedural unfairness

The Plaintiff lists, and I will consider, a number of objections to the procedure used by the OIC to investigate Ceebay’s application. It is also important in a situation like this after considering the Plaintiff’s objections to step back and consider the overall effect of what the OIC did and compare that against the requirement of procedural fairness.

The complaints are:

(1) The OIC treated Maruha preferentially by regarding Buddle Findlay as Ceebay’s solicitors;

(2) The OIC dealt personally with Maruha’s representatives but not Amaltal’s;

(3) The OIC put to Maruha but not Amaltal or Talleys all the allegations relating to Ceebay;

(4) The OIC communicated with Buddle Findlay and KPMG Legal (who acted for Amalgamated and the Amalgamated appointed directors) but not Talleys or Amaltal.

Some of these complaints proceed on the misapprehension that Talleys was somehow a party to Ceebay’s application for s 57 approval. It was not. Talleys made comments and observations about Ceebay’s application as they were entitled to. The function of the OIC was not to act as quasi-judicial body hearing evidence from both sides of a dispute and giving answers or a resolution of their dispute. Nor was it akin to a Commission of Inquiry. The OIC in this role had the job it was given in the Minister’s letter of 6 July 2000 and pursuant to the relevant legislation. (Overseas Investment Act and Fisheries Act). Talleys was not shareholder of the applicant. It was also clearly in competition with Maruha.

There had already been difficulties with the attitude of the Amalgamated (Amaltal’s) directors in pursing the s 57 application by Ceebay. Buddle Findlay acting for Maruha had applied to the OIC on behalf of Ceebay for s 57 permission to hold quota. Predictably the OIC told Maruha it would not deal with a shareholder and the company itself would need to apply. The Amalgamated/Amaltal directors effectively refused to support a s 57 application by Ceebay. Maruha applied to the High Court and obtained an order requiring the directors to consent to and facilitate such an application. Further problems ensued. Maruha was forced to return to Court again to enforce the previous order. At this hearing, full indemnity solicitor-client costs were awarded against the directors. It is difficult to understand how directors acting in good faith in the interests of Ceebay could refuse to apply for a s 57 exemption on the company’s behalf. Such a refusal would mean that Ceebay would be forced to sell its quota or the quota would be forfeited to the Crown. Clearly the court concluded the directors had not been acting in Ceebay’s interest as they were obliged to.

As to the general approach to the preparation of the report I consider OIC went out of their way to try and set up a reasonable process for dealing with the application given the difficulties between Maruha, Ceebay, Amaltal and Talleys. It proposed a method by which it considered the parties would have a fair opportunity to be heard. This of course did not mean as I have already observed that Amaltal or Talleys were effectively to be seen as litigants entitled to full “party” rights. The OIC process is illustrated in its letter of 24 July to the parties:

“6. Counsel for Amaltal seem concerned t hat Amaltal is not being given the same rights as Maruha regarding supplying information to the OIC. I think there is some confusion here. Amaltal can forward any submissions it likes to the OIC about whether permission should be granted to Ceebay to continue to hold quota. Those comments will be considered to the extent that they are relevant. Where Amaltal raises matters that adversely affect Ceebay’s application then the issues will be put to the directors of Ceebay. If commercially sensitive material is disclosed as part of any submission then we will treat in the same manner as mentioned in paragraph 4.

. . .

8. Amaltal question the logic of us allowing Maruha to make representations to the OIC about its own activities in relation to the Ceebay application. I reiterate our view based on the wording of the legislation that it is legitimate for Maruha to make a case that the proposal is in the national interest because certain benefits flow to New Zealand via Maruha as a result of its shareholding in Ceebay and Ceebay’s ownership of quota. This is because the legislation provides that “the granting of permission is in the national interest having regard to one or more of . . .” The legislation is not limited to benefits being provided by the applicant. However, for Maruha to succeed in making these claims they need to demonstrate that the benefits only flow because of Ceebay owning quotas and because of Maruha’s shareholding. I also repeat that if any of those claims can only occur because of actions or decisions that have to be taken by Ceebay then we will need to put those issues to Ceebay directors (and they possibly to shareholders) to get comfort about the likelihood of occurrence.

. . .

15. Finally, I have also been asked to arrange a meeting between the shareholders, their representatives and Ministers concerning the Ceebay application. I do not intend doing that in respect of involving Ministers. However, I am prepared to host and facilitate a meeting between the shareholders, the directors and their representatives if all parties feel I could achieve progress on issues.”

Amaltal did not agree with the proposed approach. The OIC decided (letter of 28 July) on its own process as follows:

“3. Accordingly, I have decided that, until such time as all parties agree a common approach, I will process the application as we see fit depending on the nature of the material and issues we are considering. As a guide we will follow the type of approach outlined in my previous faxes in terms of who we will seek information from in relation to issues. However, we will not as a matter of practice copy any material to parties. Instead, we will send it out to those who we think need to provide input to us in order for us to process the application.”

Amaltal sent a memorandum on that same day to the Ministers pressing its own view of a proper process. Further jostling took place between the parties concerning the OIC Act requests, disclosure of material received by the OIC, the provision of further information by Maruha, and further comment by Amaltal and Talleys.

The evidence establishes that the OIC:

(1) Requested further information from Ceebay in support of its application;

(2) Referred third party comments on the application to Ceebay for comment;

(3) Encouraged third party comment that was relevant

(4) Specifically requested information from directors of Ceebay

(5) Welcomed relevant comment from Talleys and Amaltal

(6) Showed all relevant information except commercially sensitive material to all who could have an interest in the application

(7) Undertook independent checks on some of Maruha’s and Ceebay’s assertions both inside and outside the fishing industry

The OIC’s function was investigative and report writing. The Ministers wanted to be as well informed and as accurately informed as possible.

