FEDERAL COURT OF AUSTRALIA

ADMINISTRATIVE LAW - judicial review - Administrative Decisions (Judicial Review) Act 1977 (Cth) - whether improper exercise of power granted under s 165 the Fisheries Management Act 1991 (Cth) - whether irrelevant considerations taken into account - statutory objectives identify relevant considerations - social and political considerations irrelevant in exercising the power.

ADMINISTRATIVE LAW - policy inconsistent with statute - whether discretionary power exercised at the direction or behest of another person - whether delegation of functions and powers lawful - express power to delegate - Fisheries Administration Act 1991 (Cth), s 92.

WORDS AND PHRASES - "economic efficiency" -"maximising economic efficiency" -  "accountability" - "consult" - "ecologically sustainable development".

Acts Interpretation Act 1901 (Cth) - s 15AB(1)(b)(i)

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Fisheries Administration Act 1991 (Cth) - ss 6, 7, 9, 59, 92

Fisheries Management Act 1991 (Cth) - ss 3, 16, 17, 165

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

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

Dixon v Roy (1996) 5 BPR 11655

Re Aley; Ex parte Sweeney (1996) 63 FCR 294

New Zealand Fishing Industry Association Inc v Minister of Agriculture and Fisheries (1988) 1 NZLR 544

Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492

Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24

Telstra Corporation Limited v Kendall (1994) 55 FCR 221

Re Reference Under s 11 of Ombudsman Act 1976 for an Advisory Opinion; ex parte Director-General of Social Services (1979) 2 ALD 86

O'Reilly v Commissioners of the State Bank of Victoria (1983) 153 CLR 1

R v Skinner (1968) 2 QB 700

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

BANNISTER QUEST PTY LTD v AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY

VG 268 of 1996

DRUMMOND J

BRISBANE

14 AUGUST 1997

IN THE FEDERAL COURT OF AUSTRALIA	)
	)
VICTORIA DISTRICT REGISTRY	)                                VG 268 of 1996
	)
GENERAL DIVISION	)

 

 

BETWEEN:	BANNISTER QUEST PTY LTD Applicant
AND:	AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Respondent

 

JUDGE:	DRUMMOND J
PLACE:	BRISBANE
DATED:	14 AUGUST 1997

 

MINUTES OF ORDER

 

THE COURT ORDERS THAT:

1.                     The decisions of the respondent's delegates of 2 May 1995 and 11 April 1996 be set aside.

2.                     The respondent pay the applicant's costs of and incidental to the proceedings.

THE COURT DECLARES THAT:

1.                     The respondent's policy on access to the South East Fishery by large vessels contained in its decision of 27 October 1994, as subsequently developed, is invalid.

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	)                                VG 268 of 1996
	)
GENERAL DIVISION	)

 

 

BETWEEN:	BANNISTER QUEST PTY LTD Applicant
AND:	AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY Respondent

 

JUDGE:	DRUMMOND J
PLACE:	BRISBANE
DATED:	14 AUGUST 1997

 

REASONS FOR JUDGMENT

Introduction

This is an application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) to review the decision of the respondent's delegate, Mr Palmer, made on 11 April 1996, which affirmed the decision of another delegate of the respondent made on 2 May 1995.  The decision last-mentioned dealt with an application by Bannister Quest Pty Ltd to substitute an unidentified vessel of "length greater than 32 metres less than 40 metres" for the vessel in respect of which fishing permit number 26780 had been issued to it.

Restrictions on the size of vessels permitted to fish the South East Fishery (SEF) (also referred to as the South East Trawl or SET) have long been in place:  see, eg, Fisheries Notice No 77 issued in August 1977 under the Fisheries Act 1952 (Cth).  This litigation arises out of a renewed controversy over whether fishing vessels of length greater than 32 metres should be permitted access to the SEF on the same terms and conditions that smaller vessels are permitted access to that fishery, ie, whether long vessels should be permitted to have what was called "unrestricted access" to the SEF.  This controversy has arisen in the context of the significant changes in the management of the SEF that have been implemented in recent years and which are still in the course of being worked out.  For some time, a number of operators in the fishing industry, including Bannister Quest, have sought access to the SEF for large vessels, which enable the operators to achieve higher profits than those available to the operators of smaller vessels.  Most of the operators in the SEF, however, employ smaller vessels and are opposed to the introduction of large vessels.  SETMAC, the Management Advisory Committee in respect of the SEF, which consists of industry and State governmental representatives, is said to be dominated by fishing operators opposed to the introduction of large vessels.

