Fischer and Australian Fisheries Management Authority - [2002] AATA 857

DECISION AND REASONS FOR DECISION [2002] AATA 857

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V01/387

GENERAL ADMINISTRATIVE DIVISION       )
           Re      HORST FISCHER
  Applicant
           And    AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY
  Respondent

DECISION

Tribunal Mr J. Handley, Senior Member Mr C. Ermert, Member

Date27 September 2002
PlaceMelbourne

Decision      The Tribunal sets aside the decision under review and remits the application to the respondent for reconsideration.
   ...... Sgd. Mr J. Handley.....
  Senior Member
FISHERIES : Respondent introduced Individual Transferable Quotas & Total Allowable Catch in to the Southern Shark Fishery - ITQ's based on best 3 years of catch between 1994 & 1997 - changed management arrangements - whether differential economic impacts on concession holders were minimised - whether permits were, in reality and in practice, transferable - whether relative economic position of concession holders affected - whether policy unjust - whether correct or preferable to set aside decision under review - application remitted to respondent with recommendations.
Fisheries Management Act 1991 s.32

Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634

Australian Fisheries Management Authority v PW Adams Pty Ltd, (1995) 134 ALR 51

Bannister Quest Pty Ltd v Australian Fisheries Management Authority, Federal Court, 4 August, 1997, 819/1997

PW Adams Pty Ltd v Australian Fisheries Management Authority (1995) 60 FCR 387

REASONS FOR DECISION

27 September 2002 Mr J. Handley, Senior Member Mr C. Ermert, Member

On 10 January 2001, a decision was made by an officer of the Australian Fisheries Management Authority ('AFMA'), pursuant to s.32 of the Fisheries Management Act 1991 ('the Act') to impose conditions upon permits held by the applicant. With respect to permit number 300177G, a quota allocation for gummy shark of 13,950 kg was imposed. With respect to permit 300177H, a quota allocation for school shark of 2,004 kg was imposed. Both quotas imposed applied to the period 10 January 2001 to 31 December 2001.
The applicant subsequently applied for reconsideration pursuant to s.165 of the Act and on 14 March 2001 a delegate of AFMA affirmed the primary decisions.
Mr Fischer has been a professional shark fisherman for approximately 30 years. Within that period, there have been a number of management changes made by AFMA concerning designated fishing zones.
Prior to 1988 conditions were imposed upon fisherman with respect to the method of catch. This principally related to the type and size of nets. Conditions were also imposed as to the size of catch. The conditions, as imposed, were annexed to a Commonwealth Fishing Boat Licence, which a fisherman must also have held.
On 29 April 1988, following recommendations made as to future management in the Southern Shark Fishery ("SSF") (as published by the Southern Shark Fishery Task Force) T-8, certain practices with respect to the management of the fishery were implemented. Essentially the changed management practices concerned the gillnet fisherman in categories designated as "A" and "B". These categories were imposed having regard to the aggregate level of shark catch in three of five years prior to 25 September 1984. Category A fishermen were persons so designated by reason of having taken an aggregate of 45 tonnes or more of shark during any 3 of the 5 years prior to 25 September 1984. Category B fishermen as designated were persons who caught an aggregate of between 0 and 45 tonnes in any 3 of the 5 years prior to September 1984.
Category A fishermen were then entitled to use 6 shark gill nets within the fishery. Category B fishermen were entitled to use 5 shark gill nets.
Category A fishermen became entitled to acquire one other category A licence but upon both licences becoming consolidated (as required by AFMA), the category A fisherman was entitled only to use10 nets. That is to say upon consolidation a category A fisherman was required to forfeit two nets. One consolidation per boat only was permitted. That person then had an A10 permit.
In 1990 there were some changes made in the SSF with respect to the numbers of nets permitted to category A fisherman. Those that held 10 nets were reduced to a maximum capacity of 7 and those holding 6 nets were reduced to a maximum capacity of four (T-10, p.84).
In July 1993 there were further changes made to the net capacity of SSF fisherman where the net numbers were restored however the length of net was reduced from 600 metres to 420 metres. The effect of this decision was to preserve the reduction of 30% in the catch capacity, being the consequence of the 1990 decision, (refer T-12, p.134; para 8 above).
Nonetheless the amended endorsements upon fishing boat licences as imposed by the above altered restrictions did not restrict the quantity of fish obtained or access to the fishery.
In September 1987 (T-17) AFMA issued a management paper (FMP No. 8) entitled "Allocation of Fishing Concessions where Management Arrangements Change". FMP No. 8 provides at paragraph 2 (T-docs - page 165) that although AFMA is responsible for the allocation of fishing concessions and the AFMA Board is responsible for the nature and degree of access to a fishery, the supporting legislation, regulations and objectives provide no specific guidance "on the allocation of fishing concessions where management arrangements are proposed to be changed except where a management plan is revoked and a successful management plan is made". Accordingly, FMP 8 was established to determine a "policy and procedural framework for allocating fishing concessions under such circumstances".
Eventually the Southern Shark Allocation Advisory Panel (the Panel) was established to report to the AFMA Board on certain changes with respect to the SSF. The Panel eventually reported to the AFMA Board with respect to a number of recommendations for change with respect to the SSF, principally, the imposition of a total allowable catch (TAC) and Individual Transferable Quota's ("ITQ's"). The issue of concern in the present application was a recommendation by the Panel - eventually accepted and implemented by the respondent - concerning the method by which ITQ's were allocated amongst fisherman.
The recommendation of the Panel as to the method of ITQ allocation is found at page 205 of the T-documents namely-
"our conclusion is that failing prior apportionment of the southern shark fishery TAC among the sectors each applicant for ITQ allocation in the fishery receive an allocation for each species in the proportion that the aggregate of his best three annual catches of the species taken in the fishery during the period under the authority which the permit or permits held by him when allocation is made gave for the taking of the catches bears to the aggregate of the best three annual catches of the species taken in the fishery during the period under the authority which the permits held by all applicants when allocation is made gave for the catches. The recommendation is so worded as to give effect to the principle which we consider ought to be applied that catch history attaches to the permit under the authority of which the catch was taken and not to the person who held the permit when the catch was taken, so that the catch history is that of the person who holds the permit when allocation of ITQ's is made".

The effect of this recommendation was that the allocation of ITQ's to concession holders was calculated on the aggregate catch in the best three of the four years between 1994 and 1997.
AFMA eventually accepted the recommendations of the Panel.
The applicant challenges the decisions of AFMA because it is said that in adopting a policy of allocating ITQ's to concession holders, the transferability of permits and the value to be attached to permits has been ignored. Additionally, or in the alternative it is submitted by the applicant that permits had a value prior to the implementation of the policy, which has given rise to this review. The value of permits was determined by a market. By reason of the policy eventually implemented by AFMA, the value of a permit is determined by the catch of a fisherman in the best three years between 1994 and 1997. At its extreme, persons who did not fish within that period of time have not had an ITQ allocated and their permits now have no value. Alternatively in the case of the applicant, the value of his permit is determined only by the extent of the ITQ allocated to him.
Mr Niall on behalf of Mr Fischer submitted that this policy is wrong and should be set aside. He submitted that the policy is inconsistent with the statutory objectives of the legislation because it does not take account of economic efficiency in the exploitation of fisheries resources pursuant to s.3(c) of the Act. Additionally it was submitted that the policy does not pursue cost effective fisheries management pursuant to s.3(a).
The Legislation
Section 3 of the Fisheries Management Act 1991 provides objectives that 'must be pursued' by the Minister & AFMA. The section is reproduced as follows-
"3 Objectives
(1) The following objectives must be pursued by the Minister in the administration of this Act and by AFMA in the performance of its functions:
(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 on 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.
(2)       In addition to the objectives mentioned in subsection (1), or in section 78 of this Act, the Minister, AFMA and Joint Authorities are to have regard to the objectives of:
(a)       ensuring, through proper conservation and management measures, that the living resources of the AFZ are not endangered by over-exploitation; and
(b)       achieving the optimum utilisation of the living resources of the AFZ;
but must ensure, as far as practicable, that measures adopted in pursuit of those objectives must not be inconsistent with the preservation, conservation and protection of all species of whales".

