option4 Update #125

Compensation: The one that got away

by the option4 team
December 2009

“... we agree that, when taking steps …that significantly impact on the ability of commercial fishers to take their ACE for the purposes of …competing claims between fishing sectors, the possibility of compensation should …not be excluded.”

The High Court in kahawai declined to endorse the Select Committee's comments without full legal argument.

After the TAC is set, the TACC decisions then allocate the available fisheries stock between the commercial and non-commercial fishing sectors.

Nature of commercial fishing rights

Section 309 leaves open the question of whether reallocation of the TACC between the fishing sectors would, in law, give rise to Crown liability to the commercial fishing sector. The answer to this question depends on the nature of the fishing rights held by commercial fishers.

Broadly, the quota management system provides for quota shares that are transferable (i.e. sellable) and held in perpetuity to catch a specific proportion of the volume of fish permitted for commercial purposes in a defined quota management area. Quota therefore represents a proportional share of the total allowable commercial catch (TACC), which is set annually.

Once the TACC is set, this generates an annual catch entitlement (ACE). The ACE represents a right to catch a specific tonnage of the fish species during that fishing year. The ACE catching right may be bought or sold, but ACE expires at the end of each fishing year, usually 30th September.

It can be strongly argued that any increase for recreational interests (not proportional to any change for the commercial sector) does not amount to any "taking" of quota, or of ACE. This is because the nature of commercial fishing rights under the quota management system are expressly subject to variation, including variation as may favour the recreational fishing sector.

If there is a reduction in quota and in ACE, and that reduction is otherwise lawfully made, it can be argued this does not affect any "property right" as the commercial fishers claim. In other words, it is the nature of the commercial fishers property rights that they are subject to variation.

Advice 'screwing the scrum'

So long as the Crown is not expressly protected for claims of this type, and the Courts have not ruled on the issue, commercial fishers can continue to threaten claims of compensation against the Crown.

The threat of compensation claims by the commercial fishing industry has been highly effective in maintaining the Ministry of Fisheries’ "catch-history" policy over the years.

Any risk of potential Crown liability provides a ready rationale for the Ministry to advise the Minister that there is a treasury risk, even though the prospects of success for such a claim appear to be remote.

For example, the Ministry advice to the Minister for the kahawai decisions made numerous references to the risks of varying the TACC on a non-catch-history basis, and how this may be subject to compensation claims by commercial fishers against the Crown.

This advice screws the scrum since the commercial sector could be the only beneficiary of any compensation - if any at all.

Moreover, a consequence of not clarifying the issue is a possible continuation of MFish’s ‘preferred policy’ of applying proportional reductions and justifying them on the grounds of taking a precautionary approach for sustainability reasons, particularly when there is limited information and high uncertainty.