Maritime New Zealand v Crusader Fisheries Ltd

IN THE DISTRICT COURT
AT NELSON
CRI-2006-042-1588

MARITIME NEW ZEALAND
Informant

v

CRUSADER FISHERIES LTD
Defendant

AND

MARITIME NEW ZEALAND
Informant

v

WARWICK JOHN LOADER
Defendant

Hearing: 12, 13, 14 March 2007
Appearances: A A Hopkinson and B J Marten for Informant
T Spear for Defendants
Judgment: 28 March 2007

RESERVED JUDGMENT OF JUDGE JOHN WALKER

[1] This case arises out of the loss at sea of the fishing vessel Mi Jay. The vessel sailed from Nelson on 22 November 2005. Her movements after leaving port are unknown. All that is known is that it was the intention of the master to fish at a location known as the Mermoo Bank, part of the Chatham Rise, situated between 75 and 90 nautical miles off the Canterbury coast.

[2] The vessel was lost sometime between 23 November 2005, the date of the last attempted cellphone communication from the Mi Jay, and 28 November 2005 the date when her life raft is believed to have been deployed.

[3] On 19 December 2005 the bodies of the two crewmen, Mr Tawhiti and Mr James, were found in the life raft which was drifting 15 nautical miles south-east of Kaikoura. The skipper, Mr Rees, has never been found.

[4] The Mi Jay was owned by Crusader Fisheries Ltd (CFL) and the sole director of that company is Mr Warwick Loader.

[5] On 6 December 2005, Mr Loader raised the alarm when the Mi Jay had not returned to Nelson. He considered that she was overdue. He telephoned the Rescue Co-ordination Centre and a search and rescue operation was commenced. At this time the life raft was at sea and the crew were alive.

[6] An aerial search by an Orion aircraft failed to find the Mi Jay or the life raft. Nothing had been heard from the vessel since it left Nelson and so its course was unknown. Nobody on shore knew of any past position which might have aided a search. Nobody knew quite where to look. As a result of this uncertainty as to the Mi Jay’s position, the search area covered 26,000 square miles.

[7] CFL faces a charge brought under s65(1)(a) of the Maritime Transport Act 1994 that between 22 November 2005 and 6 December 2005 at or near Nelson it operated the FV Mi Jay in a manner causing unnecessary danger or risk to other persons.

[8] Mr Loader faces a charge arising out of his position as the director of the company. Section 410(3) of the Maritime Transport Act 1994 provides:

(3) Where any body corporate is convicted of an offence against this Act, every director and every person concerned in the management of the body corporate shall be guilty of the like offence if it is proved—

(a) That the act that constituted the offence took place with his or her authority, permission, or consent; and

(b) That he or she knew or could reasonably be expected to have known that the offence was to be or was being committed and failed to take all reasonable steps to prevent or stop it.

[9] No offence can be committed by Mr Loader in his capacity as a director unless the company is convicted.

[10] The charges against CFL and Mr Loader have been heard together with the consent of each of the defendants. The evidence called by the company in its defence is relied on by Mr Loader in the event that the company is convicted and the charge against him needs to be considered. I turn first then to consider the charge against the company.

[11] The onus of proving the charge rests on the informant and the standard of proof to be attained is beyond reasonable doubt.

[12] Section 65 of the Act creates an offence of strict liability. This categorisation arises out of the decision of the Court of Appeal in Tell v Maritime Safety Authority (unreported CA 230/02 27/11/02) where at paragraph 17 of the judgment the Court said:

[17] Our consideration of the legislative history and the relevant authorities supports the conclusion that s65(1) of the Act creates an offence of strict liability. That conclusion is also supported by what we consider to be the principal purpose of s65. This is not so much to punish knowingly reprehensible conduct but rather to provide a sanction in a case where the safety of persons or property is unnecessarily put in danger or at risk. The legislative purpose of ensuring public safety is reinforced by potentially stern penalties for conduct which objectively falls within the statutory proscription.

[13] Offences of strict liability require proof only of the actus reus, the conduct constituting the offence, but a defendant is entitled to be acquitted if able to establish lack of fault on the balance of probabilities (see paragraph 13 of the Tell judgment).

[14] It was also held in Tell that whether or not the manner of operation caused unnecessary danger or risk is to be judged objectively.

