Whata-Wickliffe v Treaty of Waitangi Fisheries Commission
[2004] NZCA 113
•30 June 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA73/04
BETWEENDAVID TE HURIHUNGANUI WHATA-WICKLIFFE & ORS
First AppellantANDTE RUNANGA O MURIWHENUA & ORS
Second AppellantANDNGA RAURU O NGA POTIKI & ORS
Third AppellantANDMERE BROUGHTON & ORS
Fourth AppellantANDJOHN HANITA PAKI & ORS
Fifth AppellantANDTREATY OF WAITANGI FISHERIES COMMISSION
First RespondentANDTHE ATTORNEY-GENERAL OF NEW ZEALAND
Second RespondentANDTHE MINISTER OF FISHERIES
Third RespondentANDTE KOTAHITANGA O TE ARAWA FISHERIES TRUST BOARD
Fourth RespondentANDTE RUNANGA O NGAI TAHU
Fifth Respondent
Hearing:27-28 May 2004
Coram:Anderson P
McGrath J
Glazebrook JAppearances: A T Sykes, M Taylor and M Morrissey for Appellants
C R Carruthers QC, J P Ferguson, T B Johnson for First Respondent
C Linkhorn and D Soper for Second and Third Respondents
C Finlayson and R E Brown for Fifth Respondent
Judgment:30 June 2004
JUDGMENT OF THE COURT DELIVERED BY GLAZEBROOK J
Table of Contents
PARA NO.
Introduction [1]
Background [4]
The legislation [10]
Leasing methodology[15]
Commission’s treatment of alleged inequities [26]
Commission’s treatment of harbours and inlets [36]
Consultation [39]
Content of consultation [41]
Judgment under appeal and related decisions [53]
Appellants’ submissions [69]
Standard of review [70]
Lease and tender round inequities [71]
Consultation [81]
Juridical bay formula [86]
Commission’s submissions [93]
Standard of review [94]
Lease and tender rounds inequities [96] Consultation [104]
Juridical bay formula [106]
Crown’s submissions [111]
Ngai Tahu’s submissions [115]
Discussion [117]
The Commission’s task [117]
Court decisions on leasing and tender rounds [121]
Alleged consultation deficiencies [159]
Alleged lease and tender round inequities [166]
Juridical bay formula [180]
Result and costs [185]Appendix 1: Schedule 1A of Maori Fisheries Act
Appendix 2: Extracts from the Settlement Deed
Appendix 3: Extract from He Kawai Amokura Section C
Appendix 4: Extract from He Anga Mua: A Path Ahead
Appendix 5: Extract from He Kawai Amokura Section E
Introduction
[1] The Treaty of Waitangi Fisheries Commission holds assets that were provided by the Crown in settlement of Maori commercial fishing claims. In its report to the Minister of Fisheries of 9 May 2003, He Kawai Amokura (“the Report”), the Commission recommends a model for allocation of these assets to Maori.
[2] The appellants argue that the report was unreasonable in that:
(a)Allocations did not take into account “inequities” in the outcome of tender and lease rounds of quota undertaken by the Commission from 1990 onwards.
(b)The consultation with Maori engaged in by the Commission did not disclose those inequities.
(c)The allocation model wrongly measures coastlines on a “juridical bay” formula under which harbours and shorelines of inlets are not included.
[3] The appellants sought declarations to that effect in the High Court. McGechan J dismissed their application on 17 November 2003. They now appeal against that decision.
Background
[4] In 1986 a quota management system (QMS), designed to manage the New Zealand’s fisheries resource, was introduced. Maori alleged that the QMS was unlawful because it affected rights conferred upon Maori, either by the Treaty of Waitangi or under customary law which had statutory protection under s89 of the Fisheries Act 1983. Negotiations between representatives of the Crown and Maori followed, eventually leading to an interim settlement embodied in the Maori Fisheries Act 1989. The interim settlement provided that 10% of all quota was to be transferred to Maori over a period of four years. The sum of $10m was also provided for Maori fisheries development. The assets to be transferred to Maori under the interim settlement have become known as pre-settlement assets or PRESA and were to be held by a newly constituted body called the Maori Fisheries Commission, since renamed the Treaty of Waitangi Fisheries Commission.
[5] In 1992 an opportunity arose for Maori to take an interest in a substantial New Zealand fishing company called Sealord Products Ltd. This led, after further negotiation between Maori and the Crown, to a Deed of Settlement being signed on 23 September 1992. Under the Deed, the Crown agreed that the Maori Fisheries Commission would be renamed as the Treaty of Waitangi Fisheries Commission and that the Crown would pay to it the sum of $150m in three instalments so that it could buy a 50% share in Sealord. It also undertook to allocate to the Commission, for distribution to Maori, 20% of the quota in respect of fish species brought into the QMS after 23 September 1992. These assets have become known as post-settlement assets or POSA.
[6] As a consequence of the Deed and the negotiations between Maori and the Crown, the Treaty of Waitangi (Fisheries Claim) Settlement Act 1992 (the Settlement Act) was passed. This provided for the implementation of the 1992 settlement and amended the Maori Fisheries Act in a number of respects. Notably, the amendments provided for the Commission to develop allocation proposals for both PRESA and POSA. Prior to this, the Commission had been able, under ss5, 7 and 8 of the Maori Fisheries Act, to lease but not otherwise dispose of quota for a transitional period that was to end on 31 October 1992. Section 19(2) of the Settlement Act extended this period to end when the Commission had effected distribution of PRESA under the new s9(2)(l) of the Maori Fisheries Act. The manner in which the leasing of quota proceeded as compared to the final allocation model is one of the main issues in this appeal.
[7] The Commission’s allocation model for both PRESA and POSA is contained in its report to the Minister of Fisheries of 9 May 2003, He Kawai Amokura. The Commission recommended that both PRESA and POSA be allocated by legislation. This proposal was taken up by the Government and, on 20 November 2003, the Maori Fisheries Bill was introduced in the House of Representatives. It is currently before the Fisheries and Other Sea-related Legislation Select Committee, which is due to report back in early July this year.
[8] In brief, He Kawai Amokura proposes that all fishing quota held by the Commission (currently valued at $291m) be allocated directly to iwi. All inshore quota is to be allocated in proportion to the length or percentage of coastline attributed to each iwi. Deepwater quota, on the other hand, is to be allocated on the basis of a 25% coastline and 75% iwi population model. The Chatham Islands are an exception. There, deepwater quota is allocated 50% to mandated iwi organisations of the Chatham Islands iwi and 50% on a population basis to all mandated iwi organisations.
[9] The report also recommends that ownership of the shares in various fishing companies held by the Commission be transferred to a new holding company, Aotearoa Fisheries Ltd (AFL). AFL is then to issue voting and income shares. The voting shares are to be held centrally by a trust to be established to replace the Commission, Te Ohu Kai Moana (TOKM). The income shares in AFL are to be held as to 80% by iwi on a population basis and 20% by TOKM. It is further proposed that cash held by the Commission be allocated to iwi using a population formula, subject to the topping up of iwi allocations to ensure that all iwi receive an allocation of a least $1m, the payment of the TOKM establishment costs and the establishment of both the Putea, a trust designed to cater for non-iwi affiliated Maori, and the Te Wai Maori Trust, designed to assist freshwater fisheries initiatives.
The legislation
[10] Section 6(e) of the Maori Fisheries Act, as added by the Settlement Act, deals with the allocation powers of the Commission. It provides that it is one of the functions of the Commission:
(e) In relation to the Deed of Settlement between the Crown and Maori dated the 23rd day of September 1992,—
(i) To consider how best to give effect to the resolutions in respect of the Commission's assets, as set out in Schedule 1A to this Act:
(ii) To develop, after full consultation with Maori, proposals for a new Maori Fisheries Act that is consistent with the Deed of Settlement and makes provision for—
(A) The appointment, composition, and powers of any body succeeding the Commission; and
(B) The development of a procedure for identifying the beneficiaries and their interests under the Deed of Settlement, in accordance with the Treaty of Waitangi, and a procedure for allocating to them, in accordance with the principles of the Treaty, the benefits from the Deed of Settlement:
(iii) Within 90 days after the commencement of this paragraph, to propose for consideration by Maori provisions and a process for the Commission's accountability to Maori:
(iv) To report to the Minister on the matters referred to in this paragraph.
[11] Schedule 1A, referred to in s6(e)(i) relates to PRESA. It sets out the resolutions of the Commission’s hui-a-tau held on 25 July 1992. The relevant resolutions are set out in Appendix 1 of this judgment. Extracts from the 1992 Deed of Settlement, referred to in s6(e)(ii), are set out in Appendix 2.
[12] Section 9(2)(l) of the Maori Fisheries Act, also added by the Settlement Act, provides as follows:
After giving consideration to the matters referred to in section 6(e)(i) of this Act and reporting to the Minister on those matters under section 6(e)(iv) of this Act, and subject to subsection (4) of this section, to give effect to the scheme (if any) included in the report furnished to the Minister under the said section 6(e)(iv) (being the scheme providing for the distribution of the assets held by the Commission before the Settlement Date defined in the Deed of Settlement and being the assets referred to in clause 4.5.2 of that deed).
[13] The leasing power is contained in s7 of the Maori Fisheries Act which provides:
7 Special provisions relating to transition period
(1) During the transition period, the Commission may lease, but shall not otherwise dispose of,—
(a) Any quota which is transferred to the Commission by the Crown under any of the provisions of sections 40 to 42 of this Act and which is not transferred to Aotearoa Fisheries Limited under sections 5(e) and 43 of this Act; and
(b) Any quota which is purchased by the Commission with money paid to the Commission by the Crown under any of the provisions of sections 40 to 42 of this Act and not paid by the Commission to Aotearoa Fisheries Limited under sections 5(e) and 43 of this Act.
(2) During the transition period the Commission may not use as security for a loan any quota to which subsection (1) of this section applies.
(3) During the transition period the Commission may not sell or otherwise dispose of all or any of its shares in Aotearoa Fisheries Limited.
(4) Repealed [by Settlement Act]
(5) Notwithstanding anything in subsection (1) of this section, the Commission may during the transition period exchange for other quota any quota to which subsection (1) of this section relates.
(6) Where, during the transition period, quota is exchanged under subsection (5) of this section, the quota received in exchange shall be deemed to be quota to which subsection (1) of this section relates.
(7) Repealed [by Settlement Act]
(8) This section shall have effect notwithstanding anything in any other provision of this Act.
[14] Sections 5 and 8 of the Maori Fisheries Act provide guidelines for the exercise of these leasing powers:
5 Principal functions
The principal functions of the Commission shall be—
(a) To facilitate the entry of Maori into, and the development by Maori of, the business and activity of fishing:
(b) To grant assistance to any Maori or group of Maori for the purpose of enabling that Maori or group of Maori to enter into or to continue in or to develop the business and activity of fishing:
(c) To form, pursuant to section 12 of this Act, a public company to be called Aotearoa Fisheries Limited:
(d) To hold all the shares in Aotearoa Fisheries Limited:
(e) Subject to section 43(3) of this Act, to transfer to Aotearoa Fisheries Limited at least 50 percent of all quota and all money transferred or paid to the Commission by the Crown under any of the provisions of sections 40 to 42 of this Act (which quota and money shall be applied in paying up in full shares of Aotearoa Fisheries Limited to be issued and allotted and distributed to the Commission).
