Markellos and Australian Fisheries Management Authority - [2005] AATA 914

CATCHWORDS – FISHERIES – Southern Shark Fishery – fishing permits –Individual Transferable Quota – whether ITQ should be varied – verification of catch history on which ITQ based – whether daily catch and log books sufficient without reference to sale or dealings with catch – decision affirmed regarding verification but varied to reflect the increased quota otherwise calculated by AFMA.

Fisheries (Fish Processors) Regulations 1991 (SA) rr. 7, 8 and 9
Fisheries Act 1952
Fisheries Act 1982 (SA) ss. 5 and 54
Fisheries Administration Act 1991 ss. 7 and 9
Fisheries Management Act 1991 ss. 3, 4, 5, 17, 21, 32, 32(1A), 32(1B), 38, 39, 61, 71, 72, 95 and 165
Income Tax Assessment Act 1936 ss. 6 and 262A
Income Tax Assessment Act 1997 s. 3-10(1)
Migration Act 1958 s. 499

Australian Fisheries Management Authority v Graham (2003) 127 FCR 436

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

Re Fischer and Australian Fisheries Management Authority (2002) 71 ALD 665

Re Howard and Australian Fisheries and Management Authority [2005] AATA 360

DECISION AND REASONS FOR DECISION [2005] AATA 914

ADMINISTRATIVE APPEALS TRIBUNAL     )
  )          S2002/18
GENERAL ADMINISTRATIVE DIVISION     )

Re ARTHUR MARKELLOS

Applicant

AndAUSTRALIAN FISHERIES MANAGEMENT AUTHORITY
Respondent

DECISION

Tribunal:                   Deputy President S A Forgie
Date:  19 September 2005
Place:  Adelaide

Decision:The Tribunal:
1.varies the decision made by a delegate of the respondent on 20 December 2001 so that the Individual Transferable Quota appearing as a condition to the applicant’s Southern Shark Fishery Permit No. 26363 takes account of an increase in the applicant’s catch history of 4,549 units of gummy shark and 103 units of school shark;
2.remits the matter to the respondent to assess the applicant’s Individual Transferable Quota appearing as a condition to the applicant’s Southern Shark Fishery Permit No. 26363 to take account of an increase in the applicant’s catch history of 4,549 units of gummy shark and 103 units of school shark; and
3.otherwise affirms the decision under review.
S A FORGIE
Deputy President

REASONS FOR DECISION

Mr Arthur Markellos holds a permit entitling him to fish for school shark and gummy shark in the Southern Shark Fishery (“SSF”). Following a reviewable decision made by a delegate of the Australian Fisheries Management Authority (“AFMA”) on 20 December 2001, a condition was attached to his permit setting a quota limiting the trunked weight of school and gummy shark that Mr Markellos may catch: 971kg of school shark and 17,438kg of gummy shark. The condition was attached to his permit issued on 17 January 2002 for the period starting on that date and ending on 31 December 2002. AFMA says that it has calculated Mr Markellos’s quota on the basis of the catch history shown in his catch returns and log books where that catch history was verified by other records. More recently, it has conceded that it had omitted to have regard to some records of the Fish Factory, which verified a further portion of his catch history. Consequently, it has increased Mr Markellos’s quota allocation by 4,549 units of gummy shark and 103 units of school shark.[1]

[1] Letter dated 7 July 2004: Exhibit J

On behalf of Mr Markellos, Mr Lazarevich submitted that it should have been based on his catch returns and log books alone as, unlike many other fishermen, he processed and sold some of his own catch, did not generate sales dockets in respect of shark he processed and did not necessarily generate sales dockets when he sold shark to persons other than fish processors. I have decided that, without more, daily catch records and log books are insufficient to verify a catch history. Therefore, the decision should be varied to reflect the increased quota as a result of his catch history that has been verified by reference to other documents but not otherwise.

THE ISSUE

The primary issue in this case is whether the quota attached as a condition to Mr Markellos’s SSF permit should be varied. That raises two subsidiary issues. The first is whether there are cogent reasons justifying a departure from the requirement that Mr Markellos’s catch history be verified by reference to documents such as sales dockets. If there is, the second is whether he is able to verify his catch history sufficiently in any event.

BACKGROUND

Mr Markellos’s fishing activities

On the basis of his evidence, I find that Mr Markellos started fishing in the Gulf St Vincent and in Spencer Gulf with his father in 1977. They hand pulled for shark on a part time basis. In 1980, Mr Markellos took over from his father. For a two month period, he fished mainly in Commonwealth waters with Mr Sam Steel on the Marion H. In 1987, he built a new vessel, the Alien II. After being refused permission to fish in the Commonwealth Fishery, he used the Alien II to fish for shark in South Australian waters. In November 1991, the Alien II sank. Mr Markellos faced serious financial difficulties but was able to resume shark fishing at a reduced level by leasing the Otway Hunter and purchasing poor quality nets from another vessel. His financial position did not improve and he had to relinquish the Otway Hunter in April 1993.

Mr Markellos leased another vessel, the Karina IV. He used it for two months of fishing but, when he could not exercise his option to buy it, it was bought by another fisherman in January 1994. Mr Markellos then leased the Pacific Condor for a year so that he could resume shark fishing. As the Pacific Condor was in poor condition, its engine seized in October 1994 and he could not resume fishing until January 1995. Mr Markellos purchased the Harmony IV in December 1996. That vessel, which is now named the Actos, was extremely run down but he spent $300,000 on its repair and refurbishment. Mr Markellos now owns three fishing vessels: the Aetos, the Alien, and the Talon.

Between 1994 and 1997, Mr Markellos held a State marine fishing licence allowing him to fish for shark and most marine scale species.

Alien Seafoods

Mr Markellos and his wife sell seafood under a registered business name: Alien Seafoods. Mr Markellos supplied most of the fish in the shop from his own catches but bought product he did not catch, such as prawns, lobsters and oysters, from the Fish Factory for resale. He sold to the public from a shop in Berri and to local hotels and clubs.

Background to the introduction of the Fisheries Administration Act 1991

On the basis of the material I have in the documents lodged under s. 37 of the Administrative Appeals Tribunal Act 1975,[2] I find that shark fishing occurs in waters off the coast of South Australia, Tasmania and Victoria. The catch in the SSF largely comprises gummy shark and school shark. For many years, there have been concerns about overfishing shark and these concerns are exacerbated by the slow growing nature of sharks, their slow rate of attaining sexual maturity and the fact that they produce only a few young at a time.[3]
[2] Exhibit 1
[3] Southern Shark Fishery Task Force, Southern Shark Fishery Report on Future Management at [3.1] -[3.2]: Exhibit 1 at 30-31

Until relatively recent times, responsibility for the management of the SSF was shared between the Commonwealth and each of the three States. Before 1986, no specific licence or endorsement was required to fish for shark in Commonwealth, Victorian or Tasmanian waters. Provided a boat had appropriate licences to fish in Commonwealth or State waters, it could fish for shark. Only South Australia required an endorsement to fish for shark.[4] The second half of the 1980s saw the introduction of various restrictions on shark fishing. In 1986, limited entry was introduced in the Commonwealth sector of the SSF after it was foreshadowed in November 1985.[5] In July 1986, the transfer of endorsements was frozen.[6]
[4] Australian Bureau of Agricultural and Resource Economics, Management options for the southern shark fishery; An economic analysis at 12-16: Exhibit 1 at 103
[5] Southern Shark Fishery Task Force, Southern Shark Fishery Report on Future Management at [4]: Exhibit 1 at 33-34
[6] Southern Shark Fishery Task Force, Southern Shark Fishery Report on Future Management at [4]: Exhibit 1 at 34

Since then, other restrictions have been imposed on shark fishing in the waters comprising the SSF. They have included, for example, legal minimum lengths, legal maximum lengths, closed seasons and prohibition on the possession of certain species of shark. This was followed by an interim management plan introduced in the Commonwealth gillnet fishery based on the issue of gillnet endorsements to fishermen with a history of operating in the SSF. The interim management plan did not extend to longline fishing or to fishing in State waters. Based on their catch history, fishermen were issued with either six units of net (each being 600 metres) or with five or fewer units of net. In all, 1,678 net units were allocated among 248 boats. Strategies were put in place regarding amalgamation of allocations and restrictions on the transfer of allocations in order to reduce the number of allocated nets. Levels of fishing in the Commonwealth waters of the SSF reduced and, by 1988, 40% of the nets allocated to fishermen had been removed from the shark fishing industry. The allocations issued to fishermen under that interim management plan were reduced by an average of 36% in 1991.[7]
[7] Australian Bureau of Agricultural and Resource Economics, Management options for the southern shark fishery; An economic analysis at 12-16: Exhibit 1 at 103-107

As restrictions on shark fishing were introduced and varied over the years, there were various reports, media releases and information releases to the public. On 25 September 1984, for example, the then Minister for Primary Industry said that a special Task Force, known as the Shark Task Force, was considering the introduction of controls in the SSF.[8] When the Shark Task Force reported, the Minister said, its report would be circulated to the industry and public meetings would be held in each State. While no decision on controls had been made at that time, the Minister emphasised that controls were being considered and additional investment in the industry at that time would not be appropriate. A similar warning was issued a few months later in April 1985[9] following advice on 14 December 1984[10] that a discussion paper would be circulated at the end of January 1985. It was circulated on 25 February 1985 and public meetings arranged to discuss it.[11]
[8] Exhibit 1 at 11
[9] Exhibit 1 at 12-13
[10] Exhibit 1 at 68-69
[11] Exhibit 1 at 72-73

The introduction of limited entry in what was then known as the Southern Shark Gillnet Fishery was announced by the Minister in a media release dated 29 November 1985[12] and the conditions for entry were announced in an information bulletin issued by the Minister’s Department on 30 December 1985.[13] Further details were given in a further bulletin dated 22 July 1986.[14] A discussion paper outlining management options for the fishery was released to members of the fishing industry on 11 December 1986.[15] Limitation of boats into the Southern Shark Gillnet Fishery as from 28 February 1986 had earlier been announced on 25 February 1986.[16] On 17 October 1990, the then Minister for Primary Industry and Energy warned fishermen not to invest in automatic longline equipment as options for restricting its use for taking shark would soon be finalised.[17] In late 1990, the Australian Fisheries Service (“AFS”) established the SSF Structural Adjustment Task Force.[18]
[12] Exhibit 1 at 14-15
[13] Exhibit 1 at 16-19
[14] Exhibit 1 at 20
[15] Exhibit 1 at 65
[16] Exhibit 1 at 66-67
[17] Exhibit 1 at 83
[18] Exhibit 1 at 98