[15] In this case the allegation is that unnecessary risk was caused.

[16] The first issue is whether it is proved that CFL operated the Mi Jay at the relevant time. It will be sufficient to prove this first element if it is proved that CFL operated the Mi Jay at any time in the period 22 November 2005 to 6 December 2005. It is the defence case that it was the skipper, Mr Rees, who operated the vessel at all relevant times for the purposes of s65(1)(a) and not CFL.

[17] Section 65 of the Maritime Transport Act 1994 provides as follows:

65 Dangerous activity involving ships or maritime products

(1) Every person commits an offence who—

(a) Operates, maintains, or services; or

(b) Does any other act in respect of—
any ship or maritime product in a manner which causes unnecessary danger
or risk to any other person or to any property, irrespective of whether or not in fact any injury or damage occurs.

(2) Every person commits an offence who—

(a) Causes or permits any ship or maritime product to be operated, maintained, or serviced; or

(b) Causes or permits any other act to be done in respect of any ship or maritime product,—
in a manner which causes unnecessary danger or risk to any other person or to any property, irrespective of whether or not in fact any injury or damage occurs.

(3) Every person who commits an offence against subsection (1) or subsection (2) of this section is liable,—

(a) In the case of an individual, to imprisonment for a term not exceeding 12 months or a fine not exceeding $10,000:

(b) In the case of a body corporate, to a fine not exceeding $100,000:

(c) In any case, to an additional penalty under section 409 of this Act.

[18] Neither CFL nor Mr Loader had any direct involvement in the navigation of the vessel. It left Nelson under the command of Mr Rees. The informant says that does not matter because the definition of “operate” in s2 of the Act is wide enough to include CFL in the circumstances of this case. That section provides:

operate, in relation to a ship, means to sail or use the ship, or cause or permit the ship to sail, be used, or be in any place, whether or not the person is present with the ship; and operating, operation, and operator have corresponding meanings:

[19] The informant submits that the evidence establishes that the company as owner caused or permitted the ship to sail or be used and it has therefore operated the Mi Jay for the purposes of section 65. In answer to this, Mr Spear on behalf of the defendants, points out that the opening words of s2 makes it clear the definition in s2 applies “unless the context otherwise requires” and, considering the context, s65 itself makes a distinction between the actual operator in s65(1)(a) and the person who causes or permits in s65(1)(b). Mr Spear argues that in the context of s65 the all encompassing definition in s2 cannot apply where s65 expressly separates the basis of liability.

[20] It is clear that if to operate a ship for the purposes of s65(1)(a) is to be given the narrow meaning contended for by Mr Spear of being actually in control of the ship, then the company could not be convicted. The Mi Jay put to sea on 22 November 2005 under the control of Mr Rees.

[21] Initially I found it difficult to see why s65 is drafted in the way it is. While it creates two categories of liability, the actus reus for each is the same and the penalty is the same. It seemed that there was surplusage. It seemed that the use of “operate”, as defined, in a single section would have created the same position as the two subsections. However, the stipulative definition in s2 is in relation to ships only, whereas s65 extends to maritime products. Maritime products include safety equipment, nautical instruments, publications, radio equipment and fuel. Such products may be serviced away from the ship, or when the ship is tied up, or on a slip way and be serviced or maintained by those contracted to do so who may have nothing to do with the actual use or sailing of the vessel. Their actions, however, may have an effect on the safety of the vessel. Section 65 creates liability for such persons.

[22] Section 65 creates liability not only of those who actually operate, maintain or service a ship or maritime product but also those who cause or permit a ship or maritime product to be operated, serviced or maintained, and it needs to create the two separate heads of liability because s2 applies only to ships and only to the sailing or use of a ship. It does not apply to servicing or maintaining a ship. And so, with this distinction there is not the surplusage as first thought.

[23] In passing I note that s65 is modelled on s44 of the Civil Aviation Act 1990. The same issue which arises here could arise in a prosecution under the Civil Aviation Act. The definition of “operate” in the Civil Aviation Act 1990 is identical to the definition in the Maritime Transport Act. But again, that definition is limited to aircraft and not aviation products.

