SMW CONSORTIUM (GOLDEN BAY) LIMITED v THE CHIEF EXECUTIVE OF THE MINISTRY OF FISHERIES COA CA431/2011

SMW CONSORTIUM (GOLDEN BAY) LIMITED v THE CHIEF EXECUTIVE OF THE MINISTRY OF FISHERIES COA CA431/2011 [10 April 2013]IN THE COURT OF APPEAL OF NEW ZEALANDCA431/2011[2013] NZCA 95BETWEEN SMW CONSORTIUM (GOLDEN BAY)LIMITEDAppellantAND THE CHIEF EXECUTIVE OF THEMINISTRY OF FISHERIESFirst RespondentAND TASMAN DISTRICT COUNCILSecond RespondentCA432/2011AND BETWEEN CHALLENGER SCALLOPENHANCEMENT COMPANY LIMITEDAppellantAND THE CHIEF EXECUTIVE OF THEMINISTRY OF FISHERIESFirst RespondentAND TASMAN DISTRICT COUNCILSecond RespondentCA454/2011AND BETWEEN SANFORD LIMITEDAppellantAND THE CHIEF EXECUTIVE OF THEMINISTRY OF FISHERIESFirst RespondentAND TASMAN DISTRICT COUNCILSecond RespondentAND MARLBOROUGH AQUACULTURELIMITEDThird RespondentAND SMW CONSORTIUM (GOLDEN BAY)LIMITEDFourth RespondentAND CHALLENGER SCALLOPENHANCEMENT COMPANY LIMITEDFifth RespondentHearing: 7 and 8 November 2012Court: Ellen France, Wild and White JJCounsel: J K MacRae and A Buchanan for SMW Consortium (Golden Bay)LimitedA G Stallard for Challenger Scallop Enhancement Company LimitedB A Scott and A Kraack for Sanford LimitedP A McCarthy and S J Ritchie for the Chief Executive of the Ministryof FisheriesJ C Ironside for Tasman District Council (leave to withdraw)D J Clark for Marlborough Aquaculture LimitedG M Downing for Golden Bay Marine Farmers Consortium Limitedas IntervenerJudgment: 10 April 2013JUDGMENT OF THE COURTA The application by the Chief Executive of the Ministry of Fisheries for leave to adduce further evidence on appeal is declined.B The appeals are dismissed.C There is no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by White J)Table of ContentsPara NoIntroduction [1]Statutory background [8]Factual background [18]The six issues on appeal [22]Issue (1) – Does the word "undue" in the definitions of [24]"determination" and "reservation" necessarily imply awider inquiry beyond the matters specified in s 40 of theTransitional Act?Issue (2) – Did the Chief Executive correctly apply the word [32]"satisfied" in the definitions for the purposes of s 38 of theTransitional Act?Issue (3) – Was the Chief Executive correct in applying a five [44]per cent threshold of loss of catch as the level at which hecould be satisfied that the "undue adverse effects" testwas reached?Issue (4) – In assessing the exclusion of fishing within an interim [59]AMA under s 40(d), was the Chief Executive required to haveregard only to the area of the interim AMAs or the area likelyto be occupied by structures within the interim AMAs?Issue (5) – When assessing the cumulative effects of previous [70]Aquaculture activities under s 40(g), should the Chief Executivehave taken into account as future potential effects:(a) all the interim AMAs when making his decision abouteach of them; and(b) aquaculture activities for which consents had been given,but where no aquaculture activity had actually commenced?Issue (6) – When making a decision with respect to multiple [87]interim AMAs, was it lawful to rank the interim AMAs?Result [95]Introduction[1] These appeals relate to the interpretation of a number of provisions in the Aquaculture Reform (Repeals and Transitional Provisions) Act 2004 (the Transitional Act) as they applied to a decision of the Chief Executive of the then Ministry of Fisheries (the Chief Executive) in December 2008 approving new areasof Golden and Tasman Bays as "interim Aquaculture Management Areas" (interimAMAs) for mussel farming.[2] The Chief Executive's decision, which was called an aquaculture decision under s 38 of the Transitional Act, was made at the request of the Tasman DistrictCouncil in respect of applications by Marlborough Aquaculture Ltd (Marlborough), Sanford Ltd (Sanford), SMW Consortium (Golden Bay) Ltd (SMW) and Golden BayMarine Farmers Consortium Ltd (Golden Bay). The effect of the Chief Executive'saquaculture decision was to approve three of the five new areas sought for mussel farming by SMW and the one new area sought by Golden Bay, but to decline the areas sought by Marlborough and Sanford.[3] The Chief Executive's decision was challenged in the High Court by way ofappeal1 and judicial review2 brought by the unsuccessful applicants (SMW, Marlborough and Sanford) and by Challenger Scallop Enhancement Company Ltd (Challenger), which represented scallop fishers in Golden and Tasman Bays and opposed any new areas for mussel farming. Golden Bay appeared as an affectedparty to support the Chief Executive's decision.[4] In the course of the High Court hearing the parties agreed that the Chief Executive's decision had been made in error and would need to be remade.3The error related to the use made by the Chief Executive of what was known as "the Scallop Model" for the purpose of "ranking" the various zones and subzones in the interim AMAs. As a result of this error, the High Court ultimately allowed the appeals, granted the judicial review applications and remitted the aquaculture decision back to the Chief Executive to be remade.[5] Before doing so, however, the High Court, at the request of the parties, heard and determined issues relating to the interpretation of the Transitional Act, including those that are now the subject of appeal to this Court.4 The High Court determined these interpretation issues in order to assist the Chief Executive when remaking the aquaculture decision.5 We agree that it was appropriate for the High Court to do so and that it remains appropriate for us to do likewise on appeal.1 Transitional Act, s 42 (as it was at the time).2 Transitional Act, s 43.3 Marlborough Aquaculture Ltd v Chief Executive of the Ministry of Fisheries HC WellingtonCIV-2009-485-500, 13 June 2011 at [38]–[50] [High Court interim judgment].4 At [52]–[57].5 At [54].[6] On appeal the Chief Executive sought leave to adduce further evidence in the form of an updated version of the Scallop Model. As the further evidence is challenged by the other parties and is not relevant to the determination of the issues by this Court, leave to adduce it is declined.[7] To understand and determine the issues of interpretation raised on appeal, we need to set out briefly the relevant statutory and factual background before addressing each of them in turn.Statutory background[8] The Transitional Act, which came into force on 1 January 2005, contained provisions for the transition from the previous statutory regime governing marine farming applications to the new regime, which also came into force on that date.