IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE	
CIV-2015-409-500
[2018] NZHC 3041	

IN THE MATTER	Of an application for relief against the effects of Forfeiture pursuant to section 256(3) of the Fisheries Act 1996	
BETWEEN	SAJO OYANG CORPORATION
First Applicant

RUDI HARTONO (and 29 other foreign fishing crew seeking relief from the effects of forfeiture)
Second Applicants	
AND	THE MINISTRY FOR PRIMARY INDUSTRIES
Respondent	

Hearing:	22 November 2018	
Appearances:	J Inns for First Applicant
K K Harding for Second Applicants (by AVL) C J Lange for Respondent	
Judgment:	22 November 2018	

ORAL JUDGMENT OF NICHOLAS DAVIDSON J

A.	INTRODUCTION

[1]	This day marks the end of the litigation journey for 30 crew members of the fishing vessels Oyang 75 and Oyang 77, and for Sajo Oyang Corporation of Korea (“Sajo Oyang”), the vessels’ owner, and also the end of a litigation journey for The Ministry of Primary Industries (“the Ministry”) in its enforcement and regulatory role for the fishery in New Zealand.

SAJO OYANG CORPORATION AND RUDI HARTONO AND 29 OTHERS v THE MINISTRY FOR PRIMARY INDUSTRIES [2018] NZHC 3041 [22 November 2018]

[2]	That journey has been mentioned by Ms Harding in submissions to the Court, but it reflects the progression through the District Court,1 the High Court on appeal,2 the Court of Appeal,3 and the Supreme Court on further appeal,4 before being returned to this Court.

Forfeiture

[3]	The vessels were seized by fishery officers during the investigation of (fishery) offending which led to the charging and conviction of officers of those vessels. They were then released, in the case of the Oyang 75 pursuant to a bond entered under the Fisheries Act 1996 (“the Act”) in force at the time after posting of security, and in the case of the Oyang 77, pursuant to an order of the Court on further posting of security. Those funds have been held in the Ministry’s trust account on deposit since that time. Interest has accrued. Since release under bond and security, the vessels have been operating outside New Zealand’s Exclusive Economic Zone.

[4]	The Oyang 77 was forfeited in 2014 as a result of the conviction of the Master for offences against the Act. The Oyang 75 was forfeited in November 2014 following convictions of officers on board, again for offences under the Act.

B.	RELIEF SOUGHT

[5]	The first applicant, Sajo Oyang, has ownership interest in both vessels, which is not in dispute, and applies for relief against forfeiture under the Act. The crew members’ claim for relief against forfeiture is based on an interest in unpaid wages and, following the judgment of the Supreme Court, their ability to apply for relief in respect of both vessels is accepted, even if the crew member concerned did not work on the vessel forfeited.

[6]	A joint memorandum has been filed with the Court, setting out the statutory factors which I am bound to consider to decide whether relief should be granted. The

1	Sajo Oyang Corp of Korea v Ministry for Primary Industries [2015] NZDC 13876.
2	Hartono v Ministry for Primary Industries [2015] NZHC 3307.
3	Sajo Oyang Corp of Korea v Ministry for Primary Industries [2017]  NZCA  182,  [2017]  NZAR 611.
4	Hartono v Ministry for Primary Industries [2018] NZSC 17, [2018] 1 NZLR 857.

Court has to determine the value of the forfeit property, being the amount it will be sold for at public auction in New Zealand, that is the fishing vessels and fishing gear, the nature and extent of the interest of Sajo Oyang in the property, and the costs to the Ministry of the prosecution, including seizure, holding and further costs of disposal, including the Court proceedings, which Ms Harding has described.

[7]	The parties are agreed that the value of the Oyang 75 is somewhere between US$7,500,000.00 and US$8,000,000.00. The value of the Oyang 77 is about NZ$1,500,000.00.

[8]	The Ministry’s costs for these purposes are approximately $500,000.00.

[9]	The Court does not determine the value of the interest of the crew and is not required to do so following the settlement the parties have agreed, the terms of which are confidential except to the extent that I am bound to refer to them in this judgment. The Act permits the Court to make an order providing relief from the effects of forfeiture if it is necessary to satisfy an interest of the crew in unpaid wages or to avoid manifest injustice.

