FEDERAL COURT OF AUSTRALIA Australian Fisheries Management Authority v Graham [2003] FCA 231 ADMINISTRATIVE LAW – appeal from decision of Administrative Appeals Tribunal – fisheries and fishing rights – implementation of a change to a fishery management plan by the applicant governing the Southern Shark Fishery – introduction of individually transferable quotas and a total allowable catch to fishery formerly regulated by limits on numbers of fishermen and the numbers and types of lines used – use of a formula for allocation of quota – where formula based solely on catch history over a three year period – appeal to Tribunal based on failure of the formula applied by original decision-maker to take into account a relevant consideration– whether permits issued under previous management plan had a value not measurable by reference to catch history alone – whether such permits were transferable and whether there was a market for them – whether the Tribunal's finding of transferability of permits was wrong in law given the conditions attaching to permits and the existence of financial and regulatory penalties for their breach, or given the objects, structure and regulatory purpose of the Act – policy objective of maintaining relative economic position of fishermen. Fisheries Management Act 1991 ss 3(1), 32, 95 Administrative Appeals Tribunal Act 1975 s 44(1) P W Adams Pty Ltd v Australian Fisheries Management Authority (1998) 49 ALD 68 Re Aston and Secretary, Department of Primary Industry (1985) 8 ALD 366 Re Drake and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 634 AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY -v- RODGER GRAHAM V 744 of 2002 and AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY -v- HORST FISCHER V 745 of 2002 RYAN J 24 MARCH 2003 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 744 of 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Applicant AND: RODGER GRAHAM Respondent JUDGE: RYAN J DATE OF ORDER: 24 MARCH 2003 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The decision of the Tribunal dated 27 September 2002 be affirmed. 3. The appellant pay the respondent's costs of the application, including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 745 of 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Applicant AND: HORST FISCHER Respondent JUDGE: RYAN J DATE OF ORDER: 24 MARCH 2003 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The decision of the Tribunal dated 27 September 2002 be affirmed. 3. The appellant pay the respondent's costs of the application, including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 744 of 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Applicant AND: RODGER GRAHAM Respondent AND: V 745 of 2002 BETWEEN: AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Applicant AND: HORST FISCHER Respondent JUDGE: RYAN J DATE: 24 MARCH 2003 PLACE: MELBOURNE REASONS FOR JUDGMENT The background to Mr Fischer's application. 1 On 27 September 2002, the Administrative Appeals Tribunal ("the Tribunal") constituted by Senior Member J Handley and Member C Emert, set aside decisions by the applicant ("AFMA") and remitted the applications to AFMA for reconsideration. The respondent in proceedings No V 745 of 2002, Horst Fischer, was the holder of two permits under the Fisheries Management Act 1991 ("the Act"). One of those permits, No 300177G, entitled Mr Fischer to take gummy shark in the Southern Shark Fishery ("the SSF"). The other, No 300177H, entitled him to take school shark in the SSF. The decision which the Tribunal set aside had been made on 10 January 2001 pursuant to s 32 of the Act. By that decision, AFMA purported to attach a quota allocation of 13,950 kilograms to Mr Fischer's permit for gummy shark and a quota allocation of 2,004 kilograms to his permit for school shark. 2 In its Reasons for Decision in relation to Mr Fischer, the Tribunal traced the history of AFMA's regulation of the SSF which culminated with its acceptance of a recommendation by the Southern Shark Allocation Advisory Panel ("the Panel") for the imposition of a total allowable catch ("TAC") for the SSF as a whole and individual transferable quotas ("ITQs") for each permit holder. The Panel recommended that ITQs be allocated by reference to the ratio between the aggregate of the best three annual catches pursuant to each permit and the aggregate of the best three annual catches for the species taken in the fishery in the period ending when allocation is made. The Panel had explained that its recommendation was intended to give effect to the principle that catch history attaches to the permit under the authority of which the catch was taken and not to the person who held the permit when the catch was taken so that the catch history is that of the person who holds the permit when allocation of ITQs is made. The submissions made on behalf of Mr Fischer were summarised by the Tribunal in these terms; '16. The applicant challenges the decisions of AFMA because it is said that in adopting a policy of allocating ITQ's to concession holders, the transferability of permits and the value to be attached to permits has been ignored. Additionally, or in the alternative it is submitted by the applicant that permits had a value prior to the implementation of the policy, which has given rise to this review. The value of permits was determined by a market. By reason of the policy eventually implemented by AFMA, the value of a permit is determined by the catch of a fisherman in the best three years between 1994 and 1997. At its extreme, persons who did not fish within that period of time have not had an ITQ allocated and their permits now have no value. Alternatively in the case of the applicant, the value of his permit is determined only by the extent of the ITQ allocated to him. 17. Mr Niall on behalf of Mr Fischer submitted that this policy is wrong and should be set aside. He submitted that the policy is inconsistent with the statutory objectives of the legislation because it does not take account of economic efficiency in the exploitation of fisheries resources pursuant to s.3(c) of the Act. Additionally it was submitted that the policy does not pursue cost effective fisheries management pursuant to s.3(a).' 3 Mr Fischer had operated as a fisherman out of Lakes Entrance for about 30 years. In 1988 he had been allocated an A6 shark-fishing permit for which he had qualified by reference to his catch history between 1979 and 1984. That permit entitled him to take shark in quantities in excess of 45 tonnes. In addition to that permit, he acquired by purchase another A6 permit for $140,000. Later, the two permits were consolidated and, with the forfeiture of two nets, emerged as a single A10 permit. At about the same time, he committed himself to the construction and fit-out of a boat which would be equipped primarily for shark fishing and would cost in total about $1.6 million. 