P.W. Adams Pty Ltd v Australian Fisheries Management Authority [1998] FCA 18 (23 January 1998)

FEDERAL COURT OF AUSTRALIA

ADMINISTRATIVE LAW - fish and fisheries - grant of fishing permits to the applicant by the respondent - respondent obliged to take into account the objective of maximising economic efficiency in the exploitation of fisheries resources - finding by Tribunal that policy formulated by respondent complied with such objective - whether Tribunal took into account irrelevant considerations - whether Tribunal in error by limiting issues of debate - whether Tribunal erred in law by considering the economic efficiency of the policy of the respondent generally without specific consideration of its effect on the applicant - whether the allocation of catch quotas as a condition of fishing permits is a function of the respondent.

Fisheries Management Act 1991 (Cth), ss 3, 16, 32

Fisheries Administration Act 1991 (Cth), ss 5, 6, 7

Administrative Appeals Tribunal Act 1975 (Cth), ss 25, 44

P.W. Adams Pty Ltd v Australian Fisheries Management Authority (1995) 60 FCR 387, cited

Australian Fisheries Management Authority v P.W. Adams Pty Ltd (1995) 61 FCR 314, cited

Australian Fisheries Management Authority v P.W. Adams Pty Ltd (No 2) (1996) 66 FCR 349, cited

Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39, cited

Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (Full Federal Court, 28 November 1997, unreported), cited

Vaitaki v Minister for Immigration and Ethnic Affairs (Full Federal Court, 15 January 1998, unreported), cited

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

P W ADAMS PTY LTD v

AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY

NG 217 of 1997

BRANSON J

SYDNEY

23 JANUARY 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 217 of 1997

BETWEEN:	P W ADAMS PTY LTD Applicant
AND:	AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Respondent
JUDGE(S):	BRANSON J
DATE OF ORDER:	23 janury 1998
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 217 of 1997

BETWEEN:	P W ADAMS PTY LTD Applicant
AND:	AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Respondent

JUDGE(S):	BRANSON J
DATE:	23 january 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

This is the latest in a series of cases in which the applicant seeks to challenge the quota allocations for certain fish species specified as a condition of its 1995 fishing permit for its Danish Seine trawler, the Wellington Cape, in respect of its operations in the South East Fishery, Danish Seine Section ("the quota conditions").

On 23 August 1995, the Administrative Appeals Tribunal constituted by Deputy President McMahon, affirmed a decision of the respondent ("AFMA") not to vary the quota conditions. The quota conditions had been determined by the application of a formula which was based on the catch history for the species concerned of the Wellington Cape ("the formula").

An appeal against this decision of the AAT, plus certain other decisions of the AAT, was heard by Sackville J. Sackville J, so far as the decision of the AAT of 23 August 1995 was concerned, allowed the appeal, made certain declarations, set aside the decision of the AAT, and referred the matter to the AAT for decision according to law. His Honour's judgment is reported as P.W. Adams Pty Ltd v Australian Fisheries Management Authority (1995) 60 FCR 387. In summary, his Honour concluded that the AAT erred in that it applied a general policy in relation to the applicant's 1995 permit, 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 Fisheries Management Act 1991 (Cth). His Honour noted that it was accepted before him that the formula could accurately be described as a policy which was applied by AFMA to guide the exercise of its discretion in granting a fishing permit subject to conditions under s 32 of the Fisheries Management Act 1975 (1991) (Cth) ("the Management Act").

At 400, Sackville J stated:

"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. ... 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. ... 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 [South East Fishery]."

An appeal to the Full Court from the decision of Sackville J was dismissed. The Full Court expressed agreement with the approach taken by Sackville J. The judgment of the Full Court is reported as Australian Fisheries Management Authority v P.W. Adams Pty Ltd (1995) 61 FCR 314.