Horst Dieter Fischer

Mr Fischer is the applicant in these proceedings. He said that he had been a fisherman operating out of Lakes Entrance for about 30 years. Principally he is engaged in shark fishing.
In 1988 Mr Fischer said that he was allocated an A6 shark-fishing permit for which he qualified by reference to his catch history between 1979 and 1984. The A6 permit entitled him to catch shark in a quantity greater than 45 tonnes. The A6 permit was issued without fee however Mr Fischer purchased another A6 permit for the sum of $140,000. He recalled that a number of A6 permits were offered for sale and he took advantage of this opportunity. Mr Fischer acknowledged that when he acquired the second A6 permit he was required to forfeit two nets and eventually he was allocated an A10 permit.
At or about the time that he purchased the second A6 entitlement Mr Fischer was engaged in construction of another boat, which was fitted principally for shark fishing. He said he expended approximately $700,000 on the construction and when the boat was fitted he had expended approximately $900,000.
Prior to 1 January 2001, Mr Fischer said that AFMA granted permission for fisherman to dispose of their permits on compassionate grounds. He said a committee of AFMA responsible for shark fishing, known as SharkMac, considered asking industry representatives to make recommendations as to who should be permitted to dispose of their licences. Mr Fischer said that he and others were not comfortable with this process. He said it was common knowledge in any event that permits were being either sold or leased and he said that he had had discussions with Trysh Stone, a delegate of AFMA concerning the sales or leases of permits. Additionally he said that the sales and leases of permits were discussed at SharkMac meetings. Mr Fischer said that there were brokers who facilitated the sales and there were advertisements in professional or trade journals and magazines offering permits for sale or lease. Mr Fischer said that an A6 licence could achieve a selling price of between $100,000 and $250,000 and a A10 permit between $200,000 and $350,000. He said that the permits were sold without any reference to catch history nor did catch history have an influence on the price. He said that permits were purchased by persons - not necessarily existing fisherman - on the basis of what could be earned by the permit. The transfer of permits he said was common knowledge amongst the industry members and was often spoken about. On one occasion Mr Fischer said that he was approached by a broker in Lakes Entrance who told him he might achieve a purchase price of $450,000 for his A10 permit. With respect to the level of knowledge Mr Fischer said had been held by AFMA representatives concerning the transfer of licences, the following is reproduced from the transcript (p. 25)-
"Do you have any knowledge of whether AFMA was aware that these transactions were taking place.
AFMA was well aware. I mean we had been discussing that in the Mac meetings and also we were discussing it after meetings.
Well with any particular AFMA representatives did you have any discussion
I mean, here Trysh Stone was the Manager of the fishery and she had full knowledge of it and she also knew some of the people that did the transactions, that is for sure.
You say that she had full knowledge of it. What do you base that on?
We discussed it
And what did she tell you?
She said what can we do, you know, we did our level best and if those people do contractual - contracts or leases, there is nothing we can do about it".
At 1 January 2001 Mr Fischer understood that ITQs would be introduced. At that time he understood that the "currency of the fishery" was his entitlement to catch based on his A10 permit. That is to say, the currency was the amount of catch. He said the expression "currency of the fishery" was a term frequently used by AFMA representatives who he identified as Frank Mear, Les Roberts and Margaret Sacks.
Mr Fischer said that as a result of the permit issued at 1 January 2001 he was restricted to a total catch of 16 tonnes of shark from two species. That allocation he said was based on his catch history from the vessel "Star Fire" between 1994 and 1997. Mr Fischer said that the quota allocated to him - having regard to his investment in the fishery and in his boat-would make it "just about impossible to (economically) operate". The applicant said that he was familiar with a report produced by the Australian Bureau of Agricultural and Resource Economics (ABARE) who reported to AFMA in 1998 that an A10 licence had a value in the vicinity of $750,000. There was then no restriction on the total catch, the only restriction being that he was confined to 10 nets. Mr Fischer said that he could have sold his permit for "quite some considerable money" however he regarded the permit now as "just about worthless". He said his position within the fishery now is very different to what it was prior to 1 January 2001. Despite quotas not being transferable in the 2001 year, Mr Fischer said that he was aware that persons were selling their quotas.
In cross-examination Mr Fischer said that from approximately 1990 his boat "Star Fire" had been used in the shark fishery. From that time State Licences were also attached to "Star Fire" permitting him to engage in non-trawl fishing for blue warahou, ling and blue eye. Fishing for these species involved the use of either gill nets or hooks or traps.
Discussion then ensued between Mr Hanks and Mr Fischer as to whether he was (in his evidence in chief) referring to a sale of a licence by way of transfer or a lease of a licence by way of transfer. When it was put to Mr Fischer that sales of permits resulting in a change of ownership were only permitted in limited defined circumstances, Mr Fischer said that licences were being sold, that solicitors were acting for parties with respect to the sales and that AFMA had been aware of the practice. He said that there had been many discussions at Shark Mac meetings and AFMA representatives had told him and others that they were aware of the transactions and that there was "nothing (they) can do about it". (Transcript p. 32). Nonetheless Mr Fischer was unaware whether the transactions were in the nature of sales or leases. He said it was common knowledge that there were "contractual arrangements". Additionally he said that he was aware that there were no records of these transactions known to AFMA and he had been told by AFMA representatives that it was difficult to determine who owned the permits. That information also had emerged from Shark Mac meetings and he had heard it mentioned by Trysh Stone. He was adamant that her comments were directed to ownership and not to the operation of a permit.
Mr Fischer was then taken to the amalgamation scheme between 1991 and 1993 where shark fisherman had a 30% reduction in their net capacity. Mr Fischer said that at that time his boat "Star Fire" had become "just about obsolete or uneconomical as a shark boat". He said in hindsight he should have sold the boat and purchased "a more economical boat for the shark fishing". This remained so even after the number of nets were restored in 1993 but had been reduced in capacity by 30%. He said these changes in 1993 made no difference to his catch capacity and it was not an option then for him to lease his permit to another operator because leases were attached to boats.
With respect to his catch from time to time in the non-trawl fishery, Mr Fischer agreed that he had been successful between 1988 and 1993 and had achieved a high catch history. Nonetheless his catch history for shark in following 1994, 1995 & 1996 years had been relatively low being 9.7 tonnes, 25.5 tonnes, and 17.25 tonnes respectively. Mr Fischer agreed that his shark catch in these three years was low because he concentrated his effort on non-trawl fish achieving a catch of between 172 and 215 tonnes (of non-trawl fish).
Mr Fischer said that it was not an option for him to presently increase his shark catch by way of purchase or lease of another licence because he did not have a "plan at the moment". He said "I can't have a plan". He agreed with a summary presented to him by Mr Hanks that his principle concerns at the present time were the limitations on his shark quota and the gear restrictions on the number of nets that he can use in the shark fishery. He agreed that a combination of these factors discouraged him from fishing for shark and between 1994 and 1997 he made a business decision to concentrate his fishing activity in the non-trawl fishery rather than in the shark fishery.
Mr Hanks asked the applicant some questions concerning policy development by AFMA commencing in the late 1980's with a published paper entitled "New Directions in the Management of Fisheries". Mr Fischer agreed that the paper and some other papers discussed the possibility of the introduction of ITQ's. Mr Fischer said that whilst he agreed that ITQ's had been discussed for many years, it was his understanding that the intention of AFMA was only to introduce quotas "wherever practical". Additionally he said that fisheries had collapsed "under the ITQ system all over the world" and shark fisherman had resisted the introduction of ITQ's. Mr Fischer agreed that in June 1997, the AFMA Board published a press release (T-15 p.160) notifying shark fisherman that catch histories beyond 10 April 1997 could not be considered in the allocation of ITQ's thereby advising against increasing investment in the industry. Nonetheless Mr Fischer said that despite this advice, "nobody still dreamt about quotas or the majority of people never dreamt about quotas because we were so adamant we were sticking with input controls so it wouldn't have been a big influence".