[9] The previous statutory regime required two forms of authorisation: coastal permits under the Resource Management Act 1991 (the RMA)6 and marine farming permits under the Fisheries Act 1983.7 As a result of considerable uncertainty as to the relationship between the two approval processes and the competing interests of proposed marine farmers both between themselves and with existing fishers, applications backed up around the country. This ultimately led in March 2002 to the imposition of a moratorium on the consideration of coastal permit applications under the RMA.8 The moratorium expired on 1 January 2005 when the new regime came into force.9[10] In essence the new regime substituted a single planning process controlled by the relevant regional council under the RMA, but constrained to AMAs previously6 RMA 1991, s 87(c).7 Fisheries Act 1983, s 67J. Before the dual permitting system, marine farming was managedunder the Marine Farming Act 1971. This provided for a system of leases and licences tooccupy coastal marine areas and carry out marine farming activities. At this point aquaculturewas an emerging industry conducted on a relatively small scale, so there was no perceived needfor regional or national plans to regulate it.8 Resource Management (Aquaculture Moratorium) Amendment Act 2002; and High Courtinterim judgment, above n 3, at [8]–[14].9 Resource Management Amendment Act (No 2) 2004; and Fisheries Amendment Act (No 3)2004.approved by the Chief Executive in aquaculture decisions.10 The new regime contemplated two types of aquaculture decisions in relation to an AMA:(a) "a determination", namely a decision by the Chief Executive that he or she was satisfied that the AMA would not have "an undue adverse effect on fishing"; or(b) "a reservation", namely a decision by the Chief Executive that he orshe was not so satisfied.[11] If a determination was made, it was then possible for the regional council to grant by tender an authorisation to an intending marine farmer which conferred the right to apply for the necessary coastal permit without further reference to affected fishers.11[12] If, however, a reservation was made, an authorisation could then only be offered by the regional council to persons who had entered into "aquaculture agreements" with the commercial fishers affected.12 An aquaculture agreement involved existing fishers consenting, in return for compensation, to a new aquaculture activity being established in an existing fishery.13 Only persons holding an aquaculture agreement could apply for a coastal permit. If the holder of the aquaculture agreement were successful in obtaining a coastal permit, then the reservation would be deleted from the regional coastal plan.14[13] The effect of the Chief Executive's aquaculture decision therefore determined whether existing fishers15 received any compensation for the loss of space in which they could fish.16 If a determination was made, they would not receive any10 Transitional Act, s 44 (as it was at the time), the section was amended by s 23 of the AquacultureReform (Repeals and Transitional Provisions) Amendment Act 2011; and High Court interimjudgment, above n 3, at [16].11 RMA, ss 165A and 165C (as they were at the time).12 RMA, s 165J (as it was at the time).13 Fisheries Act 1996, pt 9A, as enacted by the Fisheries Amendment Act (No 3).14 RMA, s 165J(5) (as it was at the time).15 Fishers who were the registered quota owners of stock subject to the quota management systemor listed in schedules to the Fisheries Act 1996 in areas where aquaculture was then approved:Fisheries Act 1996, s 186ZF.16 If the Chief Executive made a reservation, the reservation had to include whether it related torecreational, customary or commercial fishing: Fisheries Act 1996, s 185H(2).compensation because an aquaculture agreement was not required, whereas if a reservation was made, they would receive compensation in the event of an aquaculture agreement being negotiated.17[14] The purpose of the Transitional Act was to repeal the previous regime and provide a process for bringing existing marine farming applications into the new regime.18 The first step in the process involved areas that had already been designated in regional coastal plans as suitable for marine farming being declared"interim AMAs" by Order in Council.19 Once an area was declared an interim AMA, the regional council could request the Chief Executive to make an aquaculture decision.20 In making an aquaculture decision, the Chief Executive would then makeeither a "determination" or a "reservation" based on whether or not he or she was satisfied that:21...the interim aquaculture management area will not have an undue adverse effect on fishing or on the sustainability of fisheries resources.(Emphasis added)The emphasised words are not in the comparable definitions under the new regime.[15] In deciding whether to make a determination or a reservation under the Transitional Act, the Chief Executive was required to take into account the matters prescribed by s 40 which provided:40 Matters to be considered by chief executiveIn deciding whether to make a determination or reservation, the chief executive must have regard only to the following matters:(a) the effect of the interim aquaculture management area on—(i) the biological diversity of the aquatic environment:(ii) the productivity and biological abundance of fisheries resources:17 Initially an agreement required the unanimous consent of the stock owners, or 90 per centconsent and the approval of the High Court (under s 186ZF of the Fisheries Act 1996). This wasreplaced with a mandatory arbitration regime by s 24 of the Fisheries Amendment Act 2011.18 Transitional Act, s 3.19 Section 36.20 Section 37.21 Section 35.(iii) habitats of known significance for fisheries management:(b) the location of the interim aquaculture management area in relation to areas in which fishing is carried out:(c) the effect of the interim aquaculture management area on fishing of any fishery, including the proportion of any fishery likely to become affected:(d) the degree to which aquaculture activities within the interim aquaculture management area will lead to the exclusion of fishing:(e) the extent to which fishing for a species in the interim aquaculture management area can be carried out in other areas:(f) the extent to which the interim aquaculture management area will increase the cost of fishing:(g) the cumulative effect on fishing of any previous aquaculture activities.[16] The consequences of the Chief Executive's aquaculture decision under theTransitional Act were similar to those under the new regime.22 A determination would lead to an AMA, while a reservation would require an aquaculture agreement with existing fishers, including payment of compensation, before a coastal permit could be granted.[17] Both the Transitional Act and the new regime have been overtaken by new legislation, although ss 38–40 remain in force.23 The provisions of the Transitional Act apply to the applications by the parties to the current appeals.24 Further, the adverse effects test has not changed in substance.25 Accordingly, the Court'sdeterminations on the meaning of the provisions in this case will affect both the reconsideration of the present applications by the Chief Executive and future applications.22 Transitional Act, s 44.23 Fisheries Amendment Act 2011; and Aquaculture Reform (Repeals and Transitional Provisions)Amendment Act 2011, ss 1–5 and 34–49. Any aquaculture decision made after 1 October 2011will fall under the amended pt 9A regime of the Fisheries Act 1996.24 See Transitional Act, s 42; and also Interpretation Act 1999, s 18.25 See Fisheries Act 1996, s 186GB.Factual background[18] Prior to the March 2002 moratorium, Marlborough, Sanford, SMW and Golden Bay had taken steps to obtain coastal permits from the Tasman District Council for the areas in which they wished to farm mussels. During the moratorium the Tasman District Council proposed and consulted on a new coastal plan which was the subject of hearings before the Environment Court.26 The Court's final report on the plan on 3 December 2004 identified three general areas, divided into subzones, that were approved for aquaculture activities.27 The approved subzones included those promoted by Marlborough, Sanford, SMW and Golden Bay.