Subsequently, before the order dismissing the appeal to the Full Court was entered, the AFMA moved the Full Court for orders that the Full Court reconsider its reasons for judgment, vary or set aside its previous orders, allow the appeal and set aside the declarations and orders of Sackville J. It was submitted by counsel for AFMA that the Full Court had proceeded under a misapprehension in dismissing the appeal from Sackville J. The alleged misapprehension was said to have arisen in this way. The point upon which the appellant succeeded before Sackville J had not been raised by it before the AAT. The Full Court determined the appeal from Sackville J on the basis that AFMA had not claimed to have suffered any prejudice by such point being raised for the first time before Sackville J. In fact AFMA had claimed that it had suffered prejudice and, on the hearing of its motion, it placed before the Full Court an affidavit containing expert evidence of the kind that it said that it would have placed before the AAT if the point had been taken before the AAT. The Full Court varied the orders initially made by it and, so far as is here relevant, varied the orders made by Sackville J by omitting therefrom the declarations made by him. The result was to leave in operation the order of Sackville J remitting the matter to the AAT for reconsideration according to law. This second decision of the Full Court is reported as Australian Fisheries Management Authority v P.W. Adams Pty Ltd (No 2) (1996) 66 FCR 349.

The Full Court, in determining not to allow the appeal from Sackville J, took the view that, if it were to allow the appeal, a substantial injustice to the respondent (to the appeal) might result. At 357 of its second judgment, the Full Court said:

"Without the benefit of knowing the detail of the evidence upon which the appellant would have sought to rely if the point had been raised in the Tribunal, we have held that, on the material before us and before Sackville J, the Tribunal's decision omitted an important consideration, namely, the maximising of economic efficiency in the exploitation of the relevant fisheries resources because that matter was omitted from consideration, at least so far as we could tell on the available material, when the respondent's quota was determined. The point remains good unless the evidence overcomes it."

The AAT, again constituted by Deputy President McMahon, again affirmed the decision of AFMA on 21 February 1997. Its reasons for decision are published as Re P.W. Adams Pty Ltd and Australian Fisheries Management Authority (1997) 45 ALD 616. It is this decision of the AAT which is the subject of the present appeal.

STATUTORY BACKGROUND

The statutory regime pursuant to which the quota conditions attached to 1995 permit issued to the Wellington Cape were imposed is set out in the earlier decisions of Sackville J (60 FCR 387) and the Full Court (61 FCR 314) to which I refer above. It is not necessary for me here to reproduce all of the relevant statutory provisions. I shall refer only to the more critical of them.

AFMA is established by s 5 of the Fisheries Administration Act 1991 (Cth) ("the Administration Act"). The Administration Act and the Management Act are consecutive Acts of the Commonwealth Parliament. Each of them was assented to on 10 November 1991. The two Acts are plainly intended to be complementary.

Section 6 of the Administration Act provides as follows:

Objectives

6. The Authority, [ie. AFMA] in the performance of its functions, must pursue the objectives of:

(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 the Authority's management of fisheries resources; and

(e) achieving government targets in relation to the recovery of the costs of the Authority."

The objectives which s 6 of the Administration Act requires AFMA to pursue in the performance of its functions are the same objectives as are identified in s 3(1) of the Management Act. Section 3(1) of the Management Act provides that such objectives "must be pursued by the Minister in the administration of this Act and by AFMA in the performance of its functions".

Section 7 of the Administration Act identifies the functions of AFMA. They are wide ranging functions touching on many aspects of the Australian fishing industry, and the management of the resources of such industry. For present purposes, the following paragraphs of s 7 are of particular relevance:

"The Authority has the following functions:

(a) to devise management regimes in relation to Australian fisheries;

...

(m) as provided by an associated law:

(i) to establish and allocate fishing rights;

... ;

(n) such other functions as are conferred on the Authority by or under this Act or an associated law."

Section 4 of the Administration Act contains the following definition:

"`associated law' means a law conferring powers and functions on the Authority".

Part 3 of the Management Act, which is comprised of ss 16-43, is concerned with the regulation of fishing. Section 16(1) of the Management Act provides as follows:

"In performing its functions under this Part, AFMA must pursue its objectives and, in addition, act in accordance with its corporate plan and its current annual operational plan."

The Management Act, as a law conferring powers and functions on AFMA, is an "associated law" within the meaning of that term in the Administration Act.

Section 32 of the Management Act, so far as is here relevant, provides as follows:

"(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 [Australian Fishing Zone] or a specified fishery.

...

(5) A fishing permit is granted subject to the following conditions:

...

(6) A fishing permit:

(a) is subject to such other conditions as are:

(i) specified in the permit; or

(ii) ...

(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

... ."