I consider each particular Plaintiff’s complaint:

(1) The OIC considered Ceebay’s lawyers Buddle Findlay when they were Maruha’s lawyers.

The OIC knew the background circumstances of the dispute as to whether Ceebay should apply for exemption under s 57. They had already rejected Maruha’s application on behalf of Ceebay. Once the High Court directed the application be made it was clear only Buddle Findlay would make and pursue the application for Ceebay. The Court had concluded the application was properly in Ceebay’s best interests, hardly surprising in the circumstances. Ceebay knew and could take into account Buddle Findlay’s dual role. There is nothing in this complaint.

(2) Meetings

The Plaintiff complains that the OIC met with Buddle Findlay and Mr Takuma of Maruha and a Maruha appointed director, but refused to meet with Talleys. This is really an allegation of bias or the appearance of bias. There is no evidence of any bias on behalf of the OIC. Talleys and Amaltals were offered every chance to say what they wanted in opposition to Ceebay’s s 57 application. The only restriction was relevance. Whether the OIC did or did not meet with particular individuals could only be relevant if others were effectively excluded from providing information. Neither Talleys nor Amaltal were so excluded. Maruha was after all the reason for the s 57 application and it was therefore pivotal to the application. There is no justified complaint in this.

(3) Communication only with Buddle Findlay and KPMG

Three points here.

(i) Amaltal was offered a fair and reasonable system for dealing with Ceebay’s application. This would have allowed Amaltal proper access to all communications relevant to it. It turned the offer down.

(ii) The OIC was considering an application from Ceebay. It sent all relevant material to the directors. Two of those directors were Amalgamated appointed Amaltal directors. It was up to them to pass on what material they chose to the shareholders they represented.

(iii) In fact the OIC communicated with all interested parties offering them ample opportunity to respond.

There is nothing in this complaint.

(4) The Plaintiff complains that the OIC put to Maruha all allegations relating to the merits of Ceebay’s application but did not do the same for Amaltal or Talleys. This assertion involves a misapprehension of roles. This was an application for s 57 approval for continued overseas ownership of quota. Maruha was the overseas shareholder who triggered s 56 and made the s 57 application necessary. It is hardly surprising it was asked to comment on allegations made of direct factual relevance to it. Amaltal and Talleys were not applicants. Talleys had no direct relationship with the company and Amaltal was simply a shareholder. The OIC thought it was appropriate to deal with the directors. This was the proper course given the shareholders’ dispute. In any event both Amaltal and Talleys were, I repeat, given proper opportunities to participate.

(5) Finally under this head, the Plaintiff complains the OIC continued with its policy after Amaltal and Talleys complained. There is nothing in this complaint because I have found the process adopted by OIC was fair to all the parties. The OIC as Mr Dawe in his affidavit showed was well aware of the allegations of unfairness. The OIC provided information to the two sets of directors (Maruha and Amaltal directors). It invited comment by other third parties including Talleys. It is the Plaintiff’s desire to treat the OIC’s function as an adversarial process that is mistaken. There is nothing in this complaint.

Inadequate investigation

The Plaintiff argues that the OIC did not take proper steps to investigate third party claims which cast doubt on Ceebay’s application. In particular it says the OIC; failed to subject many of Maruha’s claims to independent scrutiny; did not solicit third party comment; placed the burden of proof on those disputing the claim; failed to investigate/verify Maruha’s claims. In particular the Plaintiff claims that the OIC inadequately investigated:

“(a) the prevalence and relevance of methods of providing quota other than leasing;

(b) the allegations that Maruha was engaged in unsavoury practices overseas;

(c) claims that the recipients of Ceebay’s quota leases effectively pay less taxation to New Zealand than fishing companies which catch and fish the quota themselves;”

The Plaintiff raised each of these particular issues with the OIC at the time of Ceebay’s application. The OIC investigated them and reached conclusions about them. It is in this area tempting to become involved in the issues and the actual investigation and assessment by OIC. This temptation must be resisted. This is judicial review. The real question here is has the Plaintiff established there was in the context of this application an inadequate procedure for dealing with allegations by third parties or claims by applicants relevant to s 57 applications such that the Ministers may have been misled when making their decision. The Plaintiff had a process for dealing with such complaint or assertions. It was appropriate and adequate in the context of the organisation and its function.

For example the OIC carried out considerable analysis of the allegations that Maruha was involved in illegal tooth fishing and whaling. It raised and considered tax questions. It used Department of Labour, Ministry of Fisheries, Ministry of Foreign Affairs, fishing industry participants, Commerce Commission, Trade New Zealand and individuals with expert knowledge of business in Japan as sources of information to check Ceebay’s and Maruha’s claims. No doubt in any such investigation it could always be said “but you didn’t check with”. Looked at overall there is no substance to the Plaintiff’s complaints. There is a reasonable limit to be put on how extensive OIC’s investigations can sensibly be. I repeat my comment previously, the OIC is not an adversarial fact-finder and is not a Commission of Inquiry. It can only do what its own resources reasonably allow it to do. This it has done in my assessment to a high standard.

The report of 8 September from the OIC to the Ministers was some 26 pages with 10 appendices. It was preceded by a 7 August report detailing the background to the application, the controversy surrounding it and some of the more controversial national interest questions. It advised the Minister that the full report would be available in September for their consideration. The 8 September report had the following headings:

(1) Rationale for investment

(2) Background about Ceebay Holdings Limited

(3) Background of the parties involved in Ceebay

(4) Background about the fishing industry

(5) Section 57 criteria including

(a) good character

(b) granting permission in national interest (para “aa):

“(aa) Our assessment of the proposal and the material sent to us about it is that Maruha is likely to deliver the following benefits to New Zealand if Ceebay continues to own the quota”

“(i) The retention of 3 jobs in Auckland (being Maruha’s New Zealand office);

(ii) the creation of 30-40 jobs by the end of the next two years in fish harvesting and on-board processing and a small number of temporary jobs in the boat servicing and general support industry;

(iii) the introduction of new as yet unidentifiable processing and packaging technologies or skills;

(iv) significant export market access to Japan and slightly greater access to other markets than would normally be the case . . .”.

