P.W. Adams Pty Ltd v Australian Fisheries Management Authority
[1995] FCA 819
•11 OCTOBER 1995
CATCHWORDS
FISH AND FISHERIES - fishing permits - policy governing allocation of catch quotas - whether policy failed to take into account a relevant consideration - statutory objective of maximisation of economic efficiency in the exploitation of fisheries resources.
ADMINISTRATIVE LAW - Administrative Appeals - error of law - application of a policy by the Tribunal which failed to take into account a relevant consideration - circumstances in which the Tribunal ought to depart from a departmental policy - whether the Tribunal lacked jurisdiction to review a decision relating to a permit the term of which had expired.
WORDS AND PHRASES - "economic efficiency".
Administrative Appeals Tribunal Act 1975 (Cth), ss 43(1), 44
Fisheries Management Act 1991 (Cth), ss 3(1)(C), 32, 165
Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381.
Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634.
Skoljarev v Secretary, Department of Primary Industries and Energy (1994) 51 FCR 57.
Re Surf Air and Civil Aviation Authority (1991) 22 ALD 118.
Director-General of Social Services v Hangan (1982) 70 FLR 212.
Sloane v Minister for Immigration, Local Government and Ethnic Affairs (1992) 37 FCR 429.
P.W. ADAMS PTY LTD v AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY
NG 851 of 1994
NG 647 of 1995
Sackville J.
Melbourne (Heard in Sydney)
11 October 1995
FEDERAL COURT OF AUSTRALIA ) No. NG 851 of 1994
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 647 of 1995
GENERAL DIVISION )
ON APPEAL FROM THE GENERAL DIVISION OF THE ADMINISTRATIVE
APPEALS TRIBUNAL CONSTITUTED BY MR B.J. McMAHON, DEPUTY
PRESIDENT
BETWEEN:
P.W. ADAMS PTY LTD
Applicant
AND:
AUSTRALIAN FISHERIES
MANAGEMENT AUTHORITY
Respondent
CORAM: SACKVILLE J.
PLACE: MELBOURNE (HEARD IN SYDNEY)
DATE: 11 OCTOBER 1995
MINUTES OF ORDER
THE COURT:
Declares that, in affirming the decision made by the delegate of Australian Fisheries Management Authority on 31 March 1994, the Administrative Appeals Tribunal erred by giving effect to a policy which failed to take into account a relevant consideration, namely, the objective in s.3(1)(c) of the Fisheries Management Act 1991 (Cth) of maximising economic efficiency in the exploitation of fisheries resources.
Declares that, in affirming the decision made by the delegate of Australian Fisheries Management Authority on 24 July 1995, the Administrative Appeals Tribunal erred by giving effect to a policy which failed to take into account a relevant consideration, namely, the objective in s.3(1)(c) of the Fisheries Management Act 1991 (Cth) of maximising economic efficiency in the exploitation of fisheries resources.
Orders that the decision made by the Administrative Appeals Tribunal on 23 August 1995 be set aside and that the case be remitted to the Tribunal for determination according to law.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
FEDERAL COURT OF AUSTRALIA ) No. NG 851 of 1994
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 647 of 1995
GENERAL DIVISION )
ON APPEAL FROM THE GENERAL DIVISION OF THE ADMINISTRATIVE
APPEALS TRIBUNAL CONSTITUTED BY MR B.J. McMAHON, DEPUTY
PRESIDENT
BETWEEN:
P.W. ADAMS PTY LTD
Applicant
AND:
AUSTRALIAN FISHERIES
MANAGEMENT AUTHORITY
Respondent
CORAM: SACKVILLE J.
PLACE: MELBOURNE (HEARD IN SYDNEY)
DATE: 11 OCTOBER 1995
REASONS FOR JUDGMENT
The Proceedings
These are two appeals by the applicant from decisions of the Administrative Appeals Tribunal (the "AAT"), constituted by Deputy President McMahon. Each is brought under s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the "AAT Act"), which permits a party to a proceeding before the AAT to appeal on a question of law.
In the first matter, the applicant appeals against the Tribunal's decision, made on 4 November 1994, in respect of applications to review two decisions made by the respondent ("AFMA"), under the Fisheries Management Act 1991 (Cth) (the "Management Act"). Each
decision related to the issue of a fishing permit, subject to conditions, authorising the applicant to use a boat known as the Wellington Cape for commercial fishing in the South East Fishery ("SEF"). The first permit was issued for the 1993 calendar year and the second for the 1994 calendar year. The AAT dismissed the application to review AFMA's decision relating to the 1993 permit on jurisdictional grounds. It affirmed AFMA's decision relating to the 1994 permit.
The second appeal is from a decision of the AAT, given on 23 August 1995, in which the AAT affirmed a decision by AFMA not to vary the quota conditions attached to the 1995 permit issued in relation to the Wellington Cape. The hearing of this appeal was expedited, in order to give the applicant the opportunity to have the matter resolved before the end of the 1995 calendar year. Expedition of the appeal was granted on the basis that the issues were substantially the same as those raised by the first appeal. In fact, some additional jurisdictional issues were raised.
The substance of the applicant's complaint on the apppeals is that it has been disadvantaged because the quotas allocated to the Wellington Cape for flathead and school whiting were based on the vessel's catch history in the SEF. While the same approach was taken in relation to similar vessels, known as Danish seine boats, the Wellington Cape was disadvantaged because, during the relevant catch period, it had been used for much of the time to catch shark and not flathead or school whiting. The applicant challenges the formula used to allocate
quotas, and argues that the AAT fell into error in affirming AFMA's decision. The principal basis of the challenge is that the policy reflected in the formula failed to take account of a relevant consideration, namely, the objective of maximising economic efficiency in the exploitation of fisheries resources, which s.3(1)(c) of the Management Act requires AFMA to pursue in the performance of its functions.
The Management Act
The Management Act, s.3(1) provides as follows:
"3(1) The following objectives must be pursued by the Minister in the administration of this Act and by AFMA in the performance of its functions:
(a)implementing efficient and cost-effective fisheries management on behalf of the Commonwealth; and
(b)ensuring that the exploitation of fisheries resources and the carrying on of any related activities are conducted in a manner consistent with the principles of ecologically sustainable development, in particular the need to have regard to the impact of fishing activities on non-target species and 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."
AFMA was established by s.5 of the Fisheries Administration Act 1991 (Cth) ("the Administration Act"). Section 6 of that Act requires AFMA, to pursue objectives expressed in identical terms to those specified in s.3(1) of the Management Act.
The grant of fishing permits is governed by s.32 of the Management Act. This section, insofar as relevant, provides as follows:
"32(1) AFMA may, upon application made in the approved form, grant to a person a fishing permit authorising the use of a specified Australian boat by that person, or a person acting on that person's behalf, for fishing in a specified area of the AFZ or a specified fishery.
...
(4)A fishing permit may authorise the use of a boat:
(a)for commercial fishing generally;
...
(6)A fishing permit:
(a)is subject to such other conditions as are:
(i) specified in the permit; or
(ii)prescribed in relation to permits granted under this section; and
...
(c)subject to this Act, remains in force until the day specified for the purpose in the permit, being a day not later than 5 years after the day on which it came into force.
(7)Without limiting the operation of paragraph (6)(a), the conditions that may be specified in a permit include conditions relating 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 of equipment that may be used to take fish; or
(e)the methods of equipment that may be used to process or carry fish.
(8)AFMA may, by written notice given to the holder of a permit, whether or not at the request of the holder, vary or revoke a condition of the permit (not being a condition mentioned in subsection (5)) or specify a condition or a further condition to which the permit is to be subject.
...
(10)Except where a fishing permit is stated to be non-transferable, AFMA may, on the application of the holder of the permit and of another person as proposed transferee, transfer the permit to that other person."
The reference to the "AFZ" in s.32(1) is to the Australian fishing zone, as defined in s.4(1) of the Management Act.
Section 165 requires AFMA to reconsider decisions made by it, if requested to do so, and provides for a right of review to the AAT. For the purposes of s.165, "relevant decision" includes "a decision of AFMA under...section 32", while a "reviewable decision" means a decision under s.165(5): s.165(1). Section 165 contains other relevant provisions as follows:
"(2) A person affected by a relevant decision who is dissatisfied with the decision may:
(a)within 21 days after being notified of the decision...