The Australian fishing zone is currently regulated by the respondent, the Australian Fisheries Management Authority (AFMA), pursuant to the Fisheries Management Act 1991 (Cth) (the FM Ac") and the Fisheries Administration Act 1991 (Cth) (the FA Act).  This zone is defined in s 4 the FM Act.  It is divided into fisheries, one of which is the SEF.  This comprises the waters adjacent to the southern coast of New South Wales, the coasts of Victoria and Tasmania and the eastern coast of South Australia, from 3 miles offshore out to the 200 mile limit of the Australian fishing zone. Those fishing the SEF exploit a number of commercial species; the SEF is the main supplier of fresh fish to the Sydney and Melbourne markets.  It is also the major source of deep water species, such as orange roughy and blue grenadier, that are processed in onshore facilities and exported.

Bannister Quest held three permits for fishing in the SEF for the year ending 31 December 1996 and substantial quotas, fixed by AFMA, for a number of species of fish.  Permits number 300034 and 300035 were issued to it in respect of unidentified vessels; they did not authorise the taking of any fish, because none of the applicant's quotas was allocated to those permits.  Permit number 26780 ultimately authorised Bannister Quest to operate a large vessel, the "Cape Hood", in the SEF, subject to conditions unacceptable to Bannister Quest as to the types and quantities of fish to be taken and the areas and times of permitted fishing.  This permit was first issued under s 32(1) the FM Act on 25 January 1995 as a "No Boat" permit, ie, it did not specify any particular vessel.  While subject to a number of conditions, it did not at first contain any restrictions on the length of the vessel to which the permit would attach, on the nomination by Bannister Quest of a specific vessel under s 32(1B).  The conditions that ultimately attached to permit 26780 were issued in response to Bannister Quest's application made on 30 March 1995, the subject of the delegate's decision of 2 May 1995.  Prior to 30 March, Bannister Quest had advised AFMA of its intention to fish the SEF with a 38 metre long vessel, the "Newfoundland Arrow", advice that produced the response of 10 February 1995 from AFMA's SEF Manager that "AFMA management has decided not to enable vessels in excess of 32 m to have general access to the SEF at this time".  In further discussions between AFMA management and Bannister Quest, the former gave Bannister Quest a copy of the proposed conditions for vessels greater than 32 metres in the SEF.  But these conditions were unacceptable to Bannister Quest, hence its application of 30 March 1995 for unrestricted access to the SEF for a large vessel.

This unsuccessful application took the form of an "Application for Boat Replacement" to substitute for the vessel "Saxon Progress", another vessel not identified in the application, but described as a vessel of "length greater than 32 m., less than 40 m."  It is not clear from the evidence whether, in making this application, Bannister Quest erroneously assumed that permit 26780 attached to the "Saxon Progress" or whether that permit, after issue in January 1995, had in fact become attached to that particular vessel.  But the AFMA delegate who made the decision of 2 May 1995 treated it as an "application to change a condition of" that permit to allow a vessel of greater than 32 metres into the SEF on the conditions applicable to a vessel of less than 32 metres.  Subsequent to AFMA's decision of 2 May 1995, Bannister Quest acquired the "Cape Hood", 45.7 metres long, and on 13 September 1995 made an "Application for Boat Replacement" to attach permit 26780 to it:  this appears to have been made pursuant to s 31(1B) the FM Act.  In response, AFMA issued a permit on 3 October 1995 bearing this same number and current for the balance of that calendar year in respect of the "Cape Hood"; it was expressed to be subject to a large number of conditions.  The conditions were imposed consistently with a policy, adopted by AFMA in October 1994 and subsequently developed, not to permit vessels in excess of 32 metres unrestricted access to the SEF, but to permit access in "special circumstances" only.  On 21 December 1995, AFMA issued a new permit, also numbered 26780, that authorised Bannister Quest to use the "Cape Hood" in the SEF in the period 1 January 1996 to 31 December 1996 on the same conditions that were attached to permit 26780 issued on 3 October 1995.