Later when he was again asked about the relative risk of change in management practices from output controls to quotas, Mr Fischer said "we at this stage still not talked about output controls. We were very very sure that it stays with input controls. We were sure about it". When asked to clarify what he meant by "we" Mr Fischer said "the industry. And all the industry members said no way will we give ever in to get input controls at that stage. And that is a fact" (transcript p.43).
With respect to the movement towards ITQ's or output controls, Mr Fischer agreed that there was progress being made in other fisheries, rather than the SSF. He said that there was concern amongst shark fisherman that a quota system in a multi species fishery "spelt in general always a big disaster when you can't select what you are catching and the industry said it is absolutely madness". Mr Fischer explained that fisherman cannot regulate the quantities of shark that have been caught in nets. He explained that the consequence of imposing a quota on shark is to "throw it over the side". That was the main reason why the industry so strongly objected to quota management by ITQ's because really in the end no fish gets saved".
Mr Fischer explained that a quota system in the non-trawl fishery was preferable because the two or three species available in that fishery were caught by specialised methods. He said it is for that reason that the fisherman within the non trawl fishery agreed on an ITQ system.
Additionally, with respect to the South Eastern Non Trawl Fishery, Mr Fischer agreed that he had made a submission to the Panel that an allocation of quota in that fishery should be based on catch history. Mr Fischer disagreed with the proposition put that he advocated for quotas in the non trawl fishery because he would "win" on scale fish but in due course if a similar approach was implemented in the shark fishery he would "lose". Mr Fischer agreed that he had the highest level of allocation of the three fish species in the non trawl fishery and that an allocation based on catch history was the only "rational method" available for allocation of quota. Mr Fischer said that shark fishing was not ever discussed at allocation advisory panels concerning the non trawl fishery. In effect Mr Fischer submitted that any allocation of ITQ's in the shark fishery should be on a different basis to the allocation of ITQ's in the South Eastern non trawl fishery. He said that the A10 permit holders in the shark fisheries should be allocated a proportion based on the catch history of all gill net entitlements and then allocate an equal apportionment of the TAC. Mr Fischer estimated that on the basis of the TAC of 2,000 tonnes in 2001, that would equate to a share allocated to all A10 holder of in excess of 40 tonnes. He said there should be an averaging process between A10 holders so that if the TAC varied from year to year the amount allocated to all A10 holders would be the same. He said that his "rationale" for this proposition was that "people will in the future have average - have allocated the average catch what they - what that sector caught before and what the expectancies of that sector".
In re-examination Mr Fischer said that shark is more prolific in summer and non-trawl fish are more prolific in winter. He agreed that it would be possible therefore to fish for part of a year for non-trawl species and the other part of the year for shark. He also agreed that this would "maximise the seasonal differences that exist between the two forms of fishing".
Prior to the introduction of shark quotas, Mr Fischer said that it was possible to lease a shark entitlement for less than a full year. Despite licences or permits being allocated to a boat, he said it was possible for a permit holder to transfer the permit to another boat or for the permit owner to transfer the permit to the boat of the lessee. Additionally, he said it was possible to lease a boat as well as a permit.
Mr Fischer was then asked some questions concerning input and output controls or restrictions subsequent to 1 January 2001. For the purposes of these questions Mr Niall said (and Mr Fischer agreed) that output control referred to the amount of fish being removed from the water, and input control referred to the number of nets that caught fish. Mr Fischer said that input controls should be "lifted" because the only relevance of having input and output controls at the same time affects the rate at which fish are caught. That is to say, a person's catch is determined (or restricted) by the output controls and retaining input controls causes the catch to be achieved at a slower rate. Mr Fischer said that his expectation would have been that upon the imposition of output controls that input controls would have been lifted.
Prior to 1 January 2001, Mr Fischer said that there were input controls only and because it was possible to lease a shark permit it was therefore possible to obtain revenue, irrespective of the level of catch because a permit could have been leased in whole or part. In fact, Mr Fischer said that it was possible to obtain revenue from shark fishing (having leased a permit in its entirety) without having fished at all.
By way of comparison with the non-trawl fisheries, Mr Fischer said that there were no restrictions as to nets and non-trawl fishermen could not be regarded as having been issued with a concession as those in the shark fishery. It follows, he said, that it was inappropriate to determine quota after 1 January 2001 on the basis of catch history. Additionally, Mr Fischer said that imposition of quotas in a multi-species fishery is wasteful because species cannot be targeted. He said that in the non-trawl fisheries, species can be targeted and management of the fishery is more efficient. Mr Fischer explained:
"We wouldn't have a bar of quota because we knew how wasteful quota management is in a multi-species fishery if you can't target the species. In the non-trawl you can target the species. You fish very clean. One species. In the shark fishery you have the two species coming in your nets without your control. So therefore we were fully against the quota system and we resisted it as long as we could." (Transcript p.59)
Having learnt from the evidence of Mr Fischer that certain arrangements had been entered into between permit holders and others in order to transfer a licence without approval by AFMA, we then asked Mr Fischer some questions concerning this practice. Whilst he qualified his answers upon the basis that he did not have intimate knowledge of the particular arrangements entered into, he said that vendors of permits would sell upon the basis that they would ensure that in succeeding years when licences were issued (to the vendors by AFMA) the vendor would continue to assign rights under that licence to the purchaser. When we expressed our concern that purchasers might in the circumstances regard their entitlement as being insecure (because of these arrangements), Mr Fischer said that contracts were entered into and the purchasers' access to the vendors rights under the permit "surely that would have to stand up". When we asked him to comment on what appeared to be an assumption by vendors that licences would continue to be issued by AFMA, Mr Fischer said "that happens to any licence we are having at the moment because we are working under a permit what get issued every year" (p.60). Later, Mr Fischer expanded on his earlier answers and said the following:
"I mean we are talking about transferability from one year to the other. Every year we been promised, next year, next year, next year. Transferability. Right in the start when the management man came in, right, they said you would have for the first two years, you going to have only transferability for the amalgamation, and afterwards there should be full transferability. They pulled that underneath. Then they said OK, when we get the industry sorted out, you will have transferability. We gone on every year, every year, and at least twice a year in the management advisory committee that thing come up, and said, when are we going to get transferability? Yeah, we got to do this, we got to do that. We still haven't got a long term vision. I mean, for how long do you want for people to hang on a limb? I mean, this is what – this industry being strung out for ten years, and locked in, in a so-called non-transferability situation. And what happened was, for most people it was easier to fight the government against the non-transferability thing, it was easier to just make a contract what achieved the same thing, right? I mean, even Trysh Stone said, if he doesn't get it under the compassionate thing, why can't he see a solicitor and do the job. He knew Coates what did most of those contracts. He knew exactly about it. Why can't he see him? I mean, that was the thing. Now, people then finding full solution. They don't get stuck into the system for ten years or longer, waiting for AFMA to finally come clean on their policies. I mean, the industry for a long, long time said, bring transferability in. They said, oh, we have to bring legislation. Said bring the legislation in at the same time as the transferability. And it dragged on, and AFMA made never ever an attempt to really solve the problem, and of course people made their own arrangements. That is, what it was all about".
With respect to the TAC declared by AFMA, Mr Fischer said he had no quarrel. He said that a TAC sub-committee is advised by stock assessment groups being a system that Mr Fischer supported. He said he was a member of a stock assessment group in the non-trawl fishery. He said that he and other fishermen were concerned about sustainability of fish stock. He said the most appropriate method of catch allocation to fishermen was to divide the TAC equally between concession holders.
Mr Fischer said that there was little risk of reduction in a TAC with respect to gummy shark because it was a breed of fish which was well known to fishermen as being readily available if it is well managed. He said that in excess of 1600 tonnes of gummy shark had been caught for each of the last 30 years, and having regard to the known life expectancy of that fish it could remain relatively plentiful. Conversely he said that school shark "was in trouble" because it is caught as a juvenile in other sectors, it rarely reaches maturity, and because of the imposition of the quota system, school shark is often thrown "over the side" because its catch is non discriminatory. He said that each fishery needed to have a proper stock assessment in order to determine appropriate management practices.
With respect to a number of documents lodged by AFMA prior to the hearing, expressing concern as to the depletion of shark stocks - thereby giving rise to changed management practices - Mr Fischer said:
"that everyone today knows now in the case of gummy shark that was rubbish. And in the school shark, probably - not under estimated, that they were fairly close to the target, when prior to the introduction of quota most fishermen argued to the point, stick with input controls and close the areas of high mortality, no more high mortality of school shark and to protect those school shark. And most fishermen were quite happy to do so, but AFMA was hell bent we got to have quota systems. It is a sad story because quota systems doesn't help the school shark, but in the end what it does, we are throwing the school shark over the side because we may finish up with a C or TAC. Like we have in the trawl sector, a very, very low TAC on the gemfish, and if the gemfish still get caught they just get dumped. It doesn't save the gemfish. And the same thing we have with the school shark. If you dump a dead shark whom does it serve? Not the shark. I mean its pretend we are doing something about it, but it is not the right way to go. And that is why the industry is so keen not to see quota. We rather would have had large areas closed, where we can't go and fish. Those notoriously areas like in the west of South Australia or West Coast Tasmania where the majority of the school shark comes from; let's close it. Not only that it would have been good for the gummies, because in that area there is gummy sharks as well and it would have given those fish a safe haven to breed without our interference. It would have been brilliant. And for a long time we pushed it and all the time it came back, AFMA preferred – management option is quota."
With respect to the proposition that equal allocation to permit holders might discriminate in favour of those who are not committed to the shark fishery, Mr Fischer said that the differential impact between shark fishermen was greater presently than under the regime advocated by fishermen because some persons had been allocated quotas greater than the catch that they had ever achieved. He said that this occurred because declared catch history in some cases was false. That is to say, some persons "totally overstated" their catch history which consequently was reflected in the quota allocated to those persons by AFMA.
David James Collins
Mr Collins is an economic and environmental consultant who is also a Director of BTA Group Limited. Mr Collins was engaged by Mr Fischer to prepare written submissions to the Panel in May 1999, (found at pages 282 and 292 of the T documents respectively). Additionally he made a submission to a delegate of AFMA (Ms Stone) which is at page 344 of T documents. Mr. Collins said that he had had prior experience with allocation panels conducted… by or on behalf of AFMA concerning the South Eastern Non-Trawl Fishery and the East Coast Tuna and Billfish Fishery. Mr Collins said that he was aware of the AFMA policy with respect to changes in management structures, which is in part recorded within FMP 8 found at T17. Page 3 of that document (page 167 of T documents) records (in part):
"…. 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;
.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."
Mr Collins said that he was aware of this policy when he prepared his submission on behalf of Mr Fischer. Mr Collins also said that the policy required an assessment of the "relative economic position of individual operators" before and after a change in the fishery in an outline of his evidence lodged and exchanged prior to commencement of the hearing. (Exhibit A) Mr Collins in part recorded:
"The value of wealth of an individual is given by the present value of the flow of income his stock of wealth generates".
The remainder of the outline discussed the concept of "assets", the use of catch history to determine the valuation of assets and the creation, capitalisation and accumulation of income.
In order to expand on the concepts referred to in his outline of evidence, Mr Collins said that the "concept of wealth" as understood by him was referrable to a term of economics. He said that wealth:
"Is used to describe … the value of the stock of assets that you hold and the value and the valuation or the wealth determined by the future streams that can be derived from the use of that asset or assets."
Mr Collins agreed with a definition of "wealth" as recorded by Mr Sturgess in a witness statement prepared on behalf of the respondent who said:
"In general terms an individual stock of wealth can be measured as his stock of tangible and intangible possessions that have a market value."
Mr Collins said that the assets of a person, (whether they be tangible or intangible) will not be included in that person's "wealth", if they have no market value. He said this was because if an asset is capable of being exchanged in a market it will have value in economic terms. If the asset cannot be exchanged it does not have value in economic terms.
The witness said that in order to determine the relative economic position of a fisherman for the purposes of an AFMA policy following management changes, the relative wealth constituted by the concession is to be considered. He said that if it is determined that a concession does have value it must - on his above analysis - be capable of being traded in a market. In this context he said that there were different forms of transfer, being either the exchange of beneficial rights or a permanent transfer or a lease arrangement. Either form of transfer he said, will cause an income stream to be generated by the asset. The period of the transfer, whether it be by day or year or permanently he said was immaterial. The concept of "market" was the "avenue where a buyer and a seller of a concession can satisfactorily negotiate the transfer of those beneficial rights. Additionally he said, that a "market" continues to exist, irrespective of whether it was available to a person wanting to trade. By way of example he said that the stock exchange is not available to persons on Saturdays and Sundays because it is closed. Nonetheless a market exists for the purposes of trading shares.
Factors which would influence a market and a level of competition would be the number of buyers and sellers at any one time and the nature of the asset intended to be traded.
It followed that if an asset is capable of being transferred for value, it is then brought into account in assessing a person's wealth.
Mr Collins said that he was familiar with the concessions available prior to 1 January 2001 where persons held A10 and B5 licences. He said that in circumstances where AFMA would approve a transfer in compassionate circumstances, being the illness or death of a permit holder, AFMA creates a market, permitting the transfer of beneficial rights thereby establishing a value on the concession entitlement. He said this was so even though the "market" might only be available infrequently.
To the extent that a permit is capable of being leased (thereby permitting the lessor to obtain money) Mr Collins said that the permit would have "value". Equally he said it did not follow that a permit would cease to have value if a permit was not available for lease "every day". With respect to a stream of income that may be generated from a permit, Mr Collins said that past use (of a permit) would not determine the present value. He said that value is "based on expectations of future income streams that can generate through the activity of taking shark".
Additionally, Mr Collins said that the value of the permit was reflected in its ability to be transferred. He said the value of the permit remained irrespective of who held the entitlement or who had access to fishing rights by reason of the entitlement. He described the permit as an asset and that it was not necessary to establish a price in order to determine or measure relative economic position. By way of emphasis he said that the holder of a permit had access rights to fish which created an income stream which in turn established a value. Additionally, Mr Collins said that the ability of the permit to be transferred was a feature that influenced value.
Mr Collins acknowledged that individuals with permits will have differing catch histories yet he said that it was "irrational" to use catch history as a measure of the relative economic position. He said that a persons catch history was only an indicator of past use and was not referable to the ability to take fish into the future. It followed he said that the ability to take fish into the future, was an indicator of the derivation of future income.