Settlement

[10]	The parties have agreed that during a judicial settlement conference held in September and November this year, that on receipt of funds into Court, as I will describe, settlement can be achieved and effected between the parties as part of the relief against forfeiture. So, there is no dispute between the parties, indeed there is agreement that the orders should be made, but I still need to be satisfied, on the basis which I will now describe, that the orders are appropriate.

Value of vessels and costs

[11]	I refer to the value of the vessels as I have described. The value is now likely to be less due to current market conditions. It is customary to sell vessels in these circumstances, or any fishing vessels, by international tender. A valuer has expressed the view that sale by public auction in New Zealand risks the vessels being sold for significantly less than if sold by international tender. It is agreed that for the purpose

of the proceedings, that the value is as I have mentioned, recognising it may have reduced and there is a real risk of a lower sale at auction in New Zealand.

[12]	The next matter is the nature, extent, and value of the interests of the parties in the vessels, and in the case of Sajo Oyang that is as owner being the full value of each vessel. The crews interest in wages is an interest for the purpose of the Act, irrespective of whether it gave rise to a maritime lien or a proceeding in rem in Admiralty.

[13]	The respondent’s costs in relation to the prosecution, that is the Ministry’s costs, in the case of Oyang 75, will come to some $120,000.00 and in the case of Oyang 77, some $50,000.00, and there are legal costs of significance as well.

[14]	If the vessels have to be sold in New Zealand there would be berthage costs per day, commission on sale, maintenance and associated costs, and legal costs. I have before me the costs of the Ministry.

Relevant considerations for relief

[15]	I have to consider matters under s 256(67) of the Act, namely:

(a)	the purpose of the Act;

(b)	the effect of the offence from which the forfeiture arose on the aquatic environment from which the fish, aquatic life, or seaweed was taken, or in which the vessel was operating;

(c)	the effect of the offence from which the forfeiture arose on other fishers (whether commercial or otherwise) fishing in the area, or for the stock in respect of which the offence occurred.

(d)	the effect of offending of the type from which the forfeiture arose on the relevant aquatic environment.

(e)	the effect of offending of the type from which the forfeiture arose on other fishers (commercial or otherwise) fishing in the area or for the same stock;

(f)	the social and economic effects on the person who owned the property or quota, and on persons employed by that person, of non-release of the property or quota, namely those crew members who would work on the vessels that would be released, by way of relief from forfeiture if   I make the orders that are sought.

(g)	the effect of offending of the type from which the forfeiture arose on fisheries management and administration;

(h)	the offending history of the person from whose conviction the forfeiture arose. In this case the company was not prosecuted;

(i)	the economic benefits that accrued or might have accrued to the owners of the property or quota through the commission of the offence;

(j)	the prevalence of offending of the type from which the forfeiture arose; and

(k)	the cost to the Ministry of the kind that I have described.

[16]	There are other Court decisions (for example, Roach v Kidd),5 which reinforce the need for proportionality of penalties and consideration of the degree of foreseeability of offending with respect to this element of the provision that preceded what is now s 256(7)(f) of the Act.

[17]	Addressing these matters, the purpose of the Act is to provide for the utilisation of fisheries resources while ensuring sustainability. That means conserving, using, enhancing, and developing the resources to enable people to provide for their social

5	Roach v Kidd HC Wellington CP715/91, 12 October 1992.

economic, and cultural wellbeing. Sustainability is meeting the foreseeable needs of future generations concerned of course, with future utilisation.

[18]	Section 13 of the Act is the key provision to ensure sustainability, and requires the total catch for any fish stock to be set to maintain that stock at or above a level that can produce the maximum sustainable yield. This is called the Total Allowable Commercial Catch (or “TACC”), set by the Ministry at the level necessary to protect the sustainability of a fish stock, using a combination of scientific data and catch rates.

[19]	The effective management of the resource requires accurate reporting of fish taken, and the Ministry advises, and the parties agree, for the fishing  year ending   30 September 2011, the TACC for the Hoki fishery was 120,000 tonnes and the total catch recorded that year was 118,805 tonnes, leaving a small balance uncaught. In the following year, the Hoki TACC was increased to 130,000 tonnes.

[20]	When convicting and sentencing the offenders in this case, the District Court Judge concluded the quantity of fish discarded and misreported was, in the case of the Oyang 75 on the first trip; 355 tonnes of quota (ITQ) and Non-ITQ fish discarded, mainly Barracouta, Squid and Hoki. On trip two, 50 tonnes of quota (ITQ) fish and non-ITQ fish were discarded, made up of Barracouta, Squid and Hoki. On Oyang 77, for trips 3, 7 and 11, there were 1,500 kg of Squid discarded, 20 tonnes in a lost net,
5.3 tonnes of Hoki discarded, and 1,200 kg of Squid discarded.