4 Mr Fischer's evidence to the Tribunal was that, before 1 January 2001, there had been a market for the sale or lease of shark-fishing permits of which AFMA was aware. The going price in that market for an A6 permit had been from $100,000 to $250,000 and that for an A10 permit from $200,000 to $350,000. The permits had been bought and sold without reference to catch history at prices determined by what could be earned with each permit. The effect on Mr Fischer of the change which resulted from his new permit with effect from 1 January 2001 has been described by the Tribunal in these words; '24. Mr Fischer said that as a result of the permit issued at 1 January 2001 he was restricted to a total catch of 16 tonnes of shark from two species. That allocation he said was based on his catch history from the vessel "Star Fire" between 1994 and 1997. Mr Fischer said that the quota allocated to him -having regard to his investment in the fishery and in his boat-would make it "just about impossible to ( economically) operate". The applicant said that he was familiar with a report produced by the Australian Bureau of Agricultural and Resource Economics (ABARE) who reported to AFMA in 1998 that an A10 licence had a value in the vicinity of $750,000. There was then no restriction on the total catch, the only restriction being that he was confined to 10 nets. Mr Fischer said that he could have sold his permit for "quite some considerable money" however he regarded the permit now as "just about worthless". He said his position within the fishery now is very different to what it was prior to 1 January 2001. Despite quotas not being transferable in the 2001 year, Mr Fischer said that he was aware that persons were selling their quotas.' 5 The Tribunal then referred to further evidence by Mr Fischer to the effect that the permits or licences had commonly been sold or the subject of "contractual arrangements" and that these transactions had been known to Ms Stone and other senior AFMA officers, who regarded them as making it difficult to determine who owned the permits or licences. Mr Fischer explained his relatively poor history of catching shark in 1994, 1995 and 1996 as due to his concentration on non-trawl fish of which he had caught between 172 and 215 tonnes. He acknowledged that he had supported allocation of ITQs for the South-Eastern Non-Trawl Fishery ("the SENTF") on the basis of catch history but opposed a similar regime for the SFF. The distinction was due to specialised methods of catching the two or three species available in the SENTF which could not be applied to shark. The imposition of ITQs for shark, he contended, would result in stocks in excess of the quota being "thrown over the side". Mr Fischer did not oppose the imposition of a TAC for the SFF but contended that it should be shared equally between all concession holders. 6 The Tribunal in its reasons next referred to the evidence of Mr Collins, an economic and environmental consultant, who had, in May 1999, at Mr Fischer's behest, prepared a written submission to the Panel. He expressed the opinion that, in order to determine the relative economic position of a fisherman for the purposes of an AFMA policy governing the introduction of a change of management regime, the relative wealth constituted by the existing concession should be considered. If an interest in the concession could be traded in a market, it had an ascribable value. Even the limited circumstances in which AFMA would consent to transfer of a concession on the death or illness of a holder created a scope for trade which amounted to a market. Similar considerations applied to the possibility of "leasing" a concession. Mr Collins also contended that catch history was an "irrational" measure of the value of a concession because it reflected only past use and did not indicate the holder's ability to catch fish in the future thereby deriving income which was the true foundation of present value of the concession. He appeared to concede that catch history would be an appropriate measure of the value of concessions which were truly non-transferable. A decision to allocate previously transferable concessions on the basis of catch histories would, he said, result in a "significant redistribution of wealth among title holders." 7 The Tribunal next referred to the evidence of Mr Hosking, a professional fisherman who has operated out of Victor Harbour in South Australia for the past 23 years. He had acquired by the process of consolidation described earlier in these reasons, an A10 concession for the SSF. The second boat and A6 licence which he had acquired for the purpose of the consolidation had been valued respectively at $360,000 and $190,000. Through Mr Hosking, evidence was adduced of A10, A6, B5 and other SSF permits being advertised for sale or lease between January 1998 and September 1999 in a trade journal, "Professional Fisherman." Two of the advertisements stipulated a price of $180,000 and $235,000 respectively. Others had no asking price. In the light of his experience, Mr Hosking said that prices for A6 permits had ranged from $180,000 to $230,000 and those for A10 permits from $250,000 to $420,000. He also attested to a practice whereby his own permits had been valued for the purpose of securing a bank loan. An accompanying letter from Mr Coates, a solicitor specialising in documenting dealings in fishing licences, described a trust mechanism whereby the vendor of the licence retained it in his or her name but held it for the benefit of the purchaser until a transfer into the purchaser's name could be effected, presumably with the consent of AFMA. Mr Hosking also testified that senior officers of AFMA had been aware of the trade in "leases" of, or beneficial interests in, SSF licences which, he said, had caused difficulty in identifying the operative permit holders. The Tribunal also noted evidence by Mr Hosking to the effect that the application of catch history to allocate ITQs to former A10 permit holders had resulted in differentials as marked as 68 tonnes, 20 tonnes and 0 tonnes. When he acquired his second A6 licence, it had been a term of the arrangement that the vendors would act as his "agent" and apply annually to AFMA for renewal of the permit which, it was contemplated, would remain in their names. 8 Mr Geoffrey Richardson gave evidence to the Tribunal on behalf of AFMA for which he is the Senior Manager for Southern Fisheries. He regarded the SSF as continuing to be subject to "input" and "output" controls. Non-transferability of permits he regarded as an element of "input" control. He described the "lease" or trust arrangements to which Mr Hosking had attested as "under the table" transfers which were in breach of conditions attached to the licences in question and caused frustration to AFMA managers. However, he acknowledged that no prosecutions had been initiated in respect of any of these "under the table" transactions. He also accepted that other transfer mechanisms had been utilised without apparent breach of conditions attaching to the permits. 