REASONS OF THE AAT

The AAT in its reasons for decision noted that the issue upon which the appeal from its earlier decision was allowed was not one that had been argued before it, or dealt with by it. Its reasons go on to record that:

"it was agreed at a directions hearing that the only issue was whether the policy was legitimately arrived at having regard to the mandatory requirements of s 3 [of the Management Act]."

The AAT expressed the view that s 3 of the Management Act, in requiring AFMA in the performance of its functions to pursue the objective of "maximising economic efficiency in the exploitation of fisheries resources", is concerned with overall efficiency in the relevant industry, and not with the economic efficiency of any particular operator.

The AAT summarised the evidence before it on the rehearing. It referred to the evidence of Martin Lewis Exel ("Mr Exel"), General Manager, Fisheries Branch of AFMA. As to the evidence of Mr Exel, the AAT said:

"He described the way in which the Authority set about its task of regulating output from the closed fishery and described the way in which quota policy had been developed. Consistent with the origins of the present statute, emphasis has been placed on the transferability of the quotas (ITQs) which Mr Exel regarded as an integral step in maximising economic efficiency in the exploitation of the resources of the South East Trawl Fishery. The creation of these ITQs permitted operators to adjust their fishing capacity through the purchase and sale of quota with the effect of maximising individual efficiency."

The AAT's reference to "the origins of the present statute" is to be understood in the light of the following passage from its reasons:

"The origins of the present statute and of paragraph (c) of the objectives in particular, appear in a government policy document entitled `New Directions for Commonwealth Fisheries Management in the 1990s'. Dealing with economic aspects of fisheries management, the policy document emphasised the necessity for government intervention in the creation of quotas as output controls. It, too, did not concern itself so much with the way in which quotas were created as in their existence and their transferability."

The reasons for decision of the AAT contain the following quotation from the policy document "New Directions for Commonwealth Fisheries Management in the 1990s" ("the 1989 policy statement"):

"Aggregate quotas or total allowable catches have been used to provide biological protection of fisheries. Once the annual quotas have been taken the fisheries are closed. This strategy does nothing to prevent resource rent dissipation - the incentive for each fisherman to take as much of the catch as possible remains - and as a result fisheries managed in this way have been characterised by increased capitalisation in boats and ever shorter fishing seasons.

However, by setting an aggregate quota and allocating it to fishermen as individual transferable quotas (ITQs), rights over a proportion of the catch are established. Market forces distribute the quota among those fishermen who value the rights most highly and are able to use the resource most efficiently. Because quota holders are guaranteed a proportion of the catch, they no longer need to compete for their catch and can concentrate on using the most economically efficient means of taking their share. In this way, ITQs facilitate autonomous adjustment of fleet size and fishing operations.

The value of quota units to fishermen is determined by how efficiently each can use them. In general the more efficient fishermen buy ITQs from the less efficient at prices that exceed the earning capacity of those units in the hands of the less efficient fishermen. The less efficient operators leave the fishery, which reduces total fishing capacity.

ITQs also give the individual operator much greater opportunity to take advantage of favourable market conditions. If, for example, market prices decline mid way through a season, a quota holder can elect to keep fishing or can save his quota for later in the season when prices may have recovered.

ITQs can be established in either absolute values (tonnes of catch) or as a proportion of a total allowable catch. The Government favours proportional allocation, as the total allowable catch can then be readily adjusted to prevent biological over-exploitation."

The AAT in its reasons for decision also refers to the evidence of Barry Charles Kaufmann ("Mr Kaufmann"), a fisheries economist with extensive experience in both Canada and Australia. The AAT sets out in its reasons for decision the following paragraphs from Mr Kaufmann's affidavit:

"10. As a result of weak fishing rights, harvesters often spend large amounts of money in building larger and faster vessels and associated gear. This investment is frequently not aimed at the cost effective harvesting of fish. Rather, the investment is stimulated by the need to harvest fish before others do. Using a term from fisheries economic literature, harvesting investment is frequently aimed at the "race for the fish". Unfortunately, over time, such investment produces little of economic value. In other words, few additional fish are produced notwithstanding additional harvesting investment. This economic efficiency failure is a natural product of the existence of weak fishing rights assigned to fish harvesters, and is one of the major reasons that governments have undertaken a significant regulatory role in fisheries management.

...

26. It is, in my view, wrong to associate economic efficiency with the magnitude of an operator's investment in a fishery. Along this line, it has been argued that boat units reflect investment, and investment is a measure of relative efficiency.