[19] In early January 2005, shortly after the new regime came into force, these parties applied to the Tasman District Council under the RMA for coastal permits to allow them to operate mussel farms in the subzones they had promoted. These early applications, designed to secure priority, were granted by the Environment Court.28[20] In the meantime, in accordance with the process under the Transitional Act, the following steps were also taken:(a) on 21 November 2005 an Order in Council was made declaring the subzones to be interim AMAs;29(b) on 20 January 2006 the Chief Executive received an application from the Tasman District Council for an aquaculture decision in relation to the interim AMAs;(c) on 10 December 2008 the Chief Executive made the decision the26 Golden Bay Marine Farmers v Tasman District Council EnvC Christchurch W42/2001, 27 April2001; Golden Bay Marine Farmers v Tasman District Council EnvC Wellington W19/2003,27 March 2003; Golden Bay Marine Farmers v Tasman District Council EnvC WellingtonW10/2004, 18 February 2004.27 Golden Bay Marine Farmers v Tasman District Council EnvC Wellington W89/2004,3 December 2004.28 SMW Consortium Ltd v Tasman District Council EnvC Wellington W21/2006, 9 March 2006(interim decision); SMW Consortium Ltd v Tasman District Council EnvC WellingtonW34/2006, 9 May 2006 (final decision); and High Court interim judgment, above n 3, at [25].29 Aquaculture Reform (Repeals and Transitional Provisions) (Golden Bay and Tasman BayInterim Aquaculture Management Areas) Order 2005.subject of the appeals and judicial review in the High Court;30 and(d) on 18 and 20 December 2008 the decision was publicly notified.[21] We refer to relevant aspects of the Chief Executive's decision and hissubsequent report to the High Court,31 as well as to the High Court decision and the submissions for the parties, when considering the six issues raised on the appeals to this Court.The six issues on appeal[22] The agreed issues on appeal are:(1) Does the word "undue" in the definitions of "determination" and "reservation" necessarily imply a wider inquiry beyond the matters specified in s 40 of the Transitional Act?(2) Did the Chief Executive correctly apply the word "satisfied" in thedefinitions for the purposes of s 38 of the Transitional Act?(3) Was the Chief Executive correct in applying a five per cent threshold of loss of catch as the level at which he could be satisfied that the"undue adverse effects" test was reached?(4) In assessing the exclusion of fishing within an interim AMA under s 40(d), was the Chief Executive required to have regard only to the area of the interim AMAs or the area likely to be occupied by structures within the interim AMAs?(5) When assessing the cumulative effects of previous aquaculture activities under s 40(g), should the Chief Executive have taken into account as future potential effects:30 Above at [2].31 Report of the Decision Maker, 18 December 2009, provided under the High Court Rules,r 20.15; and High Court interim judgment at [34].(a) all the interim AMAs when making his decision about each of them; and(b) aquaculture activities for which consents had been given, but where no aquaculture activity had actually commenced?(6) When making a decision with respect to multiple interim AMAs, was it lawful to rank the interim AMAs?[23] Before addressing each of these issues in turn, we note that in interpreting the relevant provisions of the Act, we ascertain their meaning from their text and in light of their purpose.32 In determining purpose we have regard to both the immediate and general legislative context, as well as the social, commercial and other objectives of the Act.33 We also recognise that the legislation should be interpreted in a realistic and practical way in order to make it work.34Issue (1) – Does the word "undue" in the definitions of "determination" and "reservation" necessarily imply a wider inquiry beyond the matters specified in s 40of the Transitional Act?[24] In making the aquaculture decision in this case under s 38 of the TransitionalAct, the Chief Executive had regard "only" to the matters in s 40. In the High CourtClifford J rejected the submission for SMW that the Chief Executive had erred in not having regard to a wide range of "qualitative and contextual matters", including inparticular the relative economic value of the existing scallop and potential mussel fisheries that were effectively competing for aquaculture space.35[25] On appeal Mr MacRae for SMW reiterated his submissions in challenging the decisions of both the Chief Executive and the High Court. In particular, hesubmitted that the presence of the word "only" in s 40 did not prevent the qualitative32 Interpretation Act, s 5.33 Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR767 at [22].34 Northland Milk Vendors Association Inc v Northern Milk Ltd [1988] 1 NZLR 530 (CA); andJF Burrows and RI Carter Statute Law in New Zealand (4th ed, LexisNexis, Wellington, 2009) at205.35 High Court interim judgment, above n 3, at [107]–[113].assessment required by the expression "undue adverse effect" in the definitions of"determination" and "reservation".[26] The Chief Executive, Sanford and Challenger supported the High Court decision on this issue.[27] For the following reasons we have little difficulty in agreeing with Clifford J that the Chief Executive did not err in his approach to the scope of the "undue adverse effects" inquiry.[28] First, the text of s 40 of the Transitional Act is clear. In deciding whether tomake a "determination" or a "reservation" under s 38, the Chief Executive "must have regard only" to the matters prescribed in the section. Those mandatoryprescribed matters do not include the "qualitative and contextual matters" suggestedby SMW. If Parliament had intended such matters to be taken into account, they would have been included in the section.[29] Second, the legislative history strongly supports this approach. Subclause 186G of the Aquaculture Reform Bill originally included amongst the matters to be considered by the Chief Executive:any other matter that the chief executive considers relevant.But this was deleted on the recommendation of the Primary Production Select Committee which reported on 6 December 2004:Criteria considered in undue adverse effects testWe recommend an amendment to clause 41, deleting subclause 186G(g), namely the phrase "any other matter" in order to provide more certainty as tothe matters the chief executive of the Ministry of Fisheries can consider in considering the undue adverse effects test.Submitters felt this phrase negated the purpose of providing criteria for the administration of the undue adverse effects test.Submitters also differed about the kind of criteria that the undue adverse effects test requires. In particular several submissions called for the addition of criteria that would allow a comparison of value between fishing and farming use of coastal marine areas. That is a balancing test and not the purpose of the test in the bill. The test in the bill is a threshold test, which isan assessment of the degree to which a new use of coastal space, in this case marine farming, will affect the exercise of fishing rights that already exist in the area. If the effect is sufficiently adverse to amount to an undue adverse effect, it should not proceed, unless an aquaculture agreement can be reached with the affected fishers.