8 Criteria
The Commission shall,—
(a) In considering, whether to grant assistance to any Maori or group of Maori, have regard to—
(i) Maori custom:
(ii) Economic considerations:
(iii) Social considerations:
(aa) From time to time consult with representatives of tribes who have a history or tradition of engagement in the business and activity of fishing, and in the exercise of its functions under this Act take into account the views expressed in such consultations:
(b) Evaluate each proposal after having regard to the economic worth of the proposal, its usefulness to any Maori or group of Maori, and the prospects of its becoming profitable within a reasonable time; and shall not necessarily have regard to the value of the security available in respect of any proposal:
(c) Encourage the establishment or expansion of fishing by any Maori or group of Maori in areas where the establishment or expansion will assist the development of those areas:
(d) Endeavour to conduct its activities so as to operate on a profitable basis.
Leasing methodology
[15] From 1990 to 1993, the Commission progressively received (predominantly inshore) PRESA quota from the Crown. It was required in this period to allocate half of its quota to Aotearoa Fisheries Ltd, which in turn managed the quota on a largely commercial basis. For the rest of the quota, leasing proceeded on the basis of competitive tender, under what are referred to as tender rounds. Preference was given to Maori over others, to iwi over individuals and to those iwi with rohe adjacent to fish stocks. The relationship between iwi coastline and fish stocks is fundamental to asset allocation by what may be called the coastline method. A price adjustment factor, the Maori Development Incentive, or MDI, gave effect to those preferences.
[16] In 1993, following the 1992 Deed of Settlement, the Commission began receiving deepwater quota and other POSA quota. It decided, after consultation with Maori, on a new leasing approach that continued until 2001. The leases under this new approach were on a cost-recovery basis rather than competitive tender and there was also an element of cross-subsidy. These rounds are referred to as lease rounds.
[17] Under the QMS, New Zealand’s exclusive economic zone is divided into 10 Fisheries Management Areas (FMA). From 1993, the Commission operated on a 100% coastline methodology for leasing quota for inshore species and, for deepwater species, on a 50% coastline and 50% population methodology. This methodology was essentially a compromise between the various options advocated by different groups of Maori. Leases were allocated to FMAs and the iwi in those FMAs then decided on the division of the leases between themselves. If agreement could not be reached, the Commission then decided on the appropriate split through a dispute resolution mechanism.
[18] The Commission, in late 1999, engaged an external consultant, Mr Teepa Wawatai, to investigate the Commission’s conduct of the lease and tender rounds. A number of other reports were commissioned in the ensuing years. The reviews were provided to the Ministry of Fisheries and the Ministry engaged Deloitte to review them. The reports essentially concluded that the tender and lease rounds had (apart from some minor issues) been properly conducted.
[19] There was also extensive evidence before the High Court from the appellants’ expert, Mr Roger Taylor, analysing the tender and leasing rounds. Although McGechan J in the High Court considered that there were some weaknesses in Mr Roger Taylor’s analysis, (as discussed in para [12] of his judgment), he was prepared to treat Mr Roger Taylor’s figures as a workable approximation. We will do the same.
[20] Mr Roger Taylor calculated the total value of discount to market value given by the Commission in the period 1990-1993 as being some $11.5m and, in the period 1993 to 2001, as being some $217.4m. There were no calculations for the period after 2001. There had been variation in the extent to which iwi took up the tender option and also in the extent to which iwi benefited from the lease rounds. Ngai Tahu in particular had an exceptionally long coastline, which, combined with the fact there were no other iwi in many areas, meant it was able to benefit substantially. Mr Roger Taylor calculated that Ngai Tahu received some $7.6m of the $11.5m discount from 1990 to 1993 and some $61m of the $217.4 discount from 1993 to 2001.
[21] The appellants argued that any undue benefit received during the tender and lease rounds should have been taken into account in the final allocation model recommended in He Kawai Amokura. The benchmark for calculating undue benefit should, in their submission, be that final allocation model (including quota, cash and the income shares in AFL). On this basis, Mr Roger Taylor calculated that about half of the iwi received less than would have been their due had the leases been allocated under the He Kawai Amokura model, and half more. The total additional benefit received was some $65.5m, although individual iwi benefited to different degrees.
[22] Had the lease allocation for 1993 to 2001 been done on the basis of the final allocation model, Mr Roger Taylor calculated that Ngai Tahu, for example, would have received only some $32m of discount during the latter period as against the $61m actually received. This was not the greatest proportionate benefit, however. For example Ngai Takoto would have received only $367,071 rather than the $2.1m they obtained – an 82% difference; compared to the 48% difference in Ngai Tahu’s case. Other iwi gained a comparatively smaller benefit; for example Te Whanau a Apanui gained $3.8m when it would only have gained $3.4m – a 12% difference. We were not pointed to similar figures for the 1990-1993 period.
[23] Mr Roger Taylor also provided a table comparing the lease round profit from 1993 to 2001 to the value of quota each iwi stands to receive under He Kawai Amokura. Under these figures, there was only a $9.6m differential for Ngai Tahu and a $200,000 differential for Te Whanau a Apanui. There was a greater differential of $1.9m for Ngai Takoto. If calculated on this basis, the total differential for all iwi was some $31.6m.
[24] We note here that, as the quota leases tendered from 1990 to 1993 concerned almost exclusively inshore species which are allocated in He Kawai Amokura on a 100% coastline basis, the only differences from the final allocation model for quota in that period will likely relate to readiness to tender and tender pricing decisions.
[25] Mr Roger Taylor also provided figures measuring the lease round profit against the profit allocated to iwi if the Commission had not applied a discount in its leasing rounds and then had allocated the extra money received on a 100% population basis (in the same manner as for other cash).
Commission’s treatment of alleged inequities
[26] The question of lease round inequities was first referred to in the Commission’s July 1997 report, A Proposed Optimum Method for Allocation Consultation Document. In that report, the Commission remarked that allegations of lease round inequities were being considered separately by the Commission.
[27] The question of lease round inequities was first dealt with substantively in Te Ohu Kai Moana: Report on the Proposed Method for Allocation of Pre Settlement Assets (PRESA) of November 1998. At 20, the Commission noted that it did not consider that there had been any inequity in the lease rounds that should be allowed for in the allocation proposal. Similar comments were made in Te Ohu Kai Moana: Full Particulars of the Optimum Method for Allocation to be included in the Report to the Minister of 10 March 1999, with the Commission also noting that it saw a difference in any event between the process relating to lease rounds and final allocation. At 21, para 11, the Commission said that:
In any case, the lease rounds were focused simply on getting Maori into the business and activity of fishing, whereas the allocation process is a permanent allocation to provide redress for loss of fishing rights.
[28] In the Commission’s next report, He Anga Mua: A Path Ahead of December 2001, the matter was treated in more detail (at 32). The Commission stated that it had considered the various allegations concerning past lease rounds but was satisfied that all iwi had been treated consistently and that the same processes and methodology had been applied to all iwi. The Commission also recorded that it had received a submission that, to the extent that any final method of allocation differed from the lease round methodology, those previous lease rounds must necessarily have been inequitable and should be adjusted for. The Commission (at 33) rejected this view, saying that it failed to recognise the important distinction between leasing quota on an annual basis and the final and permanent allocation of such quota. It pointed to the different legal function of lease rounds from the final allocation. It also referred to the “without prejudice” nature of the lease rounds. The Commission considered that it would be impracticable and illogical for the Commission, after settling on a final allocation proposal, to revisit all previous lease round benefits and then further adjust the final model that had already been settled. These comments were effectively carried through into the next report, in August 2002, Te Ahu Whakamua, Report for Agreement.
[29] In He Kawai Amokura the matter was again dealt with at some length. The Commission noted the observation of this Court, in 1996 in Te Runanga o Muriwhenua and Others v Te Runanga o Te Upoko o Te Ika Association and Others [1996] 3 NZLR 10 (the Muriwhenua decision) that any past inequities in the lease and tender rounds would fall to be taken into account and adjusted as far as reasonably practicable in a future settlement. Although these comments by the Court were not binding, the Commission accepted that it should review the assistance it had provided to iwi through those rounds. In its view (at 42, para C125), the concept of equity revolves around the notion of fairness, which can be considered in terms of both process and the outcome or the effects of such process.
[30] The Commission said that it had considered the issue of inequities in a broad manner in order to assess the fairness, reasonableness and impartiality of those rounds. It recorded that it had established to its satisfaction that there had been no procedural impropriety, bias or predetermination in the development of the leasing policies or in their application. There had been isolated administrative errors but these were not considered by the Commission to be material. There had been some more serious problems in May 1990 and October 1992 but the Commission had entered into a settlement with the groups involved and therefore it considered that any inequities that might have existed had already been addressed.
[31] The Commission also pointed out (at 41, para C120 to C121) that the design process for the lease rounds had had significant iwi input and that consultation had continued throughout the period. The mixed population and coastline formula that was decided upon for the leasing of deepwater quota from 1993 onwards had been subject to a range of views and the formula decided upon by the Commission had been considered by the Commission to be a reasonable compromise. Any precedent effect that annual lease rounds could have had on final allocation had been addressed, however, through the inclusion of express “without prejudice” clauses in the lease documentation.
[32] The Commission concluded (at 43, C128) that it had not identified any material errors of process or substance in the tender and lease rounds that could reasonably have been described as inequities and, therefore, it did not consider that it needed to make any adjustment to its final allocation model. The Commission also noted that the policies behind the lease rounds had been tested on several occasions before the courts and had been found to be lawful.
[33] Merely because the final method of allocation differed from earlier annual lease rounds did not in its view mean there were inequities. The Commission was performing different statutory functions with regard to the lease rounds as against the final allocation. A lease, by its very nature, is not a permanent vesting of the property or asset concerned and, therefore, is not an allocation (at 44, para C136). The Commission (at 43, C130) also said that, simply because some iwi received unequal amounts of assistance through the annual lease rounds, this did not amount to an inequity. The settlement affected the rights of all iwi but not necessarily to an equal extent. It noted (at 43, para C131) that the debate in respect of allocation revealed that the issue of rights and interests in the settlement was able to be approached from a number of different premises, some relying on traditional rights, others on contemporary social and economic needs. What was perceived as fair under one approach would not be seen as fair or equal under another approach. As the lease and tender rounds were conducted on a tenable basis, the Commission considered that the outcomes, in the absence of some other procedural or substantive flaw, could not be seen as inequitable.
[34] The Commission recorded the submission (at 44, para C135) that iwi which had received assistance through the annual lease rounds should have some assets deducted from the overall settlement to bring their overall distribution in proportion to an allocation based on population. The Commission said that it had consulted and sought agreement on proposals that incorporated both coastline and population but which did not deduct assistance granted during the tender and lease rounds. It considered it impractical now to introduce a change as drastic as that proposed. None of the iwi recognised by the Commission had expressed support for the inclusion of the annual lease rounds by way of adjustment to the final allocations to be received by iwi as part of the allocation model (at 45, para 138).
[35] The Commission concluded (at 45, para C139) that, having regard to all of those matters, it did not consider it appropriate or practical to adjust the final allocation to provide for previous tender or lease round policies or outcomes. The passage from He Kawai Amokura, which deals with this issue, is set out in full in Appendix 3.
Commission’s treatment of harbours and inlets
[36] We now discuss the Commission’s treatment of harbours and inlets. As the final allocation model is based in part on coastline, it was necessary to define the coastline. As part of this exercise the Commission adopted an international law methodology, the “juridical bay formula”, to resolve the treatment of deep inlets such as harbours. On this approach, where there is an inlet between two points, a line is drawn between them. A semi-circle is then drawn with the line as its diameter. If the area of water in the inlet exceeds the area of the semi-circle then the area is a bay and the coastline is measured as the length of the diameter line, rather than the actual coastline. At international law, there is a limit on the principle: the diameter must not be more than 24 nautical miles long. The Commission adopted a limit of 10 kilometres – see Appendix 4 for the full explanation of this methodology and of issues relating to coastline measurement generally, as explained in He Anga Mua: A Path Ahead, the Commission’s report of December 2001.
