Fischer and Anor and Australian Fisheries Management Authority
[2005] AATA 936
•27 September 2005
|
DECISION AND REASONS FOR DECISION [2005] AATA 936
ADMINISTRATIVE APPEALS TRIBUNAL )
)V2004/1211
| GENERAL ADMINISTRATIVE DIVISION | ) | ||
| Re | HORST FISCHER | ||
Applicant
| And | AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY |
Respondent
V2004/1205
| Re | GRAHAM TAPLEY |
Applicant
| And | AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY |
Respondent
DECISION
| Tribunal | Justice Downes, President |
Date27 September 2005
PlaceMelbourne
| Decision | The decisions under review are affirmed. |
.............[sgd].................
President
CATCHWORDS
Primary industry – Fisheries – Southern Shark Fishery - Fishing quota allocation policy – relative economic position –catch history - permit value – gummy and school shark – transferability of fishing permits – “under the table” transfers - Gillnet Hook and Trap Fishery – Southern Shark Fishery – utility – depletion of fishing stocks
The Commonwealth of Australia Constitution s 51(xxxi)
Fisheries Management Act 1991(Cth) ss 3, 4(1), 17, 22, 32, 95(1), and 165
Australian Fisheries Management Authority v Graham (2003) 73 ALD 525
Bienke v Minister for Primary Industries and Energy (1996) 63 FCR 567
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Fischer v Australian Fisheries Management Authority (2002) 71 ALD 665
Minister for Primary Industry and Energy v Davey and Fitti (1993) 47 FCR 151
P.W. Adams Pty Ltd v Australian Fisheries Management Authority (1998) ALD 68
Skoljarev v Australian Fisheries Management Authority (1995) 39 ALD 517
Spencer v The Commonwealth (1907) 5 CLR 418
REASONS FOR DECISION
| Justice Downes, President |
Fishery Regulation in Australia
The Issues
The Introduction of Regulation – Input Controls
The New Regime – Output Controls
Successful Challenges to Allocations
A second attempt
The nature of these proceedings
The Applicants are seeking comprehensive reconsideration of complex and detailed issues which theoretically can have no utility
The 2004 Quota Allocation
The matters that need to be addressed
The importance of relative economic position
The importance of market value
Analysis of the issues
The preferable method for determining quota
Constraints on my decision-making freedom
Transferability under input controls
The buy-back scheme
The Approach of the Lockhart Report
The arguments of Mr Bolding
Other Arguments of the parties
Total allowable catch
The AFMA evidence
The contrary evidence
The preferable decision relating to total allowable catch
Conclusion
Fishery Regulation in Australia
Fishing in the waters surrounding Australia is regulated by both Commonwealth and State instrumentalities. The Commonwealth instrumentality is the Australian Fisheries Management Authority. Different fisheries are identified. One fishery is now called the Gillnet Hook and Trap Fishery. Through Commonwealth and State cooperation this fishery is managed by AFMA. The fishery was formed by a merger of the Southern Shark Fishery and the South East Non-Trawl Fishery. The major species harvested in the fishery include gummy shark (Mustelus antarcticus) and school shark (Galeorhinus galeus). This case concerns quota allocations for those species.
Fishing regulation is a developing practice. Initially those engaged in the fishing industry were simply required to hold a Commonwealth Fishing Boat Licence. Prior to 1988 that licence entitled operators to use gillnets to fish for both shark and scale fish. Pursuant to a management plan introduced in 1988 the Southern Shark Fishery was established. This was followed by the establishment of the South East Non-Trawl Fishery in 1994. Control was exercised by restrictions on the equipment that could be used. Such controls are called input controls. Eventually quotas for the amount of fish that could be taken were introduced. These controls are called output controls.
The Issues
In these proceedings, which take the form of challenges to quota allocations for 2004, I must consider:
· Whether and to what extent I have power to determine:
o The total allowable catch
o The method of allocating quota
· If I do have the power, what are the appropriate determinations?
A summary of my findings appears in the last paragraph of these reasons.
The Introduction of Regulation – Input Controls
The input controls in the Southern Shark Fishery were determined from catch history in a five year period between 1979 and 1984. Operators with a catch history of 45 tonnes or more in three out of the five years were accorded Category A endorsement. They were entitled to use six net units. The endorsement was described as A6. Each net unit originally entitled the operator to use 600 metres of net. Operators not qualifying for A6 endorsements were entitled to between two and five net units. These endorsements were called B2 to B5.
Operators with A6 endorsements were encouraged to acquire an additional A6 endorsement and amalgamate the two. They were required to forfeit two net units. The resulting endorsement was described as A10. Over time, as a response to stock concerns, A10 operators were reduced to 7 net units, A6 operators to 4 net units and B5 and B4 operators to 3 net units. As a result of perceived inequities in these changes, the original net units were restored but each net unit was reduced from 600 metres to 420 metres. At all times B2 and B3 entitlements remained unchanged.
In 1992 permits replaced licences as a result of the enactment of the Fisheries Management Act 1991 (Cth). Hook permits to fish for shark in the Southern Shark Fishery were introduced in January 1994. The operators that qualified were those who held a Commonwealth Fishing Boat Licence during the years 1986, 1987 and 1988, and had taken average annual catches of two tonnes of school or gummy shark in the best two of those years. They were also required to have some catch history of school or gummy shark during 1990 or 1991. Those granted access with a catch history of more than 30 tonnes of shark in any two of the years 1986, 1987 and 1988 were granted a 2000 hook permit. All others granted access were limited to a 1000 hook permit.
All the permits were stamped “non transferable”. However, some transfers were permitted. These included family transfers and certain compassionate transfers. Condition 18 of Schedule 4 to Mr Fischer’s Permit number 300177A for the year 1996-1997 states:
“This fishing permit is not transferable except by application on the approved forms to AFMA
- subject to AFMA approval, this Fishing Permit may only be transferred to the spouse or a natural or adoptive grandparent, parent, sibling, child or grandchild of the Fishing Permit holder or of the Fishing Permit holder’s spouse.”
The New Regime – Output Controls
Over a period of about five years AFMA began taking steps towards converting the Southern Shark Fishery from input controls to output controls. As the system was ultimately adopted it provided for operators to be assigned individual transferable quotas from a total allowable catch. Quotas were to be freely transferable.
AFMA determined a total allowable catch and established the Southern Shark Allocation Advisory Panel, including retired Federal Court Justice Jenkinson, to advise on the most appropriate formula to allocate the total allowable catch. The Jenkinson Panel Report was delivered on 15 July 1999. It recommended that the total allowable catch be allocated in accordance with each operator’s best three years of verified catch history from January 1994 to December 1997. AFMA accepted the recommendation. A detailed and intensive process of catch history verification was undertaken. This and other factors delayed the introduction of the new system. In late 2000 the new system was put into effect and AFMA made quota allocations in accordance with the Jenkinson Report for the year beginning 1 January 2001.