[24] If I am wrong in this approach then the scheme of s65 simply spells out what s2 provides: that liability can arise for both an actual operator and a person who causes or permits his ship to be used or to sail and creates no real distinction, no different penalty or availability of a defence. In relation to ships s65(1)(b) is redundant.

[25] The definitions in s2 apply “unless the context otherwise requires”. Context is to be given a wide meaning. It includes not only the text of the provision in question, but also the purposes and policy of the legislation, its history and the consequences of a suggested interpretation (see in this regard Police v Thompson [1966] NZLR 813, 820 and Burrows pp 288-289).

[26] Considering the text of the provision if the definition in s2 of “operate” is applied to s65(1)(a) in relation to a ship, then s65(1)(b) is rendered redundant in relation to a ship. To apply the s2 definition to s65(1)(a) does not add to or detract from the scheme of s65 which created two categories of liability and applying the definition does no harm. It simply leaves some surplusage in relation to ships.

[27] In Burrows “Statute Law in New Zealand (3d edition) at page 140 the learned author says that “sometimes to ensure the attainment of the clear purpose of a piece of legislation a Court may be prepared notionally to insert words, or even, conversely treat some of the words in the provision as surplusage. To this extent there is power to “correct drafting errors”. The learned author relies on Inco Europe Ltd v First Choice Distribution Ltd [2000] 2 All ER 109 and Irvine v Public Trustee [1989] 1 NZLR 67, 72.

[28] And further at page 2l7 he says:

Tautology apart, however, it is more difficult to “ignore” entire clauses, and this will only be done in extreme circumstances.

[29] I consider that the clear purpose of the definition and section 65 is to provide for liability of those who not only sail a ship but who cause or permit a ship to sail and would be prepared to ignore s65(1)(b) in relation to ships. it is a stated purpose of the Act:

To ensure that participants in the maritime transport system are responsible for their actions.

[30] The purposive approach to statutory interpretation is equally applicable to penal provisions such as in this case. I am conscious that if there is genuine doubt as to the meaning and purpose of a provision, the accused must get the benefit of that doubt. I do not have any such doubt.

[31] In my view the context of s65(1)(a) does not require that the definition of “operates” in s2 have no application. I conclude that Section 65(1)(a) applies to a person who causes or permits a ship to sail or to be used.

[32] Crusader Fisheries Ltd, as the owner of the ship, has at the least permitted the ship to sail from Nelson and be used at sea. By entering into the agreement with Mr Rees, fitting the vessel out for longline fishing, settling on the area for fishing, it has caused the ship to sail and be used at sea. On that basis the company operated the Mi Jay on 22 November 2005.

[33] After the vessel put to sea CFL, as owner, had the right to direct its operation, to direct it to return or extend its voyage, or change its fishing ground. In fact, of course, it did none of these things, leaving Mr Rees to do what he wanted and having no need to communicate with the vessel. Inaction on the part of CFL could amount to permitting the vessel to continue to sail but whether CFL continued to operate the Mi Jay and for what period may not require decision.

[34] The next issue is whether CFL operated the Mi Jay on 22 November 2005 in a manner which caused unnecessary risk to others. In considering this issue I concentrate on the absence of communication.

[35] No-one on shore knew of the position of the Mi Jay from the time of its departure. It is the prosecution case that CFL allowed the Mi Jay to put to sea without putting in place a reporting schedule to enable any shore-based person to know the position of the Mi Jay on a daily basis. The absence of any contact with the Mi Jay meant that when the vessel was reported as being overdue, the Rescue Co-ordination Centre did not know where to look. The only information Mr Loader could give was that the plan was to fish on the Mermoo Bank. The search area covered by the Orion was an area 139 nautical miles by 189 nautical miles or 26,000 square nautical miles. Had CFL been able to advise the last known position, the search area would have been able to be defined. The distance able to be travelled from the last known position could have been calculated.

[36] The life raft had been deployed and its general location could also have been defined with reference to the last known position of the Mi Jay.

[37] The Safe Ship Management Manual required reporting from the Mi Jay twice daily. It is Mr Loader’s evidence that he brought this requirement to the attention of Mr Rees and that the arrangement was that Mr Rees would make contact with a shore based radio station. Mr Loader was intending to travel to the West Coast in the course of his employment monitoring possums and did not intend to be in direct contact with the vessel himself. The question I need to decide is whether there was a reporting schedule arranged by CFL and whether there was a failure on the part of Mr Rees to comply with the company’s instructions.