The establishment of AFMA

Until AFMA was established on 3 February 1992, the Department of Primary Industries and Energy managed the SSF first under the Fisheries Act 1952[19] and then under the Fisheries Management Act 1991 (“Act”). AFMA was established under the Fisheries Administration Act 1991 (“Administration Act”) to undertake a number of functions including:
[19] The Fisheries Act 1952 was repealed with effect from 3 February 1995 by the Fisheries Legislation (Consequential Amendments) Act 1991, s. 3.
“(a) to devise management regimes in relation to Australian fisheries;
(aa)…
(b)to devise fisheries adjustment programs and fisheries restructuring programs;
(c)to consult, and co-operate, with the industry and members of the public generally in relation to the activities of the Authority;
(d)to devise exploratory and feasibility programs relating to fishing;
(da)…
(e)to establish priorities in respect of research relating to fisheries managed by the Authority and arrange for the undertaking of such research;
(ea)…
(f)…
(g)…
(ga)…
(h)the functions specified in section 9 relating to consultation;
(j)…
(k)…
(m)as provided by an associated law:
(i)to establish and allocate fishing rights;
(ii)…
(iii)functions relating to plans of management;
(iv)…
(v)to undertake, on behalf of the Commonwealth, management responsibilities in relation to fisheries management arrangements entered into with the States and Territories;
(vi)…
(ma)…
(n)…”[20]

AFMA may consult with persons, bodies or Governments including persons or bodies representative of the whole or part of the industry.[21]

[20] Administration Act, s. 7(1)

[21] Administration Act, s. 9(1)(a)

The object of the Fisheries Management Act 1991

In performing its functions, AFMA must pursue:
“… the following objectives …:
(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.” [22]
[22] Act, s. 3(1)

Management of fisheries

Under s. 17 of the Act, AFMA must either determine a plan of management for a fishery to which the Act applies or determine that a plan of management is not warranted. A “fishery” is defined to mean:
“… a class of activities by way of fishing, including activities identified by reference to all or any of the following:
(a)     a species or type of fish;
(b)     a description of fish by reference to sex or any other characteristic;
(c)     an area of waters or of seabed;
(d)     a method of fishing;
(e)     a class of boats;
(f)     a class of persons;
(g)a purpose of activities.” [23]

A “fish” is defined to include “… all species of bony fish, sharks, rays, crustaceans, molluscs and other marine organisms, but does not include marine mammals or marine reptiles.”[24]

[23] Act, s. 4(1)

[24] Act, s. 4(1)

Where AFMA determines that a plan of management is warranted, it must determine the plan of management in writing only after following the procedural steps set out in that section. Once a plan of management relates to a fishery, it is known as a “managed fishery”.[25]
[25] Act, s. 4(1)

A plan of management for a fishery may provide for its management by means of statutory fishing rights and other fishing concessions.[26] A “fishing right” means a “statutory fishing right”[27] and that in turn means one or other of the nine rights specified in s. 21.[28] Among those rights is a right to take a particular quantity of fish from a managed fishery. A “fishing concession” means a statutory fishing right, a fishing permit or a foreign fishing licence.[29] A “fishing permit” is a reference to a permit granted under s. 32 of the Act.[30]
[26] Act, s. 17(6)(b)
[27] Act, s, 4(1)
[28] Act, s. 4(1)
[29] Act, s. 4(1)
[30] Act, s. 4(1)

Fishing permits

In general terms sufficient for this case, a person may not engage in commercial fishing in the Australian fishing zone (“AFZ”) unless the holder of a fishing permit or acting on behalf of a holder of fishing permit. In broad terms, the AFZ comprises the waters adjacent to Australia within the outer limits of the exclusive economic zone[31] adjacent to Australia’s coast and the waters adjacent to each external territory within those outer limits.[32] It does not include State proclaimed waters but the Commonwealth may make an arrangement with a State with respect to a particular fishery in waters that are relevant to that State and that are not managed by a Joint Authority.[33]
[31] Act s. 4(1) and see also Seas and Submerged Lands Act 1973 ss. 3(2) and (2A) and the Schedule incorporating Articles 55 and 57 of the United Nations Convention on the Law of the Sea. At present, the exclusive economic zone is no more than 200 nautical miles beyond and adjacent to Australia’s territorial sea. In general terms, Australia’s territorial sea is no more than 12 nautical miles from the low water line: Seas and Submerged Lands Act 1973 s. 3(1) and the Schedule incorporating Articles 3 and 4 of the United Nations Convention on the Law of the Sea.
[32] Act, s. 4(1) as amended with effect from 16 December 1999 by the Fisheries Legislation Amendment Act (No.1) 1999, s. 3 and Schedule 1, items 4 and 5
[33] Act, s. 72 and see also ss. 61 and 71 regarding the formation of and management by a Joint Authority.

Section 32(1) provides that, upon an application’s being made to it in an approved form, AFMA may grant a person a fishing permit. Subject to certain provisos dependant upon whether a boat is specified in the fishing permit or not,[34] that permit authorises the person to whom it is granted (or a person acting on his or her behalf) to use an Australian boat for fishing in a specified area of the AFZ or in a specified fishery.[35] The boat must comply with any conditions to which the fishing permit is subject.[36] The fishing permit may authorise the use of a boat for various activities specified in s. 32(4) including commercial fishing generally.[37]
[34] Act, ss. 32(1A) and (1B)
[35] Act, s. 32(1)
[36] Act, s. 32(1C)
[37] Act, s. 32(4)(a)

Section 32(5) provides that a fishing permit is granted subject to a number of conditions that are specified in that provision. AFMA may not vary those conditions.[38] In addition to those conditions, a fishing permit is subject to any other conditions that are specified in the permit itself or prescribed in relation to permits granted under s. 32.[39] The conditions that may be specified in a fishing permit include, but are not limited to:
“(a) the fish that may be taken; or
(b)the quantity of fish that may be taken; or
(c)the rate at which fish may be taken; or
(d)the methods or equipment that may be used to take fish; or
(e)the methods or equipment that may be used to process or carry fish.”[40]
[38] Act, s. 32(8)
[39] Act, s. 32(6)(a)
[40] Act, s. 32(7)

If the holder of a permit surrenders the permit by giving AFMA written notice, that permit ceases to be in force.[41] With one exception, AFMA may transfer a permit to a person other than its holder if the holder and that other person ask it to do so.[42]
[41] Act, s. 32(9)
[42] Act, s. 32(10)

Once a fishing permit has been issued, AFMA may vary or revoke a condition to which it is subject by virtue of s. 32(8). It may also specify a condition or a further condition.[43] If AFMA wishes to take either of these courses, it must give written notice to the holder of the fishing permit and it may do so at the request of the holder of the fishing permit or at its own instigation.[44]
[43] Act, s. 32(8)
[44] Act, s. 32(8)

Section 95(1)(d) provides that the holder of a fishing permit must not contravene a condition to which that permit is subject and s. 95(1)(e) provides that he or she must not cause or permit a person acting on his or her behalf to contravene such a condition. Similarly, a person acting on behalf of the holder of a fishing permit must not contravene such a condition.[45] Contravention is an offence.[46] If AFMA has reasonable grounds to believe that there has been a contravention of a condition on a fishing permit, it may suspend the operation of that fishing permit in accordance with s. 38.[47] If the holder of a fishing permit is convicted of an offence against the Act, Regulations or any other law of the Commonwealth, Papua New Guinea or an Australian State or Territory relating to fishing, AFMA may cancel the fishing permit.[48] It may also cancel it if to do so would be in accordance with a condition of the fishing permit relating to its cancellation.[49]
[45] Act, s. 95(1)(f)
[46] Act, ss. 95(2)-(7)
[47] Act, s. 38(1)
[48] Act, s. 39(1)(a)
[49] Act, s, 39(1)(b)

A decision under s. 32 is a “relevant decision” for the purposes of s. 165(1) of the Act. AFMA made a relevant decision on 12 January 2001 when it allocated Mr Markellos a quota of 967kg of school shark and 17,275kg of gummy shark. By complying with the requirements of ss. 165(2) and (4), “A person affected by a relevant decision …” may ask AFMA to reconsider the decision. A “relevant decision” includes a decision it has made under s. 32. If AFMA makes a decision on review either in substitution for or revoking the relevant decision (i.e. its “reviewable decision”, ss. 165(1) and (5)), it must inform the person who made the request under s. 165(2) of the result of its reconsideration).[50] AFMA made a reviewable decision on 20 December 2001 when it increased Mr Markellos’s quota by 77 kg i.e. an additional 4kg of school shark and 73kg of gummy shark. Section 165(7) then provides that:
“An application may be made to the Administrative Appeals Tribunal for a review of a reviewable decision.”[51]
[50] Act, s. 165(6)
[51] Act, s. 165(7)

Management of the South East Fishery, the predecessor of the SSF, in the 1980s

The SSF was previously part of the South East Fishery (“SEF”) and was managed by the AFS. The precise area of the SEF varied somewhat depending on the precise gear that was used. In broad terms, it encompassed waters within the AFZ adjacent to New South Wales, Victoria, Tasmania and South Australia but beyond three nautical miles from the coast. Within the SEF, shark fishing with hooks and gillnets was managed as the SSF, trawling for scalefish was managed as the South East Trawl Fishery (“SETF”) and all methods of gillnet, longline, trotline, dropline and other means of targetting species of scalefish were included in the South East Non Trawl Fishery (“SENTF”).

With effect from 28 February 1986, the entry of boats to the SSF to gillnet sharks was limited to those who held a shark-endorsement on their Commonwealth Fishing Boat Licence.[52] Although the limit was imposed as an interim measure, it was imposed pending the implementation of a longer term plan. The Southern Shark Fishery Management Plan 1988 (“SSF88”) was ultimately developed for the SSF under the Fisheries Act 1952 and it came into force on 29 April 1988.[53]
[52] Announced by the Minister for Primary Industry (“Minister”): Exhibit 1 at 66-67. Entry into the demersal longline fishery was similarly restricted in January 1994. The outline of the entry criteria for that fishery appear at Exhibit 1 at 135-148.
[53] SSF88 was based on recommendations in the report entitled Southern Shark Fishery – Report on Future Management prepared by the Southern Shark Fishery Task Force: Exhibit 1 at 21-82. That task force had been established by the Australian Fisheries Council.

Development of management plan for the SSF between 1992 and 1996

In February 1988, the Southern Shark Fishery Management Committee (“SharkMAC”) was established to advise the Minister[54] on the management of the SSF and as a forum to promote discussion on management and research in the SSF. It comprised representatives from the Commonwealth and State Governments and industry as well as scientists.
[54] Since AFMA’s inception in February 1992, SharkMAC has reported directly to it.