[37] The reason given for the adoption of the rule was that the outcome would otherwise be heavily distorted in favour of iwi with harbours having extensive coastline within them, particularly where there are few commercial species or small quantities of fish in those harbours compared to the open seas. The juridical bay formula has been part of the Commission’s thinking since July 1997 when it was included in the discussion document, A Proposed Optimum Method for Allocation Consultation Document. That document describes the formula in similar terms to those in Appendix 3.
[38] The Commission decided, however, to reserve “harbour quota” for coastal iwi. In 1996, a survey was carried out to determine the percentage of QMS fishstocks commercially taken within harbours. The work involved identifying the relevant harbours by examining Ministry of Fisheries records and then carrying out a field survey of commercial fishers using their local knowledge to arrive at the percentage of fishstocks caught within each harbour. This percentage is applied to the PRESA fishstock quota and the resultant amount of quota is reserved for allocation to those iwi that border that harbour. It is expected that a similar exercise will be conducted for POSA before allocation takes place – see Appendix 5 for the Commission’s full discussion of this issue.
Consultation
[39] Extensive consultation has been conducted by the Commission since its inception. The details of that consultation are set out in Appendix 2 (at 258-267) and in Part D (at 51-60) of He Kawai Amokura. Not only have hui been held throughout the country and numerous reports produced, there has also been consultation with various working groups, including Taumata Paepae, which was a consultative group of iwi representatives from throughout the country. Taumata Paepae developed out of a memorandum of understanding between the Treaty Tribes Coalition and the Area One Consortium, two groups representing previously opposing views on allocation.
[40] The Commission was able to report in He Kawai Amokura (at 58, para D49) that it has achieved support for its allocation model from 93.1% of iwi, representing 96.7% of iwi-affiliated Maori. It obviously considers the level of agreement achieved as being evidence of the fairness of its model. It said (at 30, C38):
The Commission has had to carefully consider and balance many often conflicting factors and views. The allocation model is, by its nature, a product of this balancing of wide-ranging legal and other considerations, including the many views expressed in the course of the Commission’s numerous consultations with Iwi and Maori over the past decade. The appropriateness of the balance that the Commission has elected to adopt is reflected in the significant support that exists for the Commission to proceed with reporting this model of allocation to the Minister.
Content of consultation
[41] As will be seen from the discussion of the cases on the leasing and tender rounds (see below at paras [121] – [158]) there had been extensive consultation about the leasing formula to be used when the leasing system was changed in 1993. No consensus had been reached and therefore the Commission had taken a compromise position between the various points of view. This decision had been announced in a Panui of 9 September 1993. The differing positions taken by Maori were summarised by Anderson J in Area One Consortium Ltd & Or v Treaty of Waitangi Fisheries Commission & Ors, HC AKLD M1357-93, CP395-93, CP404-93, 27 September 1993 (Area One decision) – see para [126] below.
[42] There was also extensive consultation, as might be expected, on the allocation proposals. Discussion Documents had been released, for example, in 1993 and 1994. In those documents, the favoured proposal was the “location density” model discussed at para [46] below, at that stage using Department of Survey and Land Information line projections out to the extremities of New Zealand’s exclusive economic zone. This was found at the end of 1994 to have major technical problems and was then replaced with the coastline length concept.
[43] It is worth providing a bit more detail on some of the later reports as this shows the evolution of, and reasons for, the final allocation model. It also shows the rigorous nature of the Commission’s proceedings. The Commission’s July 1997 report, A Proposed Optimum Method for Allocation Consultation Document, was written for presentation at the Commission’s hui-a-tau of 26 July 1997 and was then to be discussed at a series of regional hui. The Commission, in that document, said that the purpose of the fisheries settlement was, in its view, primarily to address rangatiratanga and the return of collective property rights guaranteed by the Treaty of Waitangi. Social and economic elements were, in its view, a secondary focus of the settlement. These related to individual Maori, rather than collective, property rights. The Commission considered that the recognition of individual needs had necessarily to be relatively small because the total amount of the settlement was limited.
[44] The Commission said that it had determined that PRESA should be allocated rather than retained by the Commission and that it should be allocated to iwi. The Commission proposed that there be a division between inshore and deepwater quota with inshore fisheries allocated on a 100% coastline basis and deepwater fisheries on a 60% coastline and 40% population basis. The other assets were to be allocated in the same proportions as the quota allocation. The inclusion of the population element for the deepwater quota was justified on the basis of the less exclusive nature of the development right for deepwater fisheries as compared with the exclusive right to inshore fisheries. It was also designed to take account of the fact that the settlement was to be ultimately for the benefit of all Maori and to reflect the different socio‑economic needs of iwi of different sizes. The Commission indicated that it was considering the Chatham Islands as a possible special case, given their small population and small coastline.
[45] The Commission also dealt in that report with a number of proposals which had been considered and rejected. There had been a number of alternatives to allocating to iwi put forward, such as allocation to hapu, allocation to marae, allocation to regional structures and allocation to UMA. The Commission considered that, of the traditional Maori structures, iwi was the appropriate level at which fishing assets should be allocated. One reason for this was that the iwi level of organisation provided the appropriate level of skill and expertise and allowed packages of assets which would be practical in terms of modern fishing industry requirements.
[46] The Commission also discussed the alternatives to the coastline formula that had been put forward, including the “location density” model, whereby an iwi’s share of quota would be calculated on the basis of the volume of quota species present in the area offshore from the land boundaries of the iwi. The Commission considered this was unworkable as it would be too difficult to determine the marine rohe of an iwi and also too difficult to link the marine rohe with the location of fish, given that catch information did not always reflect accurately the location of fish. The population model had been put forward as a suitable model for inshore fisheries as well. The Commission considered that this proposal was inconsistent with tikanga Maori and the nature of Maori fishing rights.
[47] Another method of allocating the fisheries assets that had been put forward was to undertake historical research into the nature and extent of the traditional fishing activity of each iwi. The Commission rejected this method on the basis that the approach would be impractical. It would be time consuming and ultimately not worthwhile as the size of the settlement package was not related to historical rights.
[48] In its report of 10 March 1999, entitled Full Particulars of the Optimum Method for Allocation to be included in the Report to the Minister, the Commission noted (at 9) that, in its 1997 discussion document, it had suggested a 60% coastline and 40% population split for deepwater quota. This had been based on what the Commission saw as a just and reasonable reflection of the extent to which development rights may be exclusive to iwi. The Commission noted that a 50% population and 50% coastline split had been put forward as a compromise model by a group of iwi and, on the basis of a perceived relatively high level of support, this had been accepted by the Commission. It had been the allocation model put forward in the Commission’s November 1998 report, Report on the Proposed Method for Allocation of Pre Settlement Assets (PRESA).
[49] The Commission, in its 1999 report, analysed the responses by iwi organisations on the various components of the model. The inclusion of a coastline component was widely accepted, as was the inshore quota allocation method. Both were considered to reflect the nature of traditional Maori fishing rights. The population component was also widely accepted but there were issues with the measurement of population, because of concerns that the census figures relied upon were flawed. Twelve iwi did not agree with the 50/50 deepwater split, preferring some other ratio. Usually the preferred ratio was the 60/40 ratio that had been originally proposed by the Commission (at 17).
[50] There was a change of Commissioners in the year 2000. Because of the time that it had taken to come up with allocation proposals for PRESA, the new Commission recommended that the allocation of PRESA and POSA be dealt with at the same time. In this regard, in its discussion document released in December 2001, He Anga Mua: A Path Ahead, four alternative allocation models were proposed. The first two required the bulk of the assets to be centrally managed. The other two models had more assets provided directly to iwi. Extensive analysis of the benefits and disadvantages of each model was provided.
[51] The next document was released in August 2002 by the Commission, Te Ahu Whakamua, Report for Agreement. In that document, the Commission had moved to a 75% population and 25% coastline model for deepwater quota allocation. This was decided upon because of (at 23):
· the less exclusive nature of the development right in deepwater fisheries;
· social and economic considerations including the differing socio-economic needs of Iwi of different sizes;
· recognition that the Settlement also settles claims in relation to commercial freshwater fisheries in which all Iwi had a traditional interest, but which (aside from tuna (eels)) are unlikely to be realised in the form of commercial freshwater species within the QMS in the foreseeable future; and
· the need for securing agreement among Iwi with differing views.
[52] The Commission’s final report was He Kawai Amokura. A full summary of that document and the Commission’s analysis of its task is provided in the judgment of Glazebrook and William Young JJ in Thompson v Treaty of Waitangi Fisheries Commission & Ors, CA247/03, 15 June 2004 at paras [39]-[57]. We note in particular that the debate relating to population and coastline, which featured at the time of the Area One decision (see below at para [126]), remained a feature right up until the final allocation model was recommended. The Commission noted that (at 32 para C48) of He Kawai Amokura that there had been a range of views on the aim of the settlement but that the debate over the last 10 years could be characterised by the tension between two considerations – recognition of traditional tribal rights and the consideration of social and economic needs. The Commission considered that its settlement proposals took account, in an appropriate manner, of both of these considerations.
Judgment under appeal and related decisions
[53] This case was heard in the High Court sequentially with a number of other challenges to He Kawai Amokura. These included Watson & Anor v Treaty of Waitangi Fisheries Commission & Or (heard together with Manukau Urban Maori Authority Incorporated & Ors v Treaty of Waitangi Fisheries Commission & Ors) HC AKLD CP122/95; CP171/97, 28 November 2003, and Te Runanga o Ngai Tahu v Treaty of Waitangi Fisheries Commission & Ors, HC AKLD CIV2003-485-1113, 6 November 2003 (Ngai Tahu decision), which was not appealed. This case is discussed briefly below.
[54] In this case, turning first to the alleged failure to adjust for inequities in the lease rounds, McGechan J adopted, at para [16], the statement of this Court in the Muriwhenua decision that:
Any past inequities in the lease rounds would fall to be taken into account and adjusted as far as is reasonably practicable in a future settlement.
[55] The passage was referring, in his view, to inequities in outcome. Although the statement was obiter, he considered it compelling and not undercut by the later decision emphasising practicability in making the final allocations, Te Iwi Moriori Trust v Treaty of Waitangi Fisheries Commission CA238/96, 14 October 1996 (the Te Iwi Moriori decision). He noted later that the question of practicability did not bear on whether there were inequities. It merely related to the response to inequities if they existed.
[56] McGechan J traced, at paras [17]-[20], the reasons given by the Commission for denying the existence of inequities and accepted that the Commission’s viewpoint was genuinely held. He began his analysis of whether inequities should have been adjusted for by saying that he did not consider that Ngai Tahu’s total tender and lease round benefits constituted inequities merely because of their magnitude. The question, in his view, was whether that total was fairly gained. He then said that he could not find fault with the Commission’s processes and so the question focussed on outcome. He then outlined (at para [24]) a number of background factors as follows:
i)The Commission operated through tender and lease rounds under legislation which gave wide discretionary powers to assist Maori into fishing.
ii)Thinking in 1990 and 1993 reflecting the Muriwhenua Report recognised an association between rohe and fishing rights.
iii)Ngai Tahu’s rohe, which was most of the South Island plus Stewart Island, had a uniquely long coastline.
iv)Ngai Tahu was ready and willing, more so than many other iwi less well placed, to enter into and develop fishing business.
v)In doing so, Ngai Tahu took commercial risks. While the discount on quota leases was a cushion, Ngai Tahu was not immunised from loss.
vi)Prior to October 1993 the Commission was required by law to place half quota in AFL which operated on a fully commercial basis for the potential benefit of all Maori. That included most deepwater quota.
vii)As a function of its long coastline, in some FMAs Ngai Tahu had no competition from other iwi. That was fortuitous.
viii)Bidding and lease round charges were part of an open process which survived reviews and challenges.
ix)Post 1993 thinking reflecting the Waitangi Tribunal’s Fisheries Settlement Report allowed a 50% population element into deepwater fisheries. Ngai Tahu with a mere 6% population lost access to a considerable proportion of lucrative deepwater fisheries. That loss of access increases with the Report’s move up to 75%.