The issues raised by Bannister Quest's application for review can be summarised as follows:  firstly, it is said that Mr Palmer's decision is vitiated by error of law in that he misconstrued the economic efficiency and accountability objectives that AFMA must pursue in performing its functions, errors that led Mr Palmer to take into account irrelevant considerations and caused him to ignore relevant matters.  It is said that similar errors of law were involved in AFMA's decision to adopt the policy on large vessels in the SEF which I have mentioned and which Mr Palmer relied on in making his decision.  It is also said that both the adoption of this policy by AFMA and the way in which AFMA formulated the "special circumstances" exemption in this policy under which the conditions of Bannister Quest's permit were set involved an abdication by AFMA to SETMAC of AFMA's statutory responsibilities.  The relief ultimately sought on behalf of Bannister Quest was confined to an order that that decision be remitted to AFMA for reconsideration according to law and subject to directions regarding the proper construction of AFMA's statutory objectives.

The delegate's decision of 2 May 1995 only related to the permit number 26780 that expired on 31 December 1995.  Mr Palmer, in his decision of 11 April 1996 made in response to Bannister Quest's request of 6 December 1995 for a review of the 2 May 1995 decision, acknowledged, however, that his decision could be expected to govern the applicant's then-current 1996 permit issued on 21 December 1995.  Mr Palmer's decision in fact was that "current restrictions on permit No 26780 in relation to the operation of the "Cape Hood" should not be varied".  It is apparent from par 2 of his decision that Mr Palmer was here referring to the permit for the 1996 calendar year that was only issued on 21 December 1995, although Mr Palmer's authority under s 165(5) the FM Act was limited to review of the delegate's decision of 2 May 1995.  But the case, though in form purporting to be an application for judicial review of Mr Palmer's decision that affirmed the delegate's decision of 2 May 1995, was fought as a test case on whether Bannister Quest is entitled to unrestricted access to the SEF for its long vessels:  neither party took any point about the way in which this issue has been brought before this Court in Bannister Quest's application for review.  In this regard, it should be noted that there are a number of other operators who are also interested in using large vessels in the SEF and, in so far as Bannister Quest challenges the lawfulness of AFMA's policy of October 1994, this case will have an impact on whether those other operators can bring their large vessels into the fishery.

AFMA was established on 3 February 1992 by s 5 the FA Act.  It is required by s 6 the FA Act and ss 3 (and 16) the FM Act to pursue certain objectives in the performance of its functions.  These objectives (set out in s 3 the FM Act and s 6 the FA Act) are:

(a)        implementing efficient and cost-effective fisheries management on behalf of the Commonwealth; and

(b)       ensuring that the exploitation of fisheries resources and the carrying on of any related activities are conducted in a manner consistent with the principles of ecologically sustainable development, in particular the need to have regard to the impact of fishing activities on non-target species and the marine environment; and

(c)        maximising economic efficiency in the exploitation of fisheries resources; and

(d)       ensuring accountability to the fishing industry and to the Australian community in AFMA's management of fisheries resources; and

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

AFMA's functions include:

(a)        devising management regimes for Australian fisheries - s 7(a) the FA Act - including plans of management for a fishery - s 17(1) the FM Act;

(b)        devising fisheries adjustment programs and fisheries restructuring programs - s 7(b) the FA Act;

(c)        as provided by "an associated law" (ie, a law such as the FM Act which confers powers and functions on AFMA), establishing and allocating fishing rights, performing functions relating to plans of management and collecting, on behalf of the Commonwealth, a payment in the nature of a community return from persons exploiting fisheries resources - s 7(m) the FA Act;

(d)        granting statutory fishing rights in managed fisheries - ss 17(6)(b), 21, 22, 31 the FM Act, including fishing permits, authorising use of a specified Australian boat by a person for fishing in a specified fishery - s 32(1) the FM Act and specifying the conditions to be attached to such a permit - s 32(6)(a) the FM Act.