In November 1990, the Southern Shark Research Group concluded that the controls on gear and equipment (or “input controls”) introduced under SSF88 were ineffective in cutting back the fishing effort and shark landings to the 1982 level. Unless catches in the SSF were reduced to somewhere between 500 and 1,000 tonnes, the fishery face collapsed.[55] As a result, the AFS established the SSF Structural Adjustment Task Force in late 1990. That Task Force examined ways to address continuing overcapacity in the SSF and SharkMAC considered options to reduce effort put into the SSF. On 6 December 1991, the Australian Bureau of Agricultural and Resource Economics (“ABARE”) released a paper entitled Management Options for the Southern Shark Fishery.[56] ABARE outlined the choices that were available: either reduce the catch to a level where it was sustainable or temporarily reduce the catch to an even lower level so that future landings and profits can be increased. In so far as school sharks were concerned, the optimal outcome would be to close the SSF for eight to twelve years to allow the stock to recover. Alternatively, areas of the SSF could be closed and there could be restrictions on gear type and mesh size to reduce catches of school sharks to a sufficient level to allow stocks to recover. The same optimal outcome was recommended for gummy sharks. If that were not appropriate, the fleet should be reduced to approximately 20 boats while maintaining then current catch levels.[57]
[55] Exhibit 1 at 98
[56] Exhibit 1 at 85-133
[57] Exhibit 1 at 97

In June 1996, AFMA commissioned Fisheries Economics, Research & Management Specialists (“FERM”) to report into future management options for the SSF. FERM released a report entitled Future Management Options for the Southern Shark Fishery in early 1997. FERM noted that the inability to transfer endorsements in the SSF had inhibited economic efficiency in that fishery. It also canvassed the need for profound jurisdictional rationalisation and concluded that a properly designed and implemented Individual Transferable Quota system (“ITQ system”) would offer a number of advantages over tighter input controls.[58]
[58] e.g. controls over the number of boats and nets permitted in the SSF

The Shark Fishery Assessment Group (“SharkFAG”) prepared a report for SharkMAC in November 1996.[59] It estimated that, at the beginning of 1995, the biomass of school shark in the SSF lay between 15% and 46% of the unfished level in the SSF. SharkFAG predicted that there was a high probability that the then current effort in the SSF would lead to further reductions in the population size of school shark. If there were to be an 80% probability that mature biomass would be above the 1996 level of mature biomass in 15 years, there would need to be a catch reduction in the order of 35%. The required reductions could be phased in but that would result in a lower long-term sustainable catch.[60]
[59] Exhibit 1 at 149-159
[60] Exhibit 1 at 149

Moves to introduce individual transferable quotas in 1997

On 6 June 1997, AFMA issued a media release entitled “Shark operators warned about increasing catches”.[61] It referred to a meeting of SharkMAC which was held in April 1997 and which, subject to support from the wider industry, recommended the introduction of an ITQ system. Should it be decided that catch history would be taken into account in determining quotas, AFMA determined that catch histories after 10 April 1997 would not be taken into account.
[61] Exhibit 1 at 160

In June 1997, FERM prepared a background paper entitled “Re-allocation of Fishing Concessions where Management Arrangements have Changed” for the Board of AFMA.[62] FERM began its report by examining why governments regulate fisheries. In summary, it said that it did so as unregulated fisheries tend to become over-harvested. That in turn leads to problems of conserving the fish stock on the one hand and economic difficulties for fishermen on the other. FERM then went on to examine three tools used to reduce over-harvesting and excess capacity. They were individual transferable quotas (“ITQs”), input controls and competitive total allowable catches (“TACs”) (as opposed to a non-competitive TAC). Each tool was considered by FERM.
[62] Exhibit 1 at 170-184

The report also examined the relationship between property rights in fisheries and over-harvesting and economic inefficiency. In essence, FERM reported that a central economic problem of commercial fisheries is the over-capacity of its fishermen. That arises when the fishery’s stocks are plentiful and the fishermen expand their capacity as a result. As long as there are no barriers to new entrants in the fishery, the number of fishermen operating in the fishery grows but the stock in the fishery does not. As a consequence, the catch is spread increasingly more thinly among an increasingly greater number of fishermen. In competing for greater returns than their competitors, fishermen acquire more equipment in an attempt to become more competitive against other fishermen and to increase their catch size relative to those other fishermen. In doing so, they increase the cost of fishing and reduce the net return that they would otherwise receive from their catch. Taken across all operators in a fishery, the increased costs dissipated in this way can be substantial.

FERM also reported on why it considered that quota allocations based on individual operator economic efficiency is contrary to the requirement that AFMA pursue the objective in s. 3(1)(c) of the Act of maximising economic efficiency in the exploitation of fisheries resources. It noted that AFMA maintains that it would be operating against that objective were it to attempt to use the relative economic efficiency of individual harvesters as a criterion when re-allocating fishing concessions. Quite apart from that consideration, FERM found that ascertaining the efficiency of individual operators would require analysis of detailed data, some of which is not available. The costs of such a task would have to be factored into any calculation of economic efficiency and, as they would be prohibitively expensive, must be contrary to maximising economic efficiency. Even if that were not so, it would be analytically impossible to assess each individual operator’s economic efficiency given the various types of gear used in the same fishery and the various restrictions imposed on various types of gear. Were it analytically possible, the incentive for individual operators to illustrate a high degree of efficiency, FERM said, would weaken the data base used for fisheries management and stock assessment. That would lead in turn to a need to improve the manner in which the data is validated.

FERM then linked its reasons back to the issue of fishing rights with which it had dealt. In summary, basing quota on the basis of each individual fisherman’s efficiency significantly weakens each fisherman’s fishing concession. It does so because it creates uncertainty in the holders of those concessions and exposes them to the risk of challenge because there is no known method of determining economic efficiency in the industry. The value of a fisherman’s investment in his or her enterprise is not a reliable measure of efficiency.

FERM recommended that it was desirable that any re-allocation of fishing rights avoids differential economic or wealth impacts on resource users. Such impacts cannot be avoided and it is not possible, it suggested, to devise a system that had absolutely no impact on the relative economic positions of fishermen.

In September 1997, AFMA released a paper entitled the “Allocation of Fishing Concessions where Management Arrangements Change” (Fisheries Management Paper Series FMP No. 8) setting out its policies and procedural framework for the allocation of fishing concessions where a decision has been taken to change the management arrangements in a fishery.[63] It attached the paper prepared by FERM as an information paper to its policy paper[64] and stated the objects it was required to pursue in performing its statutory functions.[65] As to the allocation of fishing concessions, AFMA said:
“Establishment of well defined, divisible, secure and transferable fishing concessions are a major factor in the successful pursuit of AFMA’s ESD, economic efficiency and cost-effective management objectives. However, it is recognised that continually changing the method of allocation of fishing concessions will weaken those concessions and make effective fisheries management difficult. Accordingly, the fishing concessions that exist in a fishery at the time that management arrangements are proposed to change, are the ones that will be taken into account under any allocation of concessions required by the move from one management regime to another.
It should also be recognised that there will be instances where, in pursuing AFMA’s legislative objectives, it is not possible to achieve an equivalent translation of the fishing concession when changing from one management regime to another. Clearly, in these circumstances, it is not possible to design an allocation formula that will have absolutely no impact on the relative economic position of individual operators.
…
… From a legal and fisheries management perspective, AFMA will explicitly endeavour to minimise any adverse differential economic impacts on the individual operators.
Therefore, AFMA’s approach to allocation of fishing concessions is based on the premise that, in making any management changes, AFMA will ensure that:
such changes are consistent with and support the pursuit of AFMA’s legislative objectives; and
any differential economic impacts of allocations on individual fishing concession holders are minimised unless there are reasons, justifiable with respect to AFMA’s legislative objectives, that dictate otherwise.”[66]
[63] Exhibit 1 at 163-169
[64] Exhibit 1 at 165
[65] Exhibit 1 at 166
[66] Exhibit 1 at 166-167

Changes in management in the Commonwealth and State fisheries in 1999

On 30 April 1999, a Memorandum of Understanding (“the MOU”) had been executed between the Commonwealth and each of the States of South Australia, Tasmania and Victoria. At that time, AFMA managed the SETF and the Great Australian Bight Trawl Fishery (“GABTF”) in which sharks were taken as well as the SSF. Each of the three fisheries formed part of the AFZ adjacent to South Australia, Tasmania and Victoria. The MOU recorded that AFMA had decided that school shark and gummy shark would be managed by determining the TAC of each species in the SSF, which was enlarged by the addition of the coastal waters of each of South Australia, Tasmania and Victoria. Holders of fishing concessions in the SETF and the GABTF, already managed by AFMA, and in the enlarged SSF were to be allocated ITQs for school shark and gummy shark as a means of managing those fisheries. The Southern Shark Allocation Advisory Panel (“the Shark Allocation Panel”) was asked to report on the apportionment of the TAC of school shark and the TAC of gummy shark among the SSF, the SETF and the GABTF.

The SSF Industry Development Program

In June 1999, the Department of Agriculture, Fisheries and Forestry – Australia established a Working Group to advise on the most appropriate methods to provide a one-off structural adjustment assistance to the holders of fishing permits granted for the SSF under the Industry Development Program (“SSFIDP”). On the basis of Ms Sachse affidavit,[67] I find that the SSFIDP was intended to smooth the introduction of ITQs, help operators deal with the reduction in shark catches and increase the economic efficiency of the SSF. The SSFIDP proposed a buy out of SSF permits and their associated net/hook units. The Commonwealth Government agreed to fund the buy-out up to $2.6 million. Operators were invited to express their interest in the buy-out.
[67] Exhibit 2 at [39]

Those operators who met the eligibility criteria specified in the SSFIDP were provided with assistance. Despite being required to surrender their permits, those operators retained the right to hold any school shark or gummy shark allocated to them. They could buy and lease quota but lost their right to fish for shark commercially. The SSFIDP provided for payments for surrendered permits based on $8,000 per gillnet and $25 per hook. Forty permit holders surrendered their permits under the SSFIDP.

Development of apportionment and allocation policy in the SSF

On 15 July 1999, the Shark Allocation Panel issued a report entitled “Report of Advice Concerning Apportionment and Allocation in Respect of School Shark and Gummy Shark”.[68] The report began by noting that the SSF was to be enlarged and the classes of persons authorised to fish in that fishery were to be increased. That was to occur by Offshore Constitutional Settlement Arrangements (“OCS Arrangements”) to be made between the Commonwealth and the States of South Australia, Victoria and Tasmania under s. 72 of the Act. The OCS Arrangements would provide that all activities by way of commercial fishing for school shark and gummy shark in the coastal waters of the States would be managed by AFMA. The enlarged SSF comprised various sectors including the South Australian sector of licensed fishers with access to school shark and gummy shark. Each of the sectors was defined by reference to an area of water and, in broad terms, that comprised the coastal waters (as defined in s. 5 of the Act) of each State other than Victoria for its coastal waters were designated as a shark nursery area and closed.
[68] Exhibit 1 at 186-208

The Shark Allocation Panel stated that it had sent a letter to all shark fishing concession holders “in the fisheries the subject of our Terms of Reference”.[69] That letter was dated 5 March 1999 and addressed “Dear Shark Fisher” and does not otherwise identify the fishery within which the shark fisher fishes.[70] Given the Terms of Reference identify the SSF as comprising sectors including the South Australian sector of licensed fishers with access to school shark and gummy shark, I have concluded that the letter was sent to South Australian shark fishers. Submissions were sought from individuals and groups. Meetings were held at various centres including Mt Gambier, Port Lincoln and Adelaide.[71]
[69] Exhibit 1 at 192
[70] Exhibit 1 at 220-221
[71] Exhibit 1 at 192

The Shark Allocation Panel concluded that:
“In pursuit of its objectives of ‘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’, the AFMA Board proposes such a reduction. The Panel considers that, in those circumstances, apportionment of the TAC of school shark between the three fisheries should reflect directly the proportionate share of each fishery in the recent aggregate catch of school shark of the three fisheries. The share of the TAC of the Great Australian Bight Trawl Fishery will be very small indeed if that method of apportionment is adopted. But we consider that the fishermen of all three fisheries will bear the burden of the proposed catch reduction equitably if the constraint is proportioned to the magnitude of their recent catches. We would hope that the burden could be mitigated both by provision for carry-over and carry-under from year to year and by transferability of ITQs between the three fisheries as well as between the sectors of the Southern Shark Fishery.
The Panel has reached the same conclusion about the appropriate basis of apportionment of the TAC of gummy shark. Apportionment by reference to the proportionate share of each of the three fisheries in the recent aggregate catch of those three fisheries is in our opinion equitable in its constraining effect on fishing effort, and also tends to minimise ‘differential economic impacts on individual fishing concession holders.’”[72]
[72] Exhibit 1 at 194-195