(6) Each of the s 4(b)(i)A-F factors were considered in turn and under each category the OIC considered Ceebay benefits, Maruha benefits, and “our assessment”.

(7) Other matters. This included

(a) a guide as to the “other matters”

(b) Maruha’s no fault argument

(d) third party complaints including allegations of little overall return to New Zealand, whaling, false and misleading information to OIC, no New Zealand boats, no New Zealand jobs, no New Zealand taxes, and quota forfeit (s 28Z).

(8) Conclusion about national interest.

The appendices included the application and correspondence about national interest claims, correspondence with fishing companies, material about good character, legal opinion about national interest tests and allegations from other parties.

I have detailed this report to illustrate its comprehensiveness and balance. The OIC had a proper process for considering each of the complaints now made. I am satisfied Ceebay’s application was properly and comprehensively investigated.

Failure to give reasons

The Plaintiff submits that in the absence of a formal statement of reasons for the decision the Court must look to other published material to establish reasons. The court needs to do no such thing. In this situation there is no duty to give reasons. This is particularly so given there are no appeal rights (indeed there are no other “parties” as such). And the decision was in favour of the application. In this case the applicant is hardly likely to challenge the decision. This can be contrasted with the Sealord’s decision where detailed reasons were given when all six applications failed.

Interested parties, as the First Defendant has pointed out, were entitled to request information under the Official Information Act. This information would reveal relevant information to all who sought it. See Padfield v Minister of Agriculture, Fisheries & Food [1968] AC 997, 1032-33 and Gurusinghe v Medical Council of New Zealand [1989] 1 NZLR 139 at 163.

I am reinforced in this view given the essence of s 57(4)(b)(i)-(iii) criteria are broad and contain significant policy issues properly the domain of Ministers. The overarching criteria is national interest. This confirms the strong policy element of decision-making in s 57(4)(b) and underlines, as I have said, how the statute permits different political philosophies about overseas investment to be legitimately expressed.

In any event both Ministers in their affidavits have set out the issues that influence them in their decision-making. Their reasons for granting the application are clear.

NZ-isation/s 57(4)

This proposition is the foundation of the Plaintiff’s submission that the Minister failed to correctly apply s 57(4) because they did not apply the claimed NZ-isation policy. I have already rejected a NZ-isation policy overlay as claimed by the Plaintiff.

In particular as I have observed there is no “presumption” against foreign ownership. Section 57 is designed to facilitate applications for overseas companies to obtain or hold quota. National interest may involve past benefits as the Ministers in this case have identified. The legislation does not prohibit past benefits being taken into account in (b)(iii).

Nor is there any reason why the benefits cannot accrue to both the national interest and the applicant. What is good for the applicant may also be in New Zealand’s national interest. Just as possibly it may not be.

Nor must the benefits be only attainable by the applicant compared with the New Zealand company. This is not a mandatory part of s 57 but it may be relevant for the Ministers to take into account.

Finally the benefit must be tangible and not speculative. Two points here. The legislation gives the standard for national interest in s 57(4). Permission could be in the national interest if one or more of the s 57(b)(i) criteria are likely to result. “Likely” in this context means a distinct possibility (see R v Atkins [2000] 2 NZLR 46). And secondly, there is considerable and careful analysis of benefits in the report to Ministers. This is no more than in accordance with the direction given by the Ministers of 8 July 2000.

My assessment overall is that this was a thorough, fair and balanced report. It took into account and investigated third party observations. It consulted widely and used independent persons to comment on assertions. It accepted neither assertions by the applicant nor criticisms by the Plaintiff or Amaltal without proper evidence. The Ministers therefore had all the relevant facts fairly balanced on which to decide the application. The decision required weighing and balancing a range of factors some of which had high policy content as referring to the national interest. There is nothing of substance in the Plaintiff’s complaints here.

Legitimate expectation

This submission by the Plaintiff relies upon the assertion that there was a legitimate expectation by the Plaintiff that the Ceebay application would be dealt with in the same way as the Sealord application. The Plaintiff claims it was not and thus its legitimate expectations were dashed. I consider this in three parts:

(1) The Sealord application and decision

(2) The law

(3) Analysis

The Sealord application and decision

In late 1999 Brierly Investments Limited (“BIL”) advised that it intended to sell its 50% share in the Sealord group. Sealord held 149,037 tonnes of fishing quota in various species mainly Hoki. This was 23% of New Zealand’s fishing quota. The OIC received a number of applications by overseas companies for a s 57 “conditional” permission to acquire the quota. This situation also emphasises the practical importance of conditional permission. Clearly all the applicants were not going to purchase the BIL shares but each wanted to know if they had s 57 approval before negotiating a purchase from BIL.

As well as s 57 approval, because Sealords had assets in excess of $50 million and owned categories of land caught by the Overseas Investment regulations further applications had to be made to the OIC for approval. It was evident that because there was considerable public interest in the sale there would be considerable political interest as well. After discussion with the OIC the Ministers advised the OIC that they intended to make the s 57 decision themselves. They thus revoked the November 1999 delegation but limited to the Sealord decision. The OIC provided considerable material to the Ministers relevant to their decision. After considering the material the Ministers refused the six applications by overseas companies for conditional permissions to acquire the Sealord shares and thus share in the quota. The Ministers in a letter of 8 May 2000 set out the reasons for the refusal. They advised they had applied a neutral test to the applications. This was in contrast to the November 1999 direction and delegation. In summary the Ministers concluded:

(1) All applicants were of good character

(2) The benefits of the Irvin & Johnson (s 57 applicants) applications were said to be “nebulous”. And that there were no indications that similar advantages could not be attained by “something less than permanent loss of New Zealand control of quota”.