It is also one of AFMA's functions under the FA Act "to consult, and co-operate, with the industry and members of the public generally in relation to" its activities (s 7(c)) and to consult with persons or bodies representative of the whole or a part of the fishing industry, with the Commonwealth and State governments and their authorities having functions relating to fisheries and also with persons (including members of the scientific community) having a particular interest in matters associated with the industry "for the purpose of considering any matter, or obtaining information or advice, relating to the performance of its functions" (s 9 the FA Act).  Obligations to consult also appear in provisions of the FM Act, eg, s 17(1), which empowers AFMA to determine a plan of management for the fishery, but only after consultation with "such persons engaged in fishing as appear to AFMA to be appropriate".

AFMA is authorised to establish management advisory committees (MACs) "to assist it in the performance of its functions and the exercise of its powers in relation to a fishery" (ss 54 and 56 the FA Act).   SETMAC is the MAC established for the SEF.  The functions of a MAC are those determined by AFMA from time to time (s 57(1)).  A MAC is required by s 59 the FA Act to act in accordance with any policies determined by and directions given by AFMA, but subject to that, it has power, on behalf of AFMA, to do all things necessary or convenient to be done for, or in connection with, the performance of its own functions, ie, functions determined for it by AFMA (s 58).  A MAC's functions as determined by AFMA can include:

(a)        acting as a liaison body between AFMA and persons engaged in the fishery;

(b)        providing advice to AFMA in relation to the preparation and operation of a plan of management;

(c)        monitoring and reporting to AFMA in relation to scientific, economic and other information in relation to a fishery (s 57(2) the FA Act).

Section 92 the FA Act empowers AFMA to delegate, by writing under seal, any of its powers and functions to, inter alia, a director of AFMA or a MAC set up under ss 54 and 56:  ss 92(1)(a) and (b).  But as I have said, where AFMA delegates to a MAC, the latter must exercise those delegated functions and powers in accordance with any relevant AFMA policies and directions.

Section 17 the FM Act confers on AFMA the power formerly exercised by the Minister pursuant to s 7B the Fisheries Act 1952 to determine a plan of management for the SEF.  There were two plans of management for the SEF determined under s 7B the 1952 Act:

(a)        The South Eastern Trawl Fishery Management Plan, after revision, came into effect on 3 June 1985; this was administered by the Australian Fisheries Service (the 1985 plan).

(b)        The South East Fishery (Individual Transferable Quota) Management Plan 1991 (the 1991 plan) which replaced the 1985 plan when it came into force on 1 December 1991; this was administered by AFMA after its establishment.

The 1985 plan was an attempt by the Commonwealth to address the long-standing problem of over-capitalisation in the SEF:  ie, "too many boats chasing too few fish", as Mr Stevens, Managing Director of AFMA, put it.  The system of management first introduced by Fisheries Notices 77 and 77A (which were issued under the Fisheries Act 1952) is known as "input control"; it involved restrictions on the number of operators licensed to participate in the fishery, on the size and capacity of vessels which could be taken into the fishery and limitations on the gear that could be used in the fishery.  But once an operator had access to the fishery he could, under this system, fish without limit as to his catch sizes.  But by 1989 it was clear that this system had failed to provide for the effective management of the SEF.

In December 1989, the Commonwealth Government issued its policy statement, "New Directions for Commonwealth Fisheries Management in the 1990's".  This report led to movement away from "input" controls to "output" controls as the predominant fisheries management tool, ie, to controlling the amount of fish taken out of the fishery, as opposed to limiting the equipment taken in; it led also to the introduction of the 1991 plan in place of the 1985 plan and to the introduction in 1990 and 1991 of what the Minister called a suite of new legislation, that included the FM Act and the FA Act.  This policy statement identified the necessity for structural adjustment in the fishery in order to deal with what it described as the "major underlying problem" in Australian fisheries, viz, substantial excess fishing capacity, something the policy statement said "leads directly to the over-exploitation of fisheries and to generally low levels of profitability".  The statement observed that:  "Individual transferable quotas [ITQs] are the only management control currently used in Australian fisheries that promotes automatic adjustment within fishing fleets.  Input controls, which are used in most fisheries, do not result in market forces automatically generating structural adjustment".  (p 56)