[30] Third, as the Select Committee report confirms, s 40 imposes a threshold testnot a test involving the balancing of economic benefits. The purpose of the "undue adverse effects" test is to provide protection for existing property rights of commercial, customary and recreational fishers. It does not provide a balancing process whereby the undue adverse effects on fishers (or the sustainability of fisheries resources) are to be weighed against the potential benefits to marine farmers or the public generally. The decision of this Court in CRA3 Industry Assoc Inc v Minister of Fisheries,36 relied on by SMW, may be distinguished on the ground that it involved a different issue in a different context, namely whether to create a marine reserve under the Conservation Act 1987. There the issue was not restricted to a set of mandatory prescribed matters and consideration of wider public benefit factors was appropriate.[31] Fourth, an interpretation which provides protection for existing property rights is consistent with the well-established principle that clear statutory language will be required before the court will permit property to be taken, especially without compensation.37[32] Accordingly, we answer Issue (1) "No".36 CRA3 Industry Assoc Inc v Minister of Fisheries [2001] 2 NZLR 345 (CA).37 In Attorney-General v Cunningham [1974] 1 NZLR 737 (SC) at 741 Cooke J affirmed a "strictand cautious" approach to limiting individual rights. Compare Laura Fraser "Property Rights inEnvironmental Management: The Nature of Resource Consents in the Resource ManagementAct 1991 (2008) 12 NZJEL 145 at 155; Kevin Guerin Protection against Government Takings:Compensation for Regulations? (New Zealand Treasury Working Paper, 02/18,September 2002); and JF Burrows and RI Carter Statute Law in New Zealand, above n 34, at322.Issue (2) – Did the Chief Executive correctly apply the word "satisfied" in thedefinitions for the purposes of s 38 of the Transitional Act?[33] The Chief Executive proceeded on the basis that it was necessary for him to be positively satisfied that there would be no undue adverse effect before he could make a determination for an interim AMA. In his report to the High Court he said:38Section 35 of the Transitional Act required me to be "satisfied that theinterim aquaculture management area will not have an undue adverse effect on fishing or on the sustainability of fisheries resources" before making adetermination in favour of the interim AMA. I understood that if I was not satisfied that effects on fishing and the sustainability of fisheries resources would not be unduly adverse, I must enter a "reservation" against the interimAMA (in whole or in part). Generally, if I was uncertain about effects of an interim AMA, I could not be satisfied that those effects would not be undue.[34] In the High Court Clifford J rejected the submission for SMW that the Chief Executive had erred in failing to accept that to be "satisfied" he had to makeup his mind and in considering that uncertainties should be resolved in favour of fishing.39[35] On appeal Mr MacRae for SMW reiterated his submissions challenging the decisions of both the Chief Executive and the High Court. In particular he submitted that if a decision-maker has to be "satisfied", the legislation requires an evaluation of all relevant matters to reach a judgment. No burden or standard of proof is implied. In the present case as the whole exercise is characterised by uncertainty, equatinguncertainty with not being "satisfied" amounted to predetermining the result.Mr MacRae submitted that because the Chief Executive had thought it was all too hard he had effectively failed to make a decision at all.[36] Mr Downing for Golden Bay submitted that the approach of the Chief Executive and the High Court Judge was wrong because it gave precedence tothe definition of "reservation" over the definition of "determination". The Chief Executive must either be "satisfied" or "not satisfied"; he must be certain whatan adverse effect on the fishery is and decide one way or the other.38 Report of Decision Maker, above n 31, at [70].39 High Court interim judgment, above n 3, at [97]–[106].[37] The Chief Executive and Sanford supported the High Court decision on this issue.[38] For the following reasons, we agree with Clifford J that the Chief Executivedid not err in his approach to the meaning of "satisfied" in the definitions of "determination" and "reservation".[39] First, it is well-established that the meaning of the expression "satisfied" willdepend on the relevant statutory context.40 Here it is necessary to read the two definitions together as they are clearly interrelated and interdependent. Whenrequested for an aquaculture decision, the Chief Executive "must" make a"determination" or a "reservation" or one or more or both in relation to differentparts of the interim AMA.41 In deciding whether to make a "determination" or a "reservation", the Chief Executive must either be "satisfied" or "not satisfied" thatthe interim AMA will not have an undue adverse effect on fishing or on thesustainability of fisheries resources. The conjunction of the expressions "satisfied" and "not satisfied" means that the Chief Executive does need to consider whether theinformation before him is sufficient to satisfy the undue adverse effect test and, if not or if uncertainties remain, he could not be so satisfied.[40] Second, the problem for the marine farmers seeking a determination is not theword "satisfied" but the need for the Chief Executive to be satisfied of a negativeproposition, namely that the interim AMA will "not" have an undue adverse effect.In the context of this legislation, this requirement does effectively mean that marine farmers seeking a determination will need to persuade the Chief Executive that he should be satisfied that there will be no undue adverse effect. As the Chief Executive rightly considered, if he is uncertain or left with reasonable doubts, he could not be so satisfied.[41] Third, the fact that the effect of a reservation is that marine farmers have to enter aquaculture agreements is important. The creation of an AMA involves an area40 Westfield (New Zealand) Ltd v North Shore City Council [2005] NZSC 17, [2005] 2 NZLR 597at [52]; Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at[96]; and Iti v R [2011] NZCA 114 at [30].41 Transitional Act, s 38(1).in which fishers have a proprietary interest effectively being made unavailable to them. If a determination is made, intending marine farmers have to negotiate with fishers for the right to use the area over which the fishers have quota. In that negotiation, it makes sense that the risk of uncertainty falls on those who benefit from the reduction in the area available to fishers. Through negotiating aquaculture agreements, intending marine farmers can reach an amount of compensation that reflects the degree of risk to the fishery. All that a reservation by the Chief Executive does is force intending marine farmers to compensate fishers for the risk of aquaculture operating in an area over which they have quota. If, as the marine farmers claim, predicting the effect of marine farms is inherently inexact, it seems quite appropriate that they compensate fishers for the risk of adverse effects.[42] Fourth, like Clifford J,42 we do not accept the submission for SMW that the Chief Executive failed to make any decision at all. As the Chief Executive was not satisfied that there would be no undue adverse effect, he decided to enter a"reservation" rather than to make a "determination".