[38] When Mr Loader first telephoned the Rescue Co-ordination Centre on the morning of 6 December 2005, he was asked by Mr Ashby of the RCC: (JA = Mr Ashby, WL= Mr Loader)

JA: 0765. Ok, now would they normally, who would they normally be in radio contact with. Do they .... Do they normally when they go fishing, have some sort of schedule that they keep with anybody, like would they be in touch with Marine Operations.

WL: Oh, the boat has only been setup for longlining and it was their first trip. You know they sort of, you know noting .... Would come into effect for that because they wouldn’t know where they’d go, what sort of range they’d have with the radios and all that sort of staff so it was all a bit of a shake down trip but

JA: Yeah.

WL: It would take you eight days to fill the freezer up.

JA: Yeah.

WL: And if he didn’t catch fish for the first four days.

JA: Yeah.

WL: Then you did eight and then they would be sort due to show up today sort of thing.

[39] As to whether there was any expected date of return, Mr Loader told Mr Ashby on 6 December 2005 in the second telephone conversation of that day:

No, no, but he also sort of said he planned on filling up quite quickly, but then he just it’s easy to say that he said he wasn’t coming him till he was full, you know its only quite a small freezer a four tonne, so if you only caught half a tonne a day.

[40] As to whether Mr Rees was regarded as reliable when it came to reporting, the following exchange took place:

JA: But one would have assumed he would have made contact.

WL: Yeah, yep.

JA: Making contact?

WL: Yeah, yeah as far as I know.

[41] On 9 January 2006 Mr Loader was interviewed by Mr Venz, a Maritime New Zealand investigator. He was asked whether Mr Rees was instructed to make contact to a shore-based person. The only arrangement then disclosed by Mr Loader was that Mr Rees would make contact with Mr Loader’s partner about 12 hours before unloading the catch; that is at the end of the voyage.

[42] There was a further interview on 18 May 2006 when Mr Loader was asked whether he had discussed with Mr Rees the need to report to a shore-based person. Mr Loader said that Mr Rees “should have rung Sandy”; that is the operator of Nelson Marine Radio and said:

But he is not the sort of person to report in, he has never reported in.

[43] When Mr Loader was referred to the SSM Manual and the requirement for the Mi Jay to report in twice a day and was asked whether he had read it, he could not remember whether he had or not. When he was asked whether he had shown it to Mr Rees when he gave him a tour of the ship, he said he had not (page 4 transcript of second interview). This is contrary to Mr Loader’s evidence before me that he did point out the reporting requirement to Mr Rees.

[44] I do not accept Mr Loader’s evidence in this regard. The evidence is contrary to what Mr Loader said on 9 January 2006 that there was no reporting schedule and contrary to what he said on 18 May 2006. Furthermore, if Mr Loader was expecting twice daily reporting, he would be expected to tell Nelson Marine Radio of the arrangement. The whole point of reporting is to ensure that all is well and if not what the last position was. Unless the receiving station is expecting to be contacted, no one on shore would be alerted to the absence of reporting.

[45] Furthermore, if Mr Loader had expected twice daily reporting, or any reporting, I would have expected him to have checked with Nelson Marine Radio at least when he considered the Mi Jay to be overdue and before contacting the Rescue Co-ordination Centre. The evidence of Sandra Johnson (“Sandy”) is that she had no contact with Mr Loader after 22 November 2005.

[46] In his evidence Mr Loader sought to reduce the expected length of the voyage so as to have the vessel home before the Safe Ship Management Certificate expired and a survey needed to be completed by recounting a conversation in which Mr Rees said that he expected to be home for his daughter’s birthday on 28 November 2005, that is, 6 days after departure. This evidence does not accord with what he told Mr Ashby:

WL: Apparently his missed his daughter’s birthday the other day and that’s what sort of upset her like it’s a bit out of character as far as I understand it that he had missed her birthday but sometimes.

JA: Does he normally come back or just contact.

WL: Well I really don’t know, I haven’t talked to Jesse myself because someone else has actually rung her and I didn’t want to alarm her too much. I talked to her brother.