...
request AFMA, in writing, to reconsider the decision.
...
(5)AFMA must, within 45 days after receiving the request, reconsider the relevant decision and may make a decision:
(a)in substitution for the relevant decision whether in the same terms as the relevant decision or not; or
(b)revoking the relevant decision.
...
(7)An application may be made to the Administrative Appeals Tribunal for a review of a reviewable decision".
Background
The SEF covers an area from Barrenjoey Point, north of Sydney, to South Australia, including waters around Tasmania, from three miles offshore out to the 200 mile limit of the AFZ. The fishery exploits a large number of commercial species and is the main supplier to the Sydney and Melbourne markets.
Because of pressures on fishing stock, measures have been taken to control the level of catch. Management was introduced into the SEF in 1985 by means of fishing notices, which limited access to the SEF to fishermen who held an appropriately endorsed Commonwealth boat licence. The South East Trawl Management Advisory Committee ("SETMAC") was set up in 1986 to provide for consultation between industry, scientists and managers. SETMAC now has statutory powers under the Management Act. Arrangements were formalised in the South East Trawl Fishery Preliminary Management Plan 1988, made under the Fisheries Act 1952 (Cth). A paper prepared by AFMA summarised the arrangements under that plan as follows:
"Endorsements were issued to fishermen who qualified on the basis of proven operation in the fishery during specified periods. These endorsements were transferable and thus assumed a significant capital value. The management arrangements also introduced the concept of hull and engine units based on the size and power of the vessel. These units were combined to form the applicable number of units in relation to a boat, which were transferable and thus had a trading value attached to them. There were no controls on the levels of catch by endorsed vessels until specific controls were introduced for orange roughy in 1987 and gemfish in 1988."
The concept of boat units was introduced to limit the overall catching capacity of the fleet. A boat could not operate in the fishery without the applicable number of units being assigned to it. Boat units and endorsed licences did not of themselves limit or determine the catch that a particular boat could take.
To move forward somewhat, controls on the levels of catch were extended to all quota species in 1992. The maximum allowable catch for a particular species is known as the total allowable catch ("TAC"). TACs have been set on an annual basis, following advice from, and consultation with, the industry and scientists. The object of setting TACs is to achieve or maintain a sustainable level of catch for a particular species.
In May 1988 a working group of SETMAC identified a number of options for the future management of the SEF. An Australian Fisheries Council sub-committee prepared a report in December 1989, recommending that a system of Individual Transferable Quotas ("ITQs") be introduced for the major commercial species in the SEF. The then Minister announced in April 1990 that an ITQ system would be introduced. Announcements had previously been made foreshadowing possible changes in the arrangements governing access to the SEF.
The South East Fishery (Individual Transferable Quota) Management Plan 1991 ("the Management Plan 1991") was proclaimed in December 1991, pursuant to s.7B of the now repealed Fisheries Act 1952. The Management Plan 1991 provided for the allocation of
transferable quotas for named species, but restricted quotas to particular operators. Generally speaking, the quotas were intended to be based on a combination of an operator's boat units and the vessel's verified catch history in the SEF during the period 1984 to 1989.
In Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381 (FCA/FC), the Full Court dismissed an appeal from a declaration, made at first instance by O'Loughlin J., that paragraph 11 of the Management Plan 1991 (which contained the formula for allocating the quotas) was void. The Full Court upheld a finding by O'Loughlin J. that the relevant provisions of the plan were capricious and irrational, largely because the formula was statistically flawed. O'Loughlin J.'s decision was handed down on 28 July 1992 and the Full Court's decision was delivered on 19 February 1993.
In February 1992, at the request of the Minister, a Review Committee had been established to review management arrangements in the SEF. Following the report of the Review Committee and the decision of O'Loughlin J. in the Austral Fisheries Case, the Minister determined that an "averaging method" should be used to determine allocation of quotas for the remainder of 1992. In essence, the averaging method employed a different technique for determining a vessel's catch history, thereby avoiding the statistical error incorporated in the previous "market share method" invalidated in the Austral Fisheries Case.
The Management Plan 1991, as amended, ceased to have any force from December 1992, on the expiry of licences granted under the Fisheries Act 1952.
The Management Act, s.17, provides for AFMA to determine a plan of management for a fishery. However, since the expiry of the Management Plan 1991, no new plan has been determined by AFMA. Rather, AFMA has managed the SEF using fishing permits issued under s.32 of the Management Act. This technique, to use the words of Mr Rohan, the general manager of AFMA's Southern Fisheries Branch, has been used as "an interim management plan until a new statutory management plan is implemented".
On 8 December 1992, AFMA decided that fishing permits in 1993 should be granted only to persons who were eligible for and held quotas under the Management Plan 1991. AFMA also resolved that the quota entitlement available to operators was to be based on the results of the averaging method previously notified to operators, but converted to 1993 kilogram values. The TACs for 1993 for the controlled species were determined by the Board at its December 1992 meeting.
On 9 December 1993, AFMA decided that fishing permits for the SEF in 1994 should only be granted to individuals who were permanent holders of quota units in 1993. The TACs for 1994 were determined at AFMA's 28 October 1993 meeting.
As I shall explain in more detail shortly, the allocation of
quotas to Danish seiners, in respect of flathead and school whiting, for the years 1993, 1994 and 1995, used a formula. Nominally the formula allocated a weighting of 70% to catch history and 30% to boat units. In practice all Danish seiners that satisfied a very low threshold requirement were uniformly allocated 100 boat units, regardless of size or capacity. Thus the formula for the allocation of a quota relating to a species of fish depended, in substance, on an assessment of each vessel's catch history for that species during the relevant catch period.
The Applicant's Position
The applicant was described in the AAT's reasons as a family-owned sawmilling company. In about 1989, the directors (one of whom was an experienced fisherman) decided to invest in a fishing boat. The boat selected was the Wellington Cape which, as I have said, is a Danish seine trawler. The vessel has a steel hull, is about 16 metres in length and weighs about 35 tonnes. Danish seine fishing involves the use of ropes and nets which are cast in a particular way and winched together. The main target fish for Danish seiners are flathead and school whiting, which are caught in relatively shallow waters. In 1989, under the management plan then in force, the Wellington Cape had 81 hull and engine units allocated to it.
The applicant entered into an agreement with the owners of the Wellington Cape on 19 September 1989. The agreement provided for the purchase of the vessel and its licences, including its Commonwealth boat fishing licence. The price paid for the vessel
was $380,000 which (according to the evidence of a director of the applicant) included a component of $3,500 per unit for the 81 units allocated to the vessel (that is, $283,500).
Before the purchase, the Wellington Cape was heavily involved in shark fishing, especially prior to 1988. This is shown by its verified catch record for the period 1984 to 1989. The following table shows its catch, in kilograms, of tiger flathead, school whiting and "other sharks", and omits its record in relation to other quota species.
1984 1985 1986 1987 1988 1989
Tiger flathead 21 849 5 24129 78039 2500
School Whiting 0 10019 155 23963 34349 2408
Other Sharks 38682 26342 52814 15581 3927 123
The Wellington Cape had a special endorsement on its licence for shark fishing. However, the applicant's directors were aware that this endorsement would have to be surrendered and could not be transferred. This was because of the provisions of the Southern Shark Fishery Management Plan 1988, which aimed to reduce the overall shark catch. The Wellington Cape's catch history for flathead and school whiting was such that it was relatively poorly placed if quotas were allocated by reference, not merely to boat units, but to catch history over the whole of the qualifying period in relation to those species.
The directors of the applicant gave evidence before the AAT that they were not aware of the public announcements, made prior to September 1989, advising of proposed changes to the management of the SEF. Thus they were not aware when they purchased the Wellington Cape that the regulatory system governing access to the SEF was likely to change. The AAT accepted this evidence, but expressed the view that the directors had only themselves to blame, as they had every opportunity to inform themselves of the correct position before completing the purchase.