[43] Accordingly, we answer Issue (2) "Yes".Issue (3) – Was the Chief Executive correct in applying a five per cent threshold ofloss of catch as the level at which he could be satisfied that the "undue adverseeffects" test was reached?[44] The Chief Executive applied a five per cent threshold of loss of scallop catch as the level at which he could be satisfied that the undue adverse effect test was reached. He explained his reasons for doing so in his decision of 10 December 2008:I have thought long and hard, however, about what level of adverse effects on scallop catch would constitute an undue adverse effect. I find in the case of the Southern Scallop fishery that I agree with the evaluation report that I cannot be satisfied that a cumulative average annual catch loss of 5% would not be an undue adverse effect. I am aware that 5% is a "nominal number" –some submitters believe it is too high, others too low. In coming to this judgement, I am conscious that s 35 of the aquaculture transitional act requires me to make a reservation if I am not satisfied that the interim AMA will not have an undue adverse effect on fishing. In my view, given42 High Court interim judgment, above n 3, at [99]–[106].complexity of decisions, competing views and often conflicting information decisions must, to a degree, favour existing users.I am conscious that other marine farming decisions have tended, over time,towards a nominal 5% threshold on the "undue adverse effect test". I amconscious, however, that this will [be] the first time the chief executive formally indicates a level at which effects become undue.[45] In his subsequent report to the High Court, the Chief Executive added: 43[105] I was aware that the Court of Appeal had upheld a decision to establish a marine reserve that was expected to reduce the catch of rock lobster in CRA3 by 10%. My decision, however, required reconciliation of competing commercial interests, so it was not one where a significant reduction in the annual catch could be justified because of public interest factors (particularly since s 40 of the Transitional Act does not contemplate such factors being considered). Accordingly I thought that a catch loss of 10% in the context of SCA7 would be undue.[106] I considered that a 5% average reduction in weight of scallop meat taken was significant, and that it was inappropriate to impose on scallop fishers a cost of much more than 5% of the annual catch for the benefit of intending marine farmers. Accordingly I tended towards that 5% threshold as the undue level. I contemplated allowing a higher threshold but came back to 5% as the greatest average reduction in the scallop catch that I considered reasonable given the statutory framework I was dealing with andso not "undue".[107] I was also aware that a reservation would not definitely exclude aquaculture from these areas. The undue adverse effect test, if triggered, allows interested stakeholders to agree the best use of the area through aquaculture agreements. I would have settled on a threshold of about 5% even if it was not possible to enter into aquaculture agreements, but this possibility reinforced my view that commercial fishers should not suffer significant uncompensated loss for the benefit of prospective marine farmers.[46] In the High Court Clifford J rejected the submissions for SMW, Marlborough and Golden Bay that the five per cent threshold was arbitrary and not able to be justified.44[47] On appeal counsel for SMW and Golden Bay reiterated their submissions challenging the decisions of the Chief Executive and the High Court Judge on this issue.43 Report of Decision Maker, above n 31.44 High Court interim judgment, above n 3, at [89]–[95].[48] Mr MacRae submitted that there was no rationale for the selection of a five per cent loss of catch as the threshold and, on the basis of expert evidence, the fiveper cent figure was an "absurd" over-estimate of the likely effect of the interim AMAs that was not supportable. He also submitted that, as a process of measurement was envisaged by s 40, it was open to the Chief Executive to set a figure which might have been between five and 20 per cent.[49] Mr Downing for Golden Bay submitted that the five per cent threshold waswrong because it was inconsistent with this Court's decision in CRA3 Industry Assoc Inc v Minister of Fisheries, which upheld a ten per cent threshold,45 and that a higher threshold should have been adopted to permit marine farming as contemplated by the legislation.[50] While Marlborough abided by the Court's decision on this issue, Mr Clarknoted that if Parliament had intended a five per cent threshold, it would have been enacted. He also suggested that the threshold cannot be an absolute figure.[51] The Chief Executive, Sanford and Challenger supported the High Court decision on this issue.[52] For the following reasons, we agree with Clifford J that the Chief Executive did not err in adopting the five per cent threshold in the circumstances of this case.[53] First, while the expression "undue adverse effect" is not defined in therelevant legislation, it was accepted in the High Court that the definition of thephrase "adverse effect" in s 186C of the Fisheries Act 1996 could be adopted:46[A]dverse effect, in relation to fishing, means to restrict access for fishing or to displace fishing.When this phrase is qualified by the adjective "undue", the ordinary meaning of the word is apposite: "going beyond what is appropriate, warranted or natural".4745 CRA3 Industry Assoc Inc v Minister of Fisheries, above n 36, at [7].46 High Court interim judgment, above n 3, at [62]–[63] and [75].47 John Simpson et al (eds) Oxford English Dictionary (3rd ed, 2010, online ed)< www.oed.com >.[54] Second, we agree with Mr McCarthy for the Chief Executive that in thecontext of this legislation interpreting "undue" to mean "serious" or "significant"was not erroneous.48 Given that the purpose of the legislation is to allow marine farming, some effect on fishing is to be expected. Minimal or insignificant effectson fishers will therefore not be "undue". On the other hand, when marine farming will produce a more than minimal or significant effect, then it will be "undue".[55] Third, as Clifford J correctly held,49 when assessing what effect is "undue" orsignificant, the Chief Executive was entitled to recognise that the undue adverse effect test threshold was part of a statutory regime which allowed the existing property rights of commercial fishers to be reduced in value potentially without compensation. On its face, a predicted five per cent loss of catch is sufficientlysignificant to warrant a "reservation" with compensation through an aquaculture agreement rather than a "determination" without any compensation.[56] Fourth, as we have already pointed out,50 the decision of this Court in CRA3 Industry Assoc Inc v Minister of Fisheries where a ten per cent threshold was upheld may be distinguished on the ground that it involved a different statutory regime which enabled consideration of public benefit factors.[57] Finally, it was open to the Chief Executive to adopt the threshold of five per cent in the context of the present legislation, where Parliament has left the assessment of the threshold to the judgment of the Chief Executive. Apart fromsubmitting that the threshold was not "supportable", SMW in accepting that the figure might be between five and 20 per cent, did not identify any specific alternative. It was a quibble about where the figure was pitched. Like Clifford J, wewere not persuaded that the Chief Executive's judgment was wrong.