[57] He considered that three further points were influential. First, he did not accept that the He Kawai Amokura model was a neutral benchmark which could be applied back to 1990 to determine what tender and lease benefits should have existed. He Kawai Amokura was directed to allocation not leasing. Leasing occurred under other statutory powers and there was, in his view, no alignment between allocation and leasing. Secondly, the shift in policy in 1993 was a shift from one tenable policy to another and the policy change to a 75% population factor for deepwater quota did not necessarily require a reopening of the previous policy and the making of adjustments. There would, in his view, need to be something special before that was so - for example something especially wrong with the previous policy. There was nothing of that kind here. Thirdly, the lack of objection by iwi was important, although in the Judge’s view its weight was weakened because there was uncertainty as to the degree of information about relative benefits possessed by various iwi and in particular, the benefit received by Ngai Tahu. He doubted whether there was more than a general appreciation that Ngai Tahu had done well.
[58] The Judge did not, however, accept that a factor in the shift from a 50% to a 75% population factor for deepwater quota was intended to offset earlier inequities. There was, in his view, something contradictory in the Commission saying that there was no need to compensate but then saying that nonetheless compensation had been given. We note here that the Commission has indicated that the Judge had misinterpreted its submissions. It has never asserted that the shift from 50% to 75% was intended to compensate for lease round inequities as the Commission does not consider there had been any such inequities.
[59] McGechan J concluded, on the basis of the factors set out above, that he was satisfied that the Commission had reached the correct conclusion. He said at para [26] that:
Overall, while I have some reservations as to the Commission’s determination of the matter, I am satisfied that it reached the correct conclusion. The amount of benefit which Ngai Tahu received was not in itself inequitable, given that it was fairly received. A large amount, properly built up, is not itself improper. Ngai Tahu has done well, but there are no inequities in relation to others.
[60] The Judge did say that he would have granted relief, had the ground been made out, as the amounts in issue were substantial. He remarked, however, that he would have had no confidence that a new consensus could have been found. He said that the matter would have ended up with Parliament.
[61] Turning to the second claim of failure to consult as to inequities, the Judge held that this logically failed in light of his findings that there were no inequities. Nonetheless, McGechan J went on to make some general comments about the consultation process. He considered that, while the Commission had made major and commendable efforts to consult in a general manner, it did not, in his view, circulate sufficient data from which Maori could consider whether there were any inequities. He considered that it had cut off the discussion by asserting that there were no inequities. There may have been an appreciation among Maori that Ngai Tahu had done well but iwi could not properly comment without an understanding of the level to which it (and other iwi) had benefited. Even though there were no inequities, the Judge considered that data as to relative benefits should have been distributed.
[62] McGechan J said that he would not have granted relief had this cause of action been made out. The section of Maori pleaded not to have been consulted was, in his view, not large enough to have warranted the major disruption that overturning the report would have caused.
[63] On the final question of harbours and the juridical bay formula, the Judge considered that, if the matter had been viewed as solely being about bay determination and had been divorced from wider considerations of relationship to overall Maori fisheries, then a Pring v Wanganui District Council [1999] NZRMA 519 approach (heightened scrutiny) would have been appropriate. On that approach, the juridical bay formula would not, in his view have made sense. The effect of the rule was significant. The size of New Zealand’s coastline was substantially reduced by it, from 18000 kms to 6366 kms.
[64] In McGechan J’s view, the shoreline of an inlet is no less a shoreline because it does not face the sea (at para [54]). In his view, harbour iwi had no less, and possibly more, involvement with the sea than other iwi. Harbours were, and are, just as much a food basket for Maori in adjacent rohe as the sea alongside the coast is to others. Indeed, in his view, given mooring security for vessels within harbours, harbour iwi arguably had greater potential for deepwater development. The Judge noted in particular that the Kaipara Harbour, which had a shoreline of some 3000 kms or more, but with an entrance less than 10 kms wide, was traditionally a food basket supporting four marae around its internal shores. By the juridical bay formula, that harbour was effectively excluded from consideration.
[65] The harbour quota that is to be reserved for harbour iwi would, in his view, not have cured the difficulty. The PRESA harbour quota was based on records for a severely depleted resource which depressed the available proportion of total allowable catch and the POSA harbour quota was likely to face the same deficiency. McGechan J did not accept that harbours and coastal fisheries were different resources, or that there would be impermissible double counting where inlets ran parallel to the coast.
[66] McGechan J, however, considered that the use of the formula had to be viewed in the wider context of the allocation proposal. The allocation had been negotiated and agreed among iwi. The applicant groups were not iwi and could not complain if the relevant iwi had accepted the allocation model. He said (at para [60]):
The full context which like the 50% 75% split, involved decision by an expert body faced with broad policy and compromise questions and a delicate balance to be struck, is to be approached on a higher unreasonableness threshold. I can see that it could have been thought allowing in harbour coastlines would increase or distort coastline length to an unacceptable degree. Given wider considerations which are difficult for a Court to measure itself I cannot say the juridical bay formula was one which no reasonable decision-maker could have reached.
[67] The Judge recorded that he would have granted relief had this ground been made out, as the matter was too significant not to. He said again, however, that, had he granted relief, he was sure a Parliamentary solution would have been required.
[68] As indicated above, this case was heard sequentially with the Thompson and Ngai Tahu cases. In the latter, Ngai Tahu challenged He Kawai Amokura on the basis that the share of fishing assets should be governed by the fishing rights lost by the iwi concerned and not by general considerations of fairness to all Maori. The Judge rejected that argument. He then set out his view of the Commission’s role - to treat iwi fishing rights as the starting point but also to ensure that the settlement was ultimately for the benefit of all Maori. A large part of the Commission’s role was, in his view, to secure compromise among the various viewpoints of iwi on the appropriate balance between those two competing considerations. He said:
[17] The Commission’s obligations and powers that are of course a question of statutory interpretation. I do not accept either the Ngai Tahu or the Commission’s submissions to the full extent. I consider Parliament’s intention was that the Commission treat iwi fishing rights as the starting point. Indeed, these were to be at the forefront of considerations. Essentially that is a matter of commonsense and realities. When one is compensating for lost rights one looks at the extent and value of those rights. It is not a matter of open slather. There are signals that was expected in the Deed. It is reflected also by what actually happened in relation to inshore quota. There was near unanimity amongst Maori that such inshore quota should go by coastline. To a lesser degree it is supported by what happened offshore where coastline remained an element.
[18] It is however altogether too simple for Ngai Tahu to say that that must be the end of it. Parliament carefully avoided prescribing specific criteria for the Commission. It could not direct consideration of such iwi fishing rights any more than it referred to iwi populations, social needs or other like matters. It would have been self-evident to the Crown and Parliament that there would be a strong debate within Maori. Parliament directed consultation in relation to PRESA, and obviously expected it in relation to POSA as a precursor for suggested legislation, but under both the Deed and the statute Parliament effectively left Maori to it, which was consistent with the concepts of rangatiratanga and mana and the like, as well I daresay as representing shrewd politics. There were of course fall-back controls for the Crown through the Minister’s overview, and through the need for legislation, if matters got out of hand.
[19] Part of that Maori debate to which I have referred would be about what iwi fishing rights, as held by different iwi, actually were. That is still not altogether resolved, there being need for coastline agreements and the like. More importantly for present purposes it would have been clear to Parliament that there were Maori who had not signed up to the Deed and who would need winning over, and that, particularly, there would be powerful pressures from large population and small coastline iwi (the opposite of Ngai Tahu) for a population based approach which would more suit their interests. The settlement was pan Maori and expressly for the benefit of all Maori as the Deed at 4.5.1 states, at least on an ultimate basis. Demands based on fairness were very foreseeable. Such demands of course are exactly what happened. There were strong demands based on population and there still is a 15.51% population school.
[20] It would have been known accordingly to Parliament that there would be a need for the Commission to negotiate and to procure as far as possible compromise on strict rights, as events since have proved. Parliament gave the Commission the task in relation to PRESA of obtaining “agreement” as referred to in Schedule 1A, and the task in relation to POSA of obtaining at least a reasonable consensus. That agreement did not have to be unanimous but both a sufficient agreement and sufficient consensus were needed if the settlement was to be durable. Durability was important, not least I would say to the Crown. It was clearly intended in that light that the Commission should have power to negotiate and compromise and adjust strict iwi fishing rights so far as possible as a means of obtaining sufficient agreement and durability. Indeed that ability was recognised in fact even by Ngai Tahu with its previous agreement to forego 50% of the deep water quota in favour of population elements. This was not a question of principle, it was a question of degree.
Appellants’ submissions
[69] Ms Sykes, for the appellants, began by submitting that this case was of major importance to New Zealand as it concerned the fairness of the largest Treaty settlement to date. She then explained that the appellants are not iwi recognised by the Commission but that the individuals and groups involved are grass roots Maori individuals and grass roots Maori organisations representative of a large number of Maori and important traditional structures. She pointed out, too, that Te Runanga o Muriwhenua has been involved in fisheries settlement matters since the Waitangi Tribunal’s Muriwhenua report, (Report of the Waitangi Tribunal on the Muriwhenua Claim: Wai 22, 1988).
Standard of review
[70] Mr Taylor made the detailed submissions for the appellants. He began by submitting that this case should involve a high level of scrutiny. This followed, in his submission, from the direct effect of the Commission’s decision on rights. He acknowledged that the rights are communal rights but, in this context, such rights should be paramount. The need for close scrutiny by the Court was also suggested by the fact that the case turns primarily on the interpretation of the word “inequity” (something the Court is well equipped to do) and on the determination of the appropriate coastline formula (essentially raising questions of fact).
Lease and tender round inequities
[71] On the question of inequities, Mr Taylor contended that there is a duty on the Commission to ensure the fair allocation of benefits among Maori. This required any gross disparities to be considered as inequities and to be adjusted for in the final allocation. In his submission, the only fair model for adjusting for undue benefit is that set out in He Kawai Amokura because that was the model that was agreed to by all iwi. In addition, the Commission was the body charged with determining the final allocation scheme. As it determined that the model set forth in He Kawai Amokura is fair, this must be taken as the standard of fair entitlement to the settlement.
[72] Mr Taylor submitted that the case law to date clearly supported the position that any consequence of the lease and tender rounds not ultimately adopted in the final allocation must be recognised as an inequity. The crucial decision, in Mr Taylor’s submission, is that of Anderson J in Area One. Anderson J’s discussion of tika in that case was said to colour the later, briefer, discussion of the issue in this Court in the stay application that arose because of Anderson J’s orders in that case (see para [135] below). Mr Taylor also relied on the statement in the Muriwhenua decision about inequities and said that the Te Iwi Moriori decision had endorsed the approach. He referred in particular to this Court’s comment that:
The task of the Commission in devising methodology for allocating assets to Maori is a difficult one. It is understandable that priority should have been given to the primary task, with the annual leasing rounds being perceived as in the nature of interim assistance, any inequity in which can be adjusted in the final allocation. That was an approach recognised in this Court’s judgment delivered earlier this year in the Te Runanga o Muriwhenua case…
[73] There was a clear inference, in his submission, from this statement that the assistance referred to, was in fact a preliminary entitlement under a “best guess” at the final allocation methodology. Therefore he submitted that “inequity” logically referred to any differences between the lease methodology and the final allocation methodology, without requiring more. The Court was saying, in his submission, that, if the Commission had the leasing formula wrong, then it would be fixed later. That there should be such an adjustment is backed up, in Mr Taylor’s submission, by the fact that He Kawai Amokura provided (at 284) for training and development grants to be recouped from the final allocation. In his submission, this should have extended to the greater benefits accorded under the lease and tender rounds.