It then went on to consider what recent period should be chosen for catch history by which to apportion among the three fisheries. Referring to AFMA’s press release dated 6 June 1997, the Shark Allocation Panel said that it could have been understood to refer only to allocation of ITQs among individual fishing concession holders in the SSF as constituted at that time. The Shark Allocation Panel, however, considered that the OCS Arrangements were well publicised and that most shark fishermen, whether Commonwealth or State, would have become aware of it. Although AFMA’s press release had warned that catches recorded after 10 April 1997 would not be taken into account, the Shark Allocation Panel considered that any increase in fishing effort in the remaining months of 1997 following 10 April 1997, whether in ignorance or with deliberate disregard of the warning, would be unlikely to have been substantial. It thought it desirable that the chosen period be as recent as might reasonably be for three reasons: it enabled the present relative economic positions of fishermen to be accurately reflected; the period would be long enough to obviate the distortions which in a short period tend to flow from the circumstances that shark catch is affected by the degree of effort being expended at different times on targeting other species; aggregations and distribution of shark vary from year to year; and weather conditions affect the number of shark taken each year. A period of four years from 1 January 1994 to 31 December 1997 was recommended as the apportionment period.[73] The Shark Allocation Panel considered that the data required to support an allocation system of school shark and gummy shark is the catch history for the same period as that chosen for the apportionment of the TAC among the three fisheries.[74]
[73] Exhibit 1 at 197
[74] Exhibit 1 at 197

It recognised that there were difficulties in ascertaining a reliable catch history for both apportionment and allocation. Much of the catch history from 1994 to 1997, the Shark Allocation Panel found, was recorded against the registration number or symbol of the vessel into which the catch was taken. Considerable difficulties would be encountered, the Shark Advisory Panel considered, were there to be an attempt to identify the particular fisheries or sectors in which shark were caught by fishermen who were authorised to fish in more than one of them between 1994 and 1997. It considered that each sector in the enlarged SSF should be apportioned a share of the TAC, reasonably proportioned to the present relative economic position of that community. Each sector’s share, so proportioned, was best ascertained by reference to the sector’s share of recent fishery catch history.

After consultation with fishermen, the Shark Allocation Panel considered that a process of shark catch verification and audit was important if allocation were to be based in any way on catch history. That was so because fishermen had expressed concern that some of their number had logged shark catches greater in weight than that actually caught. Verification and audit was important to give fishermen confidence in the system and to ensure that allocation was fair to each of the fishermen. It considered whether any weight should be given to the manner in which the shark were caught (e.g. by line or by net) but decided to recommend that the manner of catching should be disregarded.[75]
[75] see discussion generally at Exhibit 1 at 197-200

On 6 September 1999, AFMA wrote to “Shark Fishers and other interested persons”.[76] It advised that it had decided at its meeting on 31 August 1999 to accept the Shark Allocation Panel’s recommendations for apportionment of the TAC among the enlarged SSF, SETF and the GABTF. Apportionment would be on the basis that the TAC for each fishery would be proportional to the relative aggregate catch in each during the four years from 1 January 1994 to 31 December 1997.
[76] Exhibit 1 at 240-245

AFMA also announced the manner in which the TAC for school shark and gummy shark would be allocated in the enlarged SSF. It noted that it had deferred making its decision on the basis on which allocation would be made in the SETF and the GABTF as it had yet to determine the quota mechanism which would be adopted. In the case of the enlarged SSF, it announced that it would allocate an ITQ to individual concession holders and the quota that each received would be proportional to the aggregate catch of each in their best three years during the period from 1 January 1994 to 31 December 1997. South Australian sector licensed fishermen with access to school shark and gummy shark were eligible for allocation of quota. AFMA foresaw that exceptional circumstances could affect a fisherman’s catch and it addressed that issue when it said:
“… To a large extent, the possibility of catch history being affected by exceptional circumstances in any one year has been addressed by the recommendation that only the best three of the four year period 1994-97 be taken into account. Persons who believe that their catch history has been affected by exceptional circumstances will have the opportunity to appeal when the catch verification process has been completed, quota has been allocated, and Permits varied or granted. If you are not satisfied with your quota allocation, you can appeal after a Permit has been varied or granted, and the quota appears as a condition of the Permit. You will be notified of your full appeal rights when you receive your Permit and/or quota allocation.”[77]
[77] Exhibit 1 at 242

Enclosed with AFMA’s letter was a document describing the catch history verification process.[78] It stated that catch could be verified if it had been taken legally under a valid concession endorsed for, among others, the South Australian sector of licensed fishers with access to school shark and gummy shark. Where a concession had been transferred, any catch history was also transferred with the concession. It was the responsibility of the current concession holder, and not AFMA, to obtain evidence of catch history for periods prior to his or her holding the concession.
[78] Exhibit 1 at 244-245

In order to enable catch history to be verified, each concession holder was required to produce two sorts of documents. They were primary verifiable documents and supporting documents and were required to establish four things: a relationship between the catch and the concession by referring to the boat, skipper or concession holder; the year of the catch if not the precise date; the weight and/or the total price paid for each shark species; and that payment was received for the catch. Where each shark species could not be identified and was referred to only as “shark”, “mixed shark” or “flake”, the concession holder was required to claim it as catch for the species he or she believed was taken, if that were possible, and to provide as much evidence as possible to support that claim. AFMA would refer to such matters as price per kilogram and logbooks to determine the species. If it could not do so, the catch would be verified as “other (than school and gummy) shark”.[79]
[79] Exhibit 1 at 245

The primary verifiable documents and the supporting documents were described in the following way by AFMA:
“PRIMARY VERIFIABLE DOCUMENTS: landing documents from fish cooperatives and relevant Fish Marketing Authorities, invoices, receipts, sales dockets or carrier consignment notes prepared at the time of transaction;
AND
SUPPORTING DOCUMENTS: logbooks (catch returns to authorities or personal records completed at the time the fish were taken), and financial records (eg bank statements) which show that monies were received following the taking or sale of the fish referred to in the primary verifiable document. (Individuals and companies are required to keep financial records for at least seven years for taxation purposes, and generally banks keep transaction records for a similar period of time, copies of which can be obtained by the account holder for a small fee).”[80]
[80] Exhibit 1 at 245

Where primary verifiable documents originated from certain sources, the document continued, AFMA might waive the requirement to produce supporting financial documents. A concession holder was required to produce documents that established:
“a relationship between the catch and the concession (by referring to the boat, skipper or concession holder etc);
the date (at least the year);
the weight and/or the total paid for each shark species (or for ‘mixed shark’, ‘shark’, or ‘flake’ – see below); and
that payment was received for that catch.
If the document only specifies the weight or price for ‘mixed shark’, ‘shark’, or ‘flake’, you should provide as much evidence as possible to the CVT as possible in order to establish the species breakdown. Supporting documents could include personal logbooks completed at the time the catch was taken and catch returns to authorities. AFMA will use a set of criteria, including reference to the price per kg paid and logbooks, to determine whether the catch will be verified as school or gummy shark or under some other category. If there is insufficient evidence to accurately verify the species breakdown, the catch will be verified as ‘other (than school and gummy) shark’.”[81]
[81] Exhibit 1 at 245

AFMA prepared general guidelines for its officers verifying shark catch history.[82] It drew the officers’ attention to Fisheries Management Paper Series FMP No. 8 and stated shortly that:
“The objective of the catch verification process is to substantiate claims made by concession holders concerning demersal shark catches taken for commercial gain in each year during the period 1 January 1994 – 31 December 1997.”[83]
[82] Exhibit 1 at 246-255
[83] Exhibit 1 at 246

The document repeated the information regarding primary verifiable documents and supporting financial records. It explained that, while SEF2 forms detailing catches are verified, they could not be used as primary documents in the verification process. An explanation was given:
“… This is because during the period, school and gummy shark weights were recorded as a ‘combined’ weight under the heading ‘SHX’. As these species were not under quotas, there was some sloppiness about recording, with some processors recording all shark species under the heading ‘SHX’, and others not including shark on their forms at all.
In fairness to SSF operators who must produce evidence (price paid per kg) to show that their catch was school and gummy shark and not some other species, SEFT operators will be required to reproduce their original landing documents, receipts etc to show that school and gummy shark was taken, and can only use SEF2 forms as secondary documents.
If primary documents are not available for a catch recorded on SEF2 form, and supporting evidence can be provided as to the species breakdown, verification will be considered at the discretion of the AFMA Management Section after assessing the risk to the integrity of the verification process …”[84]

[84] Exhibit 1 at 251

The requirement for Supporting Financial Records might be waived in two sets of circumstances:
“The CVT [Catch Verification Team] may waive the requirement for supporting financial documents to support a series of primary documents from a particular source if the applicant can produce financial records to support several of these dockets in a similar period (eg in the same year), or a high proportion of all documents issued by that source for that operator.
…
As a result of experience in the SENTF catch verification process, invoices, receipts and sales dockets issued by certain fish receivers can be accepted without supporting documentation. These sources are generally large fish receivers whose operations are well known to AFMA, and in particular there were no difficulties establishing the authenticity of primary documents from these sources by reference to supporting documents when these were requested in the course of the SENTF catch history verification process.
The need for supporting financial documents will usually be waived if a SEF2 form is available that accounts for the catch.
However if some doubt exists about a catch, the CVT can ask for supporting financial documents to be produced within 28 days of their visit.”[85]
[85] Exhibit 1 at 251

The general guidelines took a wide view of the financial records that could be used to support a primary document. They included cheque butts, deposit slips, passbooks or other records of payment. A concession holder’s cash book or similar record was not regarded as an independent record but could be used as a supporting financial record for small amounts if the CVT decided to do so after assessing the risk to the verification process. Catch history could be established if a primary document could be linked to a financial record showing either the amount recorded on the docket, or an amount calculated from the weight using the average price paid for that species in that period, and made on, or shortly after, the date on the docket. Where primary documents do not provide sufficient information, a bank deposit record could be used to link a docket to an operator where the operator was not explicit on the docket or to clarify the year in which a catch was taken if the docket is undated.