27. Put simply, the argument is that the more boat units an individual possesses, the greater the size and power of that individual's vessel (and investment) and the greater their relative efficiency. This line of reasoning is based on an inappropriate definition of economic efficiency. Investment (whether proxied by boat units or not) is quite different from the concept of economic efficiency. Investment refers to the magnitude of one's financial commitment in an economic venture, whereas economic efficiency refers to effectiveness of one's investment. In any given sector of the economy, many large firms are inefficient in using capital, labour and other inputs and do not survive, while at the same time many small firms are quite profitable. Efficiency and profitability are concepts unrelated to the magnitude of investment. Even if investment (or the possible proxy, boat units) were used in determining quota allocation, this would only coincidently result in allocations being based on the individual economic efficiency of operators."

The conclusion of the AAT on the issue of whether the policy of AFMA, which was reflected by the quota conditions, was arrived at by having regard to the objective of "maximising economic efficiency in the exploitation of fisheries resources" is expressed as follows:

"... I do not regard it as my role to review the economic policy developed and implemented by [AFMA] and to judge it as such. I have to enquire whether in carrying out its functions, [AFMA] took account of, or pursued, the objectives in s 3 [of the Management Act] and particularly that in paragraph (c). On any view of the evidence put before me, it must be said that [AFMA] was conscious of the economic implications of its actions and has taken account of the policy expressed in paragraph (c)."

SUBMISSIONS OF THE APPLICANT

It is contended on behalf of the applicant that the reasons for decision of the AAT are affected by three broad errors of law.

First, it is suggested that the AAT erred as a matter of law in giving consideration to the policy adopted by AFMA generally as to quota allocations instead of focussing on the specific issue of the particular condition as to quotas imposed on the applicant's 1995 permit. The applicant, in its written submissions, poses the question "In what way is one able to say that application of the formula takes into account `effectiveness of one's investment'"?

Secondly, the applicant contends that the AAT took into account irrelevant considerations in that it gave consideration to matters relevant to the performance of AFMA's functions generally, rather than to the specific function relevant to the decision under review.

Thirdly, the applicant contends that the AAT misunderstood its role when the matter was referred to it for reconsideration, in that it purported to formulate a question of law to be answered, rather than undertaking its proper role of reviewing the relevant decisions of AFMA (see s 25 of the Administrative Appeals Tribunal Act (Cth)).

I pause to comment on the notices of appeal filed in this matter. The original notice of appeal listed twenty-seven alleged errors of law. Following protest by counsel for AFMA concerning the notice of appeal, it was amended on two occasions. The further amended notice of appeal lists twenty-five alleged errors of law. The alleged errors as listed overlap significantly. It would appear that the drafter has closely examined the reasons for decision of the AAT and sought to incorporate into the notice of appeal as an alleged error of law every aspect of such reasons for decision that he or she did not regard with favour. Significantly, no reference to the further amended notice of appeal was made during the hearing of the appeal.

I wish to stress that the purpose of a notice of appeal is to identify both for the parties and for the Court the real issue or issues to be considered on the appeal. None of the notices of appeal filed in this case served this purpose.

CONSIDERATION

I propose to address the contentions of the applicant in the reverse order to that in which they are mentioned above.

The identification of the proper role of the AAT when the matter was remitted to it for decision according to law was complicated by the matter coming before the AAT constituted by the same deputy president as had made the decision set aside. When a decision of the AAT is set aside for error and remitted for rehearing, it is generally accepted by the authorities that "justice is better seen to be done" if the AAT is reconstituted for the purpose of the rehearing (Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39 per Davies and Forster JJ at 42-43; see also Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (Full Federal Court, 28 November 1997, unreported); Vaitaki v Minister for Immigration and Ethnic Affairs (Full Federal Court, 15 January 1998, unreported)). In this case, the matter was not set aside for error: it was remitted for a rehearing in the interests of justice to allow evidence to be called on an issue not raised before the AAT on the original hearing. It was for this reason, presumably, that the matter came before the AAT constituted by the same deputy president as had made the initial decision. In the circumstances, although the Full Court had indicated that "a full rehearing ... according to law" would be the just result (66 FCR 349 at 357), it was not, in my view, incumbent upon the AAT to rehear and redetermine issues dealt with on the initial hearing concerning which no complaint had been upheld by this Court, and in respect of which neither party wished to call additional evidence or make fresh submissions.