[74] Mr Taylor accepted that the courts had held in a number of cases that the lease and tender rounds could go ahead. His submission, however, was that these decisions were in the context of the necessity to ensure that the quota was not wasted. Upholding the leasing methodology allowed matters to be sorted out later without the pressure of a season going to waste. In his submission, the courts have never held that the lease round allocations were fair or equitable. The findings have just been that, on an interim basis, they were generally not unreasonable. The assessment of fairness must, in Mr Taylor’s submission, be undertaken now.
[75] As to the view that leasing cannot be aligned with the final allocation scheme, Mr Taylor contended that there is an alignment between the models justifying comparison. Both involved transfers of wealth from the Commission to iwi. Furthermore, each dollar of discount represented a loss of value to the Commission, value that would otherwise have been available to be distributed to iwi. The duty of fairness in allocating assets therefore meant that benefits already allocated had to be given the same weight as those which remained in the Commission’s hands.
[76] In Mr Taylor’s submission, the leasing powers have to be interpreted in the context of the new allocation powers that were introduced by the Settlement Act. No one could have anticipated that the transitional arrangements would go on for so long. In requesting and being granted the power to allocate its assets, Maori and the Commission had envisaged that that allocation would take place almost immediately, with little or no further discounted leasing before the final beneficial allocation of quota occurred. Thus they envisaged that the vast majority of the Commission’s assets would be distributed under an agreed fair scheme, rather than some $230m (being the total of the discount from 1990 to 2001) slipping away under a plan never finalised or agreed to. This is most evident, in his submission, from Resolutions 1 and 4 of the 1992 hui-a-tau – see Appendix 1 to this judgment. The Deed of Settlement (set out in Appendix 2 to this judgment) dated 23 September 1992 also envisaged a very short period before allocation, providing 90 days for the Commission to report back to the Crown on a scheme for distribution of benefits to Maori – see clauses 4.5.3 and 4.5.4.
[77] The delay made it even more important, in his submission, that the lease and tender rounds be aligned with the final allocations. This is because they have had such a significant allocative effect over the period of a decade. Mr Taylor took as an analogy the concept of unjust enrichment and noted that the good faith of a recipient is not a defence to the claim. It is only necessary that the enrichment be at the expense of another party. In his submission, this requirement is met here.
[78] The Commission also chose to conduct the lease rounds in a manner which anticipated final allocation. In Mr Taylor’s submission, it is clear that, as allocation proposals developed, these were implemented progressively during lease rounds. This again shows the alignment between the two. Mr Taylor pointed to a statement published by the Commission in a 21 October 1996 panui:
TOKM has also formed the view that the methodology adopted in future lease rounds should be progressively aligned with the developing PRESA allocation principles and methodology so as to reduce the potential for inequities to accrue. The risk of such inequities was commented on by the Court of Appeal.
[79] This meant that it was important that the final outcome reflected what was finally decided in terms of a fair allocation. This is especially the case as unexpectedly long periods of leasing had already transferred unexpectedly large amounts of wealth to iwi prior to that final allocation. In his submission, the duty of fairness required large unforeseen transfers of wealth to be treated and distributed in the same manner as the assets remaining with the Commission.
[80] Finally on this point, Mr Taylor submitted, that, even if this were not a case where there was a statutory duty of fairness and an intense standard of review, the disparities were so gross that the appellants would have had a case, even on a lesser standard of review. This is particularly the case in light of the finding by McGechan J that iwi had a lack of apprehension that there was anything near the total of disparity that is suggested by Mr Roger Taylor’s figures.
Consultation
[81] Mr Taylor adopted the formulation for consultation in Wellington International Airport Ltd v Air New Zealand [1993] 1 NZLR 671, which requires the provision of relevant information and then a hearing with an open mind. He submitted that, as this case deals with rights, the standard of consultation should have been high. This was particularly the case as the fisheries settlement is a precedent relevant to the entire Treaty settlement area, which is based on striking just and fair agreement with Maori. The standard of consultation set in this case, therefore, will, in Mr Taylor’s submission, reverberate throughout this field. The fisheries settlement was a just and honourable settlement and the consultation and open-mindedness must be required to be of the highest standard.
[82] In his submission, the Commission failed in its duty as it had failed to put all relevant information before iwi. It was submitted that there had been a veil of secrecy as to the tender and lease round figures. In Mr Taylor’s submission, an analysis similar to that done by Mr Roger Taylor should have been done by the Commission and provided for the purposes of consultation. Mr Taylor pointed out that the Commission had provided an analysis of benefits to each iwi with regard to the He Kawai Amokura allocation model. It should have provided similar figures with regard to lease and tender round benefits. It was not sufficient that there be a reliance on the fact that Maori would have had a general suspicion that Ngai Tahu had done well or on the fact that this had been brought to the fore by the leasing cases.
[83] All the Commission had done, before McGechan J and in this appeal, was to point to places where it had published its own views that there had been no lease or tender round inequities. This was not, in Mr Taylor’s submission, an appropriate fulfilment of the duty to consult. Even if there had been no inequities, Mr Taylor claimed that the outcomes of tender and lease rounds remained relevant information. This was because Maori were concerned to balance the benefits of the settlement, the courts had always insisted that the outcomes of the lease and tender rounds were important in settling the final allocation model, and the appellants had made it clear to the Commission that they wished to know the outcome of the rounds before a final allocation model was confirmed.
[84] In Mr Taylor’s submission, the failure to provide proper information was not saved by the front piece of Te Ahu Whakamua, Report for Agreement, the Commission’s report of August 2002, which invited further inquiry. It should not have been left up to Maori to ask for further information. It should have been provided by the Commission.
[85] Finally on this point, Mr Taylor contended that the Commission had a closed mind on the issue, as, in all its consultation material from Te Anga Mua: A Path Ahead, it had stated its view that there were no inequities.
Juridical bay formula
[86] With regard to the juridical bay formula, Mr Taylor submitted that the formula was not derived from domestic or international law and was not logically connected to the process of determining the area of fisheries under an iwi’s control. It was therefore unreasonable. He further contended that the formula cannot be saved by the fact of consultation or by its place in a wider policy decision as these were both based on an erroneous premise. Neither can it be saved by the introduction of the notion of harbour quota because that harbour quota is minimal.
[87] In his submission, the international law convention on which the formula was based was intended to retain the prized waters of harbours and bays as internal waters, rather than as part of the coastal maritime area to which other States have certain rights. By contrast, the use of the modified formula by the Commission reduced the benefit that the internal water provided to those adjacent to it. It had no logical connection to the international law rule or to the assessment of fishing rights of harbour iwi.
[88] In Mr Taylor’s submission, the Commission’s use of coastline as a component in the allocation proposal was a quasi-restitutionary measure. Its purpose was to restore, to the extent possible, the modern equivalent of extinguished customary fishing and development rights to the former holders of those rights in a manner proportionate to the incidence and holding of those rights. The evidence was that it was likely that harbours would have increased the fishing area under iwi control and, therefore, there was no logical reason why they should not have been taken into account in coastline measurement.
[89] The Commission had, in Mr Taylor’s submission, closed its mind to alternatives when it leapt to the international law test. There were many alternatives that should have been considered. In this regard, Mr Taylor referred to the island formula. This, in his submission, could have been adapted for use with respect to the harbours. Alternatively a proportion of the coastline of harbours could have been taken into account or the Commission could have examined each harbour on an individual basis, in order to assess the actual historical fishing rights of harbour hapu. The fact that these alternatives were not considered in his submission in itself makes the Commission’s conclusions unreasonable.
[90] A myriad of factors should, in Mr Taylor’s submission, have been taken into account - for example the extent of pre-European locations of Pa sites and matters of that nature. There was thus a lack of factual basis for the Commission’s consideration of the issue and for the consultation it undertook. Mr Taylor referred in particular to the Kaipara Harbour, which has a 3000km coastline and supports four principal marae around its internal shores. It is now only represented by less than 10km of coastline and thus is deprived of access to valuable deepwater species, even though the evidence was that harbour iwi may have been better able to exploit these development rights.
[91] In Mr Taylor’s submission, there was also an erroneous basis for consultation in respect of the juridical bay formula, given the reference to international law in the consultation documents. This undercut the value of the consultation process. The Commission, by referring to the international law basis for the juridical bay formula, was, in Mr Taylor’s submission, suggesting that the formula was an internationally accepted method of assessing whether a bay was likely to have increased the area of fisheries resources under the control of an iwi. This was not its purpose in international law. The risk was too real, in Mr Taylor’s submission, that a different compromise would have been agreed, if Maori had not been misinformed as to the nature of the formula.
[92] Finally, Mr Taylor submitted that the existence of harbour quota did not ameliorate the position. Any effect was minimal as the value of the PRESA harbour quota is only $573,569. While the POSA figures have not yet been done, there is no indication that these will be any higher. The harbour assessment was, in any event, a modern assessment of fish stock rather than an historical assessment and therefore did not take into account historical losses through depletion of resources, nor did it take into account development rights.
Commission’s submissions
[93] Mr Carruthers QC, for the Commission, maintained that the appellants are individuals only and that they are not representative of the public or any significant section of Maori. Having regard to the fact that the tender and lease quota rounds provided assistance to iwi and also that allocation is required to be made to iwi, it is notable, in his submission, that no iwi recognised by the Commission has maintained proceedings seeking an adjustment of the allocation model to take account of any alleged lease and tender round inequities. In particular, Mr Carruthers pointed out none of the constituent iwi of Te Runanga o Muriwhenua are among the plaintiffs. Those iwi that had been plaintiffs earlier in the proceedings had withdrawn following the release of He Kawai Amokura.
Standard of review
[94] Mr Carruthers submitted that the determination by the Commission as to whether inequities actually existed was a task which it was best placed to address and with which the Court should not lightly interfere. In his submission, it is not an assessment that can easily be made by a court, particularly on review. Mr Carruthers also questioned the utility of relief given that the Commission’s task is done and a Bill is before Parliament where the Select Committee can consider the arguments of the appellants.
[95] Similarly, the issue of whether it was open to the Commission to use the juridical bay formula is not, in Mr Carruthers’ submissions, one of fact. The Commission, in consultation with iwi, made a policy decision to use a methodology to calculate the coastline of New Zealand for the purpose of allocation. This in itself was a subset of broader decisions to classify quota (as inshore, deepwater, harbour and freshwater) and to utilise population, coastline and combinations thereof as the formula for allocating particular quota to and among iwi. The treatment of harbour coastlines is but one aspect of the Commission’s methodology for measuring coastlines. The Commission, as a specialist entity with knowledge of the history of the matter, is best placed to assess the factors relevant to these interrelated policy decisions.
Lease and tender round inequities
[96] On the issue of the alleged lease and tender round inequities, Mr Carruthers submitted that the Commission had reviewed the process and outcome of those rounds. The conclusions reached by the Commission were that there were no procedural errors that warranted redress, that the unequal amounts of assistance received by iwi under the tender and lease rounds did not amount to an inequity and that it was neither appropriate nor practicable to adjust the allocation model to provide for previous tender and lease round processes or outcomes. Mr Carruthers also pointed to the fact that the leasing methodology employed by the Commission since 1993 was developed after extensive consultation and further views were sought from iwi in 1996 and 2001 when changes were mooted or made.