[47] It is clear from this exchange that the knowledge of the daughter’s birthday had only come to Mr Loader from talking to her brother — this was not based on being told by Mr Rees that he intended to be back for his daughter’s birthday. Mr Loader said later in the telephone conversation:

WL: Because I talked to Daniel which is Paul’s son and he was talking to his sister.

JA: Yeah.

WL: And I think it was her birthday, but don’t quote me on this. I think it was the 28th and he said to her on the 22nd that you know he’d be able to get in contact with her or something on her birthday, right.

[48] Again, this explanation is at odds with what Mr Loader told me in court. I find myself unable to rely on what Mr Loader has told me in respect of these issues.

[49] I am satisfied beyond reasonable doubt that Mr Loader made no arrangement with Mr Rees for a radio or cellphone reporting schedule. The consequence was that that position of the Mi Jay was unknown after it departed Nelson.

[50] It was open to CFL, as the owner of the vessel, to require compliance with the SSM Manual as to reporting. Even daily reporting would have created a safer situation. A firm and clear instruction to Mr Rees requiring compliance with the reporting schedule was all that was required.

[51] The failure of CFL to give this direction permitted the vessel to be used in a manner which caused unnecessary risk to the crew. CFL permitted the vessel to sail on 22 November 2005 without this basic safety precaution in place.

[52] The absence of contact with the shore would obviously compromise the ability to locate the vessel or its crew in the event of an emergency. The risk to the crew, created by this omission, was tragically realised.

[53] This finding would of itself be sufficient to prove the charge against CFL. There are, however, other aspects relied on by the informant which require consideration.

Qualifications of Mr Rees

[54] It is the informant’s case that Mr Rees did not hold the necessary maritime qualification or ticket to skipper a fishing vessel outside the 12-mile limit. If the Mi Jay was operating on the Mermoo Bank which is 70-90 nautical miles off the coast, then Mr Rees would have needed to be the holder of a Coastal Fishing Master’s ticket.

[55] The evidence establishes that he did not hold such a ticket. The informant has produced a certificate under s417 of the Act which states that Mr Rees held an inshore fishing skipper’s certificate endorsed for the FV “Waimarie II” for inshore fishing area 38 and that he held no other maritime documents. Under such a certificate Mr Rees was limited to being skipper of a vessel within 12 miles of the shore. By virtue of s417 this certificate is evidence of what it states unless the contrary is proved.

[56] It does seem that Mr Rees was employed as the master of the Santa Maria II when it was long-lining for tuna in waters outside the 12-mile limit. Video footage of this trip was shown as part of the defence evidence and showed the Santa Maria II skippered by Mr Rees operating in the vicinity of Russian joint venture trawlers. Mr Loader says that he saw this video before the Mi Jay departed. The fact that Mr Rees was so engaged does not prove that he had a ticket to do so. He may well have had the experience and knowledge to qualify for such a ticket, but that does not prove that the certificate under s417 is wrong.

[57] What is not known however, is whether the Mi Jay ever went beyond the 12-mile limit. There is no evidence as to where the Mi Jay was at the time of the sinking. If it was simply a matter of exceeding the 12-mile limit, I could not be satisfied on the evidence that Mr Rees ever exceeded his limit. While it was the intention of CFL and Mr Rees to go beyond the 12-mile limit, I would need to be satisfied that he did so before I could find that CFL had permitted the vessel to be used in that way.

[58] However, even if Mr Rees was operating within the 12-mile limit, his Inshore Fishing Skipper’s ticket was limited to In-Shore Fishing Zone 38 which did not include any area east of French Pass and was limited to a particular vessel, the Waimarie II.

[59] Mr Rees, in acting as skipper of the Mi Jay and sailing the Mi Jay east of French Pass was acting outside the limits of his ticket. Section 66 of the Maritime Transport Act provides as follows:

66 Effect of breach of maritime rule

(1) Where any person is charged with any offence against section 64 or section 65 of this Act and the Court is satisfied that any act or omission of that person, or caused or permitted by that person, constitutes a breach of a relevant maritime rule, then, in the absence of proof to the contrary, it shall be presumed that the act or omission caused unnecessary danger or risk to another person or to property, irrespective of whether or not in fact any injury or damage occurred.