Successful Challenges to Allocations
Horst Fischer, one of the applicants before me, and Rodger Graham applied to have the decision relating to the allocation of quota reviewed in this Tribunal. The ground was broadly that the decision based on the Jenkinson Report drew exclusively on the extent to which each permit was utilized and gave no independent weight to the permit itself or the entitlement to fish as such. An operator who had not made use of its permit would not be entitled to any quota. On 27 September 2002 the Tribunal (SM Handley and Mr Ermert) upheld this ground. It remitted the application for reconsideration. This was roughly three-quarters of the way through the following permit year. AFMA appealed to the Federal Court. On 24 March 2003 Ryan J dismissed the appeal. This was after both the year under review and the next permit year had expired and part way through the following permit year.
A second attempt
AFMA established the Independent Allocation Review Panel comprising retired Federal Court Justice Lockhart and Mr David Purcell, an economist, to advise on the most appropriate formula to allocate the total allowable catch. They were asked to take into account the decision of the Tribunal and the judgment of the Federal Court. The Lockhart Panel Report was delivered on 4 September 2003. It recommended a quota allocation based both on entitlement to fish and on catch history. It converted to tonnage a permit value derived from a scheme under which AFMA paid operators who volunteered to surrender their permits. The proportion of total quota allocated on this basis represented approximately 17% of the total allowable catch. Permit holders in each class received the same quota allocation as other permit holders in the same class. The balance of the total allowable catch was divided between permit holders in accordance with catch history.
The nature of these proceedings
The applicants Horst Fischer and Graham Tapley applied to have the decisions relating to the allocation of quota to them reviewed in this Tribunal. Their ground is broadly that the decision should have allocated quota wholly by reference to the permit itself, taking no account of catch history, or should have placed much less emphasis on catch history.
The application was heard in May and June 2005. The hearing was partly delayed because of an effort on the part of the Tribunal to ensure that, if possible, this second hearing relating to quota allocation in what had become the Gillnet Hook and Trap Fishery should achieve finality. As part of this process other interested persons were invited to apply to be added as parties. As a result a number of persons were added as parties:
John Barrett
Brian Bolding
Rodney & Bronwyn Casement
John Doran
Trevor Gilmore
Owen and Christine Grassby
Neil Hosking
Labros and Aphrodite Kavadas
Opal Star Fisheries Pty Ltd
T and V Parissos and Theo Parissos Family Trust
Peter and Meredith Riseley
Vicki Smith
Kyriakos Toumazos
Ellinas and Zoe Toumazos and Southern Sea Eagles Pty Ltd
Maris Zalups
In separate proceedings Arno Blank and Rodney Friend sought review of the decisions relating to the allocation of quota to them for 2004. Part of their challenge was that the method of determining the total allowable catch was infected with irrationality or unreasonableness and was void. They also supported the case of Messrs Fischer and Tapley and raised an independent argument that the formula applied by AFMA to determine quota allocation failed adequately to address the economic efficiency objective which it was bound to pursue and did not adequately address differential economic impacts as its own policy required it to do. They also were added as parties to the Fischer and Tapley proceedings.
At the hearing the applicants, Fischer and Tapley, as well as Mr Hosking, were represented by Mr R Niall. Mr and Mrs Casement and Mr Doran were represented by Mr M Scarfo and Mr G Casement. Messrs Barrett, Bolding, Grassby and Kavadas formed a group for whom Mr Bolding was largely an advocate. He questioned witnesses and made submissions. Messrs Riseley, Toumazos and Zalups, as well as others, were also present for at least part of the hearing. Mr Gilmore gave evidence by telephone. Messrs Blank and Friend were represented by Dr C O’Connor. Ms D Mortimer SC and Ms R Doyle appeared for AFMA. Not all the parties were present for the whole hearing although they all had the opportunity to be present whenever the hearing was proceeding, if they wished.
All the applications before me are brought pursuant to s 165 of the Fisheries Management Act.That section permits persons affected by relevant decisions to apply to AFMA to reconsider the decision and, if dissatisfied with the reconsideration, to appeal to the Tribunal.
The precise decisions which are challenged in these proceedings are the decisions to allocate particular maximum quotas of shark, endorsed on the applicants’ permits to fish in the Gillnet Hook and Trap Fishery, for the year 1 January 2004 to 31 December 2004. The actual quotas for Mr Fischer were 17,072 units of gummy shark and 2,893 units of school shark. In 2001 he had been allocated 14,350 units of gummy shark and 2,211 units of school shark. The actual quotas for Mr Tapley were 4,913 units of gummy shark and 1,016 units of school shark. In 2001 he had been allocated 1,269 units of gummy shark and 267 units of school shark.
The measure of each permit holder’s quota is described in units. Units are used to allow for annual adjustments in the total allowable catch without affecting relativity. For example, if 1 unit equals 1 tonne and the total allowable catch is subsequently halved, then 1 unit will equal half a tonne.
The Applicants are seeking comprehensive reconsideration of complex and detailed issues which theoretically can have no utility
The Administrative Appeals Tribunal is not a court. It does not exercise the judicial power of the Commonwealth. It is part of the executive arm of Government. It makes administrative decisions. The jurisdiction under which the Tribunal makes administrative decisions is entirely controlled by statute. Unless it is given power by a statute, or delegated legislation, to reconsider an administrative decision of the executive arm of government it has no power to take any action.
The hearing of this matter commenced nearly 6 months after the expiry of the period to which the licences under review relate. One would ordinarily expect that such an application for review might be dismissed because no purpose could be served by reviewing the decision. It is not as though the Tribunal has any power to award compensation.
The delay in the hearing was substantially caused by the extent of the issues being raised. This is not a case in which Messrs Fischer and Tapley say that some error or mistake was made in calculating their entitlement or some circumstance peculiar to them was overlooked. They seek to challenge the whole basis upon which the quota was allocated. Messrs Blank and Friend go further. They seek to challenge the basis upon which the total allowable catch was calculated. In their own applications, they also challenge the quota allocated to them on the basis of circumstances particular to themselves. However, those applications have not even been heard while the Tribunal deals with the larger issues.
The Tribunal has accordingly heard evidence about the biomass of gummy shark and school shark in the southern oceans. There has been evidence about whether the stock of school sharks in the waters off Australia and New Zealand are genetically different and the extent to which the two populations migrate across the Tasman. There has been evidence about whether there has been overfishing and the extent to which fish stocks have been reduced in recent times. There has been evidence about whether there was a market for permits in the old Southern Shark Fishery notwithstanding the fact that permits were marked “non transferable” and, if there was, what was the value of the permits. There has been evidence as to how, in any event, a permit should be “valued” when the purpose of the exercise is to determine what quota allocation should be made to operators. All this is in an application by two operators challenging the individual allocation of quota to each of them.
This is the second time the Tribunal had dealt with these issues. The first attempt resulted in an appeal to the Federal Court. That process did not determine upon a quota. It resulted in the matter being remitted to AFMA for reconsideration. That reconsideration is now under challenge, albeit for the 2004 licence year. Accordingly, issues affecting up to 7 full years potentially remain unresolved. The year 2001 was the subject of the first appeals. The years 2002 and 2003 were interim years which no doubt did not spawn any appeal because the 2001 dispute had not been resolved. However, the same issues arise. I am now dealing with the year 2004. I am doing so in the second half of 2005. If there is any appeal from my decision the matter will not be resolved before 2006. If that results in some requirement for reconsideration then potentially up to two more years will be required before finality is reached.