Mr Collins was then taken by Mr Niall to "FMP 8" published by AFMA T-17) where at page 166 under the sub-heading of "Allocation of Fishing Concessions" in part it is recorded-
"….. 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".
The witness was then taken to a report entitled "Fish Futures" by Kaufmann, Geen and Sen. Mr Collins said that he had previously worked with Mr Geen, who he said was previously the chief economist of AFMA. Mr Collins understood that the authors of the publication conducted a consultancy known as "Fern" who provided reports to AFMA from time to time and had provided a report with respect to the SSF. He was then taken by Mr Niall to an extract of the report (Exhibit B) where at page 92 the following, under the heading of "transferable rights prior to ITQ's" is recorded-
"Next consider the situation where prior to the introduction of ITQ's, individual operators held transferable fishing entitlements. In this situation, a number of operators might have purchased their entitlement from other fishers. The entitlement has value as an asset regardless of whether the entitlement was used to earn income from fishing or not. Since holders of similar entitlements would have similar asset value it could be argued that equal quota allocations to all entitlement holders would minimise wealth distribution".
Mr Collins said that as to the issue of minimising the effect upon a persons economic position by change, the management structure had two "strands". He said firstly there were "transferable rights operating in the fishery and those rights provide a concession or an access right to harvest the stock then they are the ones that should be considered and the argument tends down to that seeing they have equal value there should be an equal allocation". The other strand, he said, was concerning non-transferable rights and "in that situation …. you tend to go down the path in terms of recommendation from an economic perspective of catch history path".
In the context of the asset being transferable he said using a catch history as a basis to minimise economic impact was "irrational and holds no bearing". He said that there was an arguable case for considering catch history where the asset was "non-transferable".
When asked to explain what the arguments were for using catch history, Mr Collins said-
….. it works through the second best because people would be holding assets. As we have mentioned before they are tangible assets. They will exploit those assets to generate income and those assets if they have a market value which we can trade boats and purchase services of skippers then the aim of using a catch history is that the differences in the values of those assets which will vary from person to person from permit holder to permit holder need to be taken account of and catch history has been one method to indicate that. The main reason it has gone down to catch is that if you come back up a level and say well ideally we try to make evaluation of individual asset structures based on how they could generate income in the future to make an evaluation it becomes problematic so our next best alternative is taken. I am not supporting that catch history actually gives you what future income flows would be off the employment of an asset. It is used as a rough indicator".(Transcript p.76).
Mr Collins said that catch history will only indicate what the past catch has been over a specified period of time. He said conclusions cannot be drawn as to profit that had been derived nor the revenue (by reference to the catch history only). Additionally he said that catch history indicates nothing about skill or the effort undertaken by the quota holder.
Mr Collins said that he recommended in his submissions to AFMA on behalf of Mr Fischer that catch history was the recommended method of allocation of licences because he understood that the concessions were not transferable. He was aware that AFMA had acknowledged transferable rights in the Northern Prawn Fishery and in that circumstance he understood that the re-allocation of concessions was "based equally across the concessions that existed prior to the change of management".
Nonetheless it was his opinion that the decision made by AFMA in the present application being based on catch history, was irrational and the consequences of that decision resulted in "significant redistribution of wealth amongst title holders". He said that prior to management changes, concession holders held rights of equal value based on their right to harvest fish. He said following the management changes the "substantially different allocations" will "reflect future income streams that can be earned in the fishery". It followed, he said, that the relative economic position of concession holders will be influenced by the quota that has been allocated to them.
Mr Collins said that he recommended to the AFMA panel that A10 licence holders should be considered "equally across all entitlement holders". He distinguished between A10 and B5 licence holders because persons holding those licences respectively had "different access rights to harvest the fish stock". Mr Collins was of the opinion that the decision under review in these proceedings was based on a misunderstanding of what is constituted by "wealth".
In cross-examination Mr Collins re-iterated his earlier evidence that a market exists for the acquisition of permits despite the policy of AFMA limiting transfers to compassionate circumstances. He said that a beneficial right or interest under a permit is capable of being transferred and a market exists to permit that transfer to occur. He denied that a market would only be "created" in the event that AFMA gave permission to transfer a permit in compassionate circumstances. He said that the market already exists because beneficial rights are capable of being transferred between the two parties who are buying and selling. Further to this he said that the market exists because there is a willingness in the part of a buyer and seller to transfer and acquire a licence. "The nature of the contract that surrounds that is immaterial from an economic perspective". Additionally, there is no consequence upon the value or the transfer of beneficial rights where the transaction is not recognised or approved by AFMA.
Mr Collins was taken to the submission that he prepared on behalf of Mr Fischer, which was lodged with AFMA and found within the T-documents. In part the submission recorded that the 'total stock of wealth' of a person would be influenced by the catch volume of a particular fish species. Mr Collins said that in the absence of any consideration of transferability of concession rights, the above proposition submitted by him was consistent with the FMP 8. When pressed on this issue, Mr Collins agreed that he had submitted that if quotas were to be allocated to minimise the redistribution of wealth, that catch history over a three to five year period would be appropriate. He agreed that he had submitted that such a basis for allocations of quotas would provide "a realistic assessment of the relative income generating potential of a fishers current stock of wealth". These propositions he said remained sound but not where there were transferable concessions to harvest fish.
Mr Collins was asked to consider part of the publication entitled "Fish Futures" where the authors of the document suggested that fairness and equity would dictate that there should be minimal differential economic impacts on fishermen when reallocating access entitlements. It was suggested to Mr Collins that it was this issue which was essentially before the Tribunal. Mr Collins said that he regarded the allocation process adopted by AFMA to be irrational because it was based on individual catch history. He agreed that the authors of the article suggested that other issues should be taken into account when considering reallocation, namely the value to be applied to fishing entitlements, fishing vessels, fishing gear and shore processing facilities. However, he observed that the authors of "Fish Futures" reported that the meaning and concept of wealth will differ, when the management of fishery changes, dependant on whether rights prior to ITQ's were, or were not, transferable.
Mr Collins said that if an entitlement was not transferable, it was not an "asset", it did not provide exclusive rights and future income could not be earned from it, because a lease was prohibited. It was, he said, a difficult and unreliable exercise to measure income and wealth - to determine the economic value of a fishing entitlement if a comparison was made before and after ITQ's were introduced, of catch history. Mr Collins regarded catch history as a crude indicator of future catches, which in turn was a crude indicator of future profit. It followed he said that catch history was also a crude indicator of the value of fishing assets where there is no transferable concession. Nonetheless in a fishery, where there are no transferable rights, he said that a case for catch histories "could be argued as defendable".
In the context however of a fishery where rights were transferable, Mr Collins agreed with the authors of "Fish Futures" that the fishing entitlement did have value as an asset. He agreed that some fisherman might feel aggrieved if there were equal allocations to all fisherman where prior catch histories showed variation, however Mr Collins said that the value of an asset "is what other people are willing to pay for it". He acknowledged that some fisherman might feel aggrieved if they paid a "really high price and the market has turned" however in his view entitlement of itself had a value. In this context Mr Collins said that it was not necessary to attempt to identify a "precise value" of licences - if transferable - when faced with the difficulty - as was suggested by Mr Hanks - in attributing value to entitlements which might vary between an A10 to an A6 to a B5 licence. The solution advanced by Mr Collins was not to have regard to individual catch histories but rather an apportionment by reference to total catch across the whole of the fishery by concession holders.
With respect to the decision made by AFMA to have regard to catch history over a period of a number of years in the past, Mr Collins agreed that had fisherman known that their catch histories were then being assessed to determine future allocations there would have been increased fishing activity by fisherman. Indeed it was suggested that there might have been some "speculative activity" because some fisherman would be seeking to "minimise the redistributive economic impact" upon future quota allocations. Nonetheless Mr Collins said that the use of catch histories measured over a past period of years were less relevant as a crude indicator of future catches.
In terms of valuing an A10 entitlement, Mr Collins was directed to a reference within the Australian Fisheries surveys report of 1998, which estimated the value of such an entitlement at $748,100. Mr Collins agreed that self valuation would not be a reliable indicator of value and preferred valuation based on the price that could be achieved in the market where concessions were transferable.
In re-examination Mr Collins was asked to comment on the allocation process within the Southern Non-Trawl Fishery and the allocation process in the SSF. He said that a comparison of both fisheries was not valid because the SNTF, historically was unmanaged and access to it was available only if a fisherman held a Commonwealth boat licence. Additionally, transferable rights did not exist in that fishery. However the SSF was a managed fishery with access to it allowed by the allocation of a permit. It followed, he said, that comparing both fisheries would be invalid and to do so would erroneously affect recommendations. It was his view that allocation of a permit allows the permit holder to access and harvest fish. When the entitlement is transferable it can be bought or sold and the market will determine its value. A catch history therefore was an irrational basis to determine quota allocation or value.
Neal Hosking
Mr Hosking has been a professional fisherman since the age of 15 and has operated out of Victor Harbour in South Australia for the last 23 years. He first purchased a boat at the age of 19 and has principally been engaged in shark fishing. He has served as the fishing industry representative on the South Australian Fishing Industry council and on the Shark Fishery Assessment Group. The latter entity makes recommendations to the Shark Management Advisory Committee (Sharkmac) which in turn makes recommendations to AFMA.
Mr Hosking presently owns and operates a shark fishing boat to which an A10 entitlement is attached. He initially qualified for the grant of an A6 permit when the SSF moved from an unmanaged state in 1988. The A6 permit was then issued by regard to his catch history prior to the allocation of the permit. He later acquired another A6 licence and both A6 licences were amalgamated to allow him to hold an A10 permit. In 1886 he acquired another boat and an A6 permit as a "package" for the total sum of $550,000. The boat was then valued at $360,000 and the A6 permit was valued at $190,000. The transaction was conducted through Mr Hoskings solicitor, Mr Coats in Port Lincoln, who was described as holding a practice dealing extensively with fishery related issues.
When the boat and A6 licence were acquired in 1996, Mr Hosking said that he understood the transaction to be lawful and he had received legal advice to that effect. He said that he understood that by payment of money with respect to the licence, he acquired the "exclusive rights to a fishing permit" and the "vendor" would Act as his "agent" with respect to that licence. He said this was common practice amongst other fisherman.
Additionally, Mr Hosking said that shark permits were advertised for sale in fishing journals. Mr Hosking produced three pages from the "Professional Fisherman" magazine from January 1998 and January and September 1999. The January 1998 journal advertises a "Commonwealth A6 Southern Shark gill net permit" for sale at $180,000. The January 1999 journal advertises "Commonwealth A10, A6 and B5 and other Southern Shark gill net and hook permits" for sale but without a price. The September 1999 journal advertises "Commonwealth A10 Southern Shark gill net" permits for lease and "Commonwealth A6 southern shark permit" for sale at $235,000. Mr Hosking said that the "Professional Fisherman" is a journal widely distributed amongst professional fisherman and if a person wanted to acquire a licence they would either consult the "Professional Fisherman" or other trading magazines.
Mr Hosking said that when he purchased his A6 permit (with the boat) in 1996, he did not know what the permit would currently be worth but was aware that the range of prices for A6 permits varies between $180,000 and $230,000. With respect to A10 licences he said the prices ranged between 1991 and 1997 from $250,000 to $420,000. He said he was aware of a person who purchased two A10 entitlements within this time frame at these prices.
In 1998 Mr Hosking said that he wanted to obtain finance from a bank and he obtained valuations of his licences through brokers. He produced a valuation from John Saxon Bryant and Associates dated 30 January 1998, which assessed the value of his A6 shark permit then at $200,000. He also produced a valuation from Melbourne Ship Brokers who assessed his A6 shark entitlement also at $200,000 but additionally valued his A10 shark permit at $400,000. The applicant's solicitor - Mr Coates - wrote a letter to the National Bank in Victor Harbour in January 1998 indicating that Mr Hosking and his wife "…… purchased an A6 Commonwealth Shark Fishing Permit ……". The letter also records "they have purchased the entire beneficial and equitable interest in the licence but were restrained for policy reasons from being able to transfer the actual name of the licence. Consequently the current licence holder is obligated by a legal agreement held in Victoria for stamp duty reasons to act as the trustee of our clients and upon the transferability to effect the transfer of the name".
Mr Hosking also said that he was aware that there was common knowledge within the shark fishing industry of A10 and A6 permits being leased.
Insofar as AFMA had knowledge of the transfers of fishing permits, Mr Hosking said that until approximately 1996 or 1997, transfers were permitted by AFMA "on compassionate grounds" if a fisherman became ill. After 1996 or 1997 however the policy changed and compassionate transfers were only permitted in the case of the death of a fisherman. It was his understanding that where AFMA did approve a transfer of a permit it inevitably was sold. It was his understanding that "many licences ….. had approval to be sold on compassionate grounds and were subsequently sold ……". The purchase prices were "the same" as the prices paid by Mr Hosking in relation to the permits that he acquired.
Mr Hosking said that he "was sure" that AFMA were aware that transactions involving sales and leases were occurring. He said it was common knowledge within the industry and was spoken of at management meetings and in discussions with AFMA representatives. Mr Hosking said that he had had discussions with Trysh Stone, a former Manager of the SSF about 1996 and also with subsequent managers David Johnson and Margot Saxa. Mr Hosking said that in about 1997 he approached AFMA to have them approve the transfer of the A6 permit into his name from the vendor. The approach made to AFMA was after the transaction had been completed with the vendor. He said that AFMA did not approve the transfer although he was not aware whether Ms Stone then understood that the interest in the permit had been transferred to him. On another occasion he said that he drew to Ms Stone's attention the professional fishing journals which advertised permits for sale. He recalled that she commented upon the permits being advertised with a sale price. Mr Hosking also recalled having a discussion with David Johnson about an interest that he held in another licence and recalled that Mr Johnson had then told him that AFMA intended to "fix up" or "sort out" the transfers which had not been formerly approved.
Mr Hosking said that the shark fishery managers would from time to time have contact with many shark fisherman. Additionally he said that a person Adam Sharp, who was an employee of AFMA and apparently responsible for log books, had had difficulty locating fisherman who were operating under permits which had not been formerly transferred by AFMA. He said that Mr Sharp would "talk freely to me and to other people" to help him identify the permit holders. Mr Hosking said that he would give him assistance and identify who those persons were. He said that he had had similar discussions also with Margot Saxa.
Mr Hosking said that to his knowledge AFMA had never "made any attempts to prevent transactions" similar to the transaction that he entered into concerning the A6 permit.
Subsequent to the introduction of the quota regime after 1 January 2001, Mr Hosking said that there has been considerable variation in the quotas allocated to fisherman because of reference being made to catch history. He said he knew of three A10 permit holders who initially had A6 licences who were allocated a quota of 68 tonne, 20 tonne and 0 tonne respectively. Additionally, he knew of two A6 permit holders being allocated a quota of 3.5 tonne and the other 36 tonne, although both permits had been bought and sold by a similar transaction. In the context apparently of quotas presently being sold at about $20,000 per allocated tonne, Mr Hosking said there was "a huge difference" in the values of permits.