And under s 57(4) criteria it was said:

(4) “potential” expansion of employment only was claimed

(5) while technological advantages might benefit Sealord there was no evidence it would necessarily benefit New Zealand

(6) the extent of extra export markets was ill defined, and

(7) efficiency in productivity gains were no more than suggestions.

As to the Nissui application this was for a joint venture with Sealords. The Ministers observed that this was little more than speculative. And Sea Harvests’ application was seen as doing little more than preserving the status quo. General technological advantages claimed by the applicants were typically seen by the Ministers as not sufficiently identified to benefit national interest claims. And new employment claims were rejected as too vague. In the final paragraph the Ministers recounted other considerations. They said:

(1) ordinarily fishing quota should be held by New Zealand interests. This seems little more than a reiteration of s 56.

(2) The amount of quota involved in this application was large. Effectively 11.5% of the total fishing quota in New Zealand. And the fact that it was Hoki quota was important. The Ministers said “In these circumstances we have decided to apply a substantial and robust national interest test to all applications”.

The applications were refused. Two paragraphs of the Minister’s letter to the OIC advising their decisions are worth quoting:

“We have noted the comments by various third parties on matters relevant to the applications, and your evaluation of them. We do not wish to evaluate every comment that you made in your assessments, but would record that in general, we were not persuaded by the argument of those third parties.

The substantive reason for our disagreement with your recommendations was that we were evaluating the applications in the context of a specification of government policy and applying a different standard of national interest than you had been instructed to under s(9)(2) of the Overseas Investment Act and the letters of delegation that you were operating under.”

Fourthly, the OIC in fact provided a balance of competing views on the question of Maruha’s past contribution. For example it was pointed out by the OIC that

(a) Maruha had an agreement with Amaltal to be paid the market rate for the quota should it be sold to them

(b) in any event s 333A allowed Ceebay two years to sell the quota before forfeiture

Fifthly, the 8 September report to the Minister dealt in detail with these allegations by Talleys. Appendix 9 of the report contained detail of the “allegations from the other parties” The report itself in considering s 57 (4)(b) benefits, claim and counterclaim are considered and analysed. Under other matters there is an extensive report on and analysis of third party claims. I therefore conclude the information provided to the Ministers was relevant and balanced.

(5) Purported benefits which could not offer a development beyond the status quo”

The Plaintiff says Mr Dawe’s assertion that “existing employment opportunities will be retained is a good example of a benefit which was not new and was likely to have occurred in any event.

Section 57(4)(b)(i) A says:

. . .

(b) The granting of the permission is in the national interest, having regard to one or more of the following:

(i) Whether the granting of the permission will or is likely to result in-

(A) The creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost . . .”.

Thus retention of jobs is relevant. It may be debated whether the jobs would or might otherwise be lost. Self-evidently that would depend upon who came to own the quota if Ceebay was forced to sell or forfeit. Preservation of New Zealand jobs would in this case be speculative. Ceebay could point to its record and intention. If the quota came to be owned by large fishing companies efficiency of scale may mean fewer jobs where preserved. Mr Dawe recognised if Ceebay continued to lease the quota there would be no “material difference to the job situation”. There is nothing in the Plaintiff’s complaint here.

(6) Purported benefits likely to be replicated by a New Zealand entity

The Plaintiff’s submission is that if the quota was acquired by either Amaltal or Talleys they would purchase a vessel to catch the quota thus the benefits could be reproduced by a New Zealand company. This is effectively two of the Plaintiff’s previous submissions reformulated. Firstly it relies on a view of s 56/57 which has inherent within it a NZ-isation policy. And it relies upon a counterfactual argument being accepted. To repeat, I have concluded that there is no over-riding NZ-isation purpose to s 56/57. And while the OIC Ministers can use a counterfactual analysis in considering s 57(4) matters the legislation does not require this to be done.

Merits argument

I reproduce the Plaintiff’s submissions which identifies the issue.

“The OIC formed an impression from around early 2000 that the merits of the by then well-known dispute between Amaltal and Maruha lay with Maruha. The OIC viewed Amaltal’s and Talleys’ contribution to the OIC process with suspicion and the OIC formed the view that the Plaintiff and Amaltal were attempting to improperly use the OIC process for its own commercial ends. This led the OIC to unfairly doubt Talleys and Amaltal’s credibility and to therefore disregard many valid points made by Talleys and Amaltal.”

I have already considered this issue and I have rejected the suggestion that there is any evidence to support the proposition that the OIC was bias against Amaltal’s/Talleys. I consider the evidence the Plaintiff says supports this proposition as follows:

(i) The tone of Mr Dawe’s affidavit toward Mr Talley. Self-evidently “tone” is subjective. The OIC (not Mr Dawe) prepared a memorandum which detailed Talleys’ allegations, Maruha’s reply and a conclusion and ended with the assessment that generally Talleys’ objections were technical and semantic and not substantial. This was an assessment of Talleys’ complaints which was reasonably available to the OIC. Clearly telephone discussions between Mr Talley and Mr Dawe were intense. Mr Talley was determined to try and convince Mr Dawe of his view. Mr Dawe accepted some assertions by Mr Talley but rejected most. Much of Mr Talleys’ propositions were built around his NZ-isation arguments and his view of s 56/57. The fact that Mr Dawe (correctly) did not agree with Mr Talley’s analysis does not indicate bias. The OIC requested information from other fishing companies regarding Ceebay’s application. Some companies were reluctant to provide information because “they did not want any of their comments getting into the hands of the Talley family”. This was a factual report of a consideration by the OIC. It does not indicate any “bias”. None of the evidence proposed by the Plaintiff supports the contention that the “tone” of Mr Dawe’s affidavit somehow show the dislike of or led to unfairness to Amaltal or Talleys.

