Introduction

Early on October 5 2011 the MV Rena – a Liberian-flagged, Greek-owned, 235-metre container vessel – struck the Astrolabe Reef off the cost of Tauranga, a port on the North Island of New Zealand. It was carrying around 1,400 containers at the time of grounding and approximately 1,700 tonnes of oil. It was reported that more than 350 tonnes of oil escaped from the vessel and around 350 containers were lost overboard. Salvors worked to remove the remaining oil on board before turning to recover containers. In January 2012 the vessel broke in two following bad weather. The stern section sunk, while the bow section remained wedged on the reef. Salvage work is ongoing, with a team continuing container recovery and another removing the bow section. The stern section remains on the sea floor and it is yet to be decided whether it will remain there or be removed. On May 25 2012 the master and second officer of the Rena were each sentenced to seven months' imprisonment after pleading guilty to charges laid under the Resource Management Act 1991 – New Zealand's environmental protection statute – and to charges of wilfully attempting to pervert the course of justice by altering the ship's documents (for further details please see "Charges laid in relation to MV Rena grounding").

Owner sentenced

The owner of the Rena, Daina Shipping Company (a subsidiary of Greek-based Costamere Inc), was also charged under the Resource Management Act for discharging harmful substances into water from a ship. The maximum penalty for a corporation committing this offence is NZ$600,000 plus up to NZ$10,000 for every day that the offence continues. Under the act, the court can, upon sentencing, also make enforcement orders that require the offender to do what is necessary to remedy or mitigate any actual or likely adverse effect on the environment or to reimburse any other person for costs spent on avoiding, remedying or mitigating any adverse effect on the environment. The court may also impose a sentence of reparation if an offender has caused a person to suffer loss of or damage to property.

Daina Shipping Company pleaded guilty and was sentenced on October 26 2012 at the Tauranga District Court. The court imposed a NZ$300,000 fine. This is the largest fine handed down in New Zealand for this type of offence, which is unsurprising, as the minister for the environment considered the Rena grounding New Zealand's worst maritime environmental disaster. It is interesting that the fine was not closer to the maximum available, and that no reparation or enforcement orders were made.

Fine less than maximum

In the notes on sentencing, the judge recorded that this was not an offence that was caused deliberately, finding that the actual cause of the Rena's collision with the reef was the result of poor navigational skills of the captain and second mate and a rush on their part to reach Tauranga. The notes record that at no point "has there been any suggestion that the present defendant had put any pressure of time, or of operational requirements, on those persons actually responsible for the ship running aground, and that needs to be borne in mind". While the judge considered the offence serious in terms of the environmental effect, in considering an appropriate sentence, he had to "leave room for those cases where there had been deliberateness, recklessness and/or a high level of carelessness by the person being sentenced". On this basis, the judge began with a starting point of NZ$450,000 before reducing the fine for:

• remorse;
• lack of profit realised as a result of the offence;
• absence of previous convictions;
• significant mitigating steps taken by the defendant; and
• the guilty plea.

Taking into account these mitigating factors, the judge reached a sentence of NZ$300,000. The judge noted that the court could impose additional penalties for a continuing offence, but these were not sought by the prosecution. The judge considered that this was for good reason, as the steps taken by Daina Shipping in response to the collision had met all of the objectives that any such continuing fine would meet, and it was important to recognise the value of cooperation and goodwill in resolving issues between the parties.

No reparation or enforcement orders made

There is no direct comment in the sentencing notes on why no reparation or enforcement orders were made.

It is clear that the judge was aware of the arrangements that had been entered into between the crown and the owner. The civil liability of ship owners and others for damage caused by a bunker oil spill is governed by the Maritime Transport Act 1994, with liability limited in this circumstance to approximately NZ$11.3 million. It was recorded in the sentencing notes that the owner and its insurer had reached an agreement where they would pay NZ$27.6 million to the crown (or NZ$38 million if a resource consent is granted for part of the vessel to remain on the reef). Although, as the judge recorded, the compensation payment significantly exceeded Daina Shipping's civil liability under the Maritime Transport Act and international conventions, the sentencing notes also record that the total cost to the crown as a result of the grounding up to the date of sentencing was approximately NZ$47 million. The sentencing notes record that salvors were immediately engaged after the grounding and Daina Shipping, through its insurer, had made payments for salvage and clean-up which are ongoing. Up to the sentencing date, the defendant's insurer had paid more than NZ$235 million towards salvage and clean-up and was, the judge found, committed to making further payments.

The judge noted that reparation was not "in issue", indicating that it was not raised by Maritime New Zealand, the regulating body with the authority to prosecute this type of offence. While it is not set out explicitly in the sentencing notes, it appears that because of the agreement and payments already made, Maritime New Zealand did not seek reparation orders. As far as Maritime New Zealand was concerned, reparation had been dealt with between the crown and Daina Shipping. The judge was statutorily required to take into account any agreement between the offender and the victim when sentencing the offender. No reparation was sought for any other affected party that may have suffered loss or damage to property or any consequential loss or damage. Reportedly, at least 100 businesses and two Maori iwi(tribal groups) are considering bringing claims for losses arising from the grounding. No consideration was given in the sentencing as to whether these entities should receive any reparation.

At the end of the sentencing notes, the judge recorded that Maritime New Zealand sought no other orders that are available in the Environment Court, such as enforcement orders. As set out above, these are wide orders allowing the court to order the offender to do or pay for things that are necessary to remedy or mitigate adverse effects on the environment. There is no explicit monetary limit to what the offender could be ordered to pay; however, in sentencing, New Zealand judges are required to consider whether the total sentence is appropriate to the offence and the offender. While the judge in this case noted that Daina Shipping and its insurer are committed to further payments for salvage, Maritime New Zealand could have sought an enforcement order confirming what was required of the defendant in terms of the salvage. Once again, it appears that Maritime New Zealand did not require this to form part of the sentencing order on the basis of the cooperation shown by Daina Shipping and its insurer.

Comment

While the New Zealand courts can make a variety of sentencing orders when sentencing under the environmental protection statute, in this case, Maritime New Zealand and the court took into account the degree of cooperation by the ship owner and its insurer in determining an appropriate sentence. This influenced not only the amount of the fine to which the owner was sentenced, but also whether any other available orders were sought or made.