I would be surprised if the legislature intended s 165 of the Fisheries Management Act to have this effect. Nevertheless, AFMA has not sought to have these proceedings dismissed for want of utility. It recognises that nothing can be done about the actual quotas for 2004, or for that matter 2003, 2002 and 2001. I have been informed that it will act on my decision for 2006, but that, of course, is subject to any appeal. This is a proper approach for AFMA to take and one for which it deserves credit from the industry. However, the difficulties which are thrown up should not be ignored.
I propose to deal with this matter on the merit of the arguments put to me. However, I do admit to reservations as to whether what amounts to the Tribunal conducting a mini “Royal Commission” into shark fishing in the southern oceans is an appropriate way to determine applications for review of quota allocation. I do not suggest that the Tribunal is not able to undertake such a task. Undoubtedly it is. It has, or can be given, the resources to undertake the task. It has the facilities and procedures appropriate to the task. However, if it is to conduct such wide ranging enquiries it ought to be authorised directly to do so. It does not seem to be appropriate for the Tribunal to be deciding upon quota in precise units for a period now passed when the decision cannot be implemented.
As early as the landmark decision of Brennan J in Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645 it was established that the Tribunal was not bound in its decision-making by policy considerations but that it would ordinarily apply policy unless the policy is unlawful or leads to an unjust result in the case before it. Methods for determining total allowable catch and quota allocation involve policy (see P.W. Adams Pty Ltd v Australian Fisheries Management Authority (1998) ALD 68 at 77 per Branson J). The principles enunciated by Brennan J apply (see Skoljarev v Australian Fisheries Management Authority (1995) 39 ALD 517 at 522 per Davies J).
It follows that the applicants must show that the determination of the total allowable catch and the quota allocation method for 2004 was unlawful or unjust to one or more of the applicants. I expect that injustice to one applicant will not avoid intervention just because it is also unjust to other applicants in the same way.
The 2004 Quota Allocation
The scheme of the Fisheries Management Act is to prohibit fishing without “a fishing concession, or a scientific permit, that is in force authorising commercial fishing at [a] place” (subs 95(1)). “Fishing concession” includes “a fishing permit” (subs 4(1)). Subsection 32(1) authorises AFMA to grant fishing permits “authorising … the use … of an Australian boat for fishing in a specified area of the [Australian fishing zone] or a specified Fishery”. Paragraph 32(6)(a) states that a fishing permit is subject to conditions specified in the permit or prescribed. Many fisheries are now regulated through statutory fishing rights granted under s 22 of the Fisheries Management Act pursuant to plans of management determined under s 17. However, at least partly because of the outstanding issues raised in these proceedings, the Gillnet, Hook and Trap Fishery is still regulated under s 32.
On 16 December 2003 (Fischer) and 23 December 2003 (Tapley) decisions were made which resulted in the granting of permits to the applicants for 2004. These decisions were reviewed and affirmed on 29 September 2004. The permits contained conditions determining the quota for gummy shark and school shark set out above.
The Fisheries Management Act does not contain precise specifications as to the matters to be taken into account in granting fishing permits. However, s 3 includes objectives which “must be pursued … by AFMA in the performance of its functions”. They are:
“(a)implementing efficient and cost-effective Fisheries management on behalf of the Commonwealth; and
(b)ensuring that the exploitation of Fisheries resources and the carrying out of any related activities are conducted in a manner consistent with the principles of ecologically sustainable development and the exercise of the precautionary principle, in particular the need to have regard to the impact of fishing activities on non-target species and the long term sustainability of the marine environment; and
(c)maximising economic efficiency in the exploitation of Fisheries resources; and
(d)ensuring accountability to the fishing industry and to the Australian community in AFMA’s management of Fisheries resources; and
(e)achieving government targets in relation to the recovery of the costs of AFMA.”
The matters that need to be addressed
It is not in contention that there have been concerns for many years that fish stocks are being reduced by overfishing. These concerns are recognised by the objectives and particularly objective (b).
In September 1997 AFMA published Fisheries Management Paper No. 8 setting out “AFMA’s policy and a procedural framework for the allocation of fishing concessions where a decision has been taken to change management arrangements in a Fishery …”. The paper gives as an example a change from “an input to an output control (individual transferable quota) system”.
Under the heading “Allocation of Fishing Concessions” the paper contains the following:
“Establishment of well defined, divisible, secure and transferable fishing concessions are a major factor in the successful pursuit of AFMA’s ESD, economic efficiency and cost-effective management objectives. However, it is recognised that continually changing the method of allocation of fishing concessions will weaken those concessions and make effective Fisheries management difficult. Accordingly, the fishing concessions that exist in a Fishery at the time that management arrangements are proposed to change, are the ones that will be taken into account under any allocation of concessions required by the move from one management regime to another.
It should also be recognised that there will be instances where, in pursuing AFMA’s legislative objectives, it is not possible to achieve an equivalent translation of the fishing concession when changing from one management regime to another. Clearly, in these circumstances, it is not possible to design an allocation formula that will have absolutely no impact on the relative economic position of individual operators.
A body of legal case history in relation to allocation of fishing concessions has been established both in Australia and overseas which demonstrates that fishing concession allocations resulting in a significant and differential economic impact on individual operators (which cannot be balanced against Fisheries management objectives) run the risk of being successfully challenged. From a legal and Fisheries management perspective, AFMA will explicitly endeavour to minimise any adverse differential economic impacts on individual operators.
Therefore, AFMA’s approach to allocation of fishing concessions is based on the premise that, in making any management changes, AFMA will ensure that:
· such changes are consistent with and support the pursuit of AFMA’s legislative objectives; and
· any differential economic impacts of allocations on individual fishing concession holders are minimised unless there are reasons, justifiable with respect to AFMA’s legislative objectives, that dictate otherwise.”
Because of the importance it assumed in these proceedings, I note the presence, at the end of the second paragraph, of the phrase “relative economic position of individual operators” and the presence at the end of the third paragraph of the phrase “adverse differential economic impacts on individual operators”. The subject is addressed again in the last paragraph in the statement “any differential economic impacts of allocations on individual fishing concession holders are minimised …”
The importance of relative economic position
As so often happens in litigation and tribunal hearings the above words in a policy were seized upon as in some way definitive of the result which should obtain in the proceedings rather than being taken as policy guidance which should be taken into account. After all, they were simply one part of a policy statement issued eight years ago. They did not purport to be definitive. Their meaning was not expounded. Whenever they appeared they were qualified by the suggestion that the goal either could not or might not be achieved. Yet, for example, the written submissions for the applicants Fischer and Tapley used the phrase “relative economic position” at least 40 times.
The essence of the argument presented by the applicants Fischer and Tapley is as follows:
In a change from input controls to output controls:
(i)The method of quota allocation must attempt to limit the impact on the relative economic position of individual operators;
(ii)Where there is a market for permits under input controls the economic position of individual operators is the market value of the permit;
(iii)The market value of a permit subject to input controls will not be affected by the extent of its exploitation because a purchaser is not limited by the exploitation of the permit by the vendor;
(iv)Quota should be awarded in accordance with the market value of permits which will mean that all permits with the same access entitlement will be entitled to the same quota; and
(v)To award quota wholly or partly by reference to catch history or the actual exploitation of the permit does not limit impact on the relative economic position of individual operators.