Under the 1991 plan, which was in force from 1 January to 31 December 1992, the SEF was, in large part, managed by output controls that limited the quantity of key commercial species that could be taken from the fishery.  These controls were not, however, applied to the southern remote zone of the SEF off the south coast of Tasmania; because of access difficulties, it is a zone that is only lightly fished.  The 1991 plan provided, firstly, for the setting of a total allowable catch (TAC) for each of 16 species that could be taken from each zone of the SEF (other than the southern remote zone in respect of which no limits were set for the catches that could be taken there); secondly, for the division of each TAC into units of fishing capacity and, thirdly, for the allocation of those units, as ITQs, to individual operators in the fishery.  The ITQs for each of these 16 species were allocated to individual operators, initially on the basis of the operator's catch history and its designated boat units (a measure of boat size based on hull size and engine capacity first adopted for the purposes of the 1985 plan).  Under the 1991 plan, these ITQs were to be transferable between operators to enable them to adjust the mix of species they were permitted to catch or transferable in toto, if an operator desired to leave the fishery.  It was by means of the ITQ system that the desired reduction in existing fishing capacity in the SEF was to be achieved by autonomous or voluntary adjustment.

Opposition from various industry groups to the introduction of the ITQ system provided for by the 1991 plan was apparent from the outset.  The major opposition came from the South East Trawl Fishing Industry Association (SETFIA), described in an internally prepared briefing note for the AFMA Board of February 1992 as an industry group comprising the larger operators in the SEF which claimed to represent 70% of boat units in the fishery and described by SETFIA's president as the "peak industry association representing the interests of operators in the SEF".  SETFIA's concerns were said in this note to arise from the fact that many of the larger operators had invested in the fishery on the basis of the most optimistic analysis of stock (ie, they had invested in a system of input control, where there was no restriction on catch sizes) and they feared problems servicing their debts if they were suddenly limited to an allocated portion of the TAC.  The setting of TACs was the first form of output control introduced to protect the depletion of gemfish stocks.  But it was not the TACs that operators opposed, because an operator could still compete for as much of the total catch as possible.  It was the allocation of individual quotas within those TACs which attracted opposition, because that limited each fisherman to a specific amount of catch.  The way in which it was initially planned to allocate quotas to particular operators was highly contentious and AFMA became embroiled in litigation with operators.  Opposition to the ITQ system also arose because the taxation authorities insisted that sales of quota were liable to capital gains tax.  There were also complaints that the 1991 plan had been introduced without sufficient consultation and that the TAC levels were based on insufficient scientific information.  Delay has consequently occurred in carrying into effect the industry restructure that was to follow with the new arrangements.

Although AFMA made it clear in March 1992 that it would not consider any change to the ITQ-basis of the 1991 management plan, it did, as a result of this industry opposition and at the request of the Minister, conduct a review of certain aspects of the plan.  This led to its report, "Review of South East Fisheries Management Plan" dated 27 April 1992.  The recommendations made related primarily to the method of quota allocation and to delaying the implementation of unrestricted transferability of ITQs:  during most of the life of the 1991 plan, the only dealing in ITQs that was permitted was leasing between operators.

It was common ground at the hearing that the 1991 plan ceased to have effect at the end of 1992, although cl 2 of the plan did not fix any termination date.  It was established pursuant to s 7B the Fisheries Act 1952, which was repealed as from 3 February 1992, the date of commencement of the FA Act and the FM Act, and all fishing permits issued under the plan expired on 31 December 1992.  No new management plan has come into operation, although at the date of hearing there was a draft plan in circulation which it was hoped would be implemented in 1997.  This draft management plan incorporates a maximum vessel length restriction, consistent with the AFMA policy of October 1994.