(ii) Dismissal by OIC of valid and real objections by Talleys and Amaltal.

There is nothing in these complaints. The Plaintiff’s complaints are effectively a complaint that the OIC did not accept Talleys/Amaltal’s views. The OIC were not obliged to accept their view. Because they did not does not make them improperly blind to the merits of the Talleys/Amaltal’s submissions. The way in which the OIC went about identifying each of Amaltal’s/Talleys’ arguments, Maruha’s replies and their analysis illustrated a careful and proper consideration of issues.

(iii) The Plaintiff’s complained of the “unwavering belief of Mr Dawe in the importance of FDI (Foreign Direct Investment) to the New Zealand economy and its relevance to s 57 criteria”. A definition of the FDI is to be found in the report of Controls Governing Foreign Ownership of Quota (Annexure SD-2 in Mr Dawe’s affidavit) a Report to the Ministry of Fisheries by NZIER and Chapman Tripp at page 8:

“FDI refers to international investment involving both a degree of effective control of and a lasting interest in an organisation or asset. Assets being purchased might be company shares, land, buildings or plant and machinery.

The essential difference between FDI and other foreign investment, is that the former connotes trade in entrepreneurial services and knowledge, rather than just trade in assets.”

There is simply no evidence to support this proposition and I reject it.

(iv) An allegation that Mr Dawe was sympathetic to FDI and the application of s 56 to Ceebay was potentially embarrassing.

In support of that proposition the Plaintiff cites para 90 of Mr Dawe’s affidavit. I quote para 90 of Mr Dawe’s affidavit to illustrate the lack of merit in this argument:

“I was aware that the Japanese fishing industry had made representations to the new Zealand embassy in Japan about this matter. I was also aware that the Japanese Ambassador had raised these matters with the Minister in February 1997. I was also aware that the Japanese government was rising the matter in other international forums. I was aware that the issue was viewed by some Ministers and officials as potentially embarrassing for the News Zealand government in international forum because it seems inconsistent with some of the other approaches taken by the New Zealand government in relation to trade and investment issues.”

Mr Dawe has simply recorded the argument and nothing more.

(v) The Plaintiff alleges the OIC was dismissive of its NZ-isation submissions in respect of the Sealord applications.

Quoted in support was para 192 of Mr Dawe’s affidavit. The OIC considered and analysed third party comments in fact in its Sealord report. Para 192 of Mr Dawe’s affidavit is simply a summary of those arguments. There is nothing to support this contention.

(vi) The s 56/Ceebay oversight argument

I quote paragraph 87 of Mr Dawe’s affidavit:

“My understanding of the reason why this had occurred was because the officials involved in making changes to the 1996 Act had not fully appreciated the implications of adopting the definition of “overseas person” that was in the Overseas Investment Act. The OIC’s advice was not sought about this change.”

This paragraph is no more than a record of Mr Dawe’s understanding of what the legislation means. It does not indicate any improper bias.

(vii) Failure to take Talleys/Amaltal’s submissions seriously.

In support of this allegation is Mr Michael Talley’s suggestions that Mr Dawe failed to take his (Talleys/Amaltal’s) submissions “seriously”. The submission is nothing more than an attempt to reargue in a different guise the Plaintiff’s objections to the OIC report and the Minister’s conclusions. The process followed by Mr Dawe and the OIC has been exhaustively examined. I have concluded it was fair, reasonable and proportionate. Mr Dawe in my assessment gave the submissions by Talleys/Amaltal the seriousness they deserved. The fact that Mr Talley repetitively says they did not is not evidence.

(viii) The OIC met with Maruha and its solicitors and not meeting with Amaltal’s solicitors.

I have previously dealt with this matter and rejected it.

(ix) The general language of the 8 September report.

There is nothing in the general language of the September report which supports the Plaintiff’s argument.

(x) The allegation that the OIC was dismissive of propositions advanced by Amaltal/Talleys compared with Maruha’s.

This is simply a repeat of other complaints abuse. Because the OIC preferred (from time to time) the view of Maruha rather than Amaltal and Talleys is not objectionable in itself. I have already observed the care OIC took with Amaltal/Talleys propositions.

In my assessment the OIC and Mr Dawe kept a proper objective view of the information reflected in their report despite significant efforts by Talleys/Amaltal to have Mr Dawe accept their views.

28Z Fisheries Act

On 26 May 2000 the Ministry of Fisheries and Ceebay entered into a deed which purported to return to Ceebay any quota previously held by it which may have been forfeited pursuant to s 28Z of the Fisheries Act 1983. Because of the view I take of the challenges by the Plaintiff to the Ceebay deed I do not need to decide if Ceebay’s structure offended against s 28Z. I conclude in this part that none of the Plaintiff’s challenges to the Ceebay deed can be sustained and thus whether Maruha had substantial control of Ceebay is irrelevant. The deed cures any forfeiture there may have been.

I now consider the Plaintiff’s challenges to the Ceebay deed.

(1) The NZ-isation argument.

This argument is again based on the Plaintiff’s assertion that the proposal to enter into the deed was not assessed against a legislatively mandated NZ-isation policy. No attempt was made by the Plaintiff to build any NZ-isation argument in relation to the 1983 Act and in particular s 28U Deeds. Nor could it. I have already rejected such an approach to interpreting ss 56, 57 and 58 of the 1996 Fisheries Act. Section 28U clearly contemplated such deeds being entered into. Nor is it helpful nor necessary to the interpretation of s 28U that the Plaintiff’s “NZ-isation” policy be applied. The deed is not ultra vires the 1983 or 1996 Act.