[97] It was submitted that the appellants had misconstrued the findings in previous judgments relating to tender and lease rounds and therefore had defined the scope of the Commission’s duties incorrectly. Mr Carruthers submitted that previous case law did not define “inequities” in the present context. Nor did it require adjustment in the final allocation. The remarks of Anderson J (which were in any event obiter) in the Area One decision, which are relied on by the appellants, have to be assessed against the fact that the court was dealing with applications for interim relief. It was within that context that Anderson J commented (at 16) that:
…any consequence of this impending lease round which might ultimately be revealed as wrong or inappropriate following long discussion and anxious inquiry – a conclusion which may only be reached by consensus or broad agreement – can be remedied by consensus or possibly broad agreement in future consideration of asset allocation.
[98] Further, it was submitted that the appellants have ignored the influence of timing when analysing Anderson J’s comment that “what is revealed as tika, it will be tika to implement”. The appellants argue that this refers to the “allocative fairness” of the benefits derived by each iwi. In context, in the Commission’s submission, the sentence more reasonably means that, with time, what is revealed to be right following long discussion, anxious inquiry and consensus, it will be right to implement. The Commission argued that there had been “long discussion and anxious inquiry” into the alleged inequities. Given that no iwi challenges He Kawai Amokura, it must follow, in Mr Carruthers’ submission, that the “consensus and broad agreement” among iwi is that lease rounds should not be further revisited and adjusted on final allocation.
[99] Mr Carruthers also submitted that this Court in the stay application (see para [135] below) had upheld Anderson J’s finding that the Commission had properly addressed all relevant criteria, including that of equity and fairness. In addition, it was not open for appellants to rely on the statement of this Court in the Muriwhenua case about inequities. The Court’s statement was obiter and the issue was not even before the Court. While allegations regarding alleged sharp discrepancies in past tender and lease rounds had been mentioned in the context of the proceedings, that issue had not been the subject of argument. In any event, the Commission submitted that this Court arguably qualified its earlier obiter statement in the Te Iwi Moriori decision, by questioning whether it would in fact be practical to adjust for past lease rounds upon allocation. Neither, in Mr Carruthers’ submission, do other cases support the appellants’ position. Indeed those cases have upheld the lease and tender round methodology employed. Mr Carruthers referred in particular to Gendall J’s decision in the High Court Raukawa decision which was upheld by this Court (see paras [151] to [158] below).
[100] Mr Carruthers next submitted that the appellants have misinterpreted the Commission’s duties under ss5, 6(e) and 8 of the Maori Fisheries Act. The interim leasing of quota and the final allocation of the settlement assets comprise different processes, which fall to be considered within their distinct statutory contexts. The Commission challenged the appellants’ characterisation of the Commission’s assistance to iwi through the tender and lease rounds as a prior allocation of benefits amounting to one third of the Commission’s remaining assets. This is misleading in the Commission’s submission because the leasing of quota to iwi was on a year-by-year basis, was an interim measure only and was expressly stated to be without prejudice to the final allocation model. It should not be confused with the final allocation of settlement assets. The Commission referred in this regard to Anderson J’s judgment in the Area One decision (see below at para [122]).
[101] Mr Carruthers accepted that there were, from 1993, differences between the tender and lease round methodology and the final model as set out in He Kawai Amokura. In his submission that does not show an inequity in substance or process. For the period before 1993, with the exception of the Commission’s first tender round in May 1990, the tender rounds only involved inshore quota. The greatest level of MDI preference was given to iwi within the QMA for the relevant fishstock. Inshore quota (both PRESA and POSA) is, under He Kawai Amokura, to be allocated on the basis of coastline. There can, in the Commission’s submission, be no inequity even on the appellants’ definition in this period.
[102] In any event, mere differences in outcome because of shifts from one tenable allocation policy to another do not, in the Commission’s submission, give rise to inequity. He Kawai Amokura cannot, in Mr Carruthers’ submission, be used as a benchmark from which to argue that any inconsistent tender and lease round distributions are inequities. Mr Carruthers submitted too that the figures regarding tender and lease benefits calculated by both Mr Roger Taylor and the Commission are subject to a number of important qualifications and a precise assessment of the actual benefits derived by each iwi, such that one could safely effect a readjustment now (even if desired), is not reasonably possible.
[103] Mr Carruthers finished by pointing out the effects of adjustments. As an example, he first took the case of the Chatham Islands. On Mr Taylor’s figures the Chathams have been unjustly enriched by $12.2m. The Chathams’ cash allocation is only $52,868 and their AFL share value is $713,515. If there is an adjustment, it is thus going to be taking quota from the Chathams, in circumstances where the Chathams have been regarded as a special case because of the social and economic impact of fishing. Equally, Ngai Takoto would require an adjustment of $1.7m under Mr Taylor’s figures. Ngai Takoto’s total allocation is only $443,816. It has had to be topped up by the Commission to reach a $1m allocation, the minimum the Commission considers necessary for an iwi to be able to perform the tasks now required. Presumably, if a lease round adjustment were made, it would have to be topped up again and this would defeat the purpose of the adjustment.
[182] The coastline component of the allocation model was intended as a proxy for the measurement of traditional fishing rights. The Commission considered that including harbour coastlines in that proxy measurement would have disproportionately favoured certain iwi. The analysis done by Mr Carruthers in relation to rock lobster would certainly suggest that that would have been the case. A perusal of other fish stocks shows that the problem would not have been limited to rock lobster. A model that disproprotionately favours certain iwi cannot in our view be seen as meeting either the requirements of a fair allocation to iwi based on traditional fishing rights or that of a settlement ultimately for the benefit of all Maori.
[183] The appellants submitted, however, that it was not a reasonable reaction to that possible distortion to exclude harbour coastlines completely. This was not what the Commission did. It introduced the concept of harbour quota. While the value of that quota may not be high, it still ameliorates the harshness of the exclusion rule and shows that this was a factor taken into account by the Commission. We are not in a position to second guess the Commission’s solution reached after extensive consultation and due consideration, even were it appropriate for us to do so. In our view, the juridical bay formula is merely one part of the final model set out in He Kawai Amokura in the same manner as the other variables, including the coastline proxy itself. This model was one based on compromise between sometimes competing considerations. It was also a model agreed to by iwi. That agreement must be seen as encompassing agreement for the method of measuring coastlines, including the juridical bay formula which had been part of the Commission’s model since 1997.
[184] The appellants submitted that the significance of that agreement is diminished by the fact that the explanation given by the Commission was that the formula is required by international law. Read in context, the Commission’s remarks do not, in our view go so far. When the passages in relevant documents are read as a whole, it is clear that the Commission is saying only that the United Nations Convention on the Law of the Sea is the origin of the formula. The Commission clearly explained in its consultation material that the formula was adopted because otherwise there would be heavy distortion in favour of iwi with coastlines within harbours – see for example the explanation given in He Anga Mua: A Path Ahead, reproduced in Appendix 4. Maori can ultimately have been under no misapprehension as to the purpose or effect of the formula. It is significant too, that no iwi allegedly adversely affected by the formula is a party to this litigation. In such circumstances the Commission’s decision cannot be characterised as unreasonable.
RESULT AND COSTS
[185] For the reasons given above, we consider that the decisions of the Commission not to adjust for differences in methodology in the lease and tender rounds and to adopt the juridical bay formula met the statutory criteria and were not unreasonable. Consultation was also adequate. The appeal is accordingly dismissed.
[186] The respondents have leave to file memoranda on costs on or before 16 July 2004. The appellants have until 30 July 2004 to file memoranda in reply.
Solicitors:
Woodward Law Offices, Wellington for Appellants
Kahui Legal, Wellington for First Respondents
Crown Law Office, Wellington for Second and Third Respondents
Bell Gully, Wellington for Fifth RespondentAPPENDIX 1
Schedule 1A of the Maori Fisheries Act
Resolutions Adopted at Hui-a-Tau of 25 July 1992
ALLOCATION
AUTHORITY
1. That the hui endorse the decision made by the Commission to seek legislative authority to further secure the Commission's intention to allocate its assets to iwi.
METHOD
2. That MFC [Maori Fisheries Commission] examine the alternative methods to allocate, consult with iwi, and have prepared discussion material to enable agreement to be reached on the optimum method for allocation. …
EVENT OF DELAY
4. That the hui agree that, in the event of significant delay to the implementation of the allocation strategy, the MFC hold a further tender of MFC/AFL [Aotearoa Fisheries Ltd] quota for the 1992/93 fishing year only. …
APPENDIX 2
Extracts from the Settlement Deed
4.5 Distribution of Benefits to Maori
4.5.1Maori agrees that the settlement evidenced by this Settlement Deed of all the commercial fishing rights and interests of Maori is ultimately for the benefit of all Maori.
4.5.2The Treaty of Waitangi Fisheries Commission is to consider how best to give effect to the resolutions taken at the annual general meeting of the Maori Fisheries Commission in July 1992 and will be empowered to allocate assets held by the Maori Fisheries Commission at the day before the Settlement Date.
4.5.3The Treaty of Waitangi Fisheries Commission is to develop, after full consultation with Maori, the proposals of Maori for a new Maori Fisheries Act that is consistent with this Settlement Deed, and shall report to the Crown within ninety (90) days of the date of this Settlement Deed with a request that it be enacted as soon as practicable having regard to commercial considerations. Any tribe with a beneficial interest may request that the Crown recommend to Parliament that the resulting Bill be referred to the Waitangi Tribunal under Section 8 of the Treaty of Waitangi Act and the Crown shall recommend it be referred accordingly. The final decision on the form of any Bill to be introduced shall be that of the Crown.
4.5.4Such proposals referred to in clause 4.5.3 are to include:
4.5.4.1The appointment, composition and powers of any body succeeding to the Treaty of Waitangi Maori Fisheries Commission; and
4.5.4.2Development of a procedure for identification of beneficiaries and their interests in accordance with the Treaty of Waitangi and a procedure for allocation of benefits of this Settlement Deed to them in accordance with the principles of the Treaty of Waitangi. Such proposals for distribution of settlement benefits will address the questions set out in Annexure A and will include a procedure for Maori affected, to be heard on benefit issues.
4.5.5Maori agrees that it will before the expiration of the period referred to in clause 4.5.3 provide to the Crown a scheme for the distribution of the benefits of this Settlement Deed to Maori in terms of clause 4.5.4.2 and which satisfies the Crown that all persons who may have rights and interests extinguished by or in consequence of this Settlement Deed will be fairly treated.
4.5.6The Crown agrees that, until such time as a scheme of distribution which satisfies the Crown has been provided by Maori in accordance with clause 4.5.5 and clause 4.5.4.2, the Crown will not introduce legislation conferring any power to distribute to Maori any assets or benefits of either this Settlement Deed or of the Maori Fisheries Act.
4.5.7All parties acknowledge the Treaty of Waitangi Fisheries Commission receives and holds the settlement benefits on behalf of Maori and for their benefit. …
Annexure A to the Settlement Deed
Distribution of Settlement Benefits
A distribution system should adequately address the following five questions:
iWhat will be distributed?
iiWho will manage the distribution system?
iiiWho will receive the settlement benefits?
ivHow will different levels of interest be identified and accommodated?
vHow will disputes be resolved?
These questions are expanded below:
iWhat will be distributed?
A distribution system should specify the type and form of benefits which are to be distributed.
ii Who will manage the distribution system?
A distribution system should specify any legislative requirements needed to empower a body to effectively manage the distribution scheme. Consideration should be given to the membership of such a body and what input is required to facilitate selection of members. Any management processes should be efficient and decisions should be made in a transparent way.
iii Who will receive the settlement benefits?
A distribution system should address the criteria to be applied in identifying iwi and determining if a particular iwi has a fishing interest. The scheme will need to address how individual, whanau or hapu interests can be accommodated within the iwi structures. It should consider whether a degree of independence between this function and the distribution function is warranted for purposes of transparency and accountability. Any distribution system should aim to achieve a fair allocation of the benefits among Maori.
ivHow will different levels of interest be identified and accommodated?