The 1993 Permit
On 10 December 1992 AFMA, in a letter signed by Mr Rohan, notified the applicant that a fishing permit would be needed to operate in the SEF for 1993, with the quotas for particular species being shown as a condition on the permit. The letter stated that the quotas would be based on the new averaging method. It also advised the applicant of its unit and kilogram quota entitlement for 1993. In the case of flathead the unit entitlement was 26,888, having a kilogram value of 28,232. For school whiting the equivalent figures were 29,530 units and 30,416 kilograms.
The applicant subsequently applied for a permit under the Management Act. On 26 February 1993 a fishing permit was granted under s.32(1) of the Management Act. The permit was subject to a quota condition, limiting the allowable catch for each species. In the case of flathead the unit entitlement was a mere 25, having a kilogram value of 26. The unit entitlement for school whiting was also 25, with a kilogram value of 26. The evidence in the appeal books did not explain precisely why the unit
entitlements attached to the applicant's permit were so low. However, the statement provided by AFMA to the AAT, pursuant to s.37 of the AAT Act, noted that an applicant could nominate to have only a portion of the allocated quota placed on the permit in order to reduce the levy otherwise payable. Provision was also made for the transfer of quota units in certain circumstances.
On 3 June 1993 the applicant wrote to AFMA seeking review of the decision to impose quota conditions on the 1993 permit. It is not entirely clear whether the application for internal review was regarded as having been made under s.165(2) of the Management Act, or whether it was regarded as an application to vary the quota conditions, as provided for in s.32(8) of the Management Act. In any event, after the review hearing, the delegate decided, on 28 July 1993, that there were no grounds to vary the original decision regarding the quota conditions. On 24 August 1993 the applicant applied to the AAT for review of the delegate's decision.
The 1994 Permit
On 26 December 1993, the applicant applied for a further fishing permit, pursuant to s.32(1) of the Management Act, in respect of the Wellington Cape. On 8 February 1994 the respondent issued a fishing permit authorising the use of the Wellington Cape in the SEF for commercial fishing during the period 1 January 1994 to 31 December 1994. The permit was again subject to conditions, including quotas for nominated species. The quota for flathead
was 29,184 units, having a value of 35,604 kilograms. The quota for school whiting was 30,271 units, having a value of 31,179 kilograms. The conditions imposing the quota were subsequently amended, apparently to reflect the fact that the applicant had transferred portion of its quotas to another operator. As amended, the unit quota for flathead was 24,428 units (29,802 kilograms); for school whiting it was 29,644 (30,533 kilograms). The changed kilogram value of units from 1993 reflected changes in the TAC for the relevant species.
The applicant sought internal review by AFMA of the decision to issue the permit subject to the quota conditions. AFMA treated the application for internal review as having been made under s.165(2) of the Management Act. On 31 March 1994, the delegate affirmed the original decisions. On 5 April the applicant applied to the AAT, under s.165(7) of the Management Act, to review the decision of the delegate.
The 1995 Permit and Refusal to Amend
On 23 November 1994 a booklet entitled South East Fishery Management Arrangements 1995 was sent to the applicant and other permit holders. The booklet stated that SETMAC and AFMA were continuing to develop a new management plan for the SEF. Under that plan Statutory Fishing Rights would replace quota unit entitlements. In the meantime, fishing permits would continue to be granted "as an interim measure" for 1995. No changes in the quota allocation provisions had been made since 1994. Each permit holder was entitled to the number of quota units recorded
in the Register of SEF Quota Entitlements, subject to an adjustment for carry over of credits (in caught catch) and debits (over catch).
On 15 December 1994 the applicant applied for fresh permit in respect of the Wellington Cape. On 11 January 1995, the permit was granted for the calendar year 1995. As with the earlier permits, the 1995 permit was subject to a condition imposing quotas for each of the nominated species. The unit allocation was unchanged from the unamended allocation for 1994, although there were changes in the kilogram values. Thus, for flathead the allocation was 29,184 units (35,322 kilograms), while that for school whiting was 30,271 units (31,128 kilograms).
A request was subsequently made by solicitors for the applicant requesting reconsideration of the decision "on allocation quota". Under s.165(2) of the Management Act, such a request had to be made within 21 days of notification of the decision. By letter dated 11 April 1995, AFMA advised the applicant's solicitors that it was unable to review the decision because the request had not been made within the statutory period.
The applicant's solicitors, by a letter dated 18 April 1995, sought a variation of the conditions applicable to the 1995 permit, so as to increase the relevant quotas. In the case of flathead the quota sought was 60,000 kilograms live weight and for school whiting the quota sought was 90,000. The application for variation was made under s.32(8) of the Management Act, which
permits AFMA, whether or not at the request of the holder, to vary or revoke a condition of the permit.
AFMA rejected the application for variation of the condition. By letter dated 23 May 1995, AFMA noted that, since 1993, the terms of the Management Plan 1991 had been applied, with some amendments, as policy for the determination of individual quota allocations shown as conditions on permits. A verified catch was to be determined by reference to documents identified in Schedule 5 to the Plan. The author of the letter concluded that, as the applicant had not provided additional documentation acceptable as "Schedule 5" documents, and because there were no circumstances about the case that persuaded him to depart from existing policy, he had decided to refuse the request to amend the permit. The letter advised the applicant of its right to have the decision reconsidered and, if not satisfied with the outcome, to apply to the AAT for review.
On 25 May 1995 the applicant requested review of the decision under s.165(5) of the Management Act. On 24 July 1995 the delegate affirmed the earlier decision. Notice of the decision was given to the applicant on the same day.
On 25 July 1995 the applicant sought review by the AAT of the decision made by the delegate refusing the request for an amendment to the conditions attached to the 1995 permit.
The First AAT Decision
The applications relating to the 1993 and 1994 permits were heard together by the AAT, apparently because of perceived jurisdictional difficulties in relation to the 1993 decision. The AAT observed that the relevant decision was the issue of the permit in each year, but that the applicant's real complaint was the nature of the quota formula adopted as a condition of the permit.
The main argument put by the applicant to the AAT was that there were circumstances warranting a departure from the policy of allocating quotas by reference to catch history. The applicant stressed that the directors were ignorant of the proposed changes in the industry at the time the vessel was purchased. The applicant argued that the emphasis on catch history unfairly disadvantaged the applicant compared with other operators of Danish seines who had used their vessels to fish for flathead and school whiting during the catch history period. The AAT rejected the argument, finding that
"the individual circumstances of the applicant [were] not sufficient...to put it in a special category".
The AAT also held that, in any event, no review was possible of the 1993 permit, as that permit had expired on 31 December 1993. Thus,
"[t]he decision-making power of the delegate had been exhausted for the 1993 year and there was no decision available for [the] Tribunal to review."
Section 3(1)(c) of the Management Act, which requires the AFMA to pursue the objective of "maximising economic efficiency in the exploitation of fisheries resources", received only a brief mention in the AAT's reasons. This was because the argument for the applicant concentrated on the economic consequences to it of the policy of allocating quotas by reference to catch history, as distinct from the general effect of the policy. However, as will be seen, the applicant's case was presented somewhat differently before this Court.
The Second AAT Decision
In its second decision, the AAT initially addressed a jurisdictional objection raised by AFMA to the application for review. The AAT held that, despite AFMA's contentions, the decision by the delegate not to vary the quota conditions attached to the 1995 permit constituted a "reviewable decision" for the purposes of s.165(7) of the Management Act. Accordingly, the AAT decided that it had jurisdiction to review the decision not to vary the conditions.
The AAT's reasons noted that the issues in relation to the 1995 permit were substantially the same as those which were considered in relation to the 1994 permit. Thus the legal and factual situation remained the same. The reasons recorded that some additional submissions had been made on behalf of the applicant but that these had not been developed. As these additional matters were not pressed on the appeal to this Court, I need not consider them further. The AAT concluded that nothing had been
shown to warrant any different conclusion than had been reached by it on the previous occasion. Accordingly, AFMA's decision under review was affirmed.
The Formula
Mr Street, who appeared with Ms York for the applicant, submitted that the AAT, like AFMA, had erred in law. The substance of Mr Street's argument was very simple. It was that the AAT, by applying a policy which focussed exclusively on a vessel's catch history, had failed to take into account a consideration relevant to the exercise of its powers under s.32 of the Management Act. This consideration was the objective of maximising economic efficiency in the exploitation of economic resources, which the Minister (and therefore the AAT) was obliged to pursue by virtue of s.3(1)(c) of the Management Act.