9 Mr Richardson also adverted to the difficulties created for AFMA by arrangements pursuant to which fishing operations were carried out by persons other than registered permit holders. His evidence in that respect was recounted by the Tribunal in this passage, at [103] of its reasons; '103. In terms of the ability of a permit holder to verify catch, Mr Richardson said that AFMA had regard to the boat which delivered the catch because permits were attached to a boat. If there was an "amicable arrangement" between the transferor and the transferee at the time of verification, catch would be verified without complication. Additionally, he said there were instances where catch would be landed in the name of the skipper of a boat which would generally not cause any controversy because it was not unusual for permit holders to employ another person as a skipper. Nonetheless an arrangement of that type could mask or conceal the true identity of the permit holder. He said it was the practice of AFMA to deal with permit holders and AFMA relied on and had regard to the catch history as verified by permit holders. Mr Richardson agreed with the evidence of Mr Fischer that there were instances of licence holders lodging inaccurate verification statements. He said that AFMA officers visited permit holders and reviewed verification documentation yet he acknowledged that there could be abuse. He said because there have been instances where quota has been taken from fishermen because false or misleading information was provided by them.' 10 Mr Richardson acknowledged that, at the time when A6 licences had been consolidated into A10 licences, there had been transfers and that prices in the vicinity of $100,000 had been paid for each A6 licence irrespective of the catch history attaching to it. Thereafter, transfers were permitted only to designated relatives of permit holders or, at the discretion of AFMA, in "compassionate circumstances." "Under the table" transfers also occurred for substantial prices and Mr Richardson understood that, between 1999 and 2001, there had been 17 "leases" of the 130 permits which had been issued for the SSF. Mr Richardson was aware that licences had been advertised for sale in trade journals and said that "the position taken by AFMA was that a transfer of a permit could not occur without breaching the conditions of it however it was understood that an assignment of an interest in a permit could occur without a breach of the permit conditions." After expressing his understanding of various methods by which permit holders allowed others to utilise their permits, including the appointment of other persons as skippers, Mr Richardson was cross-examined about the consideration which had passed to permit holders under arrangements of that kind. The effect of that part of his evidence was encapsulated at [118] of the Tribunal's reasons; '118. In terms of the relative value of permits, Mr Richardson agreed that prior to 1 January 2001 AFMA would agree to transfer a permit to a spouse of a permit holder in the case of death. He understood that a person who held a permit would regard it as a "good form of superannuation" and security would be available to widows of Fishermen who held permits because AFMA would assist in a licence being sold "which would be worth probably a considerable sum of money". Additionally, prior to 1 January 2001 Fishermen were capable of beneficially assigning their interest in permits which AFMA would not regard as being in contravention of permit conditions. Mr Richardson acknowledged that leases or assignment of beneficial interests in permits would also attract considerable sums of money and he acknowledged the evidence of Mr Hosking that some leases sold for $420,000.' 11 However, when re-examined, Mr Richardson asserted that there was no opportunity to lease or transfer "future rights of access and any purported transfer of such rights would not be recognised by AFMA." Further, Mr Richardson regarded AFMA as having adopted the Panel's conclusion that permits were not transferable from which it followed that they did not have an economic value. However, that did not entail that an ITQ of zero had a zero value because a permit without a quota allowed the permit holder to fish for non-quota species, ie species other than gummy shark or school shark. 12 Evidence was next adduced by AFMA from Mr Sturgess who had been a member of the Panel. He contended that there was no "single best measure" of the relative economic positions of fishermen which would differ between fisheries as management regimes differed. He asserted that the entitlement which had existed before January 2001 (presumably in the SSF) "could not be realised in the market place" and accordingly, the allocation of quota on the basis of past earnings would not disturb the relative economic positions of fishermen. Some insight into Mr Sturgess's understanding is provided by an example which the Tribunal recalled his having given of; '……… a "permit" held by a Doctor entitling that person to practise as a medical practitioner. He said the permit was not transferable, it had no capitalised value and could not be bought and sold in the market place. He said the measure of a medical practitioner's wealth is the income that flows from the permit and he regarded this as analogous to fishermen.' 13 Mr Sturgess went on to emphasise that it was the view of the Panel that permits for the SSF had not been transferable whereas the opinion expressed by Mr Collins was largely predicated on the premise that they had been. The theoretical basis for Mr Sturgess's view was revealed by this recital by the Tribunal of the relevant part of his evidence; '133. Mr Sturgess continued to emphasise the importance of permits not being transferable because in usual commercial practice, transfer of an asset entitles the transferee to acquire a title. Having heard the evidence in these proceedings it was clear to him that title was not obtained in the "under the table" transfers. He regarded the transferees in "under the table" transactions as being at risk because a fishing authority can "turn a market on and off". He noted that transfer on compassionate grounds was an "extraordinarily restricted" basis of transfer because a person has to "die to enter the market". Mr Sturgess thought that the "under the table transfers" that he had heard of in these proceedings resembled a "tenancy" which permitted the "permit holder to obtain a flow of value". He said this was achieved by payment of a fee by another person for its use however he could not regard the transaction as being a "transfer" because the "full bundle of rights and responsibilities" has not been transferred and the permit holder remains responsible for infringements.' 14 Mr Sturgess conceded that the Panel had some knowledge of "under the table arrangements" in relation to SSF permits but had not made enquiries about the form of those arrangements or the prices paid under them because the premise of its recommendation was that permits were not transferable. 