Rudi Hartono and Others v Ministry for Primary Industries

• Jurisdiction: New Zealand
• Judge: William Young J
• Judgment Date: 02 March 2018
• Neutral Citation: [2018] NZSC 17
• Docket Number: SC 61/2017
• Court: Supreme Court
• Date: 02 March 2018

Between

Rudi Hartono and Others

Appellants

and

Ministry for Primary Industries

First Respondent

Sajo Oyang Corporation

Second Respondent

[2018] NZSC 17

Court:

Elias CJ, William Young, Glazebrook, O'Regan and Ellen France JJ

SC 61/2017

IN THE SUPREME COURT OF NEW ZEALAND

Employment — Appeal against a decision of the Court of Appeal (CA”) which concluded that the claims for wages constituted interests for the purposes of s256(1) Fisheries Act 1996 (“FA”) (provisions relating to forfeit property) only if either the wages were earned on the vessel in question or if proceedings in rem had been commenced before forfeiture — appellants were fisherman on foreign-owned vessels — most vessels were forfeited to the Crown (as a result of convictions for offences against the Fisheries Act 1996 (“FA”))

Counsel:

K K Harding and C B Hirschfeld for Appellants

C J Lange and E J Couper for First Respondent

F M R Cooke QC, J Inns and E M Gattey for Second Respondent

• A The appeal is allowed, the judgment of the Court of Appeal is set aside (save as to the direction that the proceedings be transferred to the High Court) and the judgment of the High Court is reinstated.

• B The respondents are jointly and severally liable to pay the appellants costs of $25,000 together with reasonable disbursements to be fixed by the Registrar if necessary. We allow for second counsel.

• C The appellants are entitled to costs in the Court of Appeal to be fixed by that Court.

• D All issues as to costs in respect of the District Court and High Court are to be determined in the High Court.

JUDGMENT OF THE COURT

REASONS

(Given by William Young J)

Table of Contents

	Para No
The appeal	[1]
The litigation in the Courts below	[9]
The Fisheries Act forfeiture regime	[12]
The relevant principles of admiralty law	[23]
The legislative history of the 2002 amendment	[34]
Our interpretation of s 256	[40]
Disposition	[47]

The appeal

1 Sajo Oyang Corporation (Sajo Oyang) of South Korea owned and operated the fishing vessels Oyang 70, Oyang 75 and Oyang 77. These vessels fished in New Zealand's exclusive economic zone under charter to a New Zealand company, Southern Storm Fishing (2007) Ltd. This venture turned out badly: the Oyang 70 sank on 18 August 2010; the Oyang 75 and the Oyang 77 were later forfeited to the Crown (as a result of convictions for offences against the Fisheries Act 1996 committed by their masters and officers); and Southern Storm Fishing is insolvent.

2 The forfeiture regime under the Fisheries Act provides for relief to be sought by those who establish an “interest”, as defined by s 256 of that Act, in forfeited property. 1 That section provides:

256 Provisions relating to forfeit property

(1) In this section, unless the context otherwise requires,—

forfeit property means any—

• (a) fish and any proceeds from the sale of such fish; or

• (b) property used in the commission of the offence; or

• (c) quota—

forfeit to the Crown under any of sections 255A to 255D interest means,—

• (a) in the case of quota, an interest in the quota that is recorded on the Quota Register at the time of the forfeiture:

• (b) in the case of a foreign vessel, a foreign-owned New Zealand fishing vessel, or a foreign-operated fish carrier,—

  • (i) ownership; and

  • (ii) an interest, as determined by the Employment Relations Authority or any court, that any fishing crew have in unpaid wages; and

  • (iii) an interest in costs incurred by a third party (other than the employer) to provide for the support and repatriation of foreign crew employed on the vessel:

• (c) in the case of other forfeit property, a legal or equitable interest in that forfeit property that existed at the time of the forfeiture; but does not include any interest (other than an interest referred to in paragraph (b)) in a foreign vessel, a foreign-owned New Zealand fishing vessel, or a foreign-operated fish carrier.

…

(emphasis added)

Sub-paragraphs (b)(ii) and (iii) were inserted into s 256 in 2002. 2

3 Applications for relief in respect of the forfeiture of the Oyang 75 and Oyang 77 have been filed in the District Court by:

• (a) Sajo Oyang in reliance on its ownership interests; and

• (b) 26 crew members, 24 of whom were crew of Oyang 77 and two of whom had worked only on the Oyang 70. 3 They claim interests in the Oyang 75 and Oyang 77 in respect of unpaid wages.