To assess Mr Street's argument it is necessary to consider the nature of the formula governing the allocation of quotas, applied by both the Minister and the AAT. It should be noted at the outset that both Mr Street and Mr Roberts, who appeared for AFMA, accepted that the formula could accurately be described as a policy which was applied by AFMA and the Minister to guide the exercise of the discretion conferred by ss.32(1) and 32(8) of the Management Act: compare Howells v Nagrad Nominees Pty Ltd (1982) 66 FLR 169 (FCA/FC), at 194-195, per Fox and Franki JJ.
The rationale for the formula was explained by Mr Rohan in his statement:
"Quota allocation for Danish seine vessels is based on 70% catch history and 30% boat units. In the calculation of the boat unit portion of the formula, all Danish seiners are considered to have an equal share. The reason for this is that the special provisions which applied to the Danish seine fleet from 1987 allowed vessels to upgrade in size without obtaining more boat units. Thus the boat units assigned to a particular boat may not have equated to the applicable number of boat units for that boat under the provisions of the 1988 Management Plan."
In his evidence in chief before the AAT, Mr Rohan described the 30% of the formula dependant upon boat units as a "variable". However, this is something of an overstatement. In fact, as Mr Rohan acknowledged in his statement, each Danish seine boat was simply allocated a value of 100 for the purposes of the 30% of the formula said to be based on boat units.
The South East Fishery Information Paper, prepared in September 1993 by AFMA Management, in conjunction with SETMAC, stated the principles governing the allocation provisions as follows:
"l based on a combination of catch history and investment (boat units);
lcatch history from 1984 to 1989 is used;
laveraging of catch history over relevant years;
lboard trawlers, Danish seiners and particular species were assigned different catch history/investment weightings;
lfor board trawlers - weighting of 50% catch history and 50% investment for orange roughy and blue grenadier, with a weighting of 80% catch history and 20% investment for all other species;
lfor Danish seiners - weighting of 70% catch history and 30% investment for all species with each Danish seine operator considered to have the same number of units; and
lcatch thresholds applied to determine whether boat units qualify in the allocation formula."
With some minor modifications, these principles were applied in the determination of quota entitlements for 1994 and 1995.
In his submissions, Mr Roberts explained that the allocation of a standard value for boat units in relation to Danish seine vessels was derived from a formula in paragraph 11.7 of the Management Plan 1991. (It will be recalled that para.11 of the Management Plan was declared void in the Austral Fisheries Case.) The formula in paragraph 11.7 was expressed in the form of a fraction, which was to be multiplied by 100. The numerator of the fraction was fixed at 100 for vessels whose verified catch of the relevant species equalled or exceeded the threshold catch in any one year of the six year qualifying period (1984-1989). For those vessels which did not achieve the threshold catch, the numerator was set at 85 if certain other conditions (not relevant to the present case) were met. If none of the conditions was met, the numerator was zero, and the vessel received a zero boat unit component in relation to the particular species.
The denominator of the fraction was the sum of the values of the numerator attributed to all Danish seiners for the relevant species. The denominator was therefore the same for all Danish seiners. It follows that the formula produced a result that was the same for each Danish seiner whose catch exceeded the threshold in any one year of the qualifying period. Although the numerical result of the formula was not 100, it appears that the
figure of 100 units was assigned to all Danish seiners exceeding the threshold catch as a means of treating them equally.
The schedules to the Management Plan 1991 specified the threshold catch for each species. In the case of both flathead and school whiting, the threshold catch was specified to be only 100 kilograms. Thus, each Danish seiner boat that caught a minimum 100 kilograms of flathead and school whiting, in at least one of the six years of the qualifying period, received an identical number of boat units for the purposes of the formula used to allocate quotas for these species.
The evidence before the AAT did not clarify whether the "threshold catch" requirement continued to apply after the Management Plan 1991 expired on 31 December 1992. But even if it did, the likelihood (as Mr Roberts conceded) is that all Danish seiners that caught flathead and school whiting at any time during the qualifying period would have satisfied the very low "threshold catch" requirement.
The explanation given by Mr Rohan for adopting a uniform number of boat units for each Danish seiner was that, from 1987, the Danish seiner fleet was permitted to upgrade size and capacity, without any alteration being required in the number of units allocated to each vessel under the 1988 Management Plan. The reason for the increases in size and capacity being permitted, without any alteration in the units allocated to each vessel, was not explored in the evidence before the AAT. However, the
consequence was that boat units allocated to particular vessels no longer reflected (or, at least, no longer necessarily reflected) size or power of each vessel. Accordingly, the Wellington Cape, with 81 boat units, might or might not have had greater capacity to catch fish than another vessel with, say, 60 or 90 units allocated to it. By deciding to allocate a uniform number of units for each vessel, AFMA was relieved of the need to reassess the size and power of each vessel after the permitted upgrade.
Certain propositions flow from the use of the formula, as I have described it, to determine quota entitlements for Danish seiner boats in relation to flathead and school whiting.
lFirst, the 30% component of the formula, said by the Advisory Committee to represent "investment", does not, in fact, differentiate between operators according to their investment in the industry. This is so whether investment is to be assessed by reference to the funds invested by a particular operator, or simply by reference to the capacity of the vessel. All operators are treated in an identical fashion, provided they satisfy a low "catch history" threshold in any one of the six qualifying years.
lSecondly, the formula makes no attempt to measure the size and power of the vessels, either during the qualifying period or during more recent periods, except perhaps insofar as some inferences as to capacity might be drawn from a
particular vessel's catch history. However, the catch history of a particular vessel is likely to reflect many factors other than capacity, including the vessel's need for repairs and the diversion of the vessel to activities other than fishing for flathead and school whiting.
lThirdly, as Mr Street contended and Mr Roberts did not dispute, the formula, in substance, allocates quotas by reference to one criterion only: catch history. Thus the formula embodies a general policy that allocations of quota should reflect only the catch history of the particular vessels.
lFourthly, the exclusive focus on catch history as the criterion for allocating quotas for flathead and school whiting provides no guidance as to the respective efficiency of operators in obtaining their catch. It is fair to say that a careful consultative process was undertaken in determining the appropriate means of assessing the catch history of each operator during the qualifying period. But the exclusive focus on catch history means that the formula does not address the differing capacity of vessels, nor the resources devoted by operators to achieving their respective catches during the qualifying period. Consequently, the formula, of itself, says nothing about the investment of capital and labour required by different operators to secure a particular quantity or value of fish in the SEF.
Economic Efficiency
The phrase "economic efficiency", as used in s.3(1)(c) is not defined in the Management Act. Efficiency is an economic concept, which is not to say that all economists necessarily define it in the same way. Moreover, "efficiency" takes its meaning for economists from the context in which it is used. The matter is put this way, for example, by R. Cooter and T. Ulen, Law and Economics (1988), 17-18:
"Economists use the word "efficiency" to describe an equilibrium among consumers or producers. A production process is said to be productively efficient if it yields a given level of output with the least cost combination of inputs. That is, the firm cannot produce with the least level of output at lower cost. Equivalently, a process is productively efficient if it maximizes the level of output attainable from a given combination of inputs....
A related kind of efficiency, allocative efficiency, describes an equilibrium distribution of goods and services among individual consumers. A particular distribution of goods among consumers is said to be allocatively efficient if it is not possible to redistribute the goods so as to make at least one consumer better off (in his own estimation) without making another consumer worse off (again, in his own estimation)."
The authors go on to point out that "fairness and efficiency are distinguishable concepts".
Mr Street submitted that the primary vice of the formula used to allocate quotas is that, despite SETMAC's suggestion that it provides a measure of historical investment in the industry, it does no such thing. This is so whether the investment of operators in the industry is to be measured by the price paid for a vessel and its equipment, or the value of the units allocated
to the vessel, or some combination of these. In stressing the importance of the historical investment of each operator, Mr Street focussed on what he contended was the unfair impact of the formula on the applicant, in particular, its failure to take account of the applicant's investment in the industry. But as Mr Roberts observed, the objective of economic efficiency, if pursued relentlessly, is likely to produce harsh consequences for some individual operators. However, I did not understand Mr Street to limit his submission to the failure of AFMA to take account of an individual operator's investment in the fishery, or the unfairness of the policy to the applicant. He argued that the policy embodied in the formula simply fails to take into account the statutory objective of economic efficiency, expressed in s.3(1)(c) of the Management Act.