The Plaintiff makes further broad challenges to the Ceebay deed, including procedural unfairness, failure to take into account relevant considerations and taking into account irrelevant considerations. Before I consider these arguments some factual and legislative background is necessary. Firstly, I set out ss 28Z and 28U of the Fisheries Act and the whole of the Deed

“28Z. Quota not to be allocated to overseas individuals or companies with overseas control-

(1) This section applies to any person who,-

(a) Being an individual, is a person who is not ordinarily resident in New Zealand:

(b) Being a body corporate, is wholly or significantly controlled from outside New Zealand.

(2) For the purposes of subsection (1)(a) of this section any person who is not otherwise ordinarily resident in New Zealand shall be deemed to be ordinarily resident in New Zealand if-

(a) The person has resided in New Zealand for not less than two and a half years during the period of 3 years immediately preceding the date on which the matter is to be determined; and

(b) The Director-General is satisfied that the person is likely to continue to reside permanently in New Zealand.

(3) For the purposes of subsection (1)(b) of this section, a body corporate shall be deemed to be wholly or significantly controlled from outside New Zealand if 25 percent or more of the voting power in relation to the body corporate is-

(a) Held or may be exercised by or on behalf of one or more individuals who are not ordinarily resident in New Zealand; or

(4) The Director-General may, by notice in the Gazette, declare that for the purposes of this section, any company whose shares are listed on the New Zealand Stock Exchange is not wholly or significantly controlled from outside New Zealand.

(5) Except as provided in subsection (7) of this section, nothing in sections 28E to 28OE of this Act shall apply in respect of any person to whom this section applies.

(6) Where any person to whom this section applies would be entitled to be allocated an individual transferable quota or a transferable term quota if it were not for subsection (5) of this section, that quota shall be allocated to the Crown.

(7) Where any person who is allocated a provisional maximum individual transferable quota or guaranteed minimum individual transferable quota or provisional maximum transferable term quota or guaranteed minimum transferable term quota becomes a person to whom this section applies, the person may continue to hold the provisional maximum individual transferable quota or guaranteed minimum individual transferable quota or provisional maximum transferable term quota or guaranteed minimum transferable term quota until the person is allocated, as the case may require, an individual transferable quota under section 28O of this Act or a transferable term quota under section 28OA of this Act, and subsection (8) of this section shall then apply.

(8) Where any person who is the holder of an individual transferable quota or transferable term quota or the lessee of any individual transferable quota or transferable term quota becomes a person to whom this section applies, that person shall, unless an appropriate declaration is made under subsection (4) of this section, or permission is granted under subsection (9) of this section, dispose of the quota or interest in the quota within 3 months or such greater period as the Director-General may permit.

(9) The Director-General may, subject to such conditions as the Director-General considers appropriate, permit the acquisition or continued holding of individual transferable quota or transferable term quota or interests in individual transferable quota or transferable term quota by any person to whom this section applies.

(10) No person may sell or lease any individual transferable quota or transferable term quota to any person to whom this section applies other than in accordance with any permission granted under subsection (9) of this section.

(11) Where any person to whom this section applies holds any individual transferable quota or transferable term quota or any interest in any individual transferable quota or transferable term quota that is not permitted under subsection (8) or subsection (9) of this section, the individual transferable quota or transferable term quota or interest in the individual transferable quota or transferable term quota shall be forfeited to the Crown without compensation.”

“28U Power of Crown to acquire, hold, transfer, lease, or cancel quotas

(1) The Director-General may, on behalf of the Crown,-

(a) Purchase any individual transferable quota or transferable term quota or take a lease of any such quota for a specified period:

(b) Subject to subsection (2) of this section, retain any quota so acquired, without being obliged to offer them to any commercial fisherman:

(c) Transfer any individual transferable quota or transferable term quota held by or on behalf of the Crown, or lease for a specified period some or all of the rights of the Crown in relation to any such quota:

(d) Transfer to the Commission any individual transferable quota or transferable term quota held by or on behalf of the Crown.]

(2) Where any individual transferable quota held by the Crown relates to fish to which the Territorial Sea, Contiguous Zone and Exclusive Economic Zone Act 1977 applies and the Minister has determined under section 12 of the Territorial Sea, Contiguous Zone and Exclusive Economic Zone Act 1977 that the fish cannot be taken by New Zealand fishing craft within the meaning of that Act, the quota shall be made available to foreign fishing craft licensed under the Territorial Sea, Contiguous Zone and Exclusive Economic Zone Act 1977 to take those fish.

(3) Where quota or rights under quota are held on behalf of the Crown, the Crown shall have all the rights that would be enjoyed by any such holder who is not the Crown.

(4) The Minister may, unless the right to take the fish is or is required to be made available to foreign fishing craft under the Territorial Sea, Contiguous Zone and Exclusive Economic Zone Act 1977, cancel any individual transferable quota held on behalf of the Crown, and where the Minister does so, the relevant total allowable commercial catch shall be reduced accordingly.

(5) The Director-General may cancel any transferable term quota held on behalf of the Crown, and where the Director-General does so, the relevant total allowable commercial catch shall be reduced accordingly.

(6) The Director-General shall give notice in the Gazette of any cancellation of individual transferable quota or transferable term quota and the consequent reduction of the relevant total allowable commercial catch.”

The Deed entered into by the Ministry and Ceebay is reproduced in full.

“DEED dated the 26th day of May 2000

(1) THE CHIEF EXECUTIVE OF THE MINISTR OF FISHERIES acting pursuant to the Fisheries Act 1983 (“Chief-Executive”)

(2) CEEBAY HOLDINGS LIMITED (“Ceebay”)

INTRODUCTION

A. The Chief-Executive has been made aware of an issue that, pursuant to section 28Z of the Fisheries Act 1983 (“the Act”), all quota or interests in quota as specified in the Act (“quota”) now or previously held or purportedly held by Ceebay may have been inadvertently forfeited to the Crown but the Chief-Executive has not finally determined that matter.