15 In expressing its "conclusions and reasons for decision", the Tribunal acknowledged that its review involved the examination of a policy affecting 197 concession holders in the SSF which had been adopted after AFMA had accepted recommendations of the Panel based on a far-ranging enquiry. The Tribunal at [152] reminded itself that the Panel had been required to advise on the most appropriate basis for allocation of ITQs in the SSF in accordance with Fisheries Management Paper No 8 ("FMP8") which contained these passages; 'This Fisheries Management Paper sets out AFMA's policy in a procedural framework for the allocation of fishing concessions where a decision has been taken to change management arrangement in a fishery for which management arrangements are already in place and fishing concessions have been granted to eligible operators. For example this could be where a move is made from · a non-transferable input control system to a transferable unitised input control system; or · an input to an output control (individual transferable quota) system. … … … … … Allocation of fishing concessions: Establishment of a well defined devisable secure and transferable fishing concessions are a major factor in the successful pursuit of AFMAs ESD, economic efficiency and cost effective management objectives. However it is recognised that continually changing the method of allocation of fishing concessions will weaken those concessions and make effective fisheries management difficult. Accordingly the fishing concessions that exist in the fishery at the time that management arrangements are proposed to change are the ones that will be taken into account under any allocations of concessions required by the move from one management regime to another. It should also be recognized that there will be instances where in pursuing AFMAs legislative objectives it is not possible to achieve an equivalent translation of the fishing concession when changing from one management regime to another. Clearly in these circumstances it is not possible to design an allocation formula that would have absolutely no impact on the relative economic position of individual operators. A body of legal case history in relation to allocation of fishing concessions has been established both in Australia and overseas which demonstrates that fishing concession allocations resulting in a significant and differential economic impact on individual operators (which cannot be balanced against fisheries management objectives) run the risk of being successfully challenged. From a legal and fisheries management perspective AFMA will explicitly endeavour to minimise any adverse differential economic impact on individual operators. Therefore AFMAs approach to allocation of fishing concessions is based on the premise that in making any management changes AFMA will ensure: · such changes are consistent with and support the pursuit of AFMAs legislative objectives; · any differential economic impact of allocations on individual fishing concession holders are minimised unless there are reasons, justifiable with AFMAs legislative objectives that dictate otherwise.' 16 The Tribunal noted that the applicant before it, Mr Fischer, had not challenged the imposition of a TAC or the introduction of ITQs but had contended that the TAC for each year should be distributed equally between all participants in the SSF. The Tribunal then made these findings directed to whether the SSF permits before 1 January 2001 should be regarded as transferable; '161. Despite the permits being endorsed as "non-transferable" and containing conditions that they not be transferred except by application to AFMA -and then by its approval only in very limited circumstances extending to infirmity or death -we accept and find as a fact that prior to 1 January 2001 fishing permits were being sold or leased or being dealt with in a way inconsistent with the policy of non- transferability. Additionally we find and accept as a fact that this practice was known to AFMA. 162. We became intimate with the transactions undertaken by fishermen, the market that apparently exists, as evidenced by the presence of fishing brokers, advertisements placed in fishing journals, contracts being entered into and being drafted by legal representatives and finance apparently being made available by lending institutions. We learned that the contracts described ongoing obligations on the part of vendors to make certain representations to AFMA on an annual basis to ensure that the interest in the licences were preserved for the benefit of the persons who "purchased". We also learned that AFMA was aware that interests in fishing concessions had been transferred (because their record keeping was apparently incomplete ). 163. We heard that there had been many discussions with AFMA representatives on a singular and public level concerning the transfers of permits and it would appear that AFMA did "turn a blind eye". Indeed, it appears that senior managers within AFMA were aware of the practice. We heard many references to a former manager of the fishery, Ms Stone, being aware and we have no alternative, in her absence from giving evidence at the hearing, despite our inquiry, to draw an adverse inference. Mr Richardson said that he was aware of "under the table transactions" that it was debated within AFMA and that he was aware of the advertisements in fishing journals. The position of AFMA, he said, was an assignment of an interest in permits could occur without breach of permit conditions. Mr Sturgess, who was a member of the Panel, said that "under the table" transactions were referred to in background papers provided by AFMA and he understood that contracts existed between persons. He said the Panel however had no information as to the frequency detail or content of those transactions nor of the value obtained upon sale or lease. We are satisfied the Panel did have knowledge of the occurrence of transactions of this type. It was referred to in their report (refer p204). 164. The significance of transferability of permits is that considerable sums of money can be obtained upon transfer because of their inherent value. The value is determined by the income which can be obtained by the permit and the capital amounts which can be obtained upon sale. Similarly, in the case of permits being leased, the arrangements that we have learned of entitled the lessor to receive income being a proportion of catch (without having to fish), with the lease reverting to the lessor at the end of the lease period .' 