[58] Accordingly, we answer Issue (3) "Yes".48 R v Nova Scotia Pharmaceutical Society (1991) 80 DLR (4th) 206 (NSSC) at 233–234; affirmed(1992) 93 DLR (4th) 36 (SCC) at 62.49 High Court interim judgment, above n 3, at [90] and [94].50 Above at [30].Issue (4) – In assessing the exclusion of fishing within an interim AMA under s 40(d), was the Chief Executive required to have regard only to the area of the interim AMAs or the area likely to be occupied by structures within the interim AMAs?[59] In assessing under s 40(d) the degree to which aquaculture activities within the interim AMAs would lead to the exclusion of fishing, the Chief Executive had regard to the actual area involved on the basis that fishing would be excluded from the interim AMAs entirely. He did so because he considered that the scheme of the new regime, including the Transitional Act, essentially involved him making a"zoning" decision about an interim AMA, and he was not in a position to assesswhere, and to what extent, aquaculture activities, and in particular marine farm structures, would be established in a proposed interim AMA.[60] In the High Court, however, Clifford J held that the Chief Executive was in error in considering the possible adverse effects of an interim AMA by reference only to its area rather than to the area likely to be occupied by aquaculture activities.51 In reaching this conclusion, Clifford J relied on the language of s 40(d),particularly when contrasted with s 40(c), the need for some "real life" assessment ofthe degree to which aquaculture activities would occur within the interim AMA, the language of s 41(1)(d), and the fact that the legislation had not simply excluded fishing from interim AMAs which would have been likely if an aquaculture decisionwas simply a "zoning" decision.[61] On appeal Challenger and the Chief Executive challenged Clifford J'sinterpretation of s 40(d). Mr Stallard and Mr McCarthy submitted that once an interim AMA was declared and a coastal permit was granted there was no guarantee that the whole area would not end up being used for marine farming. The aquaculture decision must look not just at the proposed farming, but at the effect of all future activity. They pointed to the uncertainty involved in predicting use of aninterim AMA. Mr McCarthy also submitted that the definitions of "determination" and "reservation" required the Chief Executive to assess the effect of the "interim AMA" itself, not the farming that was to take place in it. A "real life" assessment ofthe degree to which aquaculture activities would occur within the interim AMA was51 High Court interim judgment, above n 3, at [142]–[149].not necessary. The Transitional Act (s 41) did not contemplate reference to an"application" for a resource consent as a reliable basis for assessing the impact of aninterim AMA on fishing.[62] We agree with Clifford J, whose decision on this issue was supported by Mr Scott for Sanford, Mr Downing for Golden Bay and Mr Clark for Marlborough that the Chief Executive did err in his interpretation of s 40(d). Before giving our reasons, it is convenient to set out the relevant statutory provisions:40 Matters to be considered by chief executiveIn deciding whether to make a determination or reservation, the chief executive must have regard only to the following matters:...(c) the effect of the interim aquaculture management area on fishing of any fishery, including the proportion of any fishery likely to become affected:(d) the degree to which aquaculture activities within the interim aquaculture management area will lead to the exclusion of fishing:...41 Requirements for aquaculture decision(1) An aquaculture decision must—...(d) if the decision is a determination based on a rule in a regional coastal plan or proposed regional coastal plan that relates to the character, intensity, or scale of occupation of the interim aquaculture management area by aquaculture activities,—(i) specify the rule; and(ii) state that the rule may not be revoked or amended until the chief executive makes a further aquaculture decision in relation to the area affected by the revocation or amendment; and(e) be notified to the regional council....[63] We agree with Clifford J's interpretation of s 40(d), first because it reflectsthe ordinary meaning of the text of the provision. The word "degree", which means "a step or stage in intensity or amount, the relative intensity, extent, measure, oramount of a quality, attribute, or action",52 clearly requires an assessment of the extent to which aquaculture activities will be carried out within the interim AMA and the extent to which they will actually lead to the exclusion of fishing. As Mr Scott submitted, the inquiry is on the extent to which fishing is excluded "within" theinterim AMA. It therefore cannot be assumed that fishing will be excluded from the whole of the area of the interim AMA.[64] Second, s 40(d) should be given a meaning separate and distinct from s 40(c)which requires the Chief Executive to have regard to "the effect" of the interim AMAon fishing of any fishery. The submissions for Challenger and the Chief Executive would give a similar meaning to both ss 40(c) and (d) which would not have been intended.[65] Third, Clifford J's interpretation of s 40(d) is supported by s 41(1)(d) which recognises that questions of "the character, intensity, or scale of occupation" of theinterim AMA by aquaculture activities are matters which the Chief Executive will consider, where relevant.[66] Fourth, we agree with Mr Scott that the Chief Executive would know the likely structures to be built. While conditions attached to a coastal permit may be changed without an additional aquaculture decision, that does not mean that the consent authority would change the condition without taking into account the effect of the change on fishing. Under s 127(4) of the RMA, a consent authority is required to consider every person who may be affected by a proposed change to a condition, including fishers such as scallop fishers. If a coastal permit is transferred, the transferee must still comply with all of the conditions of the permit unless formally changed.[67] Finally, given that s 40(d) expressly requires an assessment of the degree of the effect of aquaculture activities within an interim AMA, we do not agree that the52 Oxford English Dictionary, above n 47.Chief Executive is required only to make a zoning decision. As Clifford J held, a"real life" assessment is required to the extent that information is available. Weagree with Mr Scott that it cannot have been intended that the Chief Executive should turn a blind eye to information reflecting the reality of the situation and simply assume that aquaculture activities will take up the whole of the interim AMA if he knows that is not likely to be the case. To interpret s 40(d) in that way would not assist the legislation to work in a realistic and practical way.