B. Ceebay does not accept that section 28Z applies and that as a consequence any such quota has been forfeited.

C. The parties recognise:

(a) that the shareholders of Ceebay acted in good faith in structuring Ceebay in a manner where the shareholders reasonably believed that section 28Z did not apply;

(b) Ceebay has leased all its quota each year to a wide range of fishing companies;

(c) that the consequences of forfeiture would be seriously detrimental to the interests of Ceebay and its shareholders, those companies who have leased quota from Ceebay, the New Zealand fishing industry and the New Zealand economy, and if those consequences ensued it would be inequitable and contrary to the public interest;

(d) the need to preserve and provide certainty to the continued holding and leasing of Ceebay’s quota, and, in particular, to ensure that, if all or any of the quota has been forfeited to the Crown, action will have been taken effectively to restore the quota;

(e) that the Fisheries Act 1996 was amended in 1999 to include transitional provisions for persons who are prevented from owning quota under section 56 of the Fisheries Act 1996 but who are not prevented from owning quota under section 28Z of the Fisheries Act 1983;

(f) that Ceebay should have the opportunity to apply under section 57 of the Fisheries Act 1996 for permission to acquire or continue to hold quota or interest in quota.

D. The Chief-Executive has accordingly agreed, subject to the covenants below, that:

(a) if any quota now or previously held by Ceebay has been forfeited, then pursuant to section 28U(1)(c) of the Act, he will, on behalf of the Crown, restore and transfer back to Ceebay and any subsequent transferee all quota which may have been forfeited; and

(b) he will, on behalf of the Crown, waive any rights, interests, benefits, or claim which the Crown may have derived, directly or indirectly from the forfeiture.

COVENANTS

1. Pursuant to section 28U(1)(c) of the Act and if and only to the extent that any forfeiture of quota as described below has occurred, the Chief-Executive on behalf of the Crown:

(a) restores and transfers back to Ceebay any and all quota that would now be owned or held by Ceebay if such quota had not been forfeited to the Crown by Ceebay or any other person under section 28Z of the Act from the date that permission is granted under section 57(3) of the Fisheries Act 1996 to the acquisition or continued holding of quota by Ceebay;

(b) restores and transfers back to any person who has acquired or purported to acquire, directly or indirectly, any quota from Ceebay, any and all such quota that would now be owned by or held by such person if such quota had not been forfeited to the Crown by Ceebay or any other person under section 28Z of the Act from the date that permission is granted under section 57(3) of the Fisheries Act 1996 to the acquisition or continued holding of quota by Ceebay; and

(c) waives any right, interest, benefit or claim which the Crown has or may have derived directly or indirectly from any such forfeiture of the quota referred to in subclauses (a) and (b) of this clause.

2. This Deed shall be of no legal effect unless Ceebay has applied for and obtained permission under section 57(3) of the Fisheries Act 1996 to the acquisition or continued holding by Ceebay of quota or interest in quota. In the event that Ceebay does not receive permission under section 57(3) of the Fisheries Act, this Deed shall be of no legal effect . . . .”

As can be seen from the Deed:

(1) There was an acceptance between the parties that there may have been inadvertent forfeiture under s 28Z.

(2) Forfeiture was seen as being seriously detrimental to amongst others the New Zealand fishing industry and the New Zealand economy.

(3) Ceebay should have the opportunity to apply under s 57 of the 1996 Act for permission to continue to hold quota.

The restoration of quota to Ceebay was to be of no legal effect unless Ceebay applied for and obtained permission under s 57 to continue to hold or acquire quota.

At first glance this seems awkwardly framed. Before an application to retain quota can be made under s 57 the applicant must come within the transitional provisions of s 333A. That section allows those who are not prevented from holding quota under s 28Z and to whom s 56 applies to apply under s 57 to continue to retain quota. Thus an application to retain quota under s 57 can only be made if the applicant is not prevented from holding quota under s 28Z. The s 28U deed is designed in part to return forfeited quota in certain suitable circumstances. This quota must be legitimately held before a s 57 application can be made to retain the quota.

Thus it appears prima facie illogical to make the s 28U Deed subject to a successful s 57 application.

However, there is a logic structuring the Deed in this way. The Deed recognises that enforcing forfeiture now under s 28Z would be detrimental to New Zealand’s interest. Ceebay had leased its quota for many years to many lessees with all parties believing it was lawfully entitled to do so. Now the lawfulness of all those transactions had been cast into doubt. In the meantime the s 28Z statutory regime had been replaced by the s 56/57 regime. Both regimes limited overseas ownership of fishing quota but in different ways. The deed still required Ceebay to convince the Ministers/OIC that they should be allowed to retain quota as an overseas company but properly applying the contemporary statutory test (s 57). And if they could so convince the Ministers under s 57 then for the reasons identified in the deed the Ministry was prepared to restore any possibly forfeited quota to Ceebay. This was a sensible, pragmatic approach. And an approach contemplated by the Act. There are clear parallels with the situation in Southern Ocean Trawlers Ltd v Director-General of Agriculture & Fisheries [1993] 2 NZLR 53 at 61 where Cooke P said:

“The reasons for his decision set out in the deed, referring to the consequences of forfeiture and the public interest, are entirely within the policy and spirit of the Act. There is no solid foundation for contending that the Court could properly treat those reasons as not open to the director-general in the circumstances of this case. National economic considerations being involved, it is obvious that no Court would find such a decision unreasonable except on very strong grounds.”

There the Director-General of Fisheries decided to restore forfeited quota by s 28U deed after he concluded that the quota holders violation of s 28Z was inadvertent. The reasons for his decision were set out in the deed.