In cross-examination Mr Hosking summarised his history of fishing permits. He said that he acquired an A10 permit in approximately 1989 or 1990 after two A6 permits previously held by him were amalgamated. The A10 permit was attached to a fishing vessel that he then owned, the "Faye Doris." He operated that boat with that permit until October 1992 when it was sold. Thereafter the A10 permit had limited use until the vessel "Temptation" was purchased in May 1996. It was this vessel and an attached A6 permit, which was acquired by Mr Hosking for $550,000. The A6 permit thereafter was not used until late 2001. For approximately 12 to 14 months after the "Temptation" was purchased, Mr Hosking leased an A10 permit from a Mr Atterton. That lease was approved and registered with AFMA. At the expiration of the period of 12 to 14 months, the license was returned to Mr Atterton.
Between October 1992 and May 1996 Mr Hosking said that he leased another boat for about ½ of each year.
With respect to the purchase of the vessel "Temptation" and the A6 permit, Mr Hosking said that the vendors were Mr Milton and Ms Free from Lakes Entrance in Victoria. He said documents were drawn and exchanged where it was recorded that he would have "use" of the A6 permit but they would remain registered with AFMA as the permit holders. Mr Hosking said that he understood that he had "legal rights" under the permit and was the "legal beneficiary". He understood that Mr Milton and Ms Free would act as his "agent" because they would apply annually to AFMA for renewal of the permit and it would be issued in their names.
With respect to the proposed introduction of catch histories as the basis to re-allocate quota within the shark fishery, Mr Hosking agreed that he made three written representations to the SSA Panel. He was referred to his letters of 30 April 1999, 16 September 1999 and 9 January 2001 all of which were received into evidence. Some of those submissions were made jointly with other fisherman including Mr Fischer. Mr Hosking agreed that when his quota was initially allocated he applied for internal review on the basis of his special circumstances. He also agreed that his quota allocation was increased by 9,895 kilos and he presently holds a total allocation of 30,081 kilos per annum. He said he did not seek to review the subsequent decision to grant him an extra allocation. He agreed that should the application brought by Mr Fischer be successful and greater quota was allocated that he may benefit. He also agreed that his present allocation of 2.5 tonnes with respect to the A6 permit could increase if it was decided that quota allocation should not be based on catch history.
In answer to some questions from us, Mr Hosking said that when a licence was purchased or leased without approval by or knowledge of AFMA, the "vendor" continued to represent to AFMA that he/she was the legal owner. AFMA would then forward renewal notices yearly to that person who would have authority by reason of the agreement, to renew the licence on an annual basis. Mr Hosking said that he did not feel any insecurity with an arrangement of this type and believed that the documentation prepared by his solicitors established a secure legal relationship. Mr Hosking did however meet the cost annually of licence renewal, but there was no annual fee paid to the vendors to have them continue to represent to AFMA that they were the permit holders. Nonetheless Mr Hosking said that he was aware that AFMA knew that he had an "interest" in a licence which was not registered in his name.
With respect to catch histories being verified to AFMA in the case of licences which were leased or licences which were acquired but not transferred with AFMA's approval, Mr Hosking told us of three differing circumstances.
Insofar as his own circumstances were concerned, his catch history was verified by AFMA during the period of 12 to 14 months that he leased the A10 licence from Mr Atterton. He was able to verify his catch history directly because he was registered as the lessee of that permit. When the licence reverted to Mr Atterton, he - Mr Atterton - obtained the benefit of Mr Hoskings catch history from the previous 12 months.
With respect to the A6 licence acquired by Mr Hosking from Mr Milton and Mr Free, Mr Hosking obtained the benefit of the catch history as was verified to AFMA by the vendors immediately prior to the "sale".
With respect to permit holders who have sold permits but who continue to be registered with AFMA as the legal owner, Mr Hosking said that there are circumstances where fisherman provide the vendors with details of their catch and the vendors in turn make representations to AFMA as if they had actually caught the fish.
Geoffrey Richardson
Mr Richardson is the Senior Manager for the Southern Fisheries with the respondent. He has held this position since April 1997. Prior to the hearing, he lodged a comprehensive proof of evidence together with a number of other documents which he referred to in his evidence.
Mr Richardson was asked a number of questions concerning the SSF and the South Eastern Non Trawl Fishery.
As the SSF is concerned, he said that it continues to be the subject of input and output controls. The input controls extend to a limit on the length of gill nets, the mesh size of gill nets, the requirement to have a licence and limited entry into the fishery.
With respect to the South Eastern Non-Trawl Fishery, Mr Richardson said that it previously was unrestricted - save for the requirement to have a Commonwealth boat licence, however from January 1998 ITQ's were introduced and allocated to fisherman who had previously demonstrated that they had operated within that fishery. The fishing permits previously held differed as between hook or gill net fishing and some permits required a SSF endorsement. The absence of a SSF endorsement affected the type of permit that was allocated, thereby limiting the extent of access to that fishery. In some circumstances permits were transferable.
With respect to the SSF Mr Richardson said that there was a change of policy embodied in legislation passed by the Federal Parliament relating to the transferability of permits and limiting the number of commercial fisherman who were permitted access to that fishery.
As to the permits, which are issued by AFMA, Mr Richardson said that the legislation authorises the permit holder or a person appointed by the permit holder to conduct fishing activity. He said that permits carry restrictions as to the gear which is to be used and the quantity of fish which is to be taken. Compliance, he said, was the responsibility of the permit holder. He said permits in the SSF were not transferable except in certain limited circumstances and he regarded non transferability as an element of input control. He said that restricting the number of fisherman permitted to operate in the SSF, placed a limit on the quantity and species of shark taken.
With reference to the evidence of Mr Hosking Mr Richardson agreed that the limited circumstances of AFMA approving transfer of licences occurred with the amalgamation of A6 licences in to A10 licences in the late 1980's, transfer of a licences by way of a limited period of lease or transfer to an immediate family member in the case of death or serious illness. He said that there were no other circumstances where AFMA would recognise a transfer of a permit. He agreed that before 1 January 2001, there were a number of "under the table" transfers but they were not recognised by AFMA yet it did cause concern and would have been in breach of a permit condition. He said that some instances of non-recognised permits having been transferred were referred to members of the compliance section of AFMA to consider prosecution or other action however no action of this type was undertaken. Additionally he said that he had understood that there were certain legal arrangements put in place between permit holders and persons to whom those permits were "transferred" which did not appear to breach permit conditions. He recalled that there was "frustration" amongst AFMA managers about the inability to take action "over what we were being told by fisherman was actually happening".
In terms of the ability of a permit holder to verify catch, Mr Richardson said that AFMA had regard to the boat which delivered the catch because permits were attached to a boat. If there was an "amicable arrangement" between the transferor and the transferee at the time of verification, catch would be verified without complication. Additionally, he said there were instances where catch would be landed in the name of the skipper of a boat which would generally not cause any controversy because it was not unusual for permit holders to employ another person as a skipper. Nonetheless an arrangement of that type could mask or conceal the true identity of the permit holder. He said it was the practice of AFMA to deal with permit holders and AFMA relied on and had regard to the catch history as verified by permit holders. Mr Richardson agreed with the evidence of Mr Fischer that there were instances of licence holders lodging inaccurate verification statements. He said that AFMA officers visited permit holders and reviewed verification documentation yet he acknowledged that there could be abuse. He said because there have been instances where quota has been taken from fishermen because false or misleading information was provided by them.
With respect to the applicant's catch history, Mr Richardson noted that Mr Fischer had been allocated 16 tonnes of quota and that he had said in evidence that his fishing operations could not remain economically viable. Mr Richardson noted however that on the catch histories returned by Mr Fischer he had been taking shark at less than 16 tonnes per annum at a time when there was no restriction on catch.