[68] In the present case the Chief Executive has information regarding the size and intensity of mussel farm structures proposed to be built by Sanford, including the fact that the proposed mussel farm will have wide laneways between mussel farm structures that would allow scallop fishers to fish. As Clifford J pointed out,53 if the Chief Executive were properly satisfied of the factual accuracy of that proposition, and of its ongoing significance, it would not be sensible for him to fail to take account of that fact when he had regard to the degree to which aquaculture activities within an interim AMA would lead to the exclusion of fishing.[69] Accordingly, we answer Issue (4) "The Chief Executive was required to haveregard to the area of the AMAs likely to be occupied by structures".Issue (5) – When assessing the cumulative effects of previous aquaculture activities under s 40(g), should the Chief Executive have taken into account as future potential effects:(a) all the interim AMAs when making his decision about each of them; and(b) aquaculture activities for which consents had been given, but where no aquaculture activity had actually commenced?[70] When it came to the interpretation of s 40(g) – "the cumulative effect on fishing of any previous aquaculture activities" – the Chief Executive explained his approach in his report to the High Court:5453 High Court interim judgment, above n 3, at [148].54 Report of Decision Maker, above n 31, at [214].I considered that the requirement to have regard to the cumulative effect on fishing of previous aquaculture activities required me to have regard to the likely effects of marine farms/AMAs that had been approved, even if aquaculture structures had not yet been erected. I could not ignore the cumulative effects of the interim AMAs for which I was prepared to grant a"determination" in relation to the remaining AMAs.[71] In the High Court Clifford J disagreed with the Chief Executive that the possible future effect of an interim AMA being considered for approval at the same time as another interim AMA was being considered for approval could possibly beconsidered to be a "previous aquaculture activity".55 Clifford J pointed out that the emphasis in the definition in s 40(g) was on the actual activity of marine farming andthat it was the cumulative effect "on fishing" of "previous aquaculture activities" thatwas to be assessed.[72] Clifford J, however, continued:[152] Having said that, I have no difficulty in concluding that the Chief Executive was right to consider the possible adverse effects of all of the interim AMAs when making his decision about each of them. In my view, it would simply be unrealistic not to do so. The purpose of an aquaculture decision is to assess adverse effect. When a number of interim AMAs are under consideration at the same time, it simply would not make sense to make decisions about each of them in isolation from the decisions to bemade about the others of them. Some overview of the "overall" adverseeffect is sensibly required.[73] Clifford J recognised that there was no direct statutory guidance on just howthe Chief Executive was to make that overview of the "overall" adverse effect andthat the issue had caused difficulty, but considered that the answer was provided by the simple statutory presumption that the singular includes the plural.56[74] Clifford J concluded on this aspect of the issue:[155] What, in effect, s 40 requires is that first the Chief Executive properly assess the adverse effect of each interim AMA, and therefore theiroverall cumulative adverse effect. By reference then to the available "head room" that his assessment of the adverse effect of previous aquacultureactivities has indicated is available, he then needs to assess the extent to which reservations or determinations are to be made, and how those reservations and determinations should be made across the interim AMAs in question.55 High Court interim judgment, above n 3, at [151].56 High Court interim judgment, above n 3, at [153]–[154]; and Interpretation Act, s 33.[75] On appeal Sanford challenged Clifford J's interpretation of s 40(g) on thisaspect of the issue. Mr Scott submitted that the plain meaning of the provision precluded the approach adopted by the Judge.[76] The Chief Executive supported the High Court decision on the ground thatSanford's approach would produce absurdities inconsistent with the purposes of the statutory test.[77] On this aspect of the issue we agree with Clifford J that the Chief Executive did not err in respect of his interpretation of s 40(g). The statutory provision would be unworkable if, when faced with a number of applications for approval of interim AMAs, the Chief Executive was required to consider each one without regard for the existence of the others. Parliament would not have intended the provision to be interpreted in that way.[78] On the second aspect of this issue, Clifford J held that s 40(g) involved a factual assessment of the adverse effect of aquaculture activities that had already occurred and that the Chief Executive might properly conclude on the basis of relevant information and his expert assessment that previously approved, but not commenced, aquaculture activities had no realistic possibility of causing an adverse effect on fishing. Clifford J said:57[157] Aquaculture activities involve the actual activity of marine farming, including the occupation of a coastal marine area. Therefore, when s 40(g)requires the Chief Executive to assess the adverse effect of "previous aquaculture activities", he has been directed towards an assessment of theadverse effect of such aquaculture activities as have already occurred.[158] I am therefore of the view that the essentially factual assessment involved in an aquaculture decision needs to take account of the actual extent of previous aquaculture activities, and not simply the extent to which such activities may have been approved. Where, for example, certain aquaculture activities have not commenced, notwithstanding they have been approved for many years, then – based on relevant information and his expert assessment of that – the Chief Executive may properly conclude that those approved aquaculture activities have not had, and have no realistic possibility of causing, an adverse effect on fishing.57 See also at [151].[79] On appeal Challenger and the Chief Executive advanced a different approach to s 40(g). Mr Stallard and Mr McCarthy submitted that as an aquaculture activity could take place at any time within the bounds of the coastal permit it was artificial to restrict the matters considered under s 40(g) to an activity actually taking place.58The reference to "previous aquaculture activities" should be read as "previouslyauthorised, permitted or approved activities".59 Knowing that consent had been granted for a proposed marine farm, the Chief Executive could not ignore the likelihood of the farm becoming operational at some stage in the future. To make an aquaculture decision without recognising that likelihood would be impudent and could have severe consequences on the fishery.[80] Sanford, Golden Bay and Marlborough supported the High Court decision on this issue.[81] For the following reasons, we agree with Clifford J that the Chief Executive did err in respect of his interpretation of s 40(g).