Rena Submission by Pāpāmoa Beach Holiday Park (23 September 2015)
My name is Nevan Lancaster and I am here to present a submission on behalf of Bruce Crosby and his business Pāpāmoa Beach Holiday Park. Bruce cannot be here today as he is overseas. Bruce and I have worked closely together in the last 4 years while representing 53 business's in the Business Action Group – Rena incorporated (now disbanded). I was chairman of the group and Bruce was deputy. Last year almost 3 years after the grounding, settlement was reached which I am legally obligated to say was “satisfactory”.
Pāpāmoa Beach Holiday Park was “Ground Zero” for the Rena oil spill. All those pictures of Black Sand, oily sludge and beaches covered in oil were directly in front of the Holiday park and as such had a massive negative effect on the business, staff and customers not to mention Bruce and his Family. It has taken 4 years and a massive investment to return to pre Rena levels of revenue for the Holiday Park.
Despite being the most affected mainland location Bruce was not visited nor had any apology of any kind from the owners, insurers or their representatives until he went to a Public meeting in February 2013 and confronted John Owen directly. Even then it was only a week later that John Owen gave a direct apology to private meeting of 50 business owners. A meeting that they had tried to avoid for more than 18 months.
Bruce feels that given the fact that none of the promises and predictions of the Owners and Insurers in the last 4 years have ever being born out by actual events – the most egregious one being a promise that the Bow Section was on the reef so firmly that it could never move. That if the insurers are able to abandon the wreck future weather events will see more debris and rubbish being washed ashore. We have had in the last 4 years several assurances that the Rena effects are over in relation to the wreck only to have another storm and another release of debris. These storms are regular events and not freak occurrences as has being put out by the insurers. Being directly in front of the Otaiti – Astrolabe reef his business will again be affected negatively by these events when they happen.
Whats worse is that due to the settlement achieved between businesses and the insurers in 2014 there will be no financial recourse in case this happens. What's more, the insult to the people of the Bay of Plenty for Costamare and Swedish Club to lodge this consent application using the name “Astrolabe Community Trust”. A trust of this nature is supposed to benefit the community NOT leave their mess and poisons in our backyard while they scuttle back to their end of the world to count up the money they saved by not cleaning up their mess. To have 2 directors of this trust being the very lawyers that fought tooth and nail to pay no compensation to the affected business business people of the area shows what the intention of this Trust will be. Clause 4 of the Trust document, Purposes of the Trust, states that they can do all sorts of wonderful things for the area if they so wish. SO why don't they just clean up all the wreckage now and just be done with it.
The Full Wreck Removal Feasibility Appraisal demonstrates that it is entirely possible to remove the entire wreck. It is potentially hazardous, technically difficult and cost approx $400million (probably cheaper given the evidence of Capt de Jong) but so was the Costa Concordia. But, that is why they have insurance and why the insurers made a full undertaking to pay all the costs associated with the Rena in October 2011.
Failure to force full removal of the wreck will also contribute to the “Moral Hazard” which is an economic term defined as " A lack of incentive to guard against risk where one is protected from its consequences". The story of the Rena is a perfect example of that, globally ship owners in an effort to save money (as identified by a report from the International Club published in 2012) were instructing ships to take shorter routes and do what they could to save money (cutting corners was the reason the Rena grounded see the MNZ report). The problem globally is that by not making the shipping industry bear the full cost of their mistakes because of limitation treaties and not making them clean or pay for the consequences of their failures we ensure that similar mistakes will happen again in the future. Therefore given the massive threat to the environment that ship accidents tend to have we should be doing everything in our power to ensure that the shipping industry is fully aware that they will face the full costs of all future accidents. Only then will they take steps to improve navigation systems and ship safety and therefore mitigate against more accidents thus ensuring our environment is better protected. As can be seen by the Financial Reports published by Costamare the Rena had no effect (despite what has being said by Justice Allen in his Judgement in 2012) on the financial situation of Costamare. In fact I can show that the payment of $12mill to Costamare only 7 days after the grounding was extremely beneficial to Costamare. This is demonstrated by their own publicly available financial reports. Moral Hazard is an extremely important economic concept that relates to insurance and has being part of public policy formulation since the 1700's. But it is becoming even more relevant with issues of pollution, environmental degradation and public safety.