The meaning of s.3(1)(c) is to be ascertained by a process of statutory construction, not by the application of text book economics. Nonetheless, in my view s.3(1)(c) is concerned, in least in part, with productive efficiency in the sense of maximising output at least cost to the operators of the vessels comprising the fishing industry which exploits the resources of the SEF. The paragraph directs attention to economic efficiency "in the exploitation of fisheries resources". Fisheries resources are exploited, in the first instance, by catching fish. They are also exploited by selling fish. The criterion of economic efficiency doubtless requires attention to be paid to returns likely to be derived from the catch, since this is necessary to assess the economic rent derived by the industry.
But the criterion also requires that some attention should be paid to the resources - the capital and labour - required to produce the catch. For example, an industry that relies on a relatively old and poorly equipped fleet, requiring a high labour input for a given catch, is presumably more costly and therefore less efficient than one which utilises modern, technologically advanced vessels.
In my opinion, the difficulty with the formula applied by AFMA and the AAT in this case is that it pays no attention to economic efficiency, in the sense in which that term is used in s.3(1)(c) of the Management Act. Quotas are allocated by reference to historical catch levels of particular vessels, regardless of the investment made and the resources required by those operators to achieve the catches during the relevant period. The formula does not take into account the nature of the vessel or its equipment, nor the efficiency or otherwise of its operations, except insofar as these matters might have been reflected in the vessel's catch history. Nor does the formula take account of the resources required for the vessel or its operator to achieve a particular yield of fish (whether measured in value or weight) from the SEF, bearing in mind that quotas were allocated to operators some years after the relevant catch history period (1984-1989). In effect, the formula is a means of dividing a limited natural resource among the operators who happen to have exploited it during a particular period. The formula does this by calculating the respective shares of the catch that those operators enjoyed during that period. The emphasis on catch levels presumably
rewards operators with larger catches, but it does not necessarily reward past or current economic efficiency. Nor does it penalise past or current economic inefficiency in exploiting the resources of the SEF. Indeed, it is difficult to see how the formula itself is at all concerned with economic efficiency in the exploitation of the fisheries resources in the SEF.
This conclusion is supported by an internal minute of 12 July 1995, prepared within AFMA in relation to the applicant's request for an amendment to the 1995 permit. The minute noted that the Wellington Cape's allocation of 81 units under the old system of boat unit allocation was higher than the average of the fleet. The minute pointed out that boat unit allocations did not necessarily reflect the fishing capacity or efficiency of other fleet vessels since, from 1987, they could be upgraded to 55 feet without the need to assign additional boat units to them. But AFMA, having discarded a measure that, at one stage, might have provided some indication of relative efficiency, did not substitute another criterion that measures or recognises economic efficiency.
An Error of Law?
In Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634 (AAT/Brennan J.), at 640-641, Brennan J., in his capacity as President of the AAT, explained the principles relating to the formulation of a guiding policy for the exercise of a statutory discretion:
"There are powerful considerations in favour of a
Minister adopting a guiding policy. It can serve to focus attention on the purpose which the exercise of the discretion is calculated to achieve, and thereby to assist the Minister and others to see more clearly, in each case, the desirability of exercising the power in one way or another. Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.
Of course, a policy must be consistent with the statute. It must allow the Minister to take into account the relevant circumstances, it must not require him to take into account irrelevant circumstances, and it must not serve a purpose foreign to the purpose for which the discretionary power was created. A policy which contravenes these criteria would be inconsistent with the statute (see Murphyores Incorporated Ltd v The Commonwealth (1976) 136 CLR 1; Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577, at 589, and the cases there cited)....
That is not to deny the lawfulness of adopting an appropriate policy which guides but does not control the making of decisions, a policy which is informative of the standards and values which the Minister usually applies. There is a distinction between an unlawful policy which creates a fetter purporting to limit the range of discretion conferred by a statute, and a lawful policy which leaves the range of discretion intact while guiding the exercise of the power."
Later in his reasons, Brennan J. (at 645) said this:
"When the Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny.
The general practice of the Tribunal will not preclude the Tribunal from making appropriate observations on ministerial policy, and thus contributing the benefit of its experience to the growth or modification of general policy; but the practice is intended to leave to the Minister the political responsibility for broad policy, to permit the Tribunal to function as an adjudicative tribunal rather than as a political policy-maker, and to facilitate the making of consistent decisions in the exercise of the same discretionary power.
The general practice will require the Tribunal to determine whether the policy is lawful, not in order to supervise the exercise by the Minister of his discretion, but in order to determine whether the policy is appropriate for application by the Tribunal in making its own decision on review."
The observations of Brennan J. in Re Drake (No.2) have been cited with approval or applied in many cases. See, for example, Minister for Immigration, Local Government and Ethnic Affairs v Gray (1994) 19 AAR 266 (FCA/FC), at 284, per French and Drummond JJ; Perder Investments Pty Ltd v Lightowler (1990) 21 ALD 446 (FCA/Spender J.), at 447; Re Glendon Lane Pty Ltd and Australia Fisheries Management Authority (1994) 36 ALD 376 (AAT), at 381 ff; Pattanasri v Minister for Immigration, Local Government and Ethnic Affairs (1993) 34 ALD 169 (FCA/Burchett J.) at 174-175. In Drake v Minister, at 590, Bowen C.J. and Deane J. observed that the Minister was entitled to be guided by any general relevant government policy "which was not inconsistent with the provisions or the objects of the Migration Act". See the article by P. Bayne, "The Exercise of Discretion According to Policy Guidelines" (1993) 67 ALJ 214; NCA (Brisbane) Pty Ltd v Simpson (1986) 13 FCR 207 (FCA/FC) at 247, per Burchett J. (dissenting as to the result).
In my opinion, if attention is confined to the policy relating to the allocation of quotas, as embodied in the formula, that policy failed to take account of a relevant consideration, namely, the objective of maximising economic efficiency in the exploitation of fisheries resources. In the present case, the policy was implemented by AFMA and the AAT, in relation to the 1994 permit, because the formula was used to impose quota conditions. The policy was implemented by AFMA and the AAT, in relation to the 1995 permit, becaused they refused the applicant's request to vary the quota conditions, and did so on the ground that there was no basis for departing from the formula.
Of course, a decision-maker only fails to take account of a relevant consideration if he or she is bound to take that consideration into account when making the decision: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, at 39, per Mason J. But in this case s.3(1) of the Management Act obliges the Minister to pursue the objectives stated in paragraph (c). By applying a formula which allocated quotas exclusively by reference to catch history, both the Minister and the AAT were guided by a policy which failed to take into account the objective specified in s.3(1)(c) of the Management Act.
Mr Roberts, in his brief submissions made in response to Mr Street's principal contentions, did not suggest that the formula allowed economic efficiency, in the sense that the term is used
in s.3(1)(c), to be taken into account by the decision maker. In the light of his concession that the formula allocates quotas simply by reference to catch history, it is difficult to see how any such suggestion could be made out. Nor was it suggested that the AAT had directed attention to the question of whether the policy, as embodied in the formula, was lawful. As Brennan J. said in Drake No.2, an inquiry of this kind was necessary in order to determine whether the policy was appropriate for application by the AAT when making its own decision on review. The AAT did not consider how the policy of treating all Danish seiners uniformly by reference to catch history, without regard to the capacity or efficiency of particular vessels, is consistent with the statutory objective of maximising economic efficiency.
Transferability of Quotas
Although neither counsel referred to it, there is another matter that must be considered in determining whether the policy embodied in the formula took account of the objective specified in s.3(1)(c) of the Management Act. Section 32(10) of the Act provides that, except where a fishing permit is stated to be non-transferable, AFMA may, on the application of the holder of the permit and another person as the proposed transferee, transfer the permit to that other person. In point of economic theory, if boat units entitling an operator to gain access to a limited resource, such as a controlled fishery, are freely transferable, assuming no transaction costs, market forces should ultimately ensure that the resources are exploited by the most efficient
operators. See the discussion of the Coase theorem by Judge Richard A. Posner, in his Economic Analysis of Law (3rd ed 1986), at 7, 43-45.