[82] First, the meaning of the phrase "previous aquaculture activities" should reflect the ordinary meaning of "previous" and the definitions of "aquaculture activities" and "occupy" in s 2(1) of the RMA:60aquaculture activities—(a) means any activity described in section 12 done for the purpose of the breeding, hatching, cultivating, rearing, or ongrowing of fish, aquatic life, or seaweed for harvest if the breeding, hatching, cultivating, rearing, or ongrowing involves the occupation of a coastal marine area ...occupy means the activity of occupying any part of the coastal marine area—(a) where the occupation is reasonably necessary for another activity; and58 A coastal permit for aquaculture activities generally lapsed after three years if it had not beengiven effect to: RMA, s 125. The consent authority may prescribe a different lapse period in thecoastal permit.59 The Chief Executive suggested "previously approved", while Challenger suggested "previouslyauthorised or permitted".60 See also High Court interim judgment, above n 3, at [67].(b) where it is to the exclusion of all or any class of persons who are not expressly allowed to occupy that part of the coastal marine area by a rule in a regional coastal plan and in any relevant proposed regional coastal plan or by a resource consent; and(c) for a period of time and in a way that, but for a rule in the regional coastal plan and in any relevant proposed regional coastal plan or the holding of a resource consent under this Act, a lease or licence to occupy that part of the coastal marine area would be necessary to give effect to the exclusion of other persons, whether in a physical or legal sense[83] Second, there is no legal or practical reason to read the extra words –"previously authorised, permitted or approved" – into s 40(g). The fact that, as Mr Stallard pointed out, Parliament in 2011 amended s 186GB of the Fisheries Act 1996 to include similar words does not support the suggestion. On the contrary, the fact that Parliament did not take the opportunity to amend s 40(g) following the High Court decision in this case serves to reinforce the view that it did not intend the extra words to be read in to the provision.[84] There is no practical reason to read the extra words into s 40(g) when, as Clifford J accepted, the Chief Executive was required to make an essentially factual assessment. It is only if the Chief Executive properly concludes on the basis of the relevant evidence and his expert assessment that a previously approved butunimplemented aquaculture activity had "no realistic possibility" of causing anadverse effect on fishing that it should be disregarded.[85] The concerns expressed by Challenger and the Chief Executive were therefore in our view unfounded.[86] Accordingly, we answer Issue (5)(a) "Yes" and Issue (5)(b) "No".Issue (6) – When making a decision with respect to multiple interim AMAs, was it lawful to rank the interim AMAs?[87] The approach of the Chief Executive was to make aquaculture decisions as regards interim AMAs on the basis that maximised the area available for marinefarming. In other words, those areas that had the lowest density of measured scallop catch were approved first.[88] In the High Court Clifford J rejected the submission for Sanford that the Chief Executive's approach was unlawful because s 40 required each interim AMA to be assessed individually and that available headroom should have been allocated"pro rata".61 The Judge's reasons for doing so were:[168] In terms of the overall scheme of the legislation, I have no difficulty in concluding that the approach taken by the Chief Executive was a lawful one, albeit that here the Scallop Model did not provide a rational basis for the specific decision made. In the absence of any specific provision requiring interim AMAs either to be approved simply on the basis of the order in which an aquaculture decision is requested by a relevant authority, or on a pro rata basis, I consider it unnecessary to impose such a restriction. As I have said, I think s 40 did call here for an overall assessment of the interim AMAs as a whole. Having made that assessment, and if the information allows him to do so rationally, it is open for the Chief Executive to make determinations on the basis of maximising available space for aquaculture activities. In terms of s 8(1) of the Fisheries Act 1996, the overall purpose of that Act is to provide for the utilisation of fishing resources while ensuring sustainability. Where, in making an aquaculture decision, the Chief Executive identifies that there is available headroom before an undue adverse effect will be caused, allocating that headroom in a way which maximises available space for aquaculture activity is, in my view, consistent with providing for the utilisation of fishing resources where, as here, to do so does not raise issues of sustainability.[89] On appeal Mr Scott for Sanford reiterated his submission that the Chief Executive's ranking decision was unlawful and that a pro-rating method should be adopted. He proposed the following "simple but elegant solution":(a) assess each of the interim AMAs in terms of s 40(a)–40(f); that is, assess the effect on resource sustainability and fishing of each interim AMA in its own right and on a stand alone basis;(b) assess the cumulative effects of previous aquaculture activities in terms of s 40(g) to see what headroom was available, the difference between those cumulative effects and the point where adverse effects become undue; and61 High Court interim judgment, above n 3, at [167]–[171].(c) aggregate together all interim AMAs that qualify and pro-rate headroom over those interim AMAs.[90] All the parties other than Sanford supported the High Court decision on this issue.62[91] We are able to deal with this issue shortly for three reasons. First, we agreewith Clifford J's reasons for concluding that ranking of interim AMAs was not unlawful. It was in our view open to the Chief Executive to proceed as he did when considering more than one interim AMA relating to the same area at the same time. Again, the legislation should be interpreted in a realistic and practical way to make it work.[92] Second, as Mr McCarthy pointed out, the fact that Sanford has proposed a different method for resolving the issue, based on pro-rating headroom, does not mean that the ranking approach taken by the Chief Executive was unlawful. As Mr McCarthy acknowledged, pro-rating may be appropriate where there is no clear basis for distinguishing between the effects of a number of the interim AMAs.[93] Third, as Clifford J recognised,63 whether the Chief Executive should adopt a ranking or pro-rating approach to allocation when he comes to remake his decision in this case will be a matter for him to determine in the first instance on the basis of the relevant statutory provisions, the guidance in this judgment and the information available to him at that time.[94] Accordingly, we answer Issue (6) "Yes".Result[95] For the reasons we have given for upholding the decisions of Clifford J on each of the issues of interpretation before us, the appeals are all dismissed.62 High Court interim judgment, above n 3, at [167].63 At [169]–[171].[96] As all the parties have been unsuccessful on one or more of the issues, costs should lie where they fall.Solicitors:DLA Phillips Fox, Auckland for SMW Consortium (Golden Bay) LimitedStallard Law, Nelson for Challenger Scallop Enhancement Company LimitedChapman Tripp, Wellington for Sanford LimitedCrown Law Office, Wellington for Chief Executive of the Ministry of FisheriesFletcher Vautier Moore, Nelson for Tasman District CouncilWisheart Macnab & Partners, Blenheim for Marlborough Aquaculture LimitedMcFadden McMeeken Phillips, Nelson for Golden Bay Marine Farmers Consortium Limited