Pending the adoption of the new management plan, AFMA has, in reliance on the FM Act, developed a series of interim management arrangements for the SEF each of which set of arrangements has been in force for one calendar year.  Under these interim arrangements, AFMA has regulated the SEF by means of fishing permits issued annually under s 32 the FM Act.  Another feature of these arrangements is the attachment of conditions to the fishing permits.  These conditions reflect the TACs adopted by AFMA for the various commercial species and incorporate the ITQs allocated to individual operators, both of which are adjusted annually.  Although under the early interim arrangements there were restrictions on the transferability of ITQs, this changed and the 1996 interim arrangements permitted both the leasing and permanent transfer of ITQs.  The interim arrangements also incorporated restrictions on vessels longer than 32 metres, with the 1995 and 1996 interim arrangements providing for relaxations of this restriction in accordance with the policy adopted by AFMA on 27 October 1994, as subsequently developed by AFMA.  Under this policy, vessels longer than 32 metres can fish, under a fishing plan proposed by the operator and acceptable to AFMA, waters off the east coast of Tasmania for orange roughy, waters off the west coast of Tasmania for blue grenadier, but subject in both areas to certain seasonal restrictions, and also the waters off the south coast of Tasmania, comprising the southern remote zone of the SEF, without limit as to the catches that can be taken there of any species and without any seasonal restrictions.

AFMA's Statutory Objectives

I have already set out these objectives, contained in s 3 the FM Act and s 6 the FA Act.

Bannister Quest contends that: (a) in making its decision on 27 October 1994 to retain the restrictions on vessels greater than 32 m in length from entering the fishery, AFMA and (b) in formulating the criteria against which satisfaction of the "special circumstances" exception to the policy then adopted would be judged, AFMA and (c) in carrying out his internal review on 11 April 1996, Mr Palmer, both misconstrued the economic efficiency and accountability objectives in s 3(1)(c) and (d) the FM Act.

Maximising Economic Efficiency - s  3(1)(c)

Bannister Quest contends that the proper interpretation of the "economic efficiency" objective in s 3(1)(c) is settled by the Full Court decision in Australian Fisheries Management Authority v PW Adams Pty Ltd (1995) 134 ALR 51.  AFMA disputes this.  Considerable time was devoted in argument to the significance of this decision.  The Adams case involved a dispute over quota allocation as ITQs made under the interim management arrangements for the 1993, 1994 and 1995 calendar years:  Adams challenged the formula used by AFMA to allocate quotas on the ground that the policy reflected in the formula, to the effect that quota should be allocated between boats according to their historical catch, failed to take into account the statutory objective of maximising economic efficiency.  As to the meaning of the s 3(1)(c) objective, Sackville J observed at first instance (60 FCR at 399) that the phrase "economic efficiency" did not have a fixed meaning for economists, saying:  "Efficiency is an economic concept, which is not to say that all economists necessarily define it in the same way.  Moreover, 'efficiency' takes its meaning for economists from the context in which it is used."  The protean nature of "efficiency" as an economic concept is perhaps indicated by the substantial re-writing that has occurred at pp 10-12 in the second edition of Law and Economics, by Cooter and Ulen, of the passage in the first edition of this work, to which his Honour referred, in discussing two of the different senses in which the term "efficiency" is used by economists:  one with respect to whether a production process is productively efficient, the other with respect to whether a particular distribution of goods among individual consumers is allocatively efficient.  Sackville J then said (at 400):

The meaning of s 3(1)(c) is to be ascertained by a process of statutory construction, not by the application of text book economics.  Nonetheless, in my view, s 3(1)(c) is concerned, at least in part, with productive efficiency in the sense of maximising output at least cost to the operators of the vessels comprising the fishing industry which exploits the resources of the SEF.  The paragraph directs attention to economic efficiency 'in the exploitation of fisheries resources'.  Fisheries resources are exploited, in the first instance, by catching fish.  They are also exploited by selling fish.  The criterion of economic efficiency doubtless requires attention to be paid to returns likely to be derived from the catch, since this is necessary to assess the economic rent derived by the industry.  But the criterion also requires that some attention should be paid to the resources - the capital and labour - required to produce the catch.  For example, an industry that relies on a relatively old and poorly equipped fleet, requiring a high labour input for a given catch, is presumably more costly and therefore less efficient than one which utilises modern, technologically advanced vessels.  (Emphasis added)