Logbooks were also dealt with in the general guidelines:
“Logbook records, both personal logs filled out by skippers and catch returns submitted to fisheries authorities, are not appropriate for establishing catch history except as secondary source of information, due to concerns that some operators may have falsified their logbooks in case catch history was used in subsequent ITQ allocation.
Logbooks, both personal logs filled out by skippers and catch returns submitted to fisheries authorities by operators, are really no more than claims that certain catches have been made. In many cases, operators were required to fill in logbooks at sea, and therefore cannot accurately complete the weight of fish caught. While submission of logbooks was generally required between 1994-97, a variety of logbooks were filled in, under different rules in different States, and the extent to which the requirement to submit logbooks was enforced varied. Some States treat logbook data as belonging to the skipper of the vessel used to take the fish, others treat it as belonging to the holder of the fishing licence.
Logbook records can be used in certain circumstances to determine the species breakdown of a catch that was recorded on dockets as ‘shark’, ‘flake’ or ‘school and gummy shark’ provided the price paid is consistent with the species indicated ….
If a clear pattern emerges that indicates a particular operator’s logbooks are reasonably accurate (ie a series of verifiable dockets which are closely matched by the logbook records) primary documents which are consistent with logbooks but do not clearly refer to a concession, may be verified at the discretion of the AFMA Management Section after assessing the risk to the integrity of the verification process.
Generally, if a catch is recorded as ‘fish’ on the primary document, logbooks can not be used to determine the species breakdown of the catch. However, if a clear pattern emerges that indicates a particular operator’s logbooks are reasonably accurate (ie a series of verifiable dockets which are closely matched by the logbook records), the logbook records could be used to determine the species breakdown of a catch recorded as ‘fish’ (provided the price paid is consistent with the species indicated), but only if either:
·the primary document accounts for the combined weight of all shark and scalefish taken in the period; or
·other documents can be produced that account for the weight of scalefish recorded in logbooks in that period; or
·logbooks indicate that no scalefish was taken in a similar period.
In some areas, shark is marketed under the name ‘butterfish’. A document relating to a sale of ‘butterfish’ could be accepted as relating to demersal shark if this is consistent with logbook records.”[86]
[86] Exhibit 1 at 252-253

A combination of secondary material may be sufficient to verify a catch history without the need to produce primary verifiable documents but only if the AFMA Management Section considered it appropriate to do so after assessing the risk to the integrity of the verification process.

New SSF permits specifying ITQs as a condition of SSF permits

From mid December 2000, AFMA sent out new SSF permits specifying as a condition the ITQ which restricted the permit holder’s catch of school shark and gummy shark. 197 of those permits were granted. The allocations of ITQs varied greatly among permit holders as did their catch histories. From 1 January 2002, modifications were made to the gear restrictions. This reflected the change in emphasis in the SSF from input controls to output controls. From 1 January 2003, the SSF and the SENTF were amalgamated into a single gillnet, hook and trap fishery known as the Gillnet Hook and Trap Fishery (“GHATF”).

Development of the 2001 allocation policy

Following Ryan J’s judgment in Australian Fisheries Management Authority v Graham,[87] AFMA began developing its 2001 policy in accordance with the reason given by the Tribunal in the earlier Re Fischer and Australian Fisheries Management Authority.[88] It appointed a Southern Shark Independent Allocation Review Panel (“SSIAR Panel”) to review, reconsider and report to the AFMA Board regarding the allocation of school shark and gummy shark for the SSF. Based on the evidence of Ms Margot Sachse, the Manager of the GHATF,[89] I find that the SSIAR Panel, comprising the Honourable John Lockhart and an economist, Mr David Purcell, held port meetings in six venues across the eastern States and received 90 submissions. It was asked to advise the AFMA Board on the formula appropriate for allocating school shark and gummy shark ITQs among individual operators. That formula had to take account of its findings regarding the operators’ relative economic positions after taking into account the value of their SSF permits and any other considerations arising from its consultations with industry.
[87] (2003) 127 FCR 436
[88](2002) 71 ALD 665
[89] Exhibit 2

In October 2003, the SSIAR Panel reported back to the AFMA Board. I find that the SSIAR Panel concluded that the relative economic position of permit holders in the SSF prior to the introduction of ITQs was a function of both the value of the permit, as representing an entitlement to fish, and the catch history, as representing the value of the income stream derived from the utilisation of the permit. Except for those operators who held a shark permit as a result of the OCS Arrangements, it recommended that the following formula be adopted to take account of both aspects:
“(a) The value of the permit based on the amounts established under the buyback scheme adjusted using the applicable discount rate to 2003 dollars (that is, $8,000.00 per gillnet and $25.00 per hook as established under the SSFIDF …); and
(b)The quantum of catch history based on the best three years in the period 1994 – 1997 …”[90]

For those operators who held a shark permit as a result of the OCS Arrangements, the SSIAR Panel recommended that the 2001 allocation formula remain based solely on the best three years in the period 1994 to 1997. The rationale for its recommendation had been that the State shark concessions had not been transferable. On 17 October 2003, the AFMA Board accepted the SSIAR Panel’s recommendations and they became AFMA’s formal policy in respect of the ITQ allocation.

THE EVIDENCE

[90] Exhibit 2 at [72(a)]

Mr Markellos’s records of his catch history

In his evidence, Mr Markellos said that he kept handwritten records of the number of fish he caught on a per shot basis (“personal daily catch book”).[91] He did that so that he could work out fish patterns and movements and could go back to those areas where he had caught large quantities of shark. Mr Markellos did not record the size of the shark but he knew that certain areas of the State waters produced larger fish and others smaller fish. He received no difference in price for larger or smaller fish.
[91] Exhibit K

Pages of Mr Markellos’s South Australian Commercial Fishing Daily Log (“Daily Log”) were in evidence.[92] They include information such as the month, the average times set during 24 hour periods, the average length of the net, the predominant mesh and the method of disposal of the catch. As for the catch, the Daily Log required the licensee to show the day of the month on which fish were caught, the target species, the species caught, their landed weight and the condition in which they were landed.[93] He used the figures from his Daily Log to work out the amount of school shark, gummy shark and bronze whaler he claimed as his verifiable catch record in his Claim for Shark Catch History.[94]
[92] Exhibit 1 at 384-416
[93] The condition referred to whether they were whole or had been headed or gutted.
[94] Exhibit 1 at 573-578

Mr Markellos said that he filled the Daily Log out at home from his personal daily catch book. He worked out the weight by coupling the information in his personal daily catch book with receipts from landings including those from the Fish Factory. Fish processors, to whom he sold the majority of his fish, weighed the fish and showed that weight on their receipts. From these records, he could:
“… sort of work out the – how many bodies went to the ton. Your sort of, you know, you knew over 10-15 years’ fishing a fairly accurate assessment of what each particular fish weighed. Especially in the early days we actually weighed a few of those fish individually just to give us an idea. Fish rooms were another method of determining weight, like, you know, how high up your fish rooms were by the pound boards. And it happened that if you had – after unloading 40-50 times from a particular vessel, you got to know fairly well the weights and so forth.”[95]
[95] Transcript

Mr Markellos said that he had a crew of two on each fishing trip. They were paid on a percentage of the catch worked on its weight multiplied by the price. In working out that percentage, Mr Markellos and the crew estimated the weight of the catch.

Mr Markellos said that he sold fish to the Fish Factory and to a couple of small fish processors including Mr George Thallos, who runs George’s Fresh Fish. Mr Markellos also sold fish to the public and to clubs and hotels through Alien Seafoods. In cross-examination, Mr Markellos said that he did not necessarily sell his fish to the various purchasers at the same price. For the public, he sold it as fillets at “around the $10 mark. It was either $10 or $11 … the most I would have ever charged the public would have been $12 a kilo …”.[96] The highest price would have been in 1998. The range of prices paid by the Fish Factory “… wouldn’t have been much more than 5.50 to, say, 6.50, or 7 would be the absolute max.”[97] The hotels bought frozen product at $10 and the highest price he charged them was $11.00.
[96] Transcript
[97] Transcript

He sold fish to the Fish Factory in a trunked condition i.e. fins and head removed and gutted. Jenny at the Fish Factory had prepared a summary of the total amount of school shark, gummy shark and bronze whaler for Mr Markellos when he found he had so many documents missing.[98] In cross-examination, he explained that the Fish Factory would meet the boat at the wharf. He would put aside the fish he wanted to keep to sell through Alien Seafoods or to Mr Thallos and sell the rest to the Fish Factory.
[98] Exhibit E

Mr Markellos said that he kept records of what he sold Mr Thallos but thought some were missing. Mr Markellos’s sales to Mr Thallos were irregular and governed by seasonal demand. If Alien Seafoods was struggling to move stock, he would give it to Mr Thallos, who would sell it on consignment. Sometimes, Mr Markellos would give Mr Thallos a ton of stock and at others only a couple of hundred kilograms. As for other fish processors, Mr Markellos said that he had sold to “pretty well everybody in Adelaide at any particular point in time”.

Mr Markellos said that he has always sold fish from his boat if asked. In 1992 or 1993, he moved from his previous fishing base at Pt Clinton to live in Berri which is some 300 miles inland. He decided then to sell fish in a more organised way and he and his wife set up a shop that passed the health regulations. Initially, he was only open twice a month when he returned from his fishing trips. He would let people know when he was there. In a small way, he was trying to add value to his product before he sold it. The majority of his sales at that time were of fresh fish although he sold frozen product to the clubs and hotels. The shop developed and, in 1997, they opened a second shop in Renmark. Alien Seafoods closed in 1998 when he could not cover the employees’ wages and he and his wife lost $30,000 worth of stock after a freezer failure.

In Mr Markellos’s view, the only records that he had to keep in relation to the sale of fish by Alien Seafoods were in relation to purchases of fish from those who were not registered fish processors. He referred to a Monthly Fish Purchases Return that he had to complete.[99] That form required the following details:
“… Only record details of purchases from fishermen (unless you are also a licensed fisherman in which case you should give details of sales to other than registered processors). Details of purchases from other registered fish processors (other than fishermen) should not be included. Do not record details of fish purchased from outside South Australia.”[100]

Alien Seafoods completed Monthly Fish Purchase Returns for the period from November 1995 to December 1997. Sixteen were “Nil” returns. Of the remaining ten returns, only that for November 1996 referred to Shark: 23kg of gummy shark with a value of $145. Otherwise, returns showed only Crab, King George Whiting, Garfish, Snook, Squid and Yabbies.

[99] Exhibit C and Exhibit 1 at 579

[100] Exhibit 1 at 579

Mr Markellos said that he purchased product such as prawns, crayfish and lobster from the Fish Factory. Sometimes, he would pay for that product by cheque but on others the amount he owed for product would be deducted from the amount he was owed by the Fish Factory and he was paid the balance. On two occasions, he purchased shark. One was on 3 November 1996 when he purchased 14kg of shark[101] and the other on 12 November 1996 when he purchased 9kg.[102]
[101] Exhibit D, docket 129
[102] Exhibit D, docket 132

Mr Markellos said that he kept his sales documents when he sold fish to clubs and hotels. He did so as a reference because, at times, they would only pay him once a month or so and he needed a record of what he was owed. An example of his sales documents taken at random records 16kg of whiting @ 26.00 (416) and 6 snapper cutlets @ 10.00 (60.00) with a total of 476 under the name of the Loxton Hotel on 30 March 1995.[103]
[103] Exhibit A, orange book, docket 26

Mr and Mrs Markellos did not record their sales of fish to the public other than to count the cash at the end of the day. They had a cash register but it did not really work properly. In any event, Mr Markellos said, he did not bother with it because it was more paperwork.