Here the Director-General identified that if the quota was forfeited under s 28Z then the consequences of such forfeiture would not be in the best interests of New Zealand. And the Director-General was clearly aware that Ceebay would have to overcome the s 57 hurdle. Thus the deed did little more than give Ceebay the chance to bring itself within the then current legislation. Ceebay would still have to convince the Ministers that as an overseas company it could bring itself within the s 57 criteria.

To return to the Plaintiff’s particular criticisms:

(i) Procedural unfairness

The essence of the Plaintiff’s complaint is that the Ministry of Fisheries did not consult Amaltal/Talleys about the deed when it should have done so. The Ministry agrees it did not consult Amaltal and says it did not need to do so. There is no statutory obligation on the Ministry to consult with interested parties when contemplating a s 28U deed. See Southern Ocean Trawlers Ltd v Director-General of Agriculture & Fisheries supra p 62 line 28 Cooke P:

“In permitting subject to conditions the acquisition or continued holding of quota, pursuant to his powers under s 28Z(9), the director-general is acting as the guardian of the public interest. He is of course required to exercise his discretion in accordance with the purposes, policy and spirit of the Act. In the course of administering the Act he should become aware, and was aware in this case, of opinions held within the industry on issues of policy. When it comes to a specific exercise of his powers under s 28Z, I can see no sufficient reason for holding that ordinarily he should be obliged to consult the fishing industry as a whole or its representative body or other quota holders.

Perhaps special circumstances could arise in which he could not act properly in accordance with the Act without some special consultation; but there is nothing to put this case into any such category.”

The Plaintiff alleges that because the Ministry of Fisheries knew there was a dispute between the shareholders of Ceebay it was “required to hear both sides of the story” before a decision was made.

Firstly, s 28Z does not require the Ministry of Fisheries to consult anyone. Self-evidently it will wish to be informed of the factual circumstances that give rise to the need for the deed.

Secondly, as has been identified by the Plaintiff, the Ministry of Fisheries knew the essence of the dispute between the shareholders. The Ministry’s focus was not on the commercial advantages or disadvantages that may flow to Amaltal/Maruha from the deed but as is illustrated by the words of the deed itself on the relevant policy questions required of it.

This underlines the inadequacy of the Plaintiff’s submissions. The deed’s purpose is to protect the New Zealand fishing industry not to referee a dispute between Amaltal and Maruha. Ceebay and other affected parties (e.g. lessees of Ceebay’s quota) could legitimately have complained if a perceived disadvantage to Amaltal had influenced the Ministry’s decision on the deed. I reject this argument.

Relevant considerations argument

The Plaintiff alleges that the Ministry of Fisheries did not properly investigate the “facts” surrounding Ceebay’s application for the deed and thus failed to have regard to important and relevant considerations pursuant to s 28U. The “facts” alleged are:

(i) Amaltal had no effective power over Ceebay.

(ii) Maruha’s account of Ceebay’s structure was misleading.

(iii) Amaltal could only obtain Maruha’s shares with Maruha’s consent and at a fair market price.

(iv) Amaltal had not acted unreasonably as suggested by Maruha.

It is not necessary to deal with whether these so-called facts are facts at all. None of them were nor should have been relevant to the Ministry of Fisheries decision to enter into the deed. It concluded that the shareholding was structured in the way it was by the parties to avoid the consequences of s 28Z. The Ministry concluded that all parties assumed at the time that the company structure avoided the significant control provisions of s 28Z. These conclusions were clearly correct. The Ministry acknowledged there was doubt about whether the Ceebay structure in fact avoided s 28Z. It then considered the consequences of s 28Z forfeiture on innocent third parties, the New Zealand fishing industry and the New Zealand economy and concluded that if s 57 could be overcome by Ceebay it was appropriate to enter into the deed because of the effect mentioned above. None of this involved nor need it involve any of the so-called facts. Any misstatements or errors claimed by the Plaintiff in describing the shareholding or the powers of shareholders were irrelevant. In any event Maruha and Amaltal had different views about the powers each had as shareholders in Ceebay. The Ministry of Fisheries was satisfied there was a genuine dispute about forfeiture. Clearly there was. I therefore reject the Plaintiff’s submissions that the Ministry of Fisheries failed to have regard to relevant facts when it made up its mind to enter into the deed.

Irrelevant considerations argument

The Plaintiff alleges that the Ministry of Fisheries took into account the following irrelevant considerations when deciding to enter into the deed:

(i) Amaltal was acting unreasonably

(ii) Amaltal was seeking a windfall.

(iii) Amaltal had control over Ceebay.

(iv) Ceebay had inadvertently breached s 28Z.

Items (i)-(iii) are irrelevant and clearly not considered by the Ministry of Fisheries at all. It was no part of their analysis to make nor did they make any value judgments required in paras (i)-(iii) above. As to (iv) this was the Ministry of Fisheries conclusion and matched both the facts and Amaltal’s intention when the Ceebay structure was set up. Amaltal and Maruha both believed that the Ceebay structure avoided the significant control provisions in s 28Z. It is therefore clearly the case that Ceebay had inadvertently breached s 28Z in setting up a structure which it believed and its shareholders believed avoided s 28Z. In any event as the deed illustrates it was significantly the effect on other New Zealand fishing companies who had leased quota from Ceebay that the deed was designed to support.

I need not repeat the reasons why paras (i)-(iii) above were not taken into account by the Ministry of Fisheries. They are spelt out in a previous section.

I reject the Plaintiff’s challenges to the Deed. The Deed validly returned any quota which may have been forfeited under s 28Z when Ceebay’s s 57 application succeeded.

The Plaintiff’s various grounds for review/declaration are rejected for the reasons given. I invite a memorandum as to costs from the Defendants within 21 days and a reply from the Plaintiff within 14 further days.