Prior to January 1994, quota entitlements in the SEF were permanently transferable only amongst trawler quota holders. In an issues paper of October 1993, AFMA proposed that, in the interim phase prior to the commencement of a new management plan, quotas would be permanently transferable between any persons, subject to certain restrictions. However, in December 1993 AFMA resolved that quota units would be freely transferable or "leasable" in whole units to any person as from 1 January 1994. The same policy was implemented in 1995.
It is possible that an argument can be made out that the policy of initially allocating quotas only to those operators who can establish a catch history during the qualifying period is consistent with the objective of economic efficiency. The argument could be based on the transferability of quotas. Whether such an argument could be made out doubtless depends on many factors, including the actual operation of the market for quota units, the barriers to the transfer of units to new entrants to the market (such as the short term nature of quota entitlements and their susceptibility to cancellation without compensation) and the effect of other regulatory mechanisms on the transferability of units (such as restrictions on the number of vessels a quota holder is able to operate in the SEF).
My reading of the documents prepared by or for AFMA, insofar as they appear in the appeal books, does not suggest that AFMA specifically considered whether the formula for allocation of quotas could be regarded as consistent with the objective of economic efficiency by reasons of the transferability of the quotas. In this respect, it is significant that the formula was used to allocate 1993 quotas even though for that year stringent restrictions were imposed on the transferability of quotas. In 1994 and 1995, restrictions on transferability were eased, but the formula remained unchanged. This suggests that introduction of the formula was not related to the free transferability of quotas. Moreover, the reason given by Mr Rohan for allocating a uniform number of boat units was simply that operators had been permitted to upgrade their vessels without any need to acquire additional units to reflect the greater power or capacity of the upgraded vessels. This explanation does not suggest that attention was paid to whether the objective of economic efficiency was served by a formula which is exclusively concerned with catch history.
For these reasons I consider that the policy applied by AFMA and the AAT excluded a relevant consideration, namely the objective, expressed in s.3(1)(c) of the Management Act, of maximising economic efficiency in the exploitation of fisheries resources. This conclusion is not affected by the fact that, in 1994 and 1995, quotas could be transferred to existing or new operators in the SEF.
A Fresh Issue?
I should add that it would seem that the argument I have accepted was not put to the AAT, at least in the way in which it was presented to me. In the first AAT decision, reference was made to s.3(1)(c) of the Management Act, although primarily in the context of a submission that AFMA was responsible for the financial well-being of the applicant. In the second AAT decision, the submissions as recorded do not refer to s.3(1)(c). However, a submission was made to the delegate reconsidering the application to vary the permit that the policy relating to Danish seiners "had the effect of devaluing investment in boat units as it penalises larger and more efficient vessels".
Mr Roberts did not submit that the fact that the argument put to me had not in terms been made to the AAT was a ground for not entertaining the submission made on the appeal. There is no absolute principle that a new issue may not be raised in this Court, although the circumstances may be such where it is appropriate to do so: Tefonu Pty Ltd v Insurance and Superannuation Commissioner (1993) 30 ALD 455 (FCA/Beazley J.), at 459-460; Secretary, Department of Social Security v Salvona (1989) 10 AAR 521 (FCA/Lee J.), at 526-527. This is not a case where the question of law is dependent upon findings of fact that the AAT was not asked to make: compare Federal Commissioner of Taxation v Rupris (1989) 19 ALD 726 (FCA/Gummow J.), at 728; Secretary, Department of Social Security v Cooper (1990) 97 ALR 364 (FCA/FC), at 369-370. In my view, it is in the interests of justice that the question of law be determined in this Court.
An Alternative Argument - Special Circumstances
Mr Street's second argument was that the AAT had applied an incorrect test when considering whether a departure from the policy of allocating quotas by reference to the catch history of a particular vessel was warranted. Mr Street's argument was based on criticisms put forward by Beazley J., in Skoljarev v Secretary, Department of Primary Industries and Energy (1994) 51 FCR 57, of an approach by the AAT that requires "special or unique circumstances" before a departure from Ministerial policy is warranted. In Skoljarev, her Honour considered the authorities bearing on the principle that the AAT is not bound to apply Ministerial policy when reviewing a decision, but it is free to do so. She cited the passage from Re Drake (No.2), at 645, which I have set out previously. Her Honour (at 71) then said this:
"Further, although counsel for the applicant accepted the correctness of the Tribunal's statement that the effect of Sawyer [(1988) 9 AAR 92 (FCA/FC)] was that "in the absence of 'special or unique circumstances', the policy enunciated by the Minister for Primary Industries and Energy ought to be applied", there is need for care in applying Sawyer or attempting to extract from it a principle unassociated from the context in which the principle was stated. It should be noted that the Tribunal did not refer to the decision of the Full Court of the Federal Court in Sawyer, but only to the Tribunal's decision. Sawyer does not require that there must be "special or unique circumstances" before the discretion under s.9(4) can be exercised in favour of an applicant for endorsement. In my opinion, the Tribunal failed to appreciate this. This failure is implicitly revealed in the Tribunal's exercise of its discretion only in the context of the existence of "special or unique circumstances". There is nothing in the legislative scheme to so confine the discretion as was clearly recognised by the Tribunal in Re Robinson. However, as the applicant has succeeded
on the narrower basis upon which he challenged the Tribunal's exercise of discretion, it is not necessary to consider this aspect of the matter further."
The AAT concluded in the present case that the principles generally applied throughout the fishery in granting permits and allocating quotas could accurately be characterised as a "policy", even though they had not been published in the form of a management plan. As I have said, neither Mr Street nor Mr Roberts disputed this characterisation. Nor did Mr Street dispute that, on two occasions in the reasons, the AAT had correctly stated the test for determining whether it should depart from general policy formulated by a Minister or public authority. The issue was expressed this way in paragraph 6 of the reasons:
"I consider that the imposition of the quota on the applicant's permit derives from a policy which was developed in a way to which I will also refer. The question to consider therefore is whether this Tribunal should consider itself bound by that policy, or its underlying rationale, or whether it should be satisfied of the existence of cogent reasons justifying departure from policy."
The reasons also noted that:
"This Tribunal has power in its external review to decide whether that particular policy ought to be applied to individual circumstances in any one case."
However, the reasons later used the language of "special circumstances". This is shown in the following extracts:
"The individual circumstances of the applicant are not sufficient in my view to put it in a special category. The term 'special circumstances' was used in Skoljarev
in conjunction with the adjective 'unique'. Dissatisfaction with the policy based on financial disadvantage is by no means unique to the applicant. The evidence indicates that many representations were made by other permit holders, who felt discriminated against by the proposed changes. The circumstance of the applicant can not be regarded as unique. Is it reasonable to regard them as 'special'?
...
Neither of these submissions persuades me that the application of a policy, so painstakingly arrived at, should be varied in any respect because of the applicant's present circumstances. It may be that a business judgment in purchasing the vessel turned out to be not so advantageous as it had hoped for. The company is not, however, in desperate financial straits. It has certainly, on its own figures, not lost even a considerable part of the value of its investment. Its circumstances do not have 'a particular quality of unusualness that permits them to be described as special'."
In considering the AAT's reasons as a whole, I do not think that the AAT was intending to depart from the principle that cogent reasons should be shown to justify a departure from the general policy adopted by AFMA. When referring to Skoljarev, the AAT stated that the phrase "special or unique circumstances" was simply another way of examining whether cogent reasons exist justifying a departure from policy. I think it is a fair criticism that the reasons do not demonstrate a full appreciation of the distinction made by Beazley J. in Skoljarev. Nonetheless, the AAT took into account the individual circumstances relied on by the applicant to warrant a departure from the general policy for allocating quotas reflected in the formula. The AAT did not fetter itself by excluding from consideration matters that might have constituted "cogent reasons" for departing from the policy. While it would have been better for the AAT not to add an
unnecessary gloss to the principles stated by Brennan J. in Re Drake No.2, at 645, I do not think the AAT applied an incorrect principle in the present case. Thus, I would not set aside the AAT's determination on this ground.