17 After noting that the allocation of ITQs in the manner ordained by AFMA had reduced the capital worth and income producing potential of Mr Fischer's permit compared with its value before 1 January 2001, the Tribunal continued; '166. The decision by AFMA to adopt three of the best four years of fishing between 1994 and 1997 was made towards the end of that period without prior consultation. It was said that had AFMA notified in advance that it intended to embark upon that exercise, that there may have been over exploitation by fishermen in order to demonstrate a substantially higher catch than they would have otherwise achieved and an intolerable burden upon fish stocks would have occurred. AFMA explained its decision of catch history in retrospect by the ability to observe a demonstrated commitment to the shark fishery (evident by the extent of catch by fishermen within the above period). This may be so but it denies the expectation held by some fishermen that fishing permits were transferable and would be renewed annually subject to extraordinary circumstances. It denies that fishermen treated the permits as an asset capable of capital realisation. It denies fishermen choosing to fish for other species which may have been more profitable. It further denies fishermen the right or choice to return to shark fishing in any meaningful way if the ITQ allocated is considerably below that which might otherwise be achieved had there been a greater catch within the fishery within the above period. 167. By reason of the knowledge held by AFMA of the trading of fishing permits, and the reliance by it upon catch history, we believe that the method of ITQ allocation to be wrong.' 18 The Tribunal then expressed its disagreement with the Panel's conclusion that the SSF should be regarded as a fishery in which permits were not transferable. What followed from that premise was expressed in these terms at [171]-[176]; '171. … … … We accept that in a non-transferable fishery that the income stream capable of being earned from a permit cannot be exchanged and the permit has no capital value. This is because it cannot be transferred. 172. In the alternative - and relevantly for these purposes - a transferable permit entitles the permit holder to transfer the income stream to another person upon sale or lease. It also entitles the permit holder to acquire a capital benefit upon sale. 173. In our opinion, those rights existed prior to 1 January 2001 because -for the reasons given above - the environment should properly have been observed as one where permits were transferred and were transferable. In order to properly assess the relative economic position before and after 1 January 2001 an examination is required of the position of fishermen before and after that date. If by the introduction of an ITQ based on a catch history, the quota allocated is less than what might be achieved, the value necessarily of the permit is reduced by reason of the limitation on the income which can be earned from it and its reduced value as a capital asset. It follows therefore that the relative economic position of a fishermen may be worse after 1 January 2001 than previously. This is the consequence of the ITQ imposed upon Mr Fischer, which has given rise to these proceedings. 174. We find that a permit in a transferable environment has value even if fishing is not undertaken. This is because the permit creates a capacity or an entitlement on the part of the permit holder to exploit the permit and fish for shark. The imposition of an ITQ restricts the quantity of catch thereby also affecting the relative economic position. 175. In the circumstances of the present application, the differential economic impact of the introduction of the ITQs based on catch history has not been minimised and in the circumstances of the application of Mr Fischer there are reasons which would dictate a departure from the policy (refer FMP8). 176. Adopting the language in Re Drake we are satisfied the policy 'tends to produce an unjust decision' (p. 645). We are also satisfied that the policy decision under review is not sound, rather that it is flawed and in the circumstances we have decided that the application should be remitted for a reconsideration. We believe that to be the correct or preferable decision.' 19 The Tribunal then explained why it regarded it as inappropriate for it to decide for itself the permit regime which should apply, observing, at [177]-[179]; '177. … … … We do not profess to be appropriately qualified nor do we have the expertise or the historical knowledge of fisheries as is possessed by responsible persons within AFMA. Additionally we are aware that there are many other persons who are members of the SSF who did not give evidence in these proceedings and their views and circumstances are not known. It would be wrong for us to make any decision concerning the method of quota allocation. It would be more appropriate for those enquiries to be undertaken by AFMA and for it to determine a policy in lieu of a policy under review in these proceedings. 178. We would, however, urge AFMA to be mindful of the evidence of these proceedings, the conclusions especially of Mr Collins, the paper 'Fish Futures' and its own FMP8. If it pursues a policy of TAC & ITQ's, it should, we would recommend, regard the permits, at all relevant times as being transferable. 179. In the circumstances we have decided that the decision under review should be set aside and the application remitted to the respondent for reconsideration in accordance with these reasons.' The background to Mr Graham's application. 20 On 27 September 2002, the same Tribunal also set aside decisions by AFMA regarding the catch quota in the SSF allocated to Mr Rodger Graham, the respondent in proceedings No V 744 of 2002 and remitted Mr Graham's applications to AFMA for reconsideration. Mr Graham's application had been heard before the Tribunal together with Mr Fischer's application. At [4] of its reasons in relation to Mr Graham the Tribunal accurately described "the circumstances giving rise to this review … [as] virtually identical to those that existed with respect" to Mr Fischer. The decision which the Tribunal set aside had been made on 14 March 2001 pursuant to s 32 of the Act. By that decision, AFMA purported to attach a quota allocation of zero kilograms to Mr Fischer's permit for the 2001 season in respect of both species, school shark and gummy shark. 21 Mr Graham, holds a permit, No 300214D, under the Act. Mr Graham's permit entitled him to take gummy shark in the SSF. The Tribunal found at [6] that he "also held a Western Zone Cray Fishing License issued by the Victorian Government, which was also endorsed to his Commonwealth Fishing Boat License". The effect of this arrangement was that Mr Graham held a "combined permit" in respect of his vessel, the "Saint Bernadette" which allowed him to fish with six lines for gummy shark in the SSF (an A6 permit) and also allowed him to engage in cray fishing in the relevant fishery controlled by the Victorian Government. 22 In addition, Mr Graham holds a Tasmanian cray fishing permit, which is attached to the "Encounter Bay" (a vessel owned by his eldest son). That permit is not relevant to the present proceedings. 