There seem to me to be two major problems with this approach. First, it equates economic position with the capital or market value of a permit. Secondly, it gives overwhelming significance to the object of not affecting relative economic position.
The importance of market value
I wonder why the economic position of operators is to be measured by the market value of their permit. That might be appropriate for a trader in permits – someone whose income is earned by buying and selling permits. However, the evidence before me does not suggest that there are any, let alone many, of these. The persons holding permits have variously been called fishers or operators but not permit traders. Some people leave the industry, some enter it, but the evidence is that persons entering the industry do so to earn income from fishing rather than from selling their permits when a buyer comes along. Their economic position is just as much, or more, associated with the annual profit they make from fishing than it is with the market value of their permit.
A good deal of the evidence in the case was about whether there was a market for permits while the fishery was subject to input controls. If a market was established, so the argument went, then that was the way to determine the value of permits and ultimately to apportion quota.
If economic position equals value of permit and value of permit equals market value of permit then this may be correct. There is a wealth of learning on valuation practice that shows that where there is a homogeneous market or even something less, that the best way of valuing the subject is in accordance with its value in the market. If you want to know the market value of a publicly listed share there is no point in looking at net asset backing or profit to earnings ratios. The value of the share at any moment is the value placed upon it by the market. However, if you are looking for an underlying value as a tool for predicting market value in the future, the other indicators are important. The same is generally true of less perfect markets such as the real estate market. Valuers daily strive to find comparable sales which, by adjustment, can lead to the assessment of a market value. However, it is different with businesses or shares in private trading companies. There usually is no market which can be used to arrive at a value. Accordingly, valuers estimate by a variety of methods. These include capitalised earnings, discounted cash flows and net asset backing. Which method is used depends upon the nature of the business.
If the goal in the present case was to determine the market value of a permit in the Southern Shark Fishery prior to the introduction of quotas then the above considerations would have been critical. However, this does not seem to me to be the real question. The more important question is not what was the market value but what were the participants’ relative economic positions. The first question is what identity there is between economic position and market value. The real question is whether economic position did equal value of permit and whether value of permit did equal market value of permit and not what followed once equality had been assumed.
The applicants Fischer and Tapley relied upon two experts: Mr David Collins and Dr Julian Morison, both agricultural and resource economists with experience in the fishing industry. Neither of them has expertise in the valuation of businesses. The written and oral evidence of Mr Collins attacked the method of quota allocation based upon the Lockhart Report because it arrived at value, in part, from catch history and because, to the extent to which it might be found that economic position was to be derived both from permit value and catch history, it did not adequately apportion between the two. The bulk of Mr Collins’ later statement of 2 June 2005 addressed value. He uses the word eleven times in the first eight short paragraphs. Paragraph 5 is as follows:
“[The Lockhart Panel] appears to conclude that the value that corresponds to the expectations of future income that can be earned from using a permit is given by catch history (used as a proxy)”.
Mr Collins assumes that the object is to determine value, meaning market value, and then criticises the Lockhart Panel for using catch history to calculate value. I need no persuasion that where there are no output controls on permit holders, the permit held by someone with low catch history will have a similar value to the permit of someone with a large catch history. I do not think the Lockhart Panel contended otherwise. The purchaser of either permit can use it as much or as little as it wants. But that is not the point. The point is what relevance “value” has and, if it is relevant, whether value is to be equated with “market value”. It is not as though the result of the exercise is compulsory acquisition of permits for money. The object of the exercise is to award quota in a succeeding year to operators who were fishing in prior years.
In his statement dated 10 May 2005, Dr Morison answered a question posed for him in his instructions as to how he would “compare the relevant economic position conferred by the fishing concession between holders of A10 permits” as follows:
“A transferable permit has a value that is based on expectations about the future income that can be earned by having access to the Fishery. All permits in a Fishery that convey the same access rights will, at any one point in time, have the same value. Therefore, the relevant economic position conferred by the fishing concession between holders of A10 permits is identical”.
Again, relevant economic position is equated with value, apparently meaning market value, without any intermediate reasoning process.
Both Mr Collins and Dr Morison gave oral evidence and were cross examined. I have some difficulty with their evidence. To my mind much of it missed the point. It surprises me that neither of them examined critically what connection there is between economic position and value, particularly because the object of the process was not to arrive at a monetary value but to allocate quota. It also seems to me that the evidence of Mr Collins must be evaluated in the light of the circumstance that he made a successful submission on behalf of Mr Fischer and Mr Rodney Casement in support of allocation of quota in the South East Non-Trawl Fishery, when that fishery changed from input controls to output controls, which supported the use of catch history as the determinant.
Analysis of the issues
Although the role for the Tribunal might properly be a narrower one than usual when it is addressing policy considerations I propose to approach this matter on the usual basis of asking myself what is the correct or preferable decision. If that resolves the matter I may not need to address the difficult question of the extent to which I should reconsider policy. I note, however, that AFMA put substantial and persuasive submissions that the Tribunal should act cautiously when being asked to reconsider policy. Such an approach is required by Drake’s Case and the cases following it. Applying those principles may require the decisions under review to be affirmed. However, in the first instance, at least, I propose to look at the matter at large.
I start by reminding myself that the preferable decision will always be fair and just. I will proceed in accordance with the policy set out in the Management Paper because it sets out the policy of AFMA, because it is a published document which others, including operators, may have acted upon and because it seems to me to be fair and reasonable. However, I will also proceed on the basis that what I am doing is determining a fair quota allocation policy where one previously did not exist. I am not determining an acquisition price for permits. I will, consistently with the Management Paper, seek to minimise the effect on the relative economic position of operators. However, I will not proceed upon the basis, again, consistently with the Management Paper, that there may not be some such effect. I will not proceed upon the basis that the only differential economic impact is one associated with the market value of permits either before or after quota allocation.
Had I been asked to consider this matter without the benefit of the reports of the Jenkinson Panel and the Lockhart Panel and without the benefits of the reasons of the Tribunal’s decision in Fischer v Australian Fisheries Management Authority (2002) 71 ALD 665 or the Federal Court on appeal in Australian Fisheries Management Authority v Graham (2003) 73 ALD 525 I would have concluded that an important consideration was whether the quota system, when introduced, would allow operators to continue to utilise their permit as they had done in the past. I would have placed some weight on the value of the permit or the right to fish alone so that those who had not used their fishing permit at all would still retain some right to fish but I would have given it less weight. I would have weighed the fairness of allowing an operator, who had not fished much in the past, to be allowed to take an equal catch with any other operator in the future against the fairness of saying to an operator, who had made a substantial investment in exploiting a licence to the full, that it had to content itself with a right to take fish equal to every other operator including those who had done nothing at all. I would have taken into account the concerns that fish stocks were reducing from overfishing. I would have taken into account that the Government and AFMA had warned against overfishing and encouraged operators not to extend and even to reduce their operations. However, I would also have taken into account that the input controls were themselves intended to protect a sustainable fishery. Fishing, at whatever level, provided it was within the net limits, was lawful.