Additional Argument
Mr Street advanced a third argument. This was to the effect that the allocation of quotas to the applicant disregarded economic efficiency because the applicant received insufficient quotas to enable it to operate efficiently in the industry. I have some difficulty in following the force of this argument, particularly having regard to the availability of quotas on the open market. However, in view of the conclusion I have reached on other issues, it is not necessary to explore the question further.
The 1993 Decision - Relief
Mr Roberts contended that, even if AFMA had erred in law, by applying an inappropriate policy in allocating a quota to the Wellington Cape for the 1993 year, the Court had no power to set aside the decision. This was said to follow from the fact that the permit for the year had already expired before the AAT made its decision in respect of the 1993 permit. According to Mr Roberts, there was nothing that either AFMA or the AAT could do in relation to the expired permit. Thus, the AAT was correct in dismissing the application relating to the 1993 permit.
Section 165(7) of the Management Act 1991 provides that an application may be made to the AAT for review of a "reviewable decision", including a decision under s.32 of that Act. The AAT has power to review any decision in respect of which application is made to it under an enactment: AAT Act, s.25(4). For the purposes of reviewing the decision, the AAT may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision. The AAT is empowered to make a decision affirming, varying or setting aside a decision under review: AAT Act, s.43(1).
In the present case, AFMA exercised its powers under s.32(6)(a) and s.32(7)(b) of the Management Act 1991, to impose conditions specifying the quantity of fish that could be taken by the Wellington Cape for the 1993 year. The applicant sought internal review of that decision. As I have said, it is not entirely clear whether that application was made pursuant to s.165(5) of the Management Act, or by way of a request to vary the quota conditions, pursuant to s.32(8). Mr Roberts did not suggest that anything turned on the distinction, at least for the purposes of the application to the AAT in respect of the 1993 permit. In any event, whatever the true nature of the application, it was refused by AFMA.
In my view, the expiry of the permit prior to the AAT having had the opportunity to exercise its power of review under s.25(4) of the AAT Act did not terminate the AAT's power. The practical significance of the AFMA's decision may have been diminished, or even removed altogether, by reason of the expiry of the permit. But the AAT was specifically empowered to review that decision, which remained on foot. The fact that the "reviewable decision" might have lost its practical significance is one thing; the power to review the decision is another. The AAT, if it found that the decision was improperly made, had power under the AAT Act, s.43(1) to set aside or vary the decision. Accordingly, in my view, the AAT erred in law in declining to consider whether it should have exercised its powers of review in relation to the quota conditions attached to the 1993 permit.
Whether the AAT, as a matter of discretion, would choose to exercise its power to review a decision on the merits, when the relevant permit has already expired, is another question. In Re Surf Air and Civil Aviation Authority (1991) 22 ALD 118 (AAT), O'Connor J. declined to review a decision where the legislation under which a pilot's licence had been approved and cancelled had been repealed and different legislation enacted. No "sensible decision...could be substituted for that under review" (at 123). The present case is different from Re Surf Air in that the legislation has continued in force. Nonetheless, the 1993 permit (with the quota conditions attached) was issued for the calendar year only. Because of its decision on the jurisdictional issue, the AAT did not consider whether an inappropriate policy had been applied and, if so, whether any relief should be granted.
The question that now arises on this appeal is whether any relief should be granted to the applicant by reason of what I have found to be the AAT's error of law. The Court has broad powers. Section 44(4) of the AAT Act provides that, on an appeal to the
Court, it shall "hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision". Section 44(5) provides that, without limiting s.44(4), the Court may affirm or set aside the AAT's decision and remit the case to be heard and decided again. The Court's powers include granting declaratory relief as to the jurisdiction of the AAT: Director-General of Social Services v Hangan (1982) 70 FLR 212 (FCA/FC), at 224-225, per Toohey J.
Having regard to all the circumstances including the events which have occurred since the AAT's decision on the 1993 quota conditions, I do not think that there is any utility in an order requiring the AAT to reconsider the case. The 1993 permit is no longer in force and has been superseded by the 1994 and 1995 permits, in respect of which I make orders later in this judgment. To the extent that AFMA erred in its application of the formula to the 1993 permit (a matter which was not addressed by the AAT) the equivalent error for 1994 and 1995 is the subject of the orders made elsewhere in this judgment.
I have given consideration to whether it would be appropriate to make a declaration that the AAT was not precluded, by reason only of the expiry of the 1993 permit issued to the applicant, from exercising its jurisdiction to review the decision made by AFMA on 28 July 1993. In the circumstances, I do not think that any utility would be served by such a declaration, unaccompanied by any order remitting the matter to the AAT for further consideration. A declaration to the effect, of itself, will not
advance the applicant's position in relation to its dispute with AFMA relating to quota conditions.
Accordingly, I do not think it appropriate to make any order in relation to the quota conditions attached to the 1993 permit.
The 1994 Decision - Remedies
I did not understand Mr Roberts to contend that the AAT had no jurisdiction to review the decision of the delegate to affirm the quota conditions attached to the 1994 permit. If I understood him correctly, however, he contended that any relief for 1994 would be futile.
I have expressed the conclusion that the Tribunal erred in law by applying a policy which failed to take into account the consideration of economic efficiency, referred to in s.3(1)(c) of the Management Act. Despite that finding, for the reasons I have already given in relation to the 1993 quota conditions, I do not think that there is any utility in remitting the matter to the AAT. There is no point in re-assessing the quota condition for a year that has already ended.
Unlike its approach to the 1993 permit, the AAT did consider, on the merits, whether the quota conditions attached to the 1994 permit should be varied. The material before the AAT showed that AFMA has been strongly influenced by historical considerations in determining quota conditions from year to year. There is, of course, no certainty that it will continue to do so in the new arrangements that have been foreshadowed. But it might. In my view, there is likely to be some utility in a declaration, made under s.44 of the AAT Act, that the AAT erred in affirming AFMA's decision to apply the policy embodied in the formula for allocation of quotas. Accordingly, I propose to make a declaration in the following form:
DECLARE that, in affirming the decision made by the delegate of AFMA on 31 March 1994, the AAT erred by giving effect to a policy which failed to take into account a relevant consideration, namely, the objective in s.3(1)(c) of the Fisheries Management Act 1991 (Cth) of maximising economic efficiency in the exploitation of fisheries resources.
The 1995 Decision - Jurisdiction
Mr Roberts repeated the submission made to, and rejected by, the AAT, to the effect that there was no "reviewable decision" for the purposes of s.165(7) of the Management Act in relation to the 1995 permit. He contended that AFMA's decision not to vary the conditions of the permit could not be described as "a decision of AFMA under...section 32" of the Management Act. It was therefore not a "relevant decision", as defined in s.165(1) of that Act. It followed that the reconsideration by the delegate of the decision not to vary the conditions was not a decision within s.165(5) of the Management Act. Since "reviewable decision" is defined by s.165(1) to mean "a decision of AFMA under [s.165(5)]", the delegate's reconsideration was not a "reviewable decision". No application could therefore be made to the AAT for review of that decision.
In assessing the submission, it must be remembered that s.165(1) of the Management Act provides that "decision" has the same meaning as it has in the AAT Act. Section 3(3) of the AAT Act provides that a reference to a decision includes:
"(a)making, suspending, revoking or refusing to make an order or determination;
...
(g)doing or refusing to do any act or thing."
In the present case, the applicant requested AFMA to exercise its powers under s.32(8). This was a course of action expressly contemplated by the sub-section, which refers to such a request. AFMA did not decline to entertain the request on the ground, for example, that the question of quotas had been dealt with in the original permit and no timely request had been made by the applicant for reconsideration of that decision. Instead, AFMA considered the request and formally refused to exercise its powers under s.32(8) to vary the conditions. It then reconsidered the matter, in purported compliance with the procedure laid down by s.165(5). After that reconsideration, the delegate affirmed the refusal to vary the conditions.