23 Throughout the period which AFMA took into consideration in allocating ITQs, Mr Graham had used only the cray fishing component of his permit. In 1990 he suffered an injury requiring a hip replacement and thereafter engaged only in cray fishing because, in the words quoted by the Tribunal at [8] of its decision, a cray fisherman can simply "sit and drive the boat", while a shark fisherman may be away from port for five or six days at a time and is involved in heavy lifting. Mr Graham's evidence was that he was no longer capable of such exertions, and that evidence was not disputed. However, as he had no catch history for gummy shark in the period which AFMA had taken into account, he was allocated a zero quota for both species of shark. Mr Graham told the Tribunal that he had kept the A6 shark permit for eventual transfer to his three sons, who had expressed an interest in becoming fishermen, which the eldest of them had already done. 24 Mr Graham was certainly aware of a capacity to transfer or assign interests in permits of the kind which he held, having twice leased his State Government permits, and having also leased the "combined" A6 shark and cray permit to a Mr Grist for three years. He acknowledged that he could have sought to lease the combined permit again so that the shark permit would have been in active use (though he gave evidence that there was no qualified person in his district available to skipper the vessel), but he was not aware that failure to exploit the permit at all during the relevant period would result in a zero ITQ allocation. His evidence, summarised by the Tribunal at [13] and [21], was that he had understood that he would be able to keep the permits "forever", which I take to mean, as the Tribunal put it at [166] of its reasons in relation to Mr Fischer quoted at [17] above, that he was one of the fishermen who had an expectation that "fishing permits … would be renewed annually subject to extraordinary circumstances". 25 Although it is obvious that the allocation of a zero quota substantially diminishes the value of a permit, it does not extinguish it altogether as a permit holder remains entitled to buy transferable quota from other permit-holders in the fishery. However, in the light of his past permit history, it is clear that Mr Graham, from the 2001 season, had effectively lost his previous ability to derive income by "leasing" his shark permits. 26 The Tribunal found, at [26]-[29], that application of the ITQ allocation policy to Mr Graham, without regard to his exceptional circumstances, tended to produce an unjust result. Having regard to Mr Graham's injury, that conclusion is clearly right, and he was entitled to a reconsideration of his ITQ allocation by AFMA on that ground alone, regardless of the issues agitated in Mr Fischer's application going to the correctness of AFMA's policy as generally applied. AFMA, properly, does not dispute the Tribunal's finding in favour of Mr Graham in this respect. AFMA challenges only the finding in Mr Graham's case that his permit was transferable. The matters at issue in the applications. 27 This issues raised by these applications are relatively simple. It is trite to say that an appeal from a decision of the Tribunal lies to this Court only for an error of law under s 44(1) of the Administrative Appeals Tribunal Act 1975. AFMA impugns the Tribunal's decision by contending that its finding that the permits had been transferable was an error of law. If the permits could previously have been dealt with by the permit holders in such a way as to assign some beneficial interest, or even the "title" to a permit, to other operators, then the Tribunal's finding was correct and the decisions under appeal must be remitted to AFMA as the Tribunal directed. If that analysis was wrong, then the matter should be remitted to the Tribunal for determination according to law. 28 AFMA also submitted that the Tribunal had erred in law by failing to have regard to submissions which it had advanced at the hearing pointing to the value of maintaining consistent policies for the regulation of the SSF and the SENTF. The Tribunal had before it the evidence of Mr Fischer, referred to at [5] above. It also referred at [74] of its decision in Mr Fischer's case to the evidence of Mr Collins that, in his opinion, the two fisheries were not comparable. I am not prepared to find that the Tribunal disregarded this issue. Its failure to advert to it in its reasons signifies only that it considered it unnecessary to do so. Ultimately, the introduction of ITQs and a TAC was not opposed by Mr Fischer, as the Tribunal observed at [34]: "In effect Mr Fischer submitted that any allocation of ITQ's in the shark fishery should be on a different basis to the allocation of ITQs in the [SENTF]". Neither Mr Fischer, Mr Graham nor the Tribunal saw the issue as being whether there should be a fundamental difference of policy applicable to the two fisheries. Rather the question was whether there should be a different method of allocating ITQs within each fishery. The Tribunal appears to have considered, reading its reasons fairly and as a whole, that a difference in allocation method was justified having regard to differences in species and fishing methods in each fishery. In the result, I have been unable to accede to this submission on behalf of AFMA. 29 On the principal issue of whether permits were transferable, if the permits had conferred rights which were strictly personal to the permit holders, then it would have been difficult to take exception to a decision to allocate ITQ by reference to catch history alone, as that could reasonably have been regarded as the most reliable indicator of future performance. If however, the Tribunal was right to conclude that the permits were transferable in the sense that a permit holder could "transfer the income stream to another person upon sale or lease" and "acquire a capital benefit upon sale", it follows that AFMA's decisions had been made in accordance with a policy that proceeded upon a flawed assumption. If a permit holder could have assigned to another person an interest in the permit, and derived an income stream or realised a capital value as a result, catch history alone would be an incomplete or unreliable measure of value of the permits immediately before the proposed change. As soon as it is possible for a lesser interest than an undivided personal right to fish to be carved out of a permit and for income to be thereby derived by the permit holder and the holder of the lesser interest, there is a value in the permit which can properly be taken into account in any change of policy for management of the relevant fishery. That is manifestly so where one of the policy objectives of such management is, to the extent practicable, to preserve the economic position of fishermen in relation to each other. Similarly, as soon as there is a market for the permits, even if transfers are now only granted by AFMA upon the death or serious incapacity of a permit holder, the resultant value of the permits as "life insurance" or "superannuation" is also something properly to be taken into account in changing the rights attaching to the permits. 