[21]	From these figures and other information provided by the Ministry the effect of the offending from which the forfeiture arose on the aquatic environment must be addressed. The effect of the offending is that the discarded fish is lost from the aquatic food chain and breeding stock, but that needs to be balanced against these other factors. The TACC, the Total Allowable Commercial Catch, was under-caught in each case and further, it was increased in the next fishing year. Where the Oyang 75 fished on the Chatham Rise, with most of the Hoki fleet, is part of the juvenile grounds for the western and eastern Hoki stocks, and mortality of individuals in this area can affect the rebuild of the stock. The only aspect of the offending which had any effect over and above that of usual commercial fishing activities, was the guilty plea of the Master

of the Oyang 77 in relation to the accidental capture of a basking shark, the effects of that offending being minor.

[22]	I am then bound to consider the effect of the offences from which the forfeiture arose on other commercial fishers. The impact of that is assessed by the Ministry as minimal. The Southern Storm Fishing (2007) Limited (“SSFL”), associated with Sajo Oyang, either had or could have acquired Annual Catch Entitlement (“ACE”) to cover all of the fish unlawfully discarded or misreported by the officers. The TACC for Hoki to which the convictions relate, was not fully caught in the relevant year, and there was no impact on sustainability of the relevant fishery for future years, nor on other fishers.

[23]	This type of offending is capable of giving an offender an unfair advantage over other commercial fishers. Offending of this type allows fishing vessels to process the higher grade, higher value fish.

[24]	I have to address the effect of offending of the type from which the forfeiture arose on the relevant aquatic environment. This is discarding unlawfully and misreporting by removal of fish from the food chain, and breeding stock. It clearly has the potential to affect the aquatic environment, but here the TACC for Hoki was under-caught for the fishing year, and it increased in the following year.

[25]	The type of fishing activity from which the offending arose specifically targets aggregations of fish at the time of spawning. The very nature of aggregation fishing means an over-supply of the fish, resulting, for present purposes, in negligible impacts of the offending on other commercial fishers.

[26]	As to the social and economic effects on the owner of the vessels, if they are not released from forfeiture, that is the loss of value of the vessel, and the social impact is the loss of employment of the crew which works on the vessel.

[27]	I have to consider the effect of offending of the type from which the forfeiture arose on New Zealand fisheries management and administration systems. The failure to record the discarding of quota species, it has to be said, undermines those fisheries

management and administration systems. The information from catch data is an integral part of the information in determining the TACC to maintain fish stock at or above a level that can produce the maximum sustainable yield. The potential effect needs to be balanced against the quantity of fish involved in the offending, 430.3 tonnes, and the potential impact of the management of the fishery which has a TACC of 130,000 tonnes.

[28]	A relevant consideration is the previous offending of the persons from whose conviction the forfeiture arose. The Ministry is not aware of any previous offending of the vessels’ officers from whose convictions the forfeiture arose.

[29]	It is important to consider the economic benefits that accrued to the owners of the vessels through the commission of the offence. It is agreed that the accrual to Sajo Oyang in this respect is NZ$398,600.00, being the maximum deemed values that would have been payable in the event that the company did not have sufficient ACE to cover the fish unlawfully discarded and misreported. There would have been a saving in acquiring ACE for the fish stocks at a cost of approximately NZ$275,000.00 to NZ$300,000.00 and the benefit of processing higher grade, higher value product with smaller, older or damaged fish discarded, which could lead to improved efficiency.

[30]	As to the prevalence of this offending at the time, over the previous ten years, up to 100 vessels have annually fished in New Zealand’s Exclusive Economic Zone, although that number dropped to fewer than 60 by the 2011 fishing year. In that time, the Ministry took prosecutions in respect of fewer than 10 vessels in respect of this type of offending, which is difficult to detect.

[31]	I have to consider the cost to the Ministry of the prosecution, some NZ$400,000.00. There are further costs associated with the relief from forfeiture, including the judicial settlement conference, with other lesser costs.