In relation to his sales to Mr George Thallos, Mr Markellos said in an affidavit sworn on 29 December 2000 that he sold 2,400kg of gummy shark at $5.75kg and 800kg of bronze whalers at $3.50kg in 1995.[104] He was referred to an invoice he had written on 25 July 1996 showing the sale of garfish as well as the following:
“20 sm shk x 10         200
30 m shk x 12             360
40 lge shk x 10          400
90            960     x 8      7680
10 Bronze x 12           120     x 6        720
8400”[105]

Mr Markellos explained that this meant that he had given Mr Thallos 20 boxes of small shark with each box weighing 10 kilograms and so on. The figures “8” and “6” refer to the price per kilogram for fillets. All the fish that he sold to Mr Thallos was in the form of fillets. An invoice in a similar form was dated 21 November 1996 and concluded with “Price neg”.[106] That indicated that the price was negotiable and he would receive whatever was left after Mr Thallos paid himself $2.00 per kilograme. Mr Markellos conceded that there were no records showing a price of $5.75 per kilogram when he sold fish to Mr Thallos in 1995 but said that the price, referred to in his affidavit, referred to the price for finned and trunked, but not filleted, gummy shark. The amount for which he sold fish to the Fish Factory would have been a guide for him in assessing the amount for which he sold fish to Mr Thallos.

[104] Exhibit 1 at 314

[105] Exhibit A

[106] Exhibit A

Mr Mark Constas is Mr Markellos’s accountant. In a letter dated 18 April 2000 to AFMA, he analysed Mr Markellos’s total fish catch against his gross income based on Daily Log entries, Bank Statement deposits, personal drawings and an average price for shark of $5.75kg and for garfish of $4.00kg. With this information, he estimated that during 1995, Mr Markellos caught:
“Sharks  32,078kgs x $5.75/kg (average)     184,448.00
S. Whiting                  190kgs x $5.00/kg  950.00
Bronzee’s                  3482 kgs x $3.50/kg  12,187.00
General Scale Fish     2633kgs x $2.00/kg  5,266.00
Garfish  5872kgs x $4.00/kg (average)         23,488.00
Squid   435kgs x $5.00/kg  2,175.00
K.G. Whiting              344kgs x $10.00/kg  …3,440.00
TOTAL CATCH  $231,954.00”[107]

During the same period, Mr Markellos had deposited $230,860.22 and drawn cash of $16,500. His total income was, therefore, $247,360.02. The difference of $15,406.02 between the value he estimated for the total catch and the total income represented the mark up on the sale of Mr Markellos’s own fish at Alien Seafoods. His gross income from Alien Seafoods had been $58,906.88 in 1995 and the mark up ranged between 25% and 30%.

[107] Exhibit 1 at 568

Mr Markellos said that he worked out the average prices for his accountant. Those for gummy shark were worked out on the basis of the Fish Factory documents and the remaining scale fish prices were worked out on the basis of his own receipts and the average prices from statistical information kept by the South Australian Research and Development Institute (“SARDI”). In relation to the sale of Garfish, for example, he preferred to use a price that reflected State averages because he was trying to build a simplistic picture to explain the information in his Daily Logs.

He agreed that he had not gone to his own dockets to work out an average when working out his income from Garfish for 1995. The figure of $4.00 does not represent the average of what he earned in 1995 for garfish:
“Well, garfish for instance, you have three different prices: small, medium and large. What the $4 kilo average represents an average price received for the fish. You do not catch – some years you might catch the ration between large, small and medium changes. For argument sake for large garfish, maybe for ‘95m their price might have been 5.50 and $6 and the small garfish might have ranged from $1.50 or so and if you worked out the averages you probably would come to an average of $4 a kilogram.”[108]

[108] Transcript

In calculating the average price of $5.75, he had not taken into account the $10.00 per kilogram for which he sold gummy shark. Mr Markellos said:
“… what we are trying to do in our daily catch records is correlate a similarity between our income and our catch data, our weight supplied in our daily catch records.”[109]
[109] Transcript

Mr Malcolm Andrew Knight is the Manager of the Support Services (Aquatic Services) at SARDI. SARDI is a government body responsible for research across a range of primary industries in South Australia including fishing and aquaculture. Mr Knight said that the Fisheries (Fish Processors) Regulations 1991 (“FP Regulations”), made under the Fisheries Act 1982 (SA) (“Fisheries Act”) oblige various persons, including fishermen and processors, to provide certain information regarding various persons engaged in and about the fishing industry. Regulation 8 requires persons to record certain information about the purchase of fish by fish processors and to keep it for twelve months. The holder of a fishery licences is not required to comply with r. 8 in relation to fish taken under that licence. Regulation 9 requires the holder of a fishing licence to file certain returns with SARDI regarding the sale of fish to an unregistered fish processor but does not relate to the sales of fish by processors. They are known as Monthly Fish Purchase Returns.

SARDI, Mr Knight said, uses the information in the Monthly Fish Purchase Returns lodged compulsorily by licensed catchers of fish. It is interested in the price of each species of fish dealt with in the returns. South Australia is divided into regions for this purpose according to the location of the primary place of business of the fish processor. SARDI calculates an average price on a monthly basis for each species of fish purchased by fish processors in each region. It then counts the quantity of fish taken for that month within the same region and, finally, the total value of the fish caught within that region.

The process used in relation to verify Mr Markellos’s catch

On 21 March 2000, Mr David Johnson, the Manager of the SENTF and SSF wrote to Mr Markellos noting that he had reviewed the information that Mr Markellos had provided.[110] That was information in his personal logbooks, South Australian scientific logbooks, taxation returns, catch summaries from the Fish Factory and dockets. Mr Johnson also noted that the scientific logbooks correlated with the information recorded in the personal logbooks and that the income declared in his taxation returns supported his claim to have made large catches of shark. In Mr Johnson’s view, though, the secondary sources of information that Mr Markellos had provided did not support his claim for verification of his additional catches. He had only been able to verify the dockets that he had originally provided to AFMA.
[110] Exhibit 1 at 302-303

Mr Johnson was unable to accept Mr Markellos’s handwritten summaries of his catch history but proposed the following to assist Mr Markellos in verifying his catch history:
“… I recognise that obtaining copies of dockets for all sales may require considerable effort. I propose that if you provide copies of dockets to support the summary for one of the qualifying years and these match the total summary provided by the Fish Factory, I would be able to accept the summaries provided for the remaining years. Could you please send to AFMA copies of the dockets for fish sales to the Fish Factory in the 1995 calendar year. I have chosen this year because you have provided dockets that account for only about 9 t of the roughly 28.5 t of gummy shark recorded in the Fish Factory summary.”[111]
[111] Exhibit 1 at 302

In relation to shark that Mr Markellos had processed himself and sold to buyers other than the Fish Factory, Mr Johnson noted that Mr Markellos had been unable to obtain any primary documents to support his claimed catches. Mr Johnson suggested:
“… If you use a separate account for your fishing income or can clearly separate records of income from your shark fishing in some other way, verification of catches in addition to those to the Fish Factory may be possible even though your are having difficulty obtaining primary documents.
By linking financial records and logbook entries relating to Fish Factory sales it may be possible to determine which deposit records relate to the remaining quantities recorded in your logbooks. I note that 1995 was a year in which you processed some fish yourself and for which roughly 3.5 t recorded in you logbooks is not accounted for by Fish Factory sales (assuming AFMA is able to verify the summaries provided). Could you please send to AFMA any financial records for the 1995 calendar year against which we can check your personal logbook entries for 1995 including the amounts of fish that you processed yourself. If you provide financial information to support all your logbook entries for 1995, I may be able to accept the additional catches recorded in your logbooks for the remaining years.”[112]
[112] Exhibit 1 at 302-303

If Mr Markellos were unable to follow these courses, Mr Johnson suggested that he send in any Fish Factory dockets that he had not already provided to AFMA and any financial records corresponding with any sales he had made in the qualifying years.

After Mr Markellos had provided further information, AFMA determined that 18,631.8kg of gummy shark had been verified against the 28,575.8kg shown on the summary provided by the Fish Factory. In a further letter, Mr Johnson told Mr Markellos that cross-referencing the Fish Factory invoices against his bank statements had been valuable in verifying the sales amounts.[113] The statements could not be used on their own, though, because they did not indicate the weight or the species composition of the catch. Mr Johnson suggested that Mr Markellos approach the Fish Factory for copies of the invoices on which it had prepared its summary. With regard to the shark processed through his own facilities, Mr Johnson advised that the CVT had been unable to reconcile the financial records against Mr Markellos’s personal log books. That was so because the weight and composition of the catch could not be determined.
[113] Exhibit 1 at 304

On 31 August 2000, Mr Johnson advised Mr Markellos that he was satisfied with the additional information provided in relation to sales to the Fish Factory and was prepared to accept its summaries for amounts of shark purchased from him in 1994, 1996 and 1997. In relation to the 1995 year, Mr Johnson wrote:
“… an amount of 6,244 kg’s was listed on the Fish Factory dockets as simply shark rather than as specific species. As part of the catch verification process it is policy to differentiate and allocate sales recorded only as shark, on the basis of price paid and percentage of catch as determined from the logbooks.
In this case the amount of 6,244 kg’s listed only as shark in the Fish Factory dockets for 1995 shows an average price of $6.50 per kilo and on the basis of percentage figures derived from 1995 State logbook returns, is apportioned as 5,601.6 kg (90%) of gummy shark and 622.4 kg (10%) of school shark. This provides you with a final 1995 allocation of 23,809.4 kg of gummy shark and 622.4 kg of school shark.”[114]
[114] Exhibit 1 at 305

On 29 December 2000, Mr Markellos sent affidavits sworn by himself and five other people in support of his claim for catch history relating to shark sold other than to the Fish Factory.[115] Mr Markellos said in his affidavit:
[115] Exhibit 1 at 312-324
“1. I was engaged as a fisherman in 1995 targeting principally shark.
2.My total catch was 35750 kg, comprising 3200 kg school, 28878 kg gummy, 3482 kg bronze, 190 kg whiskery.
3.I operated Alien Seafoods as a retail and wholesale outlet in Berri, SA during 1995 selling processed frozen product.
4.As verified on catch records, I sold to George’s Fish Shop on Millers Road, Adelaide in 1995 a total value of $16600 being 2400 kg of gummy shark at $5.75, and 800 kg of bronzies at $3.50 kg.
5.The remaining product was sold though Alien Seafoods namely 6 tonnes of gummy shark as school shark was sold via the Fish Factory.
6.There are no sales dockets for the frozen filleted product between myself and Alien Seafoods, or between Alien Seafoods and the public … as there was no need to create and maintain that record. It was simply wasteful and unnecessary.
7.An average of approx 125kg whole product – or 60-70 kg of filleted frozen product was sold through Alien Seafoods per week and the outlet was maintained during normal opening hours.
8.Alien Seafoods sold to the public, and to Hotels and other outlets, particularly the Berri Hotel, the Tower Tavern, the Loxton Hotel, the Monash Club, the Lyrup Club, the Berri Football Club.
9.I confirm on oath the accuracy of my catch records.”[116]
[116] Exhibit 1 at 314-315

On 12 January 2001, AFMA issued a permit to Mr Markellos. The conditions on his permit reflected that he had been given an initial allocation of 17,275.00 kilograms of gummy shark and 967 kilograms of school shark. Both weights were trunked weights.[117] On 7 February 2001, Mr Markellos asked that AFMA review the decision to attach that condition to his permit.[118]
[117] Exhibit 1 at 330-331
[118] Exhibit 1 at 332-335