(2) Nothing in this section shall be construed so as to require the proof of a breach of a maritime rule as an element of any offence described in section 64 or section 65 of this Act.

[60] Maritime Rule 31C requires the skipper to hold the proper qualification to carry out that role in the vessel and area in question. While the Rule has not been complied with, the question remains whether it is a relevant rule when considering the safe operation of the vessel — see in this regard the Court Appeal judgment in R v Mathers.

[61] CFL caused or permitted Mr Rees to be the skipper of the Mi Jay. This was an act by Mr Rees which was caused or permitted by CFL which constituted a breach of a maritime rule. It must be presumed therefore in the absence of proof to the contrary, that the action by CFL caused unnecessary risk to others if it was a relevant rule. It was a relevant rule — the qualification of the skipper is relevant to the safe operation of a vessel

[62] The question is, is there proof to the contrary. It cannot be said what part if any this lack of formal qualification played in the event. It may have had no part to play at all. The presumption applies in the absence of proof to the contrary. It is not proved that the absence of an appropriate ticket did not cause unnecessary risk to others. It may well be that the formal education and examination necessary for the appropriate ticket would have instilled in Mr Rees the necessity to report daily to shore.

Crew Requirements

[63] The maritime rules also required the vessel to have a member of the crew with a Marine Engineer Class 6 ticket. Neither Mr Rees nor any member of the crew had such a ticket. I am satisfied from the evidence that Mr Rees had the knowledge and experience to obtain such a ticket. I am satisfied that this omission did not cause any risk.

Expiry of SSM Certificate

[64] The evidence is that the lifeboat was deployed at the latest by 28 November 2005. At this time the SSM certificate was still valid and to operate the vessel up to 30 November 2005 was lawful and not in breach of any maritime requirement.

Conclusion

[65] I am satisfied beyond reasonable doubt that CFL operated the vessel in a manner which caused unnecessary risk to others.

[66] The remaining question is whether CFL has established lack of fault on the balance of probabilities.

[67] CFL failed to put in place the reporting schedule. This was its responsibility and it was a simple safety precaution. I do not overlook that CFL installed radio communication equipment and that it spared nothing in this regard. Inexplicably, however, it failed to require that it be used.

[68] Absence of fault is not established. The company is convicted.

[69] The company having been convicted, I now go on to consider the charge against Mr Loader in his capacity as a director of CFL.

The charge against Mr Loader as Director of CFL

[70] The Act provides specifically for the liability of directors of companies. I have set out s410 at paragraph [8].

[71] The first issue is whether it is proved beyond reasonable doubt that the act that constituted the offence took place with Mr Loader’s authority, permission or consent. Mr Loader was the sole director of the company. It was he who directed the operation of the vessel. He acted on behalf of the company in engaging Mr Rees and entering into the arrangements with him. The company could do nothing without Mr Loader acting on its behalf. It was Mr Loader’s failure to require reporting, and failure to check the qualifications of Mr Rees, which caused the company to operate the vessel in a manner which constituted an offence against s65, and operation in this manner was with his authority and permission and consent. This element is proved.

[72] I am satisfied beyond reasonable doubt that Mr Loader could reasonably be expected to have known that operating the vessel without a reporting schedule in place would put the crew at unnecessary risk and so he would know that an offence was being committed by the company when the vessel put to sea. It was open to him to prevent this offence by requiring a reporting schedule. It would have been a reasonable step for him to require Mr Rees to comply with the reporting schedule in the Safe Ship Management manual for the vessel. He failed to do so.

[73] The charge against Mr Loader under s 410 is proved.

[74] Each of the defendants is now remanded to a date to be fixed by the Registrar for sentencing. I will be assisted by victim impact statements and the contents of those will assist me in deciding whether I need a Reparation report to ascertain the nature of any emotional harm. I request the Informant to arrange for these victim impact statements to be completed. As I will be considering the question of reparation as part of any sentence I will need to have full details of the financial state of the company and the means of Mr Loader. Mr Spear is asked to provide this information.

[75] In the course of preparing this judgment I received further submissions from Mr Hopkinson on the meaning of “operating”. I had not given leave for further submissions and leave had not been sought. I have not taken those submissions into account. I did not think it helpful to anyone to delay the issue of this judgment, which delay would have been necessary if another round of submissions and reply were to be commenced.