The AAT in its reasons for decision, acknowledged that its role on the earlier hearing was to determine whether the decisions under review were the correct or preferable decisions. It noted the limited nature of the ground upon which the appeal to this Court had been upheld. It further noted, as is mentioned above, that "it was agreed at a directions hearing that the only issue was whether the policy was legitimately arrived at having regard to the mandatory requirements of s 3 [of the Management Act]". Where the AAT, with the agreement of the parties appearing before it, is able to limit the issues to be debated before it, it is plainly in the public interest for it to do so. I see no reason to conclude that the AAT misapprehended its proper role when the matter came before it for rehearing, in the sense that it overlooked that its function was, ultimately, to determine whether the decision under review was the correct or preferable decision.

As to the contention that the AAT took into account irrelevant considerations, the applicant drew attention particularly to the following passages in the reasons for decision of the AAT:

"(In passing, it must be observed that an authority which employs a chief economist - and presumably subsidiary economists - must be interested in the economic aspects of the carrying out of its functions. The very existence of the office indicates that [AFMA] is pursuing economic objectives)";

"On any view of the evidence put before me, it must be said that [AFMA] was conscious of the economic implications of its actions ..."; and

"Clearly the mass of detailed material contained in [The Australian Bureau of Agricultural and Resource Economics survey report for 1995] is of great interest and relevance to the performance of [AFMA's] functions. There is no suggestion that [AFMA] has completely ignored these statistics."

It is true that none of the above passages contains material probative of the precise issue to be determined by the AAT. As to the first of them, it is, in my view, to be understood as a comment, as it were, in parenthesis. It is not to be understood as forming any part of the AAT's reasoning process. The other two passages identified above, and others of a like character which appear in the reasons for decision of the AAT, are, in my view, properly to be understood as observations by the AAT. Although the AAT may have derived "comfort" from the matters reflected in the passages (as it noted that it did from a report of the National Audit Office), I see no reason to conclude that it took such matters into account in reaching its decision, or that if it did, that they had any bearing on the actual decision that it reached in the sense that it would not otherwise have reached such decision. It seems clear enough from the reasons for decision of the AAT that it based its decision on the evidence of Messrs Exel and Kaufmann and the 1989 policy statement.

The principal contention upon which the applicant relies is that the AAT formulated, and addressed, an issue which was too general. In its written outline of submissions, the applicant identifies the critical question upon which it contends that the Tribunal ought to have focussed as follows:

"... whether [AFMA] in performing the function of allocation of quota as conditions of the 1995 permit to the applicant by applying the formula took account of the objective of maximising economic efficiency in the exploitation of fisheries resources in the Danish Seiner fishery." [emphasis original]

It is perhaps a narrow point, and not one, as I was informed, which was addressed before either Sackville J or the Full Court, but, in my view, the Management Act does not give to AFMA a function of allocating quotas as a condition of fishing permits. Nothing in the Administration Act or the Management Act requires AFMA to allocate quotas as a condition of fishing permits. 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. Section 6 of the Administration Act and s 3(1) of the Management Act, so far as it refers to AFMA, are to be understood in the light of s 7 of the Administration Act which identifies the functions of AFMA.

It is, in my view, a function of AFMA under Part 3 of the Management Act, and thus under ss 7(m) and (n) of the Administration Act, to grant fishing permits pursuant to s 32 of the Management Act.

A fishing permit granted under s 32 of the Management Act will be subject to the conditions specified by s 32(5) of that Act, and to such other conditions as are applicable to such permit by reason of s 32(6) of that Act. A condition which may be applicable to a fishing permit by reason of s 32(6) is a condition specified in the permit (s 32(6)(a)(i)). The quota conditions were specified in the applicant's 1995 fishing permit. The grant to the applicant of its 1995 fishing permit, with the conditions specified therein, was, in my view, an exercise of the function of AFMA to grant fishing permits pursuant to s 32 of the Management Act.

The above analysis leads, in my view, to the conclusion that it is a misreading of the Administration Act and the Management Act, to suggest that it is a function of AFMA, within the meaning of those Acts, to determine the conditions to be specified in any individual fishing permit granted under s 32 of the Management Act. AFMA has the power to determine such conditions (s 32(6) of the Management Act). AFMA has a discretion to exercise such power in the performance of its function to grant fishing permits pursuant to s 32 of the Management Act. Such discretion must be exercised by AFMA in such a way that, in the performance of its function of granting fishing licenses, it pursues the objective, amongst other objectives, of "maximising economic efficiency in the exploitation of fisheries resources". I do not regard anything said by either Sackville J or the Full Court as inconsistent with the above conclusion.