30 I was referred in the course of argument to s 32(10) of the Act which 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 of another person as proposed transferee, transfer the permit to that other person.' I was also referred to various conditions which have been imposed on permits pursuant to s 32(6)(a), and particularly to those set out in Schedule 4 to Mr Fischer's permit. The permit itself is marked "Not Transferable" on the first page and again at the head of the schedules. The conditions in Schedule 4 include the following: '18. This Fishing Permit is not transferable except by application on the approved forms to AFMA - subject to AFMA approval, this Fishing Permit may only be transferred to the spouse or a natural or adoptive grandparent, parent, sibling, child or grandchild of the Fishing Permit holder or of the Fishing Permit holder's spouse. 19. The fishing permit holder must retain responsibility for the following aspects of the operations of the boat: a) ownership of the boat or ultimate responsibility for repairs to, and maintenance of the boat; b) the payment of levies imposed under the Fishing Levy Act 1991. 20. If the Fishing Permit holder is not the skipper of the boat, then the holder must: a) appoint the skipper of the boat, by way of written notification to AFMA; and b) have responsibility for expenditures involved in running the boat; and c) directly benefit from the returns generated by fishing activities undertaken under this Fishing Permit.' 31 Far from confirming an absolute prohibition on any transfer of an interest in the permit, and the creation of a right to take fish which was purely personal to the permit holder, these conditions appear to contemplate a range of circumstances in which a transfer could be effected, or in which some lesser right to take fish could be carved out of the permit and assigned. For example, it is entirely possible that a permit holder could lease the boat and licence to a skipper appointed under condition 20(a), provided that the permit holder remained responsible "for expenditures involved in running the boat" and preserved for himself or herself some form of royalties or profit-share referable to the fishing activities authorised by the permit. Condition 18 leaves transfers effectively subject entirely to AFMA approval, and the evidence was that "compassionate circumstances" transfers were invariably approved upon the death of a permit holder, even if the transfer was for value and not to an immediate family member. Indeed, it appears that, until relatively recently, "compassionate transfers" were approved in a broad range of necessitous circumstances. This shows, at least, that there has consistently been a lawful market or trade in the relevant permits, however limited and that holders were right to attribute to their permits some value as a form of "superannuation" in the sense of insurance against death or incapacity to continue fishing. 32 However, the evidence can be put higher than that. The Tribunal found at [163] of its decision in Mr Fischer's application that AFMA knew that permits were being "leased" or sold under a variety of arrangements and that it "turn[ed] a blind eye" to these practices. The evidence of Mr Richardson, summarised above at [8] and [9], was that AFMA knew of 17 "leases" and of other transfers (not approved by AFMA) which had been effected without cancellation of the permit. There was clearly a market for these permits, whether by lease or sale under a trust or other arrangement, and that gave a value to the permits different from that which could be measured by reference to the catch history of the listed permit holder. Indeed, it seems apparent from the evidence of Mr Sturgess, summarised at [14] above, that the Panel knew of this trade but made no enquiries as to the prices paid, preferring to base its advice on the assumption that the licenses were not transferable. 33 The fact that only in limited circumstances will AFMA approve transfers of permits and that AFMA's policy governing approval of transfers may be (and, indeed, has been) changed from time to time, may cause the value of such permits to be discounted. That, however, is a matter properly to be considered by AFMA in determining how the new regime should be introduced. It is not a warrant for treating the permits as having no continuing value. 34 AFMA submitted that it was not open to the Tribunal to find that the permits were transferable "when the … Act prohibited their transfer and prohibited the exercise of rights conferred by each permit by any person other than the permit holder or a person acting on the permit holder's behalf". I was referred in this regard to subss 95(1)(a), 95(2) and 95(5). Put simply, these provisions make it an offence, punishable by a fine of up to 500 penalty units, for a person to engage in commercial fishing within the Australian Fishing Zone unless "the person is, or is acting on behalf of, the holder of a fishing concession … that is in force authorising commercial fishing at that place". A "fishing concession" is defined to include a permit under the Act. It was contended that this supported the conclusion that permits were not intended to be transferable. I am quite unable to impute that intention to the legislature. All that those sub-sections evince is an intention that, at any given time, commercial fishing should only be engaged in by persons who are themselves the holders of fishing concessions or for whom such holders are legally responsible as principals. Certainly, some of the "under the table" transfers effected between fishermen might leave either or both the transferor and transferee open to conviction for contravention of s 95. However, completely legal arrangements for the "leasing" of a permit to a designated skipper are readily conceivable. Between these two extremes there is permitted a spectrum of assignable interests in the permits. 35 Mr Hanks QC, who appeared with Ms Mortimer for AFMA, also submitted that breaches of conditions imposed by, or pursuant to, s 32 of the Act render the permit holder liable to sanctions, and that, in the context of fisheries management, the permit holder must have been intended to exercise some degree of control overthe actual operator of the boat. Arrangements, he submitted, tending to subvert the mechanism whereby the fishery management exerted effective control over fishing operators were contrary to the Act and could not be valid. That much may be conceded, but, clearly, whether a transfer or leasing arrangement between a permit holder and an operator is in breach of permit conditions will depend on the terms of the particular arrangement. The permits, as I have held, were not entirely personal and non-transferable licenses. That characterisation of them is precluded by the very terms of the conditions embodied in Schedule 4 to Mr Fischer's permit which allow a skipper other than the permit holder to derive income from the use of the permit. It is not necessary for present purposes to consider how far, by a trust mechanism or otherwise, such arrangements could go towards transferring "title" in a permit to another person without, or simply pending, AFMA's consent. 