As to the applicant's submissions that the quota allocation was flawed because there should have been an equal allocation amongst all fisherman within the fishery, Mr Richardson said that it would result in an ITQ of about 32 tonne per fisherman in 2001. This would cause some fisherman who had been allocated an ITQ of 65 tonne having a considerable reduction - more so in the current year where the total allowable catch for school and gummy shark had been reduced by approximately 25%. Another disadvantage, he said, of the applicant's proposal would be that fishermen who had demonstrated commitment to the fishery and who had accumulated a high catch history would receive "no advantage" and would be significantly disadvantaged. Indeed he said that those persons would be treated the same as persons who had no catch history.
With respect to AFMA policy concerning whether persons who have accumulated little or no catch history should be permitted to equally share the total allowable catch, Mr Richardson said-
"AFMA has a very strong view on that in the sense that we put an independent allocation advisory panel together to provide advice to the AFMA Board on an appropriate allocation formula that AAP went through the steps as outlined in my statement to gather information from fisherman, to take submissions, to ask them questions at port Meetings and to form an opinion on what the most appropriate formula should be. The AFMA Board received a report of that panel, considered it and agreed with it. So I would say AFMA would have a very strong view on that".
In cross-examination Mr Richardson said that he understood that gummy shark was currently traded at $17,000 per tonne. He said less information was available to him concerning the value of school shark, but he understood the price to be in the same vicinity. He agreed with a suggestion from Mr Niall that "a tonne of quota is worth a very substantial amount of money".
With respect to the shift by AFMA from input controls to output controls, Mr Richardson said the objective was to pursue economically sustainable development and economic efficiency. He agreed that sustainability, a decision to move to ITQ's and (more recently) transferable quotas assisted in the promotion of economic efficiency in the fishery.
As a matter of policy, Mr Richardson said that AFMA took the position that the method of allocation of quota was "neutral" and was not directed towards any specific legislative objective. This was because a TAC had been determined and additionally, AFMA had determined that there be a quota allocation. Nonetheless he agreed that the instructions given to the Panel was that any recommendations made by them should not be inconsistent with the legislative objectives.
With respect to AFMA policy, Mr Richardson also agreed that FMP8 had been adopted and it determined that if concessions were to change, any differential economic impacts to individual fishing concession holders were to be minimised unless there were justifiable reasons - having regard to the legislative objective - that would dictate otherwise. This policy he said was adopted because AFMA intended not to cause any disruption upon the relative economic position of members of the fishing industry if there was to be a shift from one system to another. He agreed that the Panel had been directed to act in accordance with FMP8.
With respect to his evidence in chief concerning whether it would have been preferable for AFMA to allocate quota equally among fisherman or whether there should be a variation, Mr Richardson said that there was no active view within AFMA that persons should be rewarded if they have a high catch history, nonetheless this was the recommendation made by the Panel, it was seen as a "better system" and was ultimately adopted by AFMA. He re-affirmed that AFMA did hold the view "that it is not better to give someone with a high catch history more than someone with an inactive licence, other things being equal" ("transcript p.161"). He said that AFMA continued to adopt FMP8 as its policy with respect to the allocation of rights where there is a change in one management regime to another. He also agreed that in order to minimise economic disruption, there needed to be an examination of the relative economic positions of persons before and after the proposed changes. It was his belief that the Panel did undertake this exercise. He understood that AFMA was of the belief that the Panel "fulfilled their terms of reference as to their best ability".
When asked about the history of shark fishing, Mr Richardson said that there was a restriction on access to fisheries prior to 1988 only by the need to have a Commonwealth Fishing Boat Licence. After 1992, additional restrictions were imposed concerning the use and size of gill nets and endorsements to catch certain fish species. Significantly however there was no restriction on the quantity of catch. He said that permits were renewed annually and there was an expectation held that permits would continue to be renewed if permit conditions were met. A levy was payable annually irrespective of the size of catch - or indeed whether there was a catch at all. Eventually A(6) licences were amalgamated to form A(10) licences which had the effect of reducing the number of operators in fisheries, which consequently removed the number of boats and nets. Permits were transferable and Mr Richardson understood they were sold in the vicinity of $100,000 each. That price was obtained irrespective of catch history.
The next stage in the history of the fishery was to have permits issued which contained conditions as to transferability. Mr Richardson acknowledged that the permits recorded that they were not transferable "except by application on the approved forms to AFMA subject to AFMA approval". Additionally, the permits recorded that transfers would only occur "to the spouse or a natural or adoptive grandparent, parent, sibling, child or grandchild of the fishing permit holder or of the spouse'. Additionally, AFMA determined that permits could be transferred in "compassionate circumstances". Whether a discretion would be exercised to permit transfer of the permit in "compassionate circumstances" was to be determined by a policy which Mr Richardson described as "loose" but which extended to "grave illness and death". The witness said the policy was "loose" because it was not "very well specified".
Having heard the evidence of Mr Hosking, Mr Richardson said that substantial prices were obtained for transfers, which he described as "under the table transfers". Additionally, Mr Richardson was aware of transfers by way of lease which he also understood would attract substantial payments of money. Between 1990 and 2001, Mr Richardson understood that there were 17 leases of permits of the 130 that had been issued but he was unable to make a comparison with other fisheries because he did not deal in AFMA's licensing section.
Mr Richardson agreed that there was considerable interaction between AFMA managers and fishermen by participation at meetings, telephone calls and other representations. Additionally, he said that the AFMA managers would interact by way of written correspondence. He expected that the managers would be "well informed" about what was actually going on in the fishery which would extend to information concerning the impact of management decisions and levels of fish stock. Additionally, knowledge would be obtained concerning the assignment between fisherman of the beneficial interest in fishing permits. He said information was obtained concerning the "under the table transactions" and some fisherman were "annoyed about it, that we weren't doing anything about it". He said it was the subject of debate within AFMA and it was known that the practice existed however it was not possible to identify the number of transfers which were not sanctioned or the frequency. He agreed advertisements were placed in professional fishing magazines, which he did not regard as a "common occurrence", nonetheless his compliance officers rang the brokers advising that the permits were not transferable. He said the position taken by AFMA was that a transfer of a permit could not occur without breaching the conditions of it, however it was understood that an assignment of an interest in a permit could occur without a breach of the permit conditions.
The witness said that signing a beneficial interest in a permit carried with it the risk of the permit being suspended if the permit holder was found to be in breach "of any Fisheries Act in the State or the Commonwealth or indeed around the world". Additionally, he said that there was a risk of correspondence that was forwarded to the transferor (being the registered owner of the permit) not finding its way to the transferee which might result in the absence of compliance with a permit condition.
Another means to avoid the seeking of AFMA approval for the transfer of a permit could be the appointment by the permit holder of another person as a skipper of the boat to whom the permit is attached. Eventually, the transferor could apply to have the permit transferred to a boat owned by the transferee. He understood that in the context of transactions of this type or the beneficial transfer of benefits generally, there was an agreement or understanding between permit holders and the persons to whom the benefit was transferred to assist each other in the catch verification process.
In terms of the relative value of permits, Mr Richardson agreed that prior to 1 January 2001 AFMA would agree to transfer a permit to a spouse of a permit holder in the case of death. He understood that a person who held a permit would regard it as a "good form of superannuation" and security would be available to widows of fishermen who held permits because AFMA would assist in a licence being sold "which would be worth probably a considerable sum of money". Additionally, prior to 1 January 2001 fisherman were capable of beneficially assigning their interest in permits which AFMA would not regard as being in contravention of permit conditions. Mr Richardson acknowledged that leases or assignment of beneficial interests in permits would also attract considerable sums of money and he acknowledged the evidence of Mr Hosking that some leases sold for $420,000.