A distribution scheme should address the criteria to be applied to determine the different levels of interest among iwi in inshore quota, deep water quota, and the benefits derived from Sealord Products Limited.
v How will disputes be resolved?
There are a number of points in a distribution system where disputes may arise. A distribution scheme should include proposals for a transparent and independent dispute resolution process.
APPENDIX 3
Extract from He Kawai Amokura
Section C, at 40-45, paras 114-139Allegations of Lease Round Inequities
114.The Commission has provided assistance to Iwi through tendering quota, leasing quota and most recently providing ACE from quota on an annual basis since the creation of the Maori Fisheries Commission in 1989. This assistance has been provided in fulfilment of the Commission’s statutory functions and to enable Iwi to gain first hand experience in the industry.
115.The provision of assistance through annual tender, lease and ACE rounds has been carried out by the Commission pursuant to the Commission’s functions of granting assistance under section 5 of the Maori Fisheries Act 1989. Subject to consistency with the statute and having regard to those matters specified in section 8 (namely, Maori custom, social and economic considerations), the Commission has a wide discretion when granting assistance to Maori or groups of Maori. This discretion allows the Commission to develop policies relating to the granting of assistance, including policies for the annual tender and/or lease of quota distributions.
116.From 1990 to 1992/93, quota was leased on a competitive tender basis with a preference known as the Maori Development Incentive (MDI) given initially to Maori and subsequently to a graduating scale from Maori individuals to Iwi bodies. In these tender rounds, the Commission sought to allow Maori greater access to its quota holdings than would have been possible with a fully commercial highest-bidder-takes-all tender. As a result of the MDI, Iwi and other Maori groupings tendering for the lease of quota held by the Commission received a preference over bids from non-Iwi/Maori commercial fishing operations.
117.The context in which the Commission made its initial decisions in relation to the tender round policies is important. The period from 1990 to 1993 was a pioneer phase when there was little institutional infrastructure and significant uncertainty. Court proceedings against the Crown were still (at that early stage) extant and discussions were occurring between the Maori Fisheries Negotiators and the Crown. The nature and extent of the final settlement was yet to be determined. The quota to be provided to the Commission by the Crown under the 1989 “interim settlement” was being transferred incrementally. During this same period the Commission was also required by statute to provide half of its quota to Aotearoa Fisheries Limited,67 which in turn managed the quota on a largely commercial basis. This entire period was one of change that is expressly referred to in the Maori Fisheries Act 1989 as the “transition period”.[1]
67 This company, which is now wound up, is a different company to Aotearoa Fisheries Limited that is proposed to be established under He Kawai Amokura.118.Furthermore, the delivery of quota through the tender process was subject to delay and intense seasonal commodity pressures. The result of this period of growth, exploration and development was that the Commission provided preferential access to communal groups, through the application of the policies that encouraged development and participation.
119.Annual lease rounds since October 1993 have proceeded on a different basis and have not used tenders or an MDI. Quota and ACE has been apportioned by the Commission between Fisheries Management Areas (FMAs) on a coastline/population formula for annual leasing. Where the rohe of more than one Iwi lies within an FMA, those Iwi are required to reach agreement on their respective shares of the available quota for that FMA.
120.The design process for the lease rounds had significant Iwi input and the final model was created in consultation with Iwi. It incorporated Iwi concerns, such as addressing the precedent effect that the annual lease rounds could have on final allocation through the inclusion of express “without prejudice” clauses in the lease documents.[2] The distribution of all Inshore Quota to those Iwi in each FMA who have coastline within each respective FMA had significant support from Iwi. The mixed population/coastline formula for Deepwater Quota was subject to a range of views, but the Commission considered that it represented a reasonable compromise and a fair reflection of its various statutory requirements.
[2] In all annual lease and ACE rounds Iwi who participate are required to sign deeds of waiver and indemnities. In these deeds, participants must formally acknowledge that annual distributions are:
· Without prejudice and create no expectation to the entitlement of the Iwi to any future leasing or allocation of quota or other assets by the Commission; and
· Not binding or to be treated as a precedent for any future availability, lease or allocation of quota by the Commission.
121.Importantly, therefore, Iwi were involved in creating and approving the lease round criteria in 1993. Beyond the division of quota between FMAs by the Commission, the particular distribution of quota leases among Iwi within each FMA was a matter for agreement by those Iwi and no prescribed formula was imposed by the Commission.[3] Furthermore, Iwi and other interested parties continued to be consulted and have their views considered when the policy was further developed in 1996 and 2001.
[3] Although, in the event of disputes, the Commission operated a Disputes Working Group which by necessity made decisions in order to enable leasing to begin before the fishing opportunity was lost through the commencement of the fishing season.
122.Both the tender rounds and subsequent lease rounds have promoted participation by Maori in the business and activity of fishing through preferential or discounted access to quota. They have also provided Maori with a valuable learning experience in the modern business of fishing without being subject to the full range of risks and responsibilities of quota ownership.
123.It has been alleged by some groups in the course of litigation relating to allocation that inequities resulted from the Commission’s tender and lease rounds with some Iwi unfairly gaining more benefit than others. The claim has been made that the Commission’s allocation model should take such alleged inequities into account and make provision for them when determining relative Iwi shares in the final allocation of assets by the Commission. These allegations have been based, in part at least, on the observation made by the Court of Appeal in 1996 that:[4]
[4] Te Runanga o Muriwhenua & Ors v Te Runanganui o Te Upoko o Te Ika & Ors [1996] 3 NZLR 10, at p 20.
Any past inequities in the lease rounds would fall to be taken into account and adjusted as far as reasonably practicable in a future Settlement.
124.While this comment by the Court may not be binding, it is accepted that the Commission should review the assistance it has provided to Iwi through the tender, lease and ACE rounds, and consider:
(a)Whether the policies were substantively equitable;
(b)Whether any inequities arose from the application of the policies; and
(c)Whether the accrued benefits received by Iwi through the tender, lease and ACE rounds should be taken into account and adjusted for in the allocation model in this Report.
125.The term “inequity” was not defined by the Court of Appeal in 1996 nor is it a term that is readily capable of singular definition. The concept of equity revolves around the notion of fairness which, with regard to the law, may be considered in terms of both process and the outcome or effects of such process. Consequently, the Commission has considered the issue of inequities in a broad manner in order to ensure that its assessment of the allegations is necessarily comprehensive and robust. The Commission has approached the issue of alleged lease rounds inequities by considering the creation, application and consequential effects of its tender and lease policies against the principles of fairness, reasonableness and impartiality.
126.The Commission has examined the annual tender and lease rounds between 1990 and 2000 to ascertain whether the policies were created and applied fairly and reasonably. These enquiries have established to the satisfaction of the Commission that there was no procedural impropriety, bias or predetermination in the development of the policies. Furthermore, the Commission has concluded that there was no procedural impropriety, bias or predetermination exercised by the Commission in the application of the policies that has not previously been identified and addressed by the Commission. The Commission’s extensive examination and analysis of annual tender and lease rounds between 1990 and 2000 did disclose some isolated administrative errors, which in terms of nature, size and effect were not considered by the Commission to be material and therefore did not warrant further consideration in terms of the development of the allocation model in this Report.
127.The other, previously identified issues related to the first MDI Deepwater tender round in May 1990 and MDI tender round 10 in October 1992. In the October 1992 tender round (finfish and paua) it was claimed that unfair results occurred in the application of the tender round policies. This affected all Iwi consortia participating in the tender round. In the May 1990 Deepwater tender round, a series of errors occurred in the preparation of lease documentation. Ngati Wai was the only Iwi affected. In both cases, however, the Commission entered into a settlement with the groups involved, and therefore considers that any inequities that might have existed have already been addressed.
128.Therefore, the Commission has concluded that no inequities presently exist. The Commission has not identified any material errors of process or substance in the tender and lease rounds that could reasonably be described as an inequity. Therefore, the Commission does not consider that it could reasonably require any adjustment to be made to He Kawai Amokura on account of previous lease and tender rounds.
129.It is also notable that the policies behind the lease rounds since 1993/94 have been tested on several occasions. In 1993, the High Court and Court of Appeal considered the lease-round methodology and made the interim finding that it met all relevant statutory and administrative law standards.[5] The lease-round methodologies were substantively tested in Court proceedings in 1996 and again were found to be lawful.[6]
[5] Area 1 Consortium Limited v The Treaty of Waitangi Fisheries Commission, High Court, M 1357/93, 27 September 1993 and Court of Appeal, CA 224/93, 29 September 1993.
[6] Te Runanga o Raukawa v The Treaty of Waitangi Fisheries Commission High Court CP 322/96, 7 August 1997. This decision was also upheld on appeal: Court of Appeal, CA 178/97, 14 October 1997. Other unsuccessful lease-round cases include Hauraki Maori Trust Board v Treaty of Waitangi Fisheries Commission High Court, CP 562/94, 12 February 1996 and Phares v Treaty of Waitangi Fisheries Commission, High Court CP 398/94, 23 December 1994.
130.However, simply because Iwi received unequal amounts of assistance through the annual lease rounds does not, in the Commission’s opinion, amount to an inequity. The Settlement affected the rights of all Iwi, but not necessarily to an equal extent. At the time of the Settlement there had been no comprehensive investigation and quantification of the precise nature and extent of each Iwi’s interest in commercial fisheries and one of the purposes of the Settlement was to avoid the need to embark upon that task.
131.The subsequent debate in relation to allocation itself has revealed that the issue of rights and interests in the Settlement may be approached from a number of different premises, some relying on traditional rights, others on contemporary social and economic need. Whether one considers Iwi’s interests according to traditional access to and control of fisheries resources, or size and location of rohe, or number of Iwi members or socio-economic status, all Iwi will necessarily differ. What may be perceived to be “fair” or “equal” on one approach may be argued to be unfair or unequal on another. The Commission has had regard in its annual tender and lease decisions to a range of relevant considerations, different views and, in its discretion, it has determined what it considered to be an appropriate and reasonable compromise. In such circumstances, unequal outcomes between Iwi, in the absence of some other procedural or substantive flaw, are not in the Commission’s view inequitable.
132.The allegation is also made that some Iwi have obtained more of an economic benefit through the granting of assistance by the Commission and that this in itself constitutes an inequity. This reflects an argument based on unequal outcomes of lease rounds in economic terms. It is argued that in the allocation model this cumulative benefit should be provided for, that is, the unequal economic gain should be deducted from those Iwi that received the economic benefit.
133.However, the population component of the lease round formula in the Commission’s post-1993 lease rounds was included as a means of addressing both overall fairness and social and economic considerations under section 8 of the Maori Fisheries Act. The Court of Appeal has confirmed that this use by the Commission of a population component in leasing reflected a regard to economic and social considerations:[7]
[7] Te Runanga o Raukawa Inc v Treaty of Waitangi Fisheries Commission, Court of Appeal CA178/97, 14 October 1997.
While the mix of coastline and population factors may to some at least seem a rather blunt instrument for giving effect to the statutory criteria, and while in the opinion of some there may be better ways of approaching the very difficult problem which the Commission faces, what is abundantly clear is that the Commission cannot be said to have had no regard to economic considerations. The Commission’s whole purpose in using population as an ingredient in its approach is to reflect such considerations, albeit in a broad way. This is perfectly plain from the evidence. …
We are satisfied that in deciding upon its general approach the Commission did have regard to economic and social considerations via the population aspect of its approach.