4 The claims by the crew members are in part resisted by Sajo Oyang and the Ministry for Primary Industries. Their position is that unpaid wages constitute an “interest” for the purposes of s 256 only if, at the time of forfeiture, the claim constituted an extant interest in the vessel in the form of a maritime lien or a

statutory claim in rem in respect of which proceedings had been issued. They accept that the 24 crew members who worked on Oyang 77 have an interest in that vessel in respect of any unpaid wages earned on that ship; this because immediately before forfeiture such unpaid wages gave rise to a maritime lien. They resist the claims in respect of vessels on which the wages were not earned (“the other vessel claims”) on the basis that

• (a) such claims do not give rise to maritime liens;

• (b) although sister ship claims – that is claims against vessels in common ownership with the vessel on which wages were earned – are provided for by s 5(2) of the Admiralty Act 1973 as statutory claims in rem, such claims give rise to an interest in the vessel only once proceedings are issued; and

• (c) no such proceedings had been commenced before forfeiture.

5 The case thus comes down to whether sub-para (b)(ii) of the definition in s 256(1):

• (a) encompasses only a claim for wages which, prior to forfeiture, was supported by a proprietary interest in the form of either a maritime lien or a statutory in rem claim where proceedings had been issued; or

• (b) proceeds on the basis that claims for wages which are within the language of sub-para (b)(ii) are an interest, irrespective of whether they gave rise to a maritime lien or proceedings in rem had been commenced before forfeiture.

6 The other vessel claims of the crew members were dismissed by Judge Kellar on what was, in effect, a preliminary question. 4 That decision was reversed on appeal by Nicholas Davidson J, 5 but Judge Kellar's decision was reinstated by the

Court of Appeal which concluded that the claims for wages constituted interests for the purposes of s 256(1) only if either the wages were earned on the vessel in question or if proceedings in rem had been commenced before forfeiture. 6

7 The interpretation advanced by Sajo Oyang and the Ministry depends upon the premise that the operation of sub-para (b)(ii) of the definition is controlled by the admiralty rules applicable to claims for wages. This argument is advanced, at least in part, on the basis that para (b) should be read alongside para (c) of the definition and thus as extending only to claims which, at the time of forfeiture, constituted a “legal or equitable interest” in the vessel. This means that it will be necessary to address the principles of admiralty law on which Sajo Oyang and the Ministry rely. It will also be necessary to address whether there are principles of admiralty law which correspond to sub-para (b)(iii) of the definition.

8 Against that background we will, in the succeeding sections of these reasons, discuss:

• (a) the approaches taken in the Courts below;

• (b) the Fisheries Act forfeiture regime;

• (c) the relevant principles of admiralty law;

• (d) the legislative history of the current definition of “interest”; and

• (e) our interpretation of s 256.

The litigation in the Courts below

9 The primary argument advanced on behalf of the crew members in the Courts below turned on a circuitous approach to the definition of “interest” and “forfeit property”. For reasons which will become apparent, there is no need to engage with this argument. A contention that the other vessel claims of the crew

members were within the language of sub-para (b)(ii) of the definition was thus not at the forefront of the arguments advanced on their behalf. It was however addressed in passing and was dismissed on the basis that, as the crew members had not commenced in rem proceedings before forfeiture, their rights were not within the definition of “interest”. 7

10 In the District Court and High Court, Sajo Oyang argued that before crew members could establish an interest in property, they must have had their claim to unpaid wages conclusively determined by the Employment Relations Authority or any court. The alternative approach, which found favour with the District Court and the High Court, is that the court hearing the relief application can itself determine, in the context of the forfeiture proceedings, the validity and extent of the wages claims. 8 This conclusion was not challenged in the Court of Appeal and we see no reason to revisit it.

11 Because the amounts claimed for unpaid wages exceed the jurisdiction of the District Court, they were transferred by the Court of Appeal to the High Court.

The Fisheries Act forfeiture regime

12 Article 73 of the United Nations Convention on the Law of the Sea provides: 9

Enforcement of laws and regulations of the coastal State

• 1. The coastal State may, in the exercise of its sovereign rights to explore, exploit, conserve and manage the living resources in the exclusive economic zone, take such measures, including boarding, inspection, arrest and judicial proceedings, as may be necessary to ensure compliance with the laws and regulations adopted by it in conformity with this Convention.

• 2. Arrested vessels and their crews shall be promptly released upon the posting of reasonable bond or other security.

…

13 Before the Fisheries Act 1996 came into effect, fishing in New Zealand's...