It can be seen that Sackville J was here commenting on some of the considerations relevant to the discussion of efficiency in a particular production process, viz, exploitation of a fishery.  His Honour was not concerned with identifying, in a definitive way, the ambit of the expression in the sub-section.  It was unnecessary for him to do that.  To demonstrate error of law on the part of AFMA, it was enough for his Honour to identify one of the considerations which s 3(1)(c), on its proper construction, required AFMA to take into account and to show that AFMA had failed to have any regard to that particular consideration in adopting the policy upon which it relied to make the decision there challenged.  In the passage immediately following that set out above, Sackville J said (at 400-401):

In my opinion, the difficulty with the formula applied by AFMA and the AAT in this case is that it pays no attention to economic efficiency, in the sense in which that term is used in s 3(1)(c) of the Management Act.  Quotas are allocated by reference to historical catch levels of particular vessels, regardless of the investment made and the resources required by those operators to achieve the catches during the relevant period …  The emphasis on catch levels presumably rewards operators with larger catches, but it does not necessarily reward past or current economic efficiency.  Nor does it penalise past or current economic inefficiency in exploiting the resources of the SEF.  Indeed, it is difficult to see how the formula itself is at all concerned with economic efficiency in the exploitation of the fisheries resources in the SEF.

His Honour said (at 402-403) that AFMA, by applying such a formula, made an error of law and concluded:

Mr Roberts (counsel for AFMA) in his brief submissions made in response to Mr Street's principal contentions, did not suggest that the formula allowed economic efficiency, in the sense that the term is used in s 3(1)(c), to be taken into account by the decision-maker.  In the light of his concession that the formula allocates quotas simply by reference to catch history, it is difficult to see how any such suggestion could be made out.

The Full Court in Adams (No 1) dismissed an appeal from Sackville J's decision (reported at (1995) 134 ALR 51).  In the course of the leading judgment, Sheppard J noted that the appellant (AFMA) had not challenged the construction placed on s 3(1)(c) by Sackville J and found additional reasons in the Second Reading Speech on the Management Bill for the correctness of Sackville J's view that the question of productive efficiency in the exploitation of the fishery was a consideration which s 3(1)(c) required to be taken into account.  But, like Sackville J, Sheppard J was not concerned with definitively interpreting s 3(1)(c) of the Act.  As his Honour noted, it was not disputed that the quota allocation formula did not take account of economic efficiency.

Bannister Quest relied on the subsequent history of the Adams litigation in the Full Court.  In dismissing the appeal in Adams, the Full Court commented, at 70, that the point upon which the respondent succeeded before Sackville J and on which it succeeded on appeal - that the policy adopted by AFMA excluded a relevant consideration, viz, the objective expressed in s 3(1)(c) the FM Act - was not argued before the AAT, but the appellant did not claim to have suffered prejudice as a consequence of this.  Immediately after the Full Court's judgment was delivered, the appellant asked the Court to reconsider its orders, saying that it had suffered prejudice:  if the point in question had been raised before the Tribunal, the appellant claimed that it would have led economic evidence which would have tended to establish that, notwithstanding the way AFMA approached the matter in determining the allocation of the quota and the issuing of the permit, it in fact did take into account the matters which it was required to take into account by s 3(1)(c) of the Act.  The result was that the Full Court varied its orders to ensure that when the AAT reconsidered the matter as required by Sackville J's judgment, AFMA would have the opportunity of adducing evidence of the kind it said it wanted to rely on.  The Full Court did not, however, attempt to define the content of s 3(1)(c) on the second occasion the matter was before it.  I do not consider that the Full Court at any stage of the Adams litigation purported to state in a definitive way the true meaning of the sub-section.