134.The use of population as one factor during the annual lease rounds therefore clearly reflects the Commission’s regard to economic and social considerations in the annual lease of quota. Both fairness and social and economic considerations were also among the matters taken into account by the Commission when it increased to 75% the weighting given to the population component of the formula for the allocation of Deepwater Quota in the allocation model. In its consideration of social and economic factors in the course of finalising the allocation model in this Report, the Commission had regard not only to Iwi populations, but also generally to the assistance that the Commission has granted cumulatively to various Iwi over the years, including the assistance from the lease rounds. These considerations were among the matters that influenced the Commission in its decision to maintain an increased weighting of 75% for the population component of the formula for the allocation of Deepwater Quota in the final allocation model that is contained in this Report.
135.It has also been put to the Commission that some Iwi have received significant assistance through the annual lease rounds. That assistance together with the allocation to those Iwi of their entitlements under the Settlement would exceed the proportion that each Iwi would receive based on a methodology that allocated solely on the basis of population. For those Iwi it was suggested that some assets should be deducted to bring their overall distribution in proportion to an allocation based on population. The Commission has already consulted and sought agreement on a proposal that incorporates both coastline and population but does not deduct assistance granted during the tender, lease and ACE rounds. It is impractical to now introduce a change as drastic as that which is discussed above. This proposal is viewed by the Commission as being without merit.
136.It has also been suggested that, to the extent that any final method of allocation differs from the formula used by the Commission for earlier annual lease rounds, those previous lease rounds must necessarily have been inequitable and should therefore be adjusted for in final allocation. However, this view fails to recognise the important distinction between leasing quota on an annual basis and the final and permanent allocation of such quota by the Commission. Different statutory functions and processes apply. This distinction reflects an even more fundamental policy differentiation within the Maori Fisheries Act, namely, the prohibition on the sale or transfer of quota by the Commission prior to the implementation of the final allocation model.[8] The Commission is, however, expressly empowered to lease quota.[9] A lease by its very nature is not a permanent vesting of the property or asset concerned and, in terms of the Maori Fisheries Act, is not allocation.
[8] See section 7 of the Maori Fisheries Act 1989 and section 19(2) of the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992.
[9] Section 7(1) of the Maori Fisheries Act 1989.
137.In conducting the annual lease rounds, the Commission is fulfilling a principal function of granting assistance under section 5(a) and (b) of the Maori Fisheries Act. The exercise of this function is not restricted to leasing, but also extends to providing scholarship assistance, research funding, and other grants of assistance. In developing proposals for PRESA and POSA allocation on the other hand, the Commission is performing a specific function subject to a prescribed statutory process, which carries with it particular legal and political considerations and obligations that necessarily extend beyond the issues considered in the annual lease of quota. Furthermore, as noted above, the annual lease rounds are expressly conducted on a without prejudice basis with regard to both future lease rounds and the final allocation of assets by the Commission.
138.Finally, the Commission has considered both the submissions received on He Anga Mua and the responses to Ahu Whakamua in relation to alleged lease round inequities (which were expressly discussed in both publications). None of the Iwi recognised by the Commission expressed support for the inclusion of the annual lease rounds, by way of adjustment to the final allocations to be received by Iwi, as part of the allocation model.
139.Having regard to all of the matters above, the Commission considers that it is neither appropriate nor practicable to adjust He Kawai Amokura to provide for previous tender or lease round policies or outcomes.
APPENDIX 4
Extract From He Anga Mua: A Path Ahead
(December 2001)
Calculating Iwi Coastlines
Exactly how are Iwi coastline lengths to be worked out? Iwi organisations have provided Te Ohu Kai Moana with what they consider to be their coastline. They have indicated the points where they consider their rohe meets that of another Iwi on the coast. As we might expect, there are many situations where claimed coastlines overlap.
In the first place Iwi organisations will have to reach agreement with neighbouring Iwi organisations as to where their coastlines meet. Te Ohu Kai Moana intends that once two neighbours have agreed on those geographic points they will sign a legal agreement prepared by the Commission. This agreement will specify that it is only for the purposes of allocating fisheries assets. That agreement will state quite clearly that the agreed coastal points cannot be used for any other purpose, for example in the Courts or Waitangi Tribunal to “validate” an Iwi’s coastal rohe. Consequently Iwi representatives need not fear that by making a compromise for this specific purposes that they will jeopardise some future issue regarding their rohe.
The exact coastline length for a Quota Management Area and the Iwi within will be calculated as follows:
(i)rivers will be cut off at the coast and the distance across the river mouth included in the coastline measurement;
(ii)the coastline length of harbours and bays whose natural entrance points are greater than 10 km apart will be included in the coastline measurement;
(iii)the juridical bay formula (see below) will be applied to harbours and bays whose natural entrance points are less than 10 km apart in order to determine whether those harbours and bays would be included in the coastline measurement; and
Calculations will be done by a neutral agency.
The Juridical Bay Formula
The Juridical Bay formula is used to determine whether the distance across the entrance of the bay or the actual coastline of the bay should be added to the coastline measurement. It is applied to bays where the natural entrance points are less than 10 km apart.
The formula works as follows:
(i)a straight line is drawn between the natural entrance points of the bay;
(ii)a semicircle is drawn on the straight line into the bay (using the straight line as the diameter of the circle) and the surface area of the semicircle is calculated;
(iii)the surface area of the bay is also calculated using map information software;
(iv)if the surface area of the semicircle is smaller than the water surface area of the bay (See Figure 1) then the distance between the natural entrance points is included in the coastline measurement; or
(v)if the surface area of the semicircle is bigger than the water surface area of the bay (see Figure 2) then the shoreline of the bay is measured and included in the coastline measurement.
It is important to note that the Juridical Bay formula is an international convention which comes from the United Nations Convention on the Law of the Sea. The Juridical Bay formula has been adopted as a way of indicating whether the existence of a bay on an Iwi’s coastline was likely to have increased the area of the fisheries resources under the control of the Iwi.
Harbours with Commercial Catches
A number of Iwi with coastlines within harbours (such as Kaipara Harbour) have wanted to claim the coastline lengths within these harbours as part of the coastline that would be used to calculate their PRESA entitlement to quota. Because some harbours have extensive coastlines within them, the outcome would be very heavily distorted in favour of those Iwi, particularly where there are few commercial species or small quantities of fish in those harbours compared to the open seas. The allocation of deepwater fishstocks would also be distorted towards the Iwi bordering harbours if the harbour coastline were included.
In 1996, a survey was carried out to determine the percentage of QMS fishstocks commercially taken within harbours. The work involved identifying the relevant harbours by examining Ministry of Fisheries records and then carrying out a field survey of commercial fishers using their local knowledge to arrive at the percentage of fishstocks caught within each harbour.
This percentage is applied to the PRESA fishstock quota and the resultant amount of quota is reserved for allocation to those Iwi who border that harbour. Where more than one Iwi is involved, it is proposed that the reserved quota is divided by their agreement or by Te Ohu Kai Moana’s Dispute Resolution Procedures.
The remainder of the available fishstock quota is allocated by the coastline method to all Iwi with rohe adjacent to the QMA including those Iwi who have received quota via their association with a harbour provided they also have a seaward coastline in the QMA.
With the exception of island coastlines (see below), all aspects of the method for calculating coastline set out above have received general acceptance during the earlier consultation process, including acceptance by Taumata Paepae and endorsement by a large majority of Iwi delegates at the 1996 Hui-a-Tau.
Islands
Under an earlier allocation proposal island coastlines were not included in Iwi coastline measurements. The Commission had adopted this view because the existence of islands on the continental shelf off an Iwi’s coastline would not normally increase the area of ocean over which the Iwi could exert control. The Chatham Islands were an exception because these islands have a continental shelf separate from the mainland and the Iwi occupying the islands clearly have an exclusive claim to the inshore fisheries on the continental shelf adjacent to the islands.
A second approach, proposed by Taumata Paepae and subsequently adopted by the Commission, was to include island coastlines in Iwi coastline measurements if an Iwi could demonstrate:
·ahi kaaroa (long term and current habitation on the island);
·a traditional and separate fishing history associated with the island; and
·occupation of the island such as existing marae and other communal infrastructures.
This approach has the effect of including the coastlines of Great Barrier Island and Stewart Island along with the Chatham Islands, in Iwi coastline measurements.
APPENDIX 5
Extract From He Kawai Amokura
Section E, at 66-67, paras 29-35
Harbours with commercial catches
29.A number of Iwi with coastlines within harbours (for example Kaipara Harbour) have wanted the coastline lengths within these harbours to form part of the coastline used to calculate their entitlement to quota on the basis that the fisheries within those harbours have traditionally supported them. However, because some harbours have extensive coastlines within them, the outcome would be very heavily distorted in favour of such Iwi, particularly where there are few commercial species or only small quantities of fish in those harbours compared to the open sea.
30.Notwithstanding this, the Commission recognised that a specific allowance should be made for Iwi bordering harbours which had recognised commercial catches provided that it did not distort coastline measurements. The Commission therefore proposes, on a species by species basis, to identify, isolate and allocate to Iwi whose rohe abut harbours that support a commercial fishery, a proportionate amount of the quota for the relevant QMA [Quota Management Area]. The Commission considers that this is fair and reasonable and recognises local environmental and abundance issues on a fishstock by fishstock basis. The harbours that have been recognised by the Commission are set out in the Draft Maori Fisheries Development Bill. 17
17 See section 54 and Schedule 3 of the Draft Maori Fisheries Development Bill.
31.In 1996, a survey was carried out to determine the percentage of PRESA QMS fishstocks commercially taken within harbours. The work involved identifying the relevant harbours by examining Ministry of Fisheries records and then carrying out a field survey of commercial fishers using their local knowledge to arrive at the percentage of fishstocks caught within each harbour. The list of PRESA harbours that support a commercial fishery and the proportion of the TACC in these harbours are set out in Schedule 3 of the Draft Maori Fisheries Development Bill. [As attached to He Kawai Amokura]
32.No POSA fishstocks were included in the survey, but it is expected that POSA harbours assessment will be completed before allocation and Iwi will be advised of the results in due course. The survey will include all current POSA fishstocks and will also assess those fishstocks that the Crown has announced it intends to introduce into the QMS before 2005. Any POSA fishstocks that the Crown introduces prior to 2005, but which are not covered in the POSA harbours survey, or any POSA fishstocks introduced after 2005, will be assessed in a later survey that Te Ohu Kai Moana will carry out. In all cases the Draft Maori Fisheries Development Bill provides that Te Ohu Kai Moana may by notice in the Gazette specify POSA Harbour Quota for any of the harbours set out in Schedule 3 of the Bill.
33.Where a commercial catch is taken from a harbour, the Commission will use the results of the survey and take the highest of the range of catches over the five years as the percentage of the catch within the harbour that will be applied to the quota held by the Commission in the relevant fishstock. The resultant amount of quota will be reserved for allocation to those Iwi who have a boundary that abuts that harbour. Iwi who have a rohe boundary which abuts a harbour will still receive a proportion of quota based on the juridical bay formula.
34.Where more than one Iwi is involved, it is proposed that the reserved quota is divided by agreement between those Iwi or, where agreement cannot be reached, by using Te Ohu Kai Moana’s [the successor to the Commission] proposed dispute resolution procedures.18
18 See discussion in this Part of this Report and Part 9 of the Draft Maori Fisheries Development Bill.
35.After the deduction and separate allocation of the Harbour Quota from the quota held by the Commission for those relevant QMA, the balance of the quota will be allocated on the usual formula. It is anticipated that all Harbour Quota will be Inshore Quota and therefore it will be allocated to those Iwi with rohe adjacent to the relevant QMA. The fact that an Iwi has been allocated Harbour Quota in relation to a particular QMA, does not preclude Iwi from also being allocated quota for the balance of the QMA, provided they have a seaward coastline within the QMA.
[1] Section 7 of the Maori Fisheries Act 1989
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