At 1 January 2001 the respondent introduced a regime of "output controls" which effectively placed restrictions on the quantity of catch. The restrictions as to nets continued, however the respondent introduced a ceiling on the total catch from the fishery known as the Total Allowable Catch (TAC). It also introduced Individual Transferable Quotas (ITQ's) and allocated ITQs to fisherman in the SSF. The quota determined by the respondent had regard to the catch history of Mr Fischer and others in the best three years between 1994 and 1997.
The Panel acted under terms of reference which were issued by AFMA. It was directed to provide recommendations to the AFMA Board on "apportionment of the total allowable catch (TAC) of school shark and the total allowable catch (TAC) of gummy shark amongst Southern Shark Fishery . . . " It was also directed to provided recommendations on the "appropriate formula(e) for the allocation of individual transferable quotas (ITQs) for school shark and for gummy shark amongst Southern Shark Fishery permit holders . . ."
The Panel specifically was directed to advise the AFMA Board on "the most appropriate basis for allocation of ITQs in the SSF in accordance with Fisheries Management Paper No. 8 (FMP8) 'Allocation Of Fishing Concessions Where Management Arrangements Have Changed'" (refer T19 p213/214).
FMP8 is found at T17 p165 and it records:
This Fisheries Management Paper sets out AFMAs policy in a procedural framework for the allocation of fishing concessions where a decision has been taken to change management arrangement in a fishery for which management arrangements are already in place and fishing concessions have been granted to eligible operators. For example this could be where a move is made from