The conclusion to which I would have come is that fairness in general and the Management Paper policy should cause emphasis to be placed upon adverse differential economic imports. I would have taken into account permit market value, if it could be estimated, but I would have regarded it as less significant than the economic impact on operators represented by their earnings or catch history. I would have proceeded on the basis that the bulk of operators were in the industry to earn income from fishing not to earn income from buying and selling permits. I would have placed some weight, but not great weight, on determining a value for the fishing right severed from its actual exploitation.
Once the matter is approached in this way, questions of whether there was a market for permits under the input control regime, which took up a great deal of the time in the earlier proceedings and a great deal of the evidence before me, become less important. Even if there was a market for permits, although stamped non transferable, under the input control regime, that does not seem particularly important to me as a matter which should inform the relevant decision-making.
It is at this point that the unique role of the Administrative Appeals Tribunal as a decision-maker, which is part of the executive, becomes relevant. This is one of those cases where there is no correct decision. It is within the discretion of the decision-maker to arrive at the preferable decision. Others might arrive at a different decision. However, unless the decision is infected by error of law it will stand. This is the essence of executive or administrative decision-making. A range of decisions is available. There are no certainties to determine the result. There is no one correct answer. A range of possible results will all avoid legal error. Expert evidence will assist the decision-maker. However, the ultimate decision is not one for experts but one which depends upon judgement.
The preferable method for determining quota
I have come to the conclusion that a division of the total allowable catch so that approximately 17 per cent is divided among different categories of permit, and each amount so determined is then divided equally within each permit type, appropriately reflects in quota terms the right to fish or access entitlement. All operators, whether they did not fish, whether they fished a little or whether they fished a lot should be entitled to quota calculated in this way. I have also come to the conclusion that approximately 83 per cent of the total allowable catch should be divided between all permit holders in accordance with catch history.
This seems to me to reflect a reasonable apportionment of the total allowable catch. Operators with a large catch history will suffer a reduction in what they can catch but the reduction will be unlikely to be so great that they suffer crippling limitations on their established businesses. Operators with no catch history or a small catch history will benefit, although not to any great extent. They will be able to continue fishing at a slightly greater level than they have. If they simply wish to sell their permit, it is true that they will not achieve as much as they would have if all permits had an equal quota but what they will gain will reflect the effort they have put into the fishery. I do not ignore the fact that many operators are diversified and work in more than one fishery. The operator who puts extensive resources into one fishery may put less into another. Mr Fischer may be someone who concentrated on one fishery to his financial benefit to the partial exclusion of the taking of gummy shark and school shark in the Southern Shark Fishery. Although I accept that some operators may have reduced their activities in the Southern Shark Fishery in response to calls for restraint in fishing effort I do not think that this should lead to a quota allocation system which gives those who heeded this call a larger quota to the expense of those who, quite lawfully, fully exploited their existing rights under a system where there was no quota.
I have found the affidavits of Thim Skousen particularly helpful in showing the effect of the quota allocation system under review. Attachment A shows graphically the quota distributions under the 2001 and 2004 allocations as well as under the proposal of Messrs Fischer and Tapley. Attachments B and C show the position for individual operators.
My own inclination is, therefore, that the preferable quota system is that which was recommended by the Lockhart Panel and adopted by AFMA. The next question I must consider is whether there are any constraints precluding me from deciding this matter in accordance with my inclination.
Constraints on my decision-making freedom
The most important matter for me to consider is the prior decision of this Tribunal and the appeal in the Federal Court. That matter determined that there was a market for permits under the system of input controls.
Transferability under input controls
There is no doubt that there were transactions relating to permits under input controls. Family transfers were expressly permitted. Compassionate transfers were allowed. There were private arrangements including sales, leases and other contractual devices which enabled third parties to operate licences although not authorised by AFMA. These were called “under the table” transactions or “grey” transactions in the hearing. I am not sure to what extent transactions such as these, whose object was apparently to subvert the system, should then be taken into account by the very regulator whose system was being subverted, in deciding how a system of input controls should be converted to a system of output controls. It does not seem to me particularly relevant that AFMA did not vigorously root out and prevent these breaches, if that is what they were. Unlawful conduct does not become lawful because the regulator does not act vigorously to prevent it. Nevertheless, I find that there were transactions of this kind.
The more important question is not whether there were transactions, nor whether they could be used to determine a value for a permit, but what should flow from a positive finding. I have taken into account the potentiality for such sales in my above consideration but I have not found that finding a market value is of particular significance. If I had found it significant to find some market value for a permit from the kinds of transactions I have referred to, I would have found that the evidence was too slight to come to any positive finding. The transactions which were before the Tribunal were too few and so lacking in detail that no reliable conclusions could be drawn.
I will summarise the evidence and my findings relating to transactions in permits prior to the introduction of the quota system. The evidence before me on these matters was much more particular than the evidence before SM Handley and Mr Ermert.
There were twelve approvals to sell permits on compassionate grounds. Five approvals were granted upon the death of the permit holder. The others were granted because of terminal or serious illness on the part of the permit holder or spouse. Nine approvals for lease were granted on compassionate grounds. They were all due to serious illness. AFMA records show virtually no details of sale prices or rental payments. The evidence of Mr Jeremy Semkiw of AFMA shows that compassionate transfers were not readily approved. Mr Doran gave evidence of a refusal to approve a transfer by a person who had medical advice to give up fishing because of unsteadiness following a brain haemorrhage.
One transaction which was the subject of evidence before me was a purchase by Peter Riseley. He bought a boat and licence package in 1996, which had AFMA approval, on compassionate grounds. He paid $670,000 for the entire package which included $370,000 for the boat and the balance for the A10 permit. Mr Riseley gave evidence. He agreed that he paid a premium price because there was significant demand for “completely legal” transfers. This sale would hardly satisfy the test for comparative sales first established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. It is worth noting that Mr Riseley said that although a permit acquired “under the table” may have cost less he “did not want to take the risk of either being prosecuted or having the permit suspended”.
Neil Hosking gave evidence that he leased an A10 permit for about 14 months in 1996. He paid $45,000 per annum.
There was much reference in the evidence to the so-called “under the table” transactions. This evidence did not establish any clear market or evidence as to value. At most it established, as had been established in the previous challenge, that such transactions took place, that AFMA was aware of them and that AFMA took no action to prevent them. I note, however, that Mr Doran, for example, refrained from pursuing an “under the table” transaction because he understood that permits were not transferable.
Mr Fischer gave evidence, largely of a hearsay kind, of “under the table” transactions he was aware of. At its highest he said that he was offered a licence for about $450,000 by a broker.
Mr Hosking gave evidence that he bought the beneficial interest in an A6 licence. He initially paid $550,000 for a boat and licence package. The purchase of the boat represented $360,000 of the total. That leaves $190,000 for the permit. Valuations made in 1998 for the purpose of obtaining finance are said to support this value. He said that at the time A6 permits were selling for between $180,000 and $230,000. Mr Hosking also obtained valuations in January 1998 which showed a value of $200,000 for A6 permits and $400,000 for A10 permits.