I therefore reject the contentions of the applicant, contained in its outline of submissions, that:

"The function performed by [AFMA] in the allocation of quota to the applicant is a function in respect of which the objectives under section 3(1) [of the Management Act] must be pursued ..."; and

"The critical question upon which the Tribunal had to focus was whether [AFMA] in performing the function of allocation of quota as conditions of the 1995 permit to the applicant by applying the formula took account of the objective of maximising economic efficiency in the exploitation of fisheries' resources in the Danish Seine fishery." (Emphasis added).

I further reject the contention of the applicant that the question for the AAT to answer was:

"In what way is one able to say that application of the formula takes into account `effectiveness of one's investment'"?

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.

The appropriate management of certain fisheries requires that restrictions be imposed on the total annual catch of particular fish species so as to ensure the resource represented by such species remains able to sustain exploitation. Individual transferable quotas ("ITQs") are a means of allocating to individuals a proportion of the total allowable catch in respect of particular species. The quota conditions specified in the applicant's 1995 permit reflected a formula adopted by AFMA in respect of the calculation of ITQs for Danish seine trawlers. As is mentioned above, it was accepted before Sackville J, as it was before me, that such formula could accurately be described as a policy that was applied by AFMA to guide the exercise of its discretion in granting a fishing permit subject to conditions under s 32 of the Management Act. As Sackville J found, at 393, "the formula for the allocation of a quota relating to a species depended, in substance, on an assessment of each vessel's catch history for that species during the relevant catch period."

As was noted by Sackville J, the explanation given by Brennan J, in his capacity as President of the AAT, in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640-641, of the principles relating to the formulation of a guiding policy for the exercise of a statutory discretion has been widely accepted. In that case, Brennan J stated:

"There are powerful considerations in favour of a Minister adopting a guiding policy.

...

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.

...

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 can be shown to have been exposed to parliamentary scrutiny.

...

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 only ground upon which it is now contended that the formula adopted by AFMA in respect of the calculation of individual transferable quotas for Danish seine trawlers was unlawful is that it fails to comply with s 3(1)(c) of the Management Act. Having regard to the above analysis of the relevant function of AFMA, that contention, in my view, may appropriately be rephrased as follows: that the implementation of the formula by AFMA has the consequence that AFMA, in the performance of its function of granting fishing permits, is not pursuing the objective of "maximising economic efficiency in the exploitation of fisheries resources".

The implementation of the formula was a step in the process whereby the system of ITQs, as referred to in the 1989 policy statement, was introduced. The Tribunal found that the ITQ system itself is intended to maximise economic efficiency in the South East Fishery. That finding was plainly open to the AAT. It was not sought to be challenged before me.

It is true that the formula itself does not pretend to have anything to do with maximising economic efficiency: the evidence before the AAT suggests that it was intended to reflect notions of fairness. Indeed, it was the opinion of Mr Kaufmann "that allocating quota through bureaucratic estimation of the economic efficiency of individual harvesters would be operationally impossible, prohibitively expensive (and thus contrary to AFMA's maximum economic efficiency objective) and equivalent to allocating quota through a lottery process".

However, the formula is not open to legal challenge, in my view, because, looked at in isolation, it cannot be demonstrated to support the objective of "maximising economic efficiency in the exploitation of fisheries resources". The question is whether the implementation of the ITQ system, based as it is upon the formula, has the consequence that AFMA, in the performance of its function of granting fishing permits, is not pursuing the objective of "maximising economic efficiency in the exploitation of fisheries resources". This question the AAT can be understood to have answered adversely to the applicant. I am not satisfied that any error of law by the AAT in this regard has been identified.

The appeal will be dismissed.

I certify that this and the preceding sixteen (16) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.

Associate:

Dated:

Counsel for the Applicant:	A.W. Street SC with P.S. York
Solicitor for the Applicant:	Thomson Rich O'Connor
Counsel for the Respondent:	P. Roberts
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	5 November 1997
Date of Judgment:	23 January 1998