I would also like to take this opportunity to answer some questions that the panel have asked of the applicants witnesses which they have not being able or willing to answer.
The first being – Did any businesses go bankrupt due to the grounding? Yes business did stop trading, change owners or have to change activities due to the grounding. In the case of the Dolphin watch business's Dolphin Seafari's was sold this was because the owner had brought a new boat and then when the Rena ran aground he had massively reduced income for the summer which forced him to sell the business and get a regular job to cover debts. Mark Tucker was going to launch his new business that summer and never did and Graham Butler stopped trading and retired. Numerous other business (about 1/3rd) were sold or stopped trading without bankruptcy and though the Rena was probably not the sole reason for the problems facing these businesses it was in many cases a major contributing factor.
Much has being made by the applicants of the cost of removal. I feel that we should keep costs in perspective. The Global shipping industry is a $400 billion per year industry. The cost of removing the wreck is estimated at $400million in other words less than 0.1% of Global shipping revenues. Put simply that cost though large to the lay person is not a massive cost to global shipping and should be looked at in respect. Also much was made by John Owen of the fact that they feel they have done enough. Should the insurers in Christchurch also be allowed to stop rebuilding when they feel they have done enough? Maybe next time you crash your car maybe the insurers can stop fixing it when they feel they have done enough? Yes John points out that they have done more than other ship owners globally in past but to be honest that is an extremely low bar and it is now 2015 not 1915.
Times change and the response to shipwrecks and the environment must change as well. Also given leaving the wreck would save the insurers an estimated $300million plus we would in effect be rewarding them for delay and procrastination as well as leaving 8000 tonnes of junk on the reef. This is not something that should be encouraged. Not to mention the compensation to the community is a tiny fraction of the cost saving to the insurer if they are successful with the application. Given the massive delays and dirty tactics employed by the insurers to minimize the compensation paid to businesses many of whom suffered severe financial and emotional hardship I don't feel that we should place much faith in the goodwill of the insurers who have since the beginning of this process in October 2011 only being interested in minimizing their costs as local business owners can attest to.
John Owen also stated that they had paid all costs associated with the grounding which is incorrect.
The Govt costs associated with the clean up have being in excess of $50million. The insurers made a payment to the Govt of only $27million leaving a huge shortfall. The losses to the local economy were much greater than that and the insurers have hidden behind the badly written legislation that works on principles dating back to the 1800's to justify not paying the full costs of the grounding to the local community and business. I would like to also bring up the occasion where John Owen in the meeting with business owners promised to fairly settle all claims in an effective and efficient way. John also assured us that his was the final word and he was perfectly happy to go through this process. Bruce and myself met with John the next day to work out a plan to do so and we sorted out a framework that was to finalized the next week at a meeting with their legal team. Bruce and I drove to Auckland and meet with our Legal team including Bruce Davidson QC who flew up from Christchurch for our meeting at which we were informed that we were fraudsters and con artists who were just trying to take advantage of the insurers and that we should just suffer and go bust. John was in attendance for the whole meeting sat and said nothing. In fact he was relegated to the corner. He later when I meet him and Konstaninos in Athens,Greece said it was "unfortunate".
Also the QC for the applicant has stated that their would be no economic benefit to the NZ if they were made to remove the wreck. However in Oct 2012 they were issuing press releases saying that the local economy had benefited from the work done on the wreck and though Bruce and Myself represented many businesses that lost money we both know many local businesses that benefited.
The direct spend in the local economy was about 30% of the salvage spend according to their press statement in 2012 so I am wondering why they believe that we would be better off by getting a tiny payoff of $3.6 Million rather than a local economy spend of $100million plus.
I thank you for your time and am happy to answer any questions you may have.
Ends.
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