Further information provided during the review process

Mr Petrus Maria Juckers was a customer at Alien Seafoods and had also accompanied Mr Markellos on three fishing trips. They had caught approximately seven tonnes of shark and approximately two tonnes of shark had been taken to Alien Seafoods. Mr Juckers had helped Mr Markellos to unload his catch on other occasions. It had comprised gummy shark, school shark, bronze whalers, nannagai, morwong, bonfish and many varieties of scale fish, which they filleted and packed into one and two kilogram packs.[119]
[119] Exhibit 1 at 316-317

Mr Erotoclis Papadopoulos had also been a regular customer of Alien Seafoods. Mr Markellos had employed him as a deckhand for six months and as an assistant at Alien Seafoods. Mr Markellos, he said, would take loads of gummy shark, bronze shark and marine scale species weighing between 400 kg and a ton to Alien Seafoods. Approximately half the load would be shark and sometimes it would be a larger proportion of the load. Of the shark that was processed at Alien Seafoods, 90% was gummy shark. Mr Papadopoulos packed fillets into two kilogram packs and froze those that were surplus to immediate needs in the shop. The freezer measured 20 feet by 8 feet and he had seen it nearly full of frozen product, most of which was gummy shark. He served hundreds of regular customers in Alien Seafoods and delivered frozen gummy shark, snapper, whiting and garfish to Berri and Loxton as well as to George’s Fresh Fish in Adelaide.[120]
[120] Exhibit 1 at 318-319

Mr Christopher John Philp is the proprietor of Berri Diesel Injection Service Pty Ltd and has known Mr Markellos for 15 years both as a friend and as one of his customers. Mr Philp has purchased fish from Alien Seafoods and had on many occasions helped Mr Markellos to unload 400 to 500 kilograms of shark and a similar amount of scale fish for processing. They talked about Mr Markellos’s fishing trips and he knew that Alien Seafoods supplied many of the Riverland’s hotels and restaurants with fish and shark between 1992 and 1997.[121]
[121] Exhibit 1 at 320-321

Mr Brian Frederick Jeffery, who has known Mr Markellos for ten years, purchased shark and scale fish from Alien Seafoods between 1992 and 1997. He and Mr Markellos are good friends. Mr Markellos is well known in the area and is a good fisherman supplying seafood to restaurants and hotels in the Riverland.[122]
[122] Exhibit 1 at 322

Mr Sotirius Koutouzis was employed by Mr Markellos between 1996 and 1998 to manage Alien Seafoods. He confirmed that Alien Seafoods processed fish caught by Mr Markellos. In the main, it processed gummy shark and garfish. Alien Seafoods sold that fish to the public and kept frozen stock to sell to local hotels and takeaway shops. Frozen fillets were also sold in Adelaide. Mr Koutouzis estimated that 10 tonnes of gummy shark (finned and trunked) were processed each year at Alien Seafoods.[123]
[123] Exhibit 1 at 323-324

CONSIDERATION

On behalf of Mr Markellos, Mr Lazarevich submitted that he did not attack AFMA’s policy in allocating the ITQ system. Rather, the attack was directed to the strict application of the verification process in circumstances in which it is not warranted. In any event, AFMA had failed to take account of all relevant information such as the Fish Factory summaries. With regard to the Fish Factory, I note that AFMA has increased Mr Markellos’s quota allocation by 4,549 units of gummy shark and 103 units of school shark to take account of Fish Factory summaries.

In reviewing the ITQ allocated to Mr Markellos, I have had regard to the principles that would normally guide my decision. Those guidelines would normally involve my having regard to any policy developed by AFMA although I am not limited to it. That follows from the fact that, although the Tribunal is not bound in this context to have regard to any of AFMA’s lawfully formulated policies,[124] any such policies are part of the factual matrix.[125] In view of Ryan J’s judgment in Australian Fisheries Management Authority v Graham,[126] I cannot have regard to AFMA’s policy that was followed in 2001 in allocating Mr Markellos’s ITQ.[127] At the same time, AFMA’s 2004 policy is not applicable as it has been applied only to operators in the Commonwealth sector of the SSF and not to those such as Mr Markellos operating in State waters.
[124] e.g. Migration Act 1958, s. 499
[125] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 645 per Brennan J, President
[126] (2003) 127 FCR 436 at 452 per Ryan J
[127] My reasons are set out in Re Howard and Australian Fisheries and Management Authority [2005] AATA 360

In a case such as this, though, there is no need for me to consider the guidelines as a whole. Mr Lazarevich has disputed only one aspect of AFMA’s policy in formulating the ITQ. That aspect is the means by which the catch history used as a step in determining that ITQ is determined or, to use the language of AFMA, is verified. That is the aspect on which I need to focus.

When I do that, it is apparent that the resources of a fishery must be a critical factor in the development of any policy to manage that fishery. That is apparent from AFMA’s obligation to pursue an objective to ensure that the exploitation of fisheries resources and the carrying on of any related activities are conducted in a manner that is consistent with, among others, ecologically sustainable development[128] and maximises the economic efficiency of that exploitation.[129] At the same time, it is clear that AFMA must make its decision in a manner that can be supported by reason and notions of fairness. Those factors are inherent in the requirement that AFMA pursue an objective of ensuring accountability to the Australian fishing industry and the Australian community.[130] In some instances, it is not possible for AFMA to pursue each objective in each decision that it makes.[131] This is not one of them. The history that I have set out shows, for example, that AFMA has developed its various policies having regard to scientific studies about the available fish stocks, the impact of fishing effort on those stocks and the steps required to preserve fish stocks at a sustainable level. It has attempted to ensure that sustainable levels are maintained by regulating the fishing effort either through the regulation of the equipment that fishermen can use or, more recently, through limiting the weight of each fisherman’s catch. In doing so, AFMA has also had regard to the economic consequences to fishermen of its measures in regulating and limiting their fishing efforts. That has followed from the principles in Australian Fisheries Management Authority v Graham.
[128] Act, s. 3(1)(b)
[129] Act, s. 3(1)(c)
[130] Act, s. 3(1)(d)
[131] This is consistent with the conclusion reached by Ryan J in Australian Fisheries Management Authority v Graham (2003) 127 FCR 436 at 451 when he said of s. 3(1) that “The provision is exhortatory, and each objective cannot be pursued with equal vigour at one and the same time. …”

It becomes apparent that the reliability of the information AFMA uses in developing its policy and in regulating the fishery is vital. If, for example, its information regarding the level of fish stocks does not accurately reflect the true situation, it may develop a policy that leads to overfishing to the extent that the fish stock is reduced to a level below a sustainable level. Alternatively, it may develop a policy that unnecessarily limits fishermen’s rights to fish and so their income. That. in turn, might not maximise the economic efficiency in the exploitation of fisheries resources. The accuracy of the information that AFMA uses is equally important in applying its policy. If it is not accurate, the application of the policy could lead to overfishing of the fish stock and so to unsustainable ecological development of the fishery. If inaccurate information leads to under fishing of the fishery, it is hard to say that AFMA has maximised the economic efficiency in the exploitation of fisheries resources. Inaccurate information may also lead to inequities between fishermen were one fisherman permitted to catch a greater share of the TAC than would be permitted by the proper administration of the policy. Inequities of that sort would undermine the confidence of other fishermen and the Australian community in the system as they would undermine the relative economic position of those who were previously engaged in shark fishing in the various sectors of the SSF.

Given that fishing is a human activity conducted in often trying conditions, it is difficult to compile records of a catch with precision while a fisherman is on board his vessel. This finding is supported by the evidence in this case and recorded in Mr Markellos’s records. Mr Markellos himself said that he estimated the weight of his catch while on board. He was very confident of his ability to estimate it accurately and that may well be so. Others, though, may not be as good or as careful at the task as he believes himself to be even though they may share his confidence. This in itself is a sound reason for requiring fishermen to provide further information supporting their own records whether maintained at sea or prepared subsequently.

The verification policy is based on this sort of philosophy. Although it distinguishes between primary and supporting documents and places greater reliance on primary documents, the policy does allow some flexibility in the documents that it will accept. The limits of flexibility are prescribed by the need for the documents, either alone or when taken with other documents, to establish four matters: a relationship between the catch and the concession by referring to the boat, skipper or concession holder; the year of the catch if not the precise date; the weight and/or the total price paid for each shark species; and that payment was received for the catch. There is some emphasis on the type of shark that has been caught and that must be so given AFMA’s regulation of particular species of shark in the fishery. AFMA has placed primary weight on documents that evidence dealings between the fisherman and third parties regarding dealings with his catch rather than on documents prepared solely by a fisherman recording his catch. The former sorts of documents are more likely to reflect on all four matters that are being looked for. The latter sort are more likely to reflect on the first two but not on the weight, price per kilogram of the fish or that payment was received. Payment for the catch as well as the catch itself is important given that AFMA is charged with having regard to maximising the economic efficiency of the fishery. It is not charged with the regulation of recreational fishing.

What of the documents in this case? AFMA has already accepted the catch reflected in the Fish Factory’s records and I do not need to consider them. Taken together, they reflect the information to establish the four matters. Those records only establish a part of the total catch claimed by Mr Markellos. He relies on the records in his log book as showing his catch during the years from 1994 to 1997. He describes those log books as the best evidence of his catch on the basis that there is no reason to overstate what is recorded as they may be relevant in a tax audit and they are the basis on which his crew was paid. Furthermore, he is an experienced fisherman. As submitted by Mr Lazarevich, the log books show the following catch history:

Year	gummy shark	school shark
1994	16,847	-
1995	28,878	3,200
1996	9,033	2,276
1997	30,152	4,818

On the basis of Mr Markellos’s evidence, I find that he compiled the entries in his Daily Log from those in his personal daily catch book and after he had returned to shore. He did so by coupling his records of the numbers that he had caught with his assessment of what each fish weighed. His assessment was based on the number of bodies that went to the ton when he sold his fish to the Fish Factory and on his experience. For all Mr Markellos’s experience, though, his assessment could only ever be an estimate. It could never be a figure that could be relied on as necessarily accurate. There are several reasons for this.

First, despite his evidence that he could do so (and there is no reason to doubt him), I find that he did not record his estimate of their weight in his personal daily catch books or even whether the fish were large or small or somewhere in between. Their size would determine the number that went to the ton and, in the absence of evidence, it is difficult to find that the same number of bodies would always make up a ton of fish. Without an estimate of their weight recorded at about the time that they were caught, it is difficult to make the leap between the number of fish recorded in Mr Markellos’s personal daily catch books and the weights shown in his Daily Logs as a comparison of the two sets of records shows inconsistencies between them and inconsistencies between them.