36 I was also referred in the course of argument to the statutory objectives which AFMA is obliged, by s 3(1) of the Act, to pursue. That sub-section provides: '(1) The following objectives must be pursued by the Minister in the administration of this Act and by AFMA in the performance of its functions: (a) implementing efficient and cost-effective fisheries management on behalf of the Commonwealth; and (b) ensuring that the exploitation of fisheries resources and the carrying on of any related activities are conducted in a manner consistent with the principles of ecologically sustainable development and the exercise of the precautionary principle, in particular the need to have regard to the impact of fishing activities on non-target species and the long term sustainability of the marine environment; and (c) maximising economic efficiency in the exploitation of fisheries resources; and (d) ensuring accountability to the fishing industry and to the Australian community in AFMA's management of fisheries resources; and (e) achieving government targets in relation to the recovery of the costs of AFMA.' Those objectives were considered by Branson J in P W Adams Pty Ltd v Australian Fisheries Management Authority (1998) 49 ALD 68 where, at 76-77, her Honour said: '… Neither s 6 of the Administration Act, nor s 3(1) of the Management Act, can, in my view, be construed as intending to impose on AFMA an obligation to ensure that every action or step that it takes is one which, standing alone, can be characterised as an action or step taken in pursuance of its objectives. Such a construction of the two Acts would make the administration of AFMA virtually impossible. … … Plainly, there is a difference between "maximising economic efficiency in the exploitation of fisheries resources" and maximising the economic efficiency of individual participants in the fishing industry. The objectives of AFMA are objectives intended to be pursued in the public interest; they are not intended to require AFMA to pursue, assuming that it would be possible for it to do so, the separate interests of individual participants in the fishing industry. Of course, in many circumstances, the respective interests of individual participants in the fishing industry and the public interests which AFMA is required by its objectives to pursue in the performance of its functions will be consistent. In some circumstances they will not be consistent.' 37 Her Honour's observations are plainly correct. The provision is exhortatory, and each objective cannot be pursued with equal vigour at one and the same time. The objectives enumerated in s 3(1) impose no duty on AFMA to advance the economic interests of individual fishermen. However, to say that is far from supporting a construction which entails that the economic effect on participants in the industry is irrelevant to a decision to be taken by AFMA in the management of a fishery. 38 The respondents have not submitted in the present case that AFMA has a responsibility to promote their individual interests. Their argument has been, rather, that the Tribunal concluded that AFMA's decision in each case to allocate ITQs on the basis of catch history alone was not the correct and preferable decision, as it failed to take into account that each permit had value as a transferable asset and thus failed to preserve the relative economic position of permit holders. This was a conclusion open to the Tribunal standing in the shoes of a decision-maker within the executive arm of government. 39 In coming to its conclusion, the Tribunal placed some importance on the FMP8 principle of minimising any changes to the relative economic position of permit holders when effecting a change in the management regime of a fishery and a consequential reallocation of rights between participants in that fishery. It was to that principle which the Tribunal found that the Panel had failed to give effect because it had concluded, erroneously, that the permits were not transferable. 40 It is true that the Tribunal departed from the policy recommended by the Panel which had been arrived at after substantial consultation with the industry. There is clear authority that the Tribunal will ordinarily follow a policy settled at a Ministerial level, following wide industry consultation: see e.g. Re Aston and Secretary, Department of Primary Industry (1985) 8 ALD 366. In that case the Ministerial policy was followed, although it was observed, in passing, by the full Tribunal (Davies J, Layton DP and Mr Pascoe) at 380 that a policy ought not to be followed if "the evidence showed that it was entirely misconceived or proceeded on a wholly erroneous basis." 41 I cannot discern any error of law by the Tribunal in the view which it took of the policy that AFMA had adopted on the advice of the Panel. Certainly, where there has been industry consultation, and in the context of a change in the management regime for an industry, such a policy is not to be departed from lightly. It is apparent from its reasons at [147] that the Tribunal was aware of Brennan J's observations in Re Drake and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 634 at 642-643 and the effect of authorities in this Court referred to at [157] and [158] of its reasons in relation to Mr Fischer. Those authorities discuss the concept of "economic efficiency" in the context of a change of management in relation to a fishery. I consider that the Tribunal rightly regarded itself as required to arrive at the correct and preferable decision, once it had concluded that AFMA's decision worked an injustice upon the individual applicant. Moreover, it was open to the Tribunal to accord less weight to the views of the Panel than had been accorded in Aston to the policy formulated by a council of State and Federal Ministers. That was particularly so when it is remembered that the Panel had proceeded on an assumption, contrary, as I have found, to the facts and the preferable legal analysis, that the permits were entirely non-transferable. Whether the permits were transferable at the relevant time was a question of mixed fact and law. As already indicated, I regard the Tribunal's conclusion on the legal element of that question as correct. Once it is acknowledged that the permits could be transferred, even in limited circumstances, or that there were rights which could be carved out and alienated by the permit holder for commercial advantage, it follows that there were considerations which AFMA should have taken into account, but did not, in allocating the new ITQs. That is not to say, as the Tribunal itself acknowledged, that those considerations should be decisive in arriving at the correct and preferable decision. Conclusion 42 It follows, for the reasons which I have endeavoured to explain, that the Tribunal's decision was not vitiated by any error of law. Each appeal must therefore be dismissed and each decision of the Tribunal affirmed. There will be an order that AFMA pay the respondent's costs of each application, including any reserved costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan. Associate: Dated: 24 March 2003 Counsel for the Applicant: Mr P Hanks QC with Ms D Mortimer Solicitor for the Applicant: Ladbray Consortium Counsel for the Respondent: Mr R Niall Solicitor for the Respondent: Fitzpatrick Teal Date of Hearing: 4 and 5 February 2003 Date of Judgment: 24 March 2003