[32]	Additional considerations are that Sajo Oyang and SSFL, an associated company, were not charged with any offences under the Act. That company, SSFL, pursuant to commercial agreements in place between it and Sajo Oyang, undertook

steps to ensure the operation of the vessels in New Zealand was compliant with legal and  regulatory   requirements,   including   contracting   Fisheries   Consultancy (NZ) Limited to provide compliance management services, contracting another company to review all its regulatory returns prior to their being filed with the respondent Ministry, engaging a forensic accounting firm to review all fishing returns from the first few voyages of the Oyang 75 to ensure compliance on the basis that Oyang 75 was new to the New Zealand fishery, and maintaining a programme of regular, comprehensive briefings of officers regarding compliance. There were fines imposed on the officers of the vessels, totalling some $650,000.00.

[33]	I come to the circumstances then in which relief may be granted, having regard to these considerations. The Court may grant relief from the effects of forfeiture:

(a)	where it is necessary to avoid manifest injustice; or

(b)	to satisfy an interest, such as in this case, the interest in a foreign-owned New Zealand fishing vessel that a fishing crew has regarding a claim for unpaid wages.

[34]	I have considered, but in the end concluded without hesitation, that for reasons which I have mentioned and which follow, the orders sought by all parties are lawful and can be made.

[35]	The settlement reached, in my view, reflects a proper result for the crew whose interests have been advanced with such tenacity by Ms Harding. It results from a fair and balanced response by Sajo Oyang represented by Ms Inns and Ms Proctor-Weston, and it has been much assisted by the Ministry’s very balanced approach to this, not simply taking a litigation course to its conclusion which would have taken years from now with uncertain result. The Ministry’s approach has been conducted by Mr Lange in particular. So, in short, in that sense, it is a measured and proportionate outcome given the interests of the crew, the seriousness of the offending, the position of Sajo Oyang, and the impact on the fishery.

[36]	A settlement requires compromise not available in a judgment of the Court, and the outcome of judgment is always uncertain, as the history of this litigation shows. There were still many contestable issues in the litigation, and associated litigation in the Employment Court. These would have taken, I am certain, many years to come to a conclusion, and in that time, the value of the vessels would have been eroded, distressing the crew as their lives go on, and occupying the Ministry in a great deal of time and resource.

[37]	Having seen first-hand, in the judicial settlement conference, the interaction of the Sajo Oyang senior officers who came from Korea for the conference, the dignity of the crew members who came from Indonesia for the purpose of the conference, and the approach that was taken by the Ministry, this resolution by a settlement conference, common-sense, hard argument, and finally with a sense of reality, reached the proper outcome. This is therefore a case for relief as the parties have agreed should be granted. It passes all the legal threshold tests I have been through, and is a pragmatic and fair resolution.

[38]	I will make these orders and then conclude with a final remark.

C.	ORDERS

(1)	I order that on the payment by the Registrar of the High Court to the second applicants, the crew members, and the respondent the Ministry, from the funds received under the settlement agreement dated 14 November 2018, of the amounts set out in clause 5 of that agreement, the FV Oyang 75and FV Oyang 77 and the fishing gear on board the vessels at the date of seizure, be returned to the first applicant Sajo Oyang, being the owner of the forfeit property at the time of forfeiture.

(2)	I make a further order that access to or publication of the confidential settlement agreement annexed to the memorandum before the Court is prohibited, on the grounds that such an order is necessary to achieve compliance with rule 7.79(6) of the High Court Rules 2016. The parties are entitled to confidentiality as to the conclusion reached between them and in the context of a judicial settlement conference.

[39]	By the making of such orders and their perfection by the payment of money through the Registrar of this Court, that will bring these proceedings to an end. It will mean that the bond of 20 September 2011 in respect of the FV Oyang 75 and the order of the District Court under s 159 of the Search and Surveillance Act 2012, in respect of the Oyang 77, will be of no further effect.

D.	CONCLUDING REMARKS

[40]	I conclude with something I have already said, but I want to repeat because it is an endorsement of the process taken, and the approach by counsel and the parties they represent. I have mentioned them all by name, but I want to commend you for the way you have done this. This would never have been settled had you not taken the course that you did. I also want to make particular mention now of the Registry of the Court. I am pleased senior officers are here for this purpose, Ms Graham and Ms Fahey I can see them and there may be somebody else. The way a judicial settlement conference is conducted is decisive in the outcome. Your officers have been exceptional, as have you, and I want to commend you.

…………………………………………….
Nicholas Davidson J