These were the best proved cases of “under the table” transfers. Other evidence was anecdotal and speculative.
Undoubtedly there were “under the table” transactions. But that is what they were. They were not full transfers in a legal market. The evidence relating to them does not enable me to establish any value for permits. Fortunately, that does not matter a great deal. I accept that the right to fish, apart from the extent of the exercise of that right, was a matter to be taken into account in determining quota but I do not think that valuing that right is critical. If it was, I find that the evidence of neither family nor compassionate transfers nor of “under the table” transfers enables any reliable valuation to be arrived at.
The buy-back scheme
There was, however, a legal market which does provide some evidence of market value. Prior to the introduction of quotas, operators were given the opportunity to take part in a buy-back scheme. AFMA established an Adjustment Assistance Program for those who did not wish to change to the proposed scheme of output controls. Under the scheme operators were paid $8,000 per gillnet unit for gillnet permits and $25 per hook for hook permits. Forty permit holders took part in the scheme. They gave up their fishing permits but they retained the right to allocation of quota. However, the quota could not be utilized otherwise than by transfer or by acquisition of a fresh fishing permit. Under the new scheme the quota allocated could be sold to someone with a permit. Although the buy back does not amount to an open market it was voluntary and does provide some evidence of the value of permits severed from the quota entitlements about to be introduced. I note that at the time of the buy-back the Jenkinson Panel had already announced its proposal that quota should be based on catch history.
The Approach of the Lockhart Report
To this point I have made little reference to the Report of the Lockhart Panel. I have come to the same conclusion without any reliance upon its reasons and by reference solely to my own reasoning process which I have set out above. I would not, however, wish it to be thought that I have any disagreement with the reasons of the Lockhart Panel. Constant reference was made to the Panel’s Report during the hearing and it was extensively addressed in submissions. I have read it and considered it with care. I wish to say that I agree with it. It provides an alternative basis, with which I agree, for coming to the same conclusion at which I have arrived.
In most respects my own reasoning and the reasoning of the Lockhart Panel agree. I particularly agree with Chapter 5 of its report and especially with its concluding paragraphs, the last three of which I will set out:
“As is the case in other areas of commercial endeavour, the economic position of Fishers in the SSF at any time (in this instance, prior to the introduction of ITQs) is a function of the assets and rights held and how these and other inputs are employed. In this regard, the Panel takes the view that the value of permits is a component of wealth and, thus, of the relative economic position of permit holders. However, the Panel is also persuaded to the view that the possession of a fishing permit does not, of itself, necessarily fully reflect the economic circumstances of a permit holder. The earning of income from the use of the fishing entitlement as a result of fishing, whether through the direct efforts of the permit holder or others, is also a relevant consideration.
Accordingly, the Panel is of the view that the relative economic position of permit holders in the SSF prior to the introduction of ITQs is a function of both the value of permits held, as representing an entitlement to fish, and the catch history, as a contributory measure of the value of the income stream derived from utilisation of the permit.
The issue to be resolved is how, in a non arbitrary fashion, to integrate these two elements into a well defined and divisible allocation formula. The Panel’s recommendation in relation to this matter is dealt with in Chapter 6.”
The Lockhart Report reasoning differs from my reasoning in the method by which it carried out the integration of the two elements. The Panel took the buy-back price adjusted to 2003 dollars and then, using a 2003 value of $25,000 per tonne, for gummy and school shark, arrived at a quota in tonnes. For example, an operator who surrendered an A10 permit under the buy-back scheme received $80,000. In 2003 values that was $88,592. Using the 2003 value of $25,000 per tonne the value converted to a tonnage of 3.544. The Panel then apportioned that between gummy shark and school shark in accordance with the proportions they bore to one another in the total allowable catch so that the resulting tonnage was 3.038 for gummy shark and 0.502 for school shark. The permit value was conveniently converted to a quota. Those who did not surrender their permits were awarded as the permit linked component of their quota, that amount of fish which in a sale would gross the buy-back price.
Similarly for hook permits, an operator who surrendered a 2000 hook permit under the buy-back scheme received $50,000. In 2003 values that was $55,370. Using $25,000 per tonne the value converted to a tonnage of 2.215. This was apportioned into 1.896 tonnes for gummy shark and 0.314 tonnes for school shark.
No method of quota allocation would please all operators. Ultimately a decision-maker has to choose one method which the decision-maker considers to be the preferable one. I repeat that the process that the Lockhart Panel was undertaking and the process this Tribunal is undertaking is not judicial. It is discretionary administrative decision-making. If the decision has the required level of unreasonableness a court may set it aside but that is not a step lightly taken.
In a sense the Lockhart Panel has determined permit linked quota by saying it should equate with that amount of fish which will achieve in a sale a gross amount similar to the buy-back price. The quota will not, of course, return a net amount equal to the sale price after the costs of catching the fish are taken into account.
I see nothing unreasonable in the Lockhart Panel’s method of determining permit associated quota. The result accords with my own assessment. The Lockhart Panel method was criticised because it did not either include a method of determining quota associated with catch history (it was simply the residue) or because it did not address the reasonableness of the integration. However, as the Lockhart Panel said, its whole object was to “integrate these two elements into a well defined and divisible allocation formula”. It is obvious that they must have looked at the result which their formula achieved and decided that it was both reasonable and the preferable result.
In any event I have certainly approached the matter on the basis that a fair apportionment is required. In my opinion, the apportionment which the Lockhart Panel method yields, which accords with the apportionment I have selected, is the most reasonable and preferable apportionment.
The use of the buy-back price was criticised on the basis that it was not a price determined in an open market. I have dealt with that. Forty operators were prepared to give up permits in return for its compensation. It is the most reliable evidence of value. Next it is said that it represented only part of market value because it did not include anticipated quota. On the contrary, that is one of its virtues. It can be seen as representing permit value or access entitlement, which is what the Lockhart Panel was using it to determine. It is also said that the sale price was too much influenced by the now rejected Jenkinson Panel method which was then in effect. There may be something in this. However, the history of the change from input quotas to output quotas in the Gillnet, Hook and Trap Fishery is such that it is too late to return to conditions unaffected by the history of the introduction of the change.
The arguments of Mr Bolding
It follows that I reject the arguments advanced by the applicants Fischer and Tapley and Mr Hosking. I broadly agree with the arguments presented by Mr and Mrs Casement and Mr Doran and those presented by AFMA. However, the group for whom Mr Bolding was the main advocate presented a slightly different argument to those presented by the applicants Fischer and Tapley. Their arguments ultimately proceeded from a different rationale.
Mr Bolding made out a convincing case that throughout the eighties and nineties the Government, AFMA and its predecessor issued warnings that fish stocks were falling and encouraged operators to apply restraint. There is no doubt about this. Mr Bolding particularly relies upon an announcement made by AFMA in 1992 that quota would be allocated “solely on unit holdings” and that it was too late for operators to seek to maximise quota allocation by increasing their catches. In these circumstances Mr Bolding argues that allocating quota to any extent on catch history is rewarding those who have ignored the warning and refused to limit their fishing.