a non-transferable input control system to a transferable unitised input control system; or
an input to an output control (individual transferable quota) system.

At paragraph 4 (page 166/167) the following is found within FMP8:
Allocation of fishing concessions:
Establishment of a well defined devisable secure and transferable fishing concessions are a major factor in the successful pursuit of AFMAs 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 the fishery at the time that management arrangements are proposed to change are the ones that will be taken into account under any allocations of concessions required by the move from one management regime to another.
It should also be recognized that there will be instances where in pursuing AFMAs 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 would 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 impact on individual operators.
Therefore AFMAs approach to allocation of fishing concessions is based on the premise that in making any management changes AFMA will ensure:

such changes are consistent with and support the pursuit of AFMAs legislative objectives;
any differential economic impact of allocations on individual fishing concession holders are minimised unless there are reasons, justifiable with AFMAs legislative objectives that dictate otherwise.

The Panel apparently was aware of its responsibility to have regard to FMP8 because it reproduced significant parts of it in its report (page 190/191, 390/392). In its recommendations concerning allocation of permits in the SSF, the Panel concluded, at page 205:
While in respect of apportionment between fisheries we have recommended use of aggregate catches during the whole of the four years ending 31 December 1997, for allocation of ITQs among individual fishermen we recommend that the aggregate catches be derived from the best three annual catches during that period. The personal vicissitudes of a fisherman's life, such as injury or other illness, loss of, or serious damage to, gear or vessel, occurring during so short a period as four years are likely to affect his aggregate catch during the period to an extent that distorts his relative economic position. By using the best three years of the period the risk of such distortion is lessened, in our view.
Our conclusion is that, failing prior apportionment of the Southern Shark Fishery TAC among the sectors, each applicant for ITQ allocation in the fishery receive an allocation for each species in the proportion that the aggregate of his best three annual catches of the species taken in the fishery during the period under the authority which the permit or permits held by him when allocation is made gave for the taking of the catches bears to the aggregate of the best three annual catches of the species taken in the fishery during the period under the authority which the permits held by all applicants when allocation is made gave for the catches. The recommendation is so worded as to give effect to the principle, which we consider ought to be applied, that catch history attaches to the permit under the authority of which the catch was taken and not to the person who held the permit when the catch was taken, so that the catch history is that of the person who holds the permit when allocation of ITQs is made.
If, however, apportionment of the fishery TAC among the sectors has been made before allocation, then we recommend that each applicant for ITQ allocation in a sector of the fishery receive an allocation for each species in the proportion that the aggregate of his best three annual catches of the species taken in that sector during the period under the authority which the permit or permits, held by him when allocation is made, gave for the taking of the catches bears to the aggregate of the best three annual catches of the species taken in that sector during the period under the authority which the permits, held by all applicants when application is made, gave for the catches.
Mr Richardson said in evidence that AFMA continued to regard FMP8 as its policy concerning allocating rights if there is a change in one management regime to another. He also said that the AFMA Board accepted the recommendations of the Panel and implemented those recommendations.
There is no challenge by Mr Fischer to the introduction of TACs or ITQs. Indeed it is our view that the introduction of a TAC is consistent with the legislative objective found at s.3(1)(b) of the Act. We think there are sound ecological and economical reasons placing a limit on the total catch permitted in a fishery. Clearly this is to preserve fish stock and to ensure survival of the species. It is our view also that controlled exploitation of the fishery enhances "maximising economic efficiency in the exploitation of fisheries resources" (refer s.3(1)(b)).
Drummond J extensively discussed the concept of "economic efficiency" in Bannister Quest Pty Ltd v Australian Fisheries Management Authority, Federal Court, 4 August, 1997, 819/1997. In his judgement his Honour extensively referred also to Australian Fisheries Management Authority v PW Adams Pty Ltd, (1995) 134 ALR 51 and PW Adams Pty Ltd v Australian Fisheries Management Authority (1995) 60 FCR 387.
Bannister Quest considered economic efficiency in the context of the introduction of a TAC into the SSF which of itself was not opposed by the applicant. The issue appears to have been the introduction of ITQs limiting fishermen to a specific amount of catch. Whilst that issue is strictly not an issue in these proceedings, the discussion by his Honour as to "economic efficiency" is useful in comprehending the meaning to be given to s.3 of the Act. In the present case there is no opposition by Mr Fischer to the introduction of a TAC or indeed ITQs. Mr Fischer submitted that there should be an averaging process between all members of the SSF resulting in an equal allocation of the TAC to all of those members as determined from year-to-year. He understood, and agreed, that there may be variation from year-to-year based on the TAC. The significant issue in this review is the affect upon capital value of fishing concessions by the introduction of ITQs based on catch history in a fishery where permits were transferable. The allocation of ITQs were submitted by Mr Niall, where catch history was relied upon in a fishery where permits were transferable, to have "wrongly assessed the relative economic position obtaining before 1 January 2001" (refer written submissions at paragraph 95). Having failed to comprehend the relativities of the applicant's economic position, the decision under review – it was submitted – was flawed and the decision under review should be set aside.
For reasons which will follow we agree with those submissions and have decided that the method of allocation of ITQs should be reconsidered by AFMA.
A very dominant feature of these proceedings was the knowledge we acquired of the extent of transfer and leasing of fishing permits.
Despite the permits being endorsed as "non-transferable" and containing conditions that they not be transferred except by application to AFMA - and then by its approval only in very limited circumstances extending to infirmity or death - we accept and find as a fact that prior to 1 January 2001 fishing permits were being sold or leased or being dealt with in a way inconsistent with the policy of non-transferability. Additionally we find and accept as a fact that this practice was known to AFMA.
We became intimate with the transactions undertaken by fishermen, the market that apparently exists, as evidenced by the presence of fishing brokers, advertisements placed in fishing journals, contracts being entered into and being drafted by legal representatives and finance apparently being made available by lending institutions. We learned that the contracts described ongoing obligations on the part of vendors to make certain representations to AFMA on an annual basis to ensure that the interest in the licences were preserved for the benefit of the persons who "purchased". We also learned that AFMA was aware that interests in fishing concessions had been transferred (because their record keeping was apparently incomplete).
We heard that there had been many discussions with AFMA representatives on a singular and public level concerning the transfers of permits and it would appear that AFMA did "turn a blind eye". Indeed, it appears that senior managers within AFMA were aware of the practice. We heard many references to a former manager of the Fishery, Ms Stone, being aware and we have no alternative, in her absence from giving evidence at the hearing, despite our inquiry, to draw an adverse inference. Mr Richardson said that he was aware of "under the table transactions" that it was debated within AFMA and that he was aware of the advertisements in fishing journals. The position of AFMA, he said, was an assignment of an interest in permits could occur without breach of permit conditions. Mr Sturgess, who was a member of the Panel, said that "under the table" transactions were referred to in background papers provided by AFMA and he understood that contracts existed between persons. He said the Panel however had no information as to the frequency detail or content of those transactions nor or the value obtained upon sale or lease. We are satisfied the Panel did have knowledge of the occurrence of transactions of this type. It was referred to in their report (refer p204).
The significance of transferability of permits is that considerable sums of money can be obtained upon transfer because of their inherent value. The value is determined by the income which can be obtained by the permit and the capital amounts which can be obtained upon sale. Similarly, in the case of permits being leased, the arrangements that we have learned of entitled the lessor to receive income being a proportion of catch (without having to fish), with the lease reverting to the lessor at the end of the lease period.
The opportunity to earn an income from a permit cannot be underestimated. We learned of fishermen investing many hundreds of thousands of dollars in fishing boats and equipment and being engaged in a relatively high risk industry. Fishermen generally are self-employed and do not have access to the benefits which are generally available to persons who are employed in a typical employer/employee relationship. The opportunity to earn income from fishing by reason of a permit is to ensure that profits are achieved commensurate with effort and risk and also to permit planning for retirement. It also follows that the permits have a capital value which a fisherman may chose to dispose by way of transfer because it is an asset achieved through a history of fishing. The introduction of ITQs in the manner presently under review has sufficiently affected Mr Fischer to the extent that the value of his permit is now considerably reduced compared to the value that it had prior to 1 January 2001, in terms of its capital worth and the extent of income which might be earned from it having regard to the fixed quota which has now been imposed.
The decision by AFMA to adopt three of the best four years of fishing between 1994 and 1997 was made towards the end of that period without prior consultation. It was said that had AFMA notified in advance that it intended to embark upon that exercise, that there may have been over exploitation by fishermen in order to demonstrate a substantially higher catch than they would have otherwise achieved and an intolerable burden upon fish stocks would have occurred. AFMA explained its decision of catch history in retrospect by the ability to observe a demonstrated commitment to the shark fishery (evident by the extent of catch by fishermen within the above period). This may be so but it denies the expectation held by some fishermen that fishing permits were transferable and would be renewed annually subject to extraordinary circumstances. It denies that fishermen treated the permits as an asset capable of capital realisation. It denies fishermen choosing to fish for other species which may have been more profitable. It further denies fishermen the right or choice to return to shark fishing in any meaningful way if the ITQ allocated is considerably below that which might otherwise be achieved had there been a greater catch within the fishery within the above period.
By reason of the knowledge held by AFMA of the trading of fishing permits, and the reliance by it upon catch history, we believe that the method of ITQ allocation to be wrong.
If the views expressed in evidence by Mr Sturgess were an indication of the views held by the Panel, it is our view that inadequate and incomplete consideration was given to these issues in its deliberations.
Mr Sturgess presented his evidence strongly upon the basis that the SSF was a non-transferable fishery. This was despite the knowledge that he had whilst a member of the Panel that transfers were taking place. He sat through the three days of evidence and heard with some intimacy the information obtained concerning the extent of transfers. We asked him if the Panel had received information of that type during its review, whether it would have made the same recommendations. He said he was unable to speak on behalf of the Panel but said that he was confident that the Panel would not have sought any further information. On that basis we are satisfied that inadequate consideration or heed was given to the apparent wide spread industry practice of transfer and or lease of permits. It follows that the Panel – and AFMA – should have regarded the fishery as being one where permits were transferable. With that in mind the conclusions reached by Mr Collins and by the authors of "Fish Futures" is virtually inescapable.
At page 92 of the article "Fish Futures" the authors refer to "Transferable Rights prior to ITQs". The thesis is developed on the basis that:- individual permit holders held transferable entitlements prior to the introduction of ITQs; some operators purchased entitlements from other fishermen; the entitlement has value because it is an asset irrespective whether it is used to earn income or not; holders of similar entitlements would therefore have similar asset values and equal allocation to entitlement holders would minimise wealth redistribution. The authors recognised that fishermen who harvested above average catches may feel aggrieved by equal allocation to all fishermen and that they should be entitled to a greater share of the TAC. The solution advanced was:
"One option to deal with this situation is to provide all entitlement holders with a base allocation of quota estimated to have the same value as a no/catch/history effort entitlement and then allocate additional quota based on catch history. Different circumstances may require different approaches. In our opinion what is important is that if equity and fairness are objectives in the allocation process then a principled and transparent approach to allocation based on an explicit consideration of pre ITQ entitlements should be followed."

The authors then referred in part to FMP8 where it referred to "differential economic impacts should be minimised where there is a re-allocation of fishing concessions in a changed management regime". The authors continued:

". . . Fisheries managers should fully expect that various interest groups will appeal to these management objectives in order to increase their share of the TAC. However the objectives of fairness and equity would certainly appear to be relevant considerations when determining quota allocations. In keeping with fairness and equity it would be prudent for fisheries managers to examine the wealth redistribution consequences of alternative allocation formulae."

We were impressed by the evidence of Mr Collins and believed that his conclusions should be carefully considered in any reconsideration of allocation of ITQs. We accept that in a non-transferable fishery that the income stream capable of being earned from a permit cannot be exchanged and the permit has no capital value. This is because it cannot be transferred.
In the alternative – and relevantly for these purposes – a transferable permit entitles the permit holder to transfer the income stream to another person upon sale or lease. It also entitles the permit holder to acquire a capital benefit upon sale.
In our opinion, those rights existed prior to 1 January 2001 because – for the reasons given above – the environment should properly have been observed as one where permits were transferred and were transferable. In order to properly assess the relative economic position before and after 1 January 2001 an examination is required of the position of fishermen before and after that date. If by the introduction of an ITQ based on a catch history, the quota allocated is less than what might be achieved, the value necessarily of the permit is reduced by reason of the limitation on the income which can be earned from it and its reduced value as a capital asset. It follows therefore that the relative economic position of a fishermen may be worse after 1 January 2001 than previously. This is the consequence of the ITQ imposed upon Mr Fischer, which has given rise to these proceedings.

We find that a permit in a transferable environment has value even if fishing is not undertaken. This is because the permit creates a capacity or an entitlement on the part of the permit holder to exploit the permit and fish for shark. The imposition of an ITQ restricts the quantity of catch thereby also affecting the relative economic position.
In the circumstances of the present application, the differential economic impact of the introduction of the ITQs based on catch history has not been minimised and in the circumstances of the application of Mr Fischer there are reasons which would dictate a departure from the policy (refer FMP8).
Adopting the language in Re Drake, we are satisfied the policy 'tends to produce an unjust decision' (p. 645). We are also satisfied that the policy decision under review is not sound, rather that it is flawed and in the circumstances we have decided that the application should be remitted for a reconsideration. We believe that to be the correct or preferable decision.
We do not believe that it is appropriate for us to decide the policy appropriate in the circumstances. We do not profess to be appropriately qualified, nor do we have the expertise or the historical knowledge of fisheries as responsible persons within AFMA possess. Additionally, we are aware that there are many other persons who are members of the SSF who did not give evidence in these proceedings and their views and circumstances are not known. It would be wrong for us to make any decision concerning the method of quota allocation. It would be more appropriate for AFMA to undertake those enquiries and for it to determine a policy in lieu of a policy under review in these proceedings.
We would, however, urge AFMA to be mindful of the evidence of these proceedings, the conclusions especially of Mr Collins, the paper 'Fish Futures' and its own FMP8. If it pursues a policy of TAC & ITQ's, it should, we would recommend, regard the permits, at all relevant times as being transferable.
In the circumstances, we decide that the decision under review should be set aside and the application be remitted to the respondent for reconsideration in accordance with these reasons.
I certify that the 179 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J Handley and Mr C Emert.
Signed:         Katherine Navarro.............................
  Associate
Date/s of Hearing  19, 20 and 21 February 2002 and 4 April 2002
Date of Decision  27 September 2002
Counsel for the Applicant         Mr Niall
Solicitor for the Applicant          Fitzpatrick Teale
Counsel for the Respondent    Mr Hanks
Solicitor for the Respondent    Ladbray Consortium