In my opinion, by reason of s.3(3)(g) of the AAT Act, if not by s.3(3)(a) of the same Act, the decision by AFMA to refuse to vary the conditions, as requested by the applicant, was "a decision of AFMA under [s.32(8)]". It was therefore a "relevant decision". It is true that AFMA did not affirmatively exercise its powers under s.32(8) in favour of the applicant. But it was requested by the applicant to do so and, after consideration of the request, refused to vary the conditions. Similarly, in my opinion, the decision of the delegate to affirm the refusal was a decision under s.165(5) and therefore a "reviewable decision" for the purposes of s.165(7) of the Management Act.
The analogous question of whether refusal to reconsider a decision can constitute a decision made under an enactment for the purposes of the Administrative Decisions (Judicial Review) Act 1977 (Cth) has received some attention. In Sloane v Minister for Immigration, Local Government and Ethnic Affairs (1992) 37 FCR 429 (FCA), at 443, French J. put the position this way:
"It is correct to say, as counsel for the respondent submitted, that an administrative decision remains good in law unless and until it is declared invalid by a court of competent jurisdiction....That submission, however, offers no answer to the proposition that reconsideration of a statutory decision may itself be a course contemplated or authorised by the statute. The question is one of statutory construction. It is not without difficulty and it is attended by policy considerations which are in some degree in conflict. The implication into an express grant of statutory power of a power to reconsider its exercise would be capable, if not subject to limitation, of generating endless requests for reconsideration on new material or changed circumstances. Each decision taken in the exercise of such an implied power would arguably attract the application of the Administrative Decisions (Judicial Review) Act or the Constitutional jurisdiction conferred on the High Court by s.75(v) of the Constitution and in its statutory form, on this Court by s.39B of the Judiciary Act 1903 (Cth). It would be hard to resist the proposition that a refusal
to consider an earlier decision has the character of a final or operative decision in the extended sense contemplated by the High Court in Australian Broadcasting Tribunal v Bond [(1990) 170 CLR 321]. And if authorised by implication from the grant of primary decision making power, the refusal to reconsider in such a case would seem to answer the description of a decision made "under an enactment". A decision is made under an enactment if it is made "in pursuance of" or "under the authority of" the Act or ordinance or instrument concerned...".
That passage was cited by the Full Court in Comptroller-General of Customs v ACI PET Operations Pty Ltd (1994) 49 FCR 56, at 72-73, without disapproval, although the issue was not finally resolved in that case.
In the present case, AFMA had a specific statutory power to vary or revoke the conditions of the permit. In determining whether there was "a decision of AFMA under...[s.32]", there is therefore no need to rely upon any implied power to consider an earlier decision. AFMA considered the applicant's request that it should exercise its powers under s.32(8) and specifically refused to do so. This is a different situation to that which would have applied had AFMA simply declined to entertain a request to vary the conditions of the permit. It is not necessary to consider whether, had it adopted such a course, AFMA would be regarded as having made a decision under s.32. On this issue see TEAC Australia Pty Ltd v Kelly, Comptroller-General of Customs (Full Federal Court, unreported, 19 August 1992, considered in Controller of Customs v ACI PET Operations Pty Ltd, at 70-72.
I should add that Mr Roberts relied on Re Gee and Director-General of Social Services (1981) 3 ALD 132 (AAT). However, that
case involved different issues under different legislation and I do not think it assists in the present case.
It follows that, in my view, the AAT correctly decided that it had jurisdiction to entertain the application for review of the decision made by the delegate pursuant to s.165(5) of the Management Act.
The 1995 Decision - Relief
Mr Street argued, somewhat optimistically, that I should not only quash the AAT's decision in respect of the 1995 application to vary the quota conditions, but order AFMA to issue an amended permit forthwith for the balance of the 1995 year with a threefold increase of allocated quota for flathead and school whiting. Mr Street asserted that the power to take this course of action was found in s.44(4) of the AAT. He also asserted that such an order would give effect to the direction in s.22 of the Federal Court of Australia Act 1976 (Cth), to grant remedies to which any of the parties appears entitled
"in respect of a legal or equitable claim properly brought forward by him in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of these matters avoided."
While the applicant's desire to see this protracted dispute resolved is readily understandable, there is no basis for an order of the kind sought by Mr Street. He did not explain, for example, why a threefold increase, as opposed to any other kind
of adjustment, was appropriate. Nor did he explain how the Court could exercise a judgment in the competing policy and factual questions, of the kind that is required in the present case.
In my view, the appropriate course is to set aside the AAT's decision to affirm the delegate's decision of 24 July 1995 which, in turn, affirmed the decision not to vary the quota conditions attached to the 1995 permit. This should be done on the ground that the AAT, by applying the policy embodied in the formula, failed to take into account a relevant consideration, namely the objective of maximising economic efficiency in the exploitation of fisheries resources. The case should be remitted to the AAT to be heard and decided again. The nature of any further evidence that should be received by the AAT is a matter for it to determine. However, the applicant should have the benefit of a declaration to the same effect as the declaration I intend to make in relation the 1994 permit.
Because of the pressures created by the fact that the permit has only a short time to run, it is appropriate to add some comments about the role of the AAT in dealing further with the case. It may be that, upon reconsideration of the matter, and if additional material is adduced by AFMA, the AAT will be satisfied that the policy embodied in the formula is consistent with pursuit of the objective of maximising economic efficiency in the exploitation of fisheries resources because of other aspects of the arrangements governing permits and quotas for the SEF. I have already said that I think it possible that AFMA could make
out such a case, although as yet it has not done so.
However, if the AAT is not so satisfied, the unavoidable position is that any variation in the quota conditions attached to the 1995 permit is likely to be of little practical significance, even assuming the AAT is able to deal with the matter before the end of the calendar year. The major practical significance of these reasons therefore may lie in the need to take account of the objective of maximising economic efficiency in preparing a formula for allocating quotas (or some other policy) for 1996 and beyond.
In any event, any reconsideration of this case for the 1995 permit year must take into account the limitations on total catch imposed in the interests of proper conservation and management of the fishery (see Management Act, s.3(2)). The AAT must also consider the fact that quotas have been allocated for the year within the limits imposed by the TAC. Presumably, the quota holders or their transferees have by now largely utilised the allocations made at the commencement of the year. None of these allocations, so far as I am aware, has been the subject of challenge in the AAT or this Court. Any reconsideration by the AAT of the application to vary the applicant's 1995 quota conditions must therefore take into account, not only the statutory objective of maximising economic efficiency, but factors of the kind to which I have referred.
Summary
In my view, the AAT erred in two respects:
lIt held that it lacked jurisdiction to review AFMA's decision to confirm the issue of a permit to the applicant for 1993, which imposed quota conditions. The AAT had jurisdiction to review the decision.
lIt applied a general policy in relation to the applicant's 1994 and 1995 permits, embodied in the formula for determining quota conditions, which failed to take into account the objective of economic efficiency, stated in s.3(1)(c) of the Management Act.
Because there is no utility in doing so, I do not think any relief should be granted in respect of the 1993 permit. However, relief should be granted in relation to the 1994 and 1995 permits as follows:
lA declaration that, in affirming the decision made by the delegate of AFMA on 31 March 1994, the AAT erred by giving effect to a policy which failed to take into account a relevant consideration, namely, the objective in s.3(1)(c) of the Fisheries Management Act 1991 (Cth) of maximising economic efficiency in the exploitation of fisheries resources.
lA declaration that, in affirming the decision made by the
delegate of AFMA on 24 July 1995, the AAT erred by giving effect to a policy which failed to take into account a relevant consideration, namely, the objective in s.3(1)(c) of the Fisheries Management Act 1991 (Cth) of maximising economic efficiency in the exploitation of fisheries resources.
lAn order that the decision made by the AAT on 23 August 1995 be set aside and the case be remitted to the AAT for decision according to law.
AFMA should pay the applicant's costs of both appeals.
I certify that this and the preceding 51 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville.
Associate:
Dated:9 October, 1995
Heard:6 September, 1995
Place: Melbourne (Heard in Sydney)
Decision:11 October 1995
Appearances: Mr A.W. Street and Ms P.S. York, instructed by Thomson Rich O'Connor, Solicitors, appeared for the applicant.
Mr P. Roberts, instructed by the Australian Government Solicitors, appeared for the respondent.
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