Taking March and December 1996 as examples, there is no consistency between the number of gummy shark and an average of their weight. Mr Markellos marked the left hand column of his March 1996 personal daily catch records with the letters “Gum”.[132] They showed a total of 345 gummy shark and 215 of an unnamed species. Given that the weight of gummy shark shown for March 1996 in his Daily Log is 3,160kg, the average weight of each gummy shark is approximately 9.16kg. His Daily Log for March 1996 records his having caught 445 gummy shark and 115 school shark. If that is the case, the average weight of each gummy shark is 7.1kg. His personal daily catch book for December 1996 does not distinguish which column represents gummy shark. Assuming that Mr Markellos was consistent in his record keeping, he caught 27 gummy shark in December 1996 and 812 of another unnamed species. If that is correct, the average weight of each fish in December 1996 when his Daily Log shows that he caught a total of 1,869kg was 69.2kg. If the figure of 812 represents the gummy shark he caught in that month, their average weight was 2.3kg. The same randomness is shown whatever months are chosen. In July 1997, when his Daily Log shows a total of 1,600kg of gummy shark, for example, Mr Markellos recorded the species caught in two columns. Assuming that one or the other represents gummy shark, the average weight of each fish was either 7.6kg or 6.4kg.
[132] Exhibit K

Furthermore, Mr Markellos’s evidence was that he would put aside the fish he wanted to sell through Alien Seafoods or to, or on consignment through, Mr Thallos. There is no evidence as to whether the fish that were put aside reflected the same cross-section of relative sizes as those fish sold to the Fish Factory. In the absence of that evidence, it is unsafe to rely on statistical information drawn from sales to the Fish Factory to compile figures about the whole of Mr Markellos’s catch.

Is there other information that supports Mr Markellos’s figures? I have looked to the dockets he has kept in relation to sales to clubs and hotels. Of them, only a relative handful refer to the sale of shark. From my own examination of the invoices, I do not quibble with Ms Mortimer’s count that only 44 of 350 invoices make that reference.[133] On the whole, they refer to more highly priced scale and shell fish. Where they do refer to the sale of shark, the prices are marked between $8.00 and $10.00. On those occasions, the reference is to “flake”. A few make reference to “shark” and the price marked on those occasions ranges between $6.50 and $7.00. It is not clear whether they prices are for filleted shark or for finned and trunked. Given the price and the description, it is more likely that the shark refers to it in its finned and trunked state but it is not clear.
[133] Exhibit B

The variation in prices suggests that it is unsafe to rely on an average sale price of $5.75 per kilogram as did Mr Constas. That figure is certainly the average of what seems to be a low of approximately $4.50 and a high of $7.50 per kilogram for shark sold to the Fish Factory. That would be for shark sold in a finned and trunked state. To apply that figure across the board to all of the shark sold by Mr Markellos would not be reasonable. It is even more unsafe when there are other variations in the price for which Mr Markellos sold gummy shark. So, for example, Mr Markellos sold some to Mr Thallos as fillets for $8.00 per kilogram but, for others, received what was left from an unknown sale price set by Mr Thallos and after Mr Thallos had deducted $2.00 per kilogram. Even if I accept that some of those variations result from some being sold as fillets and some as finned and trunked, those variations remain and I have no means from the evidence of reconciling the two forms in which the gummy shark was sold. I have no means of knowing whether Mr Thallos sold all of the gummy shark he sold on some form of consignment basis and, if so, how much and for what return to Mr Markellos.Mr Thallos made a statement but it does not assist as his evidence was given in broad dollar amounts ranging between $30,000 and $150,000.[134] Without an accurate price related to product presented in the same form and without a proper breakdown of the product from which Mr Markellos earned income, I cannot begin to rely on Mr Constas’s analysis as a means of assessing the weight of Mr Markellos’s catch.
[134] Exhibit 1 at 350

The evidence regarding the sales to the general public through Alien Seafoods does not assist me in working out the amount of gummy shark and school shark that Mr Markellos caught and sold through that avenue. The evidence of its employees and customers is expressed in general terms and is not helpful in working out the amounts that Mr Markellos sold and so caught with any precision. Mr Koutouzis, for example, estimated that 10 tonnes of gummy shark (finned and trunked) were processed each year at Alien Seafoods. That would amount to 10,000kg and would represent approximately 59%, 34.6%, 111% and 33% of the figures shown for the total catch of gummy shark recorded by Mr Markellos in his Daily Log for the years 1994 to 1997. In reality, Mr Koutouzis’s figure of 10 tonnes would reflect a much greater percentage of the figures shown in the Daily Log for Mr Koutouzis based his figures on the filleted weight and the Daily Log records whole fish or fish in a trunked condition. Apart from the figure of 111% for 1996, none of the percentages, whether higher or lower, is consistent with the evidence of Mr Markellos to the effect that he sold the majority of his fish to fish processors. The figure of 111% for 1996 suggests that Mr Markellos sold none of his fish to fish processors but sold even more than he caught through his shop.

Mr Markellos does not have records from Alien Seafoods to assist in identifying the species of fish Mr Markellos sold through it. Quite apart from having a cash register that did not really work properly, Mr Markellos did not bother with it because it simply meant more paperwork. Had there been any paperwork it is possible that it could have been used to relate weights and prices to species caught or bought by Mr Markellos. There is no possibility when there is no paperwork.

Mr Markellos says that it does not matter because he did not have to keep that paperwork. I may agree with him but, for the reasons I give below, I cannot reach a definite view. I note that the Monthly Fish Purchases Return itself said that he had to “… give details of sales to other than registered processors …” but have also had regard to the Fisheries Act and of FP Regulations made under it.

Mr Knight said that r. 9 of the FP Regulations provided that a registered fish processor[135] must lodge a return with the Executive Director of SARDI. That return must be in respect of the sale, purchase, processing, storage and movement of fish in that month. The word “fish” is defined in s. 5(1) of the Fisheries Act in terms wide enough to include School Shark and Gummy Shark. A “fish processor” is a “… person who for the purpose of trade or business processes or purchases or obtains fish”.[136] The word “processing” in relation to fish means “… scaling, gilling, gutting, filleting, freezing, chilling, packing or any other activity involved in preparing fish for sale.”[137]
[135] Subject to the regulations, a person must not act as a fish processor unless registered under s. 54 as a fish processor: Fisheries Act, s. 54.
[136] Fisheries Act, s. 5(1)
[137] Fisheries Act, s. 5(1)

Mr Markellos, I find, is such a person but is not a registered fish processor. There is no requirement that he be registered as a fish processor if he only processes fish he has taken as the holder of a fishery licence[138] for sale to a registered fish processor or directly to persons who consume the fish.[139] If it is the case that Mr Thallos and the clubs and hotels to which he sold fish were registered fish processors and on the assumption that he sold the remainder of his fish to members of the public who consumed the fish, Mr Markellos would not have been required to be a registered fish processor. If that is not the case, he would have been required to be a registered fish processor and to comply with r. 9 in relation to fish sold or delivered to an unregistered processor. In view of the definition of “processing”, the clubs and hotels to which he sold the fish might or might not have been unregistered fish processors as it would depend on whether cooking fish is included in the words “any other activity involved in preparing fish for sale”. I do not have enough information on which to decide whether or not Mr Markellos has met his obligations under the South Australian legislation.
[138] A fishery licence is a licence granted under Part 4, Division 1 of the Fisheries Act; Fisheries Act, s. 5(1)
[139] FP Regulations, r. 7(b)(i)

Quite independently of the duties he has to provide information to AFMA or to State fishing authorities. Commercial fishing is a business and is subject to the taxation laws. In general terms, s. 262A of the Income Tax Assessment Act 1936 (“ITA Act”) requires that “… a person carrying on business must keep records that record and explain all transactions and other acts engaged in by the person that are relevant for any purpose of this Act”.[140] A “business” is defined to include “… any profession, trade, employment, vocation or calling, but does not include occupation as an employee”.[141] The records that must be kept include any documents that are relevant for the purpose of ascertaining the fisherman’s income and expenditure[142] and they must be kept to enable his or her liability under the ITA Act to be readily ascertained.[143] Although there are exceptions requiring a longer period, a person is required to keep the records for five years after they were prepared or obtained or after completion of the transactions to which they relate.[144] The Income Tax Assessment Act 1997, which came into operation on 1 July 1997, continues to require the records to be kept in this way.[145]
[140] ITA Act, s. 262A(1)
[141] ITA Act, s. 6(1)
[142] ITA Act, s. 262A(2)(a)
[143] ITA Act, s. 262A(3)(b)
[144] ITA Act, s. 262A(4)
[145] Income Tax Assessment Act 1997, s. 3-10(1)

In view of the business framework within which he operated, it is reasonable to expect that Mr Markellos would have maintained and retained records to show his income and expenditure during the previous five years. Furthermore, it is reasonable to expect that Mr Markellos would have kept “records that record and explain all transactions and other acts …” involved in selling fish he caught and in buying and selling fish and shell fish that he had not caught as they were acts he engaged in while he earned his income and that are relevant for assessing the income tax he must pay. This would mean that, when he lodged his claim for shark catch history on 8 October 1999, he could be expected to have retained, for the purposes of his taxation responsibilities, records back to 8 October 1994 being five years before that date.

Taking all of these matters into account, I am not satisfied that Mr Markellos’s estimate of his catch history based on his personal daily catch books and Daily Logs should be accepted as his catch history. Except in so far as AFMA has already accepted those records as supported by records of the Fish Factory, I am not satisfied that they are supported by other information held by Mr Markellos or by others. His commercial fishing was a business and his sale of fish whether to fish processors or to persons other than fish processors was simply part of that business. That is so even if he had value-added to the fish he caught by selling them in a filleted state. As a fisherman who was value-adding to his product he might have differed from some of the other fishermen involved in the SSF but, for all that, he was engaged in a business. Even though, like others engaged in the SSF, he would not have known that the records for 1994 to 1997 would have been relevant when he was fishing and selling, it was not unreasonable that all fishermen maintain the records required by Commonwealth and State law. He was not in a unique position when compared with other fishermen engaged in the SSF. His operation of Alien Seafoods and his sales to persons other than fish processors or to fish processors without invoices is not enough to place him in that position. The income tax legislation requires that he keep “records that record and explain all transactions and other acts …” engaged in while he earned his income and that are relevant for assessing the income tax he must pay. Were I to accept his log books as an accurate record of his catch history without their being supported by other information, I would be placing him in a unique position when compared with other fishermen who have had to do that.

For the reasons I have given, I:
1.vary the decision made by a delegate of the respondent on 20 December 2001 so that the Individual Transferable Quota appearing as a condition to the applicant’s Southern Shark Fishery Permit No. 26363 takes account of an increase in the applicant’s catch history of 4,549 units of gummy shark and 103 units of school shark;
2.remit the matter to the respondent to assess the applicant’s Individual Transferable Quota appearing as a condition to the applicant’s Southern Shark Fishery Permit No. 26363 to take account of an increase in the applicant’s catch history of 4,549 units of gummy shark and 103 units of school shark; and
3.otherwise affirm the decision under review.
I certify that the one hundred and sixteen preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President S A Forgie,

Signed: ………………........................................

Associate

Dates of Hearing  27 and 28 May 2004, 10 to 12 August 2004
Date of Decision  19 September 2005
Counsel for the Applicant             Mr A. Lazarevich
Solicitor for the Applicant            Mr T. Bassett
  Coates Pty Ltd
Counsel for the Respondent         Ms. D. Mortimer
Solicitor for the Respondent         Ms A. Dornau
Dibbs Abbott Stillman