There is some force in this argument. Many operators may have heeded the warnings. However, I do not have evidence which would enable me to address each operator. Even if I did have such evidence I also have evidence that many operators are diversified. The operator who intensively fishes in one fishery may exercise restraint in another. More importantly, notwithstanding the warnings, there was nothing unlawful in fully exploiting a permit under input controls. The objectives of the Fisheries Management Act and AFMA are not confined to achieving sustainability in accordance with the precautionary principle. The third objective, for example, is maximising economic efficiency in the exploitation of Fisheries resources. More than ten years have passed since AFMA made its 1992 statement. Giving full weight to these important matters does not cause me to change my opinion or my agreement with the recommendations of the Lockhart Panel.
There was one matter on which Mr Bolding’s group disagreed with the claim of the applicants Fischer and Tapley as well as their reasoning. The applicants Fischer and Tapley suggest that quota allocation should be equal between holders of permits of the same type. The holders of all A10 permits would receive the same quota. Mr Bolding agrees with this. However, he does not agree with the way Messrs Fischer and Tapley arrive at the total catch to be divided between all holders of the same category of permit.
The Fischer and Tapley method apportions the total allowable catch between different categories of permit in accordance with catch history. It is that total for each category of permit which is then divided equally between permit holders.
Mr Bolding argues that this proposed method of allocation is not truly a method of allocation in accordance with access entitlement. If the total catch history of A10 permit holders is more than twice the total catch history of B5 permit holders then each A10 permit will attract more than twice the quota of each B5 permit. Mr Bolding says that if quota should be allocated by reference to access entitlement, each net unit should attract the same quota. This would mean than an A10 permit holder would receive exactly twice the quota of a B5 permit holder. As part of this submission Mr Bolding says that an A10 permit should be treated as equivalent to a 2,000 hook permit and a B5 permit should be treated as equivalent to a 1,000 hook permit.
If allocation of quota according to access entitlement should alone determine how quota is allocated there is no room for catch history to be given any operation. However, if A10 permit holders are capable of receiving more than twice the quota allocated to B5 permit holders, as they are under the Fischer and Tapley proposal, catch history would be playing a part. This is a substantial flaw in the Fischer and Tapley proposal. The Bolding proposal much more fairly reflects a system based on access entitlement alone. However, I have rejected the argument that allocation according to access entitlement should be the only basis for quota allocation. Accordingly, notwithstanding the arguments of Mr Bolding, I continue to be of the view that the quota determination under review, in all its aspects, is the preferable method.
Other Arguments of the parties
When the Southern Shark Fishery moved from no controls other than the requirement for a Commonwealth Fishing Boat Licence, in 1988, the net unit allocations were awarded by reference to catch history. Catch history remains an important part of the system of allocation under review. One argument advanced by those opposing the system under review is that there is a compounding error. Catch history was used to introduce input controls and that catch history will automatically be taken up by AFMA’s scheme. To introduce catch history again will place too much emphasis on catch history. I do not agree. More than ten years passed between the two processes. Moreover, the first process did not introduce any controls on the actual catch which could be taken. It still seems to me to be appropriate to place weight on the operators’ fishing effort, measured by the fish they had taken, when allocating quota.
Another criticism was levelled at the use of catch history between 1994 and 1997 for quota allocation in 2001 and now 2004. This criticism is not persuasive. No system of assessing the extent of exploitation of permits will be perfect. A four year period may not be truly representative. No period will be. However, it is a reasonable basis from which meaningful figures can be drawn. Catch history after 1997 should not be used because it must be too influenced by the imminence of the quota system and its later actual introduction. The Jenkinson Panel announced that catch history would be the sole determinant in July 1999. Although the figures might be out of date that is partly because of the delay flowing from challenges to the allocations. One important factor is that since at least July 1999 it has been known that catch history between 1994 and 1997 might be a determining factor. Both the Lockhart Panel and I have to do the best we can with what is available. The figures are not so unreliable that catch history should not be given the weight I have decided it should have. I agree with the Lockhart Panel that the 1994-1997 figures should be used.
It was also argued that the Lockhart Panel erred by using adjusted buy-back prices and 2003 prices for shark when it was dealing with a 2001 conversion from input controls to output controls. Again, I do not agree. It was advising upon quota for 2004. That is what I am dealing with. This is another example of the consequences of the time it has taken to resolve these quota issues.
Mr Zalups filed extensive written submissions and briefly addressed the Tribunal. He argues that the quota allocation under review amounts to the acquisition of property other than on just terms contrary to s 51(xxxi) of the Constitution. The Tribunal should not make a decision which contravenes the law. However, I do not think that that the decision I propose involves either property or an acquisition of property (Minister for Primary Industry and Energy v Davey and Fitti (1993) 47 FCR 151; Bienke v Minister for Primary Industries and Energy (1996) 63 FCR 567). If property were involved difficult questions might arise as to whether that property was represented by the permit as it was in 2000 or by the permit in 2003. So far as I know, the 2002 and 2003 permit allocations were not challenged. Do they not then represent the potential property which might now be acquired?
Trevor Gilmore took part in the buy-back. Under the Fischer and Tapley proposal he would not be entitled to any quota because he no longer has a permit. Persons who took part in the buy-back were informed they would be entitled to quota. The quota allocation under review will give persons such as Mr Gilmore an entitlement to quota although less than under the Jenkinson Panel scheme. The system under review seems to me to be appropriate for persons who took part in the buy-back.
Kyriakos Toumazos also gave evidence. He broadly supported the system under review. So did Peter Riseley.
Total allowable catch
The proceedings by Messrs Fischer and Tapley were commenced last year. The joined parties were added early this year. Also at the end of last year Messrs Blank and Friend commenced proceedings. Those proceedings relate to quota allocation for the 2004 year. The applicants challenge the allocations to them on grounds peculiar to their situations. They seek to argue that even if the quota allocation policy is appropriate it should not apply to them because of matters personal to them. However, they also join in the challenge by Messrs Fischer and Tapley although their arguments, briefly set out above, are slightly different. They have been joined as parties in the Fischer and Tapley proceedings. The purpose is to see if the wider issues can be determined finally in the Fischer and Tapley proceedings.
Nothing in the arguments put on behalf of Messrs Blank and Friend persuade me to any different conclusions than those I have already reached. In particular, I do not think that the Lockhart Panel failed to take into account the objectives in s 3 of the Fisheries Management Act or any part of them. In my own separate reasons and in my analysis of the Lockhart Report I have had regard to all those objectives.
The Blank and Friend challenge, however, includes a challenge that is not raised by any of the other parties in this case. They challenge the total allowable catch itself. Logically, that should be the first question for decision, but I have left it until this point in my reasons because the issue was only recently raised and because none of the other parties took part in that part of the proceedings. That is not to say that they would complain about sharing any favourable consequences flowing from success in the argument.
The total allowable catch for gummy and school shark for 2004 was set by the AFMA Board in October 2003. The total allowable catch for gummy shark was set at 1,800 tonnes and for school shark at 292.2 tonnes.
Gummy shark stocks are in a relatively robust state. Catches from this fishery have remained stable over the years. The same is not true for school shark. Their stocks have been heavily depleted.
The AFMA evidence
In determining total allowable catch AFMA relied partly on the advice of the Shark Resource Assessment Group. Dr Jeremy Prince has chaired the Group since 2001. It includes scientists, industry members and AFMA representatives. Dr Prince is a distinguished marine biologist who specialises in fisheries ecology and fisheries stock assessment.
Dr Prince gave evidence in this matter. I wish to say at once that his evidence was authoritative and persuasive. Dr Prince explained that under modern fisheries policy unrestrained fishing was no longer acceptable. Quota systems were meant to prevent unrestrained competition which is sometimes called the “race for fish”. One principle he recognised, and which is one of the objectives contained in s 3, was the precautionary principle: “…where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation”.
Dr Prince’s opinion was that because stocks of gummy shark were relatively robust total allowable catch for 2004 should be set at around the level of the long term average catch with the aim of preventing an escalation of fishing pressure. In the future, consideration should be given to reducing the catch slightly as a means of reducing the incidental catch of school shark.
School shark are in a different position. Two Australian sub-stocks can be reasonably assessed. These are the Bass Strait stock, which is estimated to be at extremely low levels and the stock in South Australian waters which is at a slightly higher level. There is serious concern as to whether the stocks can ever recover even if all catching could be stopped. Accordingly, catches of school shark should be reduced to the lowest possible level. However, the incidental catching of school shark by those fishing for gummy shark is unavoidable. As good regulatory practice does not prohibit conduct that is unavoidable the best way to set the total allowable catch for school shark is to work towards limiting it to the estimate of the incidental catch. The object is to work towards eliminating all targeted fishing of school shark by 2006.
The data upon which these assessments are based are the best available data. It was developed by a lengthy, exhaustive, vigorous and well documented scientific process. The 1996 school shark assessment was reviewed by an expert from outside Australia who, whilst not finding it to be perfect, did find it to be “probably the most comprehensive assessment of any shark population in the world”.
I accept fully the evidence of Dr Prince. I make findings in accordance with the preceding paragraphs. They amount to my understanding of Dr Prince’s evidence in summary form. However, the eighteen pages of his statement make the case more clearly and in more detail. I accept that evidence.
The contrary evidence
The proponents of a system which either abandons the idea of total allowable catch or substantially increases it, namely Messrs Blank and Friend, have called limited evidence. None of it causes me to doubt my findings or to reject any of the evidence of Dr Prince.
The evidence called on behalf of Messrs Blank and Friend is the evidence of Dr Peter Hale and Dr Gary Sharp. Dr Hale is a Doctor of Science. He is a wildlife population biologist and an Honorary Research Associate in the School of Integrative Biology at the University of Queensland. Dr Sharp is a Doctor of Marine Biology. He is the Scientific Director of the Centre for Climate/Ocean Resources Study and has conducted research in the management of fish stocks. The evidence of Dr Hale and Dr Sharp, particularly the evidence of Dr Hale, addresses one aspect of the material upon which the total allowable catch is based, namely, whether the stocks of gummy and school shark have been reasonably determined. More specifically it is said that the school shark throughout the South Pacific are probably genetically identical. That shows that there is migration between different areas. School shark are known, for example, to move from New Zealand to Australia. This argument proceeds to the conclusion that fishing in Australia does not affect the species as such and probably does not affect its numbers overall. The evidence is that school shark are not depleted elsewhere and particularly not in New Zealand.
It seems to me that there are at least two flaws in this argument. First, the setting of a total allowable catch for school shark should not be arrived at simply on the basis of whether the species needs to be protected overall but on the basis of whether the stocks of the species around Australia need to be protected. Secondly, the fact that New Zealand school shark migrate to Australia, which is not in doubt, does not mean that migration, even over long periods of time, would provide sustainable stocks. The evidence of Dr Prince is directly to the contrary.
The preferable decision relating to total allowable catch
In the result I agree that there should be a total allowable catch subject to quotas for both gummy shark and school shark. I agree with the total allowable catch as assessed.
Had I concluded that there should be a total allowable catch but there were doubts as to the manner of its assessment and the resulting quantities I would have been in a difficult position. The evidence called on behalf of the respondent appears to lead to one conclusion. In any event, no argument was presented to me on behalf of Messrs Blank and Friend that the material before me should have lead to a nominated total allowable catch different to that actually adopted. There was no attempt to present principles which might guide me to a different determination of actual total allowable catch. The argument was simply that the total allowable catch was so flawed that it must be abandoned. Ultimately the basis for the flaw was said to be the absence of satisfactory evidence of the biomass of gummy and school shark.
Arguments such as these create problems for the Tribunal. Had I decided that the material upon which AFMA acted was flawed what could be done? The Tribunal could not commission an assessment of the reserves. That is not its role. It does not have the resources available to it. The Tribunal must do the best it can with the material before it. At most it could say that it would have decided upon a more generous total allowable catch. But what would guide it? The flawed assessment might still have reached the appropriate result. The Tribunal would also need to act cautiously before it sought to require AFMA to conduct research involving substantial expenditure.
Conclusion
Two applications are before the Tribunal. They challenge quota allocations for the year 2004 for gummy and school shark allocated to Horst Fischer and Graham Tapley. No grounds specific to Messrs Fischer and Tapley are relied upon. Messrs Fischer and Tapley say that the quota should not be determined by reference to the quantity of shark they had caught in the past. They say that equal quota should be awarded to all operators holding the same permits. I have found that the quota system under review by which quota calculations are based partly upon equality between permits, representing the right to fish, or access entitlement, and partly upon catch history, is the preferable way to allocate quota. I have also found that the way the two have been integrated are the appropriate and preferable methods. Two other operators have argued that there were flaws in the calculation of the total allowable catch because the method of assessing the biomass of fish was unreasonable and inadequate and because the shark stocks in the South Pacific were treated as genetically different when they were not. I have found that the assessment of the biomass of fish was reasonable and that the total allowable catches arrived at were the appropriate and preferable quantities. An issue would have arisen as to the extent to which flaws in policy should impact on individual quota allocations if I had upheld any of the challenges. I am relieved from addressing that problem. However, I note that the Tribunal will approach with caution large and complex issues with which the agency making the reviewable decision is especially equipped to deal. This is particularly so when the issues are influenced by policy and not merely by matters peculiar to the reviewable decisions themselves. The decisions under review will be affirmed.
I certify that the preceding 107 paragraphs are a true copy of the reasons for the decision herein of Justice Downes, President
Signed: .........[sgd]......................
Associate (Peter Pikis)
Date of Hearing 16, 17, 18, 19, 23, 24 May, 6, 7, 8, 14, 15, 16, 17 June 2005
Date of final submissions 18 July 2005
Date of Decision 27 September 2005
Counsel for the Applicant (Fischer) Mr R Niall
Solicitor for the Applicant Fitzpatrick Teale
Counsel for the joined Applicant Mr M Scarfo and Mr G Casement
(Casement)
Solicitor for the joined Applicant Warren Graham & Murphy
(Casement)
Solicitor for Messrs Blank and Friend Thomson Rich O’ConnorCounsel for the Respondent Ms D Mortimer SC and Ms R Doyle
Solicitor for the Respondent Dibbs Barker Gosling
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