While it was unnecessary for the Court, in Adams, to identify the true meaning of s 3(1)(c) the FM Act, it is necessary for me to undertake that task, in view of the issues raised in this case.  Little assistance is provided by either the FM Act or the FA Act in illuminating the proper construction of the statutory objectives.  The imperative nature of the obligation cast on AFMA by s 3(1) the FM Act is emphasised by the contrast between the language of s 3(1) and 3(2):  the former states that the five objectives listed in the sub-section "must be pursued" by AFMA in the performance of its functions, while the latter sub-section provides only that:  "in addition to the objectives mentioned in sub-section (1) … AFMA … [is] to have regard to" the two additional objectives set out in that sub-section, ie, it must take them into account in performing its functions but is not bound to seek to achieve them.  In Adams, Sheppard J, at 67-68, read s 3(1) the FM Act as requiring AFMA to take into account, in making any decision in the exercise of its functions, all the s 3(1) objectives, although he added:

No doubt there will be cases in which the minister may give varying degrees of weight and emphasis to this or that objective.  So long as each objective is pursued, there will be no breach of duty.  But if one of the objectives is not pursued at all, then that will not be the case.

Tamberlin and Lehane JJ, however, considered that, because of the differences in the nature, level and importance of particular decisions that are taken by AFMA, s 3 the FM Act could not be construed as compelling AFMA to take into account the statutory objectives in making every decision made for the purpose of performing its functions.  (See pp 71-72)  But accepting this, the importance of the policy decision AFMA made on 27 October 1994 and later developed and which Mr Palmer in 1996 considered, held to be valid and applied, is such that both were bound to take into account all the s 3(1) objectives:  this policy decision effectively governs whether any large vessel will be permitted access to the SEF.

Although the concept of "efficiency" may not be one of fixed meaning so far as economists are concerned, since "maximising economic efficiency in the exploitation of fisheries resources" is an imperative obligation cast by statute on AFMA, it must, in that context, have a fixed and definite content which, as Sackville J observed in Adams, is to be ascertained "by a process of statutory construction, not by the application of textbook economics".  If it were open to AFMA to say that, in order to comply with this objective in a particular setting at a particular time, it was necessary or appropriate for AFMA to take into account, eg, equity and social considerations such as the impact of a proposed decision or course of action on the viability of individual operators in a particular fishery and open to AFMA, in another setting or in the same setting at a different time, to ignore such considerations, while still asserting compliance with this statutory objective, the result would be to deprive the particular provision of any real meaning and make largely illusory the limitations s 3(1) appears plainly to impose on AFMA in performing its functions.  This is not to dispute Sheppard J's comment in Adams that in making one decision, AFMA may be fully entitled to give different weight to each of the s 3(1) objections from that which it gives to them in making a different decision.  But given that the explication of s 3(1)(c) - and s 3(1)(d) also - is to be achieved by the process of statutory construction, the task is to identify what the legislature sought to achieve by imposing obligations, so expressed, on AFMA.

In view of the obscurity and ambiguity of much of the language in s 3(1), s 15AB(1)(b)(i) the Acts Interpretation Act 1901 (Cth) permits consideration of relevant extrinsic materials in performing this task.  The Explanatory Memorandum relating to the Fisheries Management Bill 1991 states that the Bill:  "gives effect to the Government's policies with respect to fisheries management as announced in December 1989 in the fisheries policy statement 'New Directions for Commonwealth Fisheries Management in the 1990s'".  In its original form, the Bill did not contain a clause equivalent to s 3 the FM Act.  However, the Bill was subsequently amended to include such a provision, which was itself copied from the Fisheries Administration Bill 1990.  Clause 7 of the latter Bill always included a clause that became s 6 the FA Act, a provision relatively identical to s 3(1) the FM Act.  The Explanatory Memorandum relating to the Administration Bill stated:  "The proposed Act will establish new arrangements for the administration of Commonwealth fisheries management activities.  The new arrangements, which will be administered by the Australian Fisheries Management Authority, were announced in December 1989 in the Government's policy statement 'New Directions for Commonwealth Fisheries Management in the 1990s'".  The Minister, in his Second Reading Speech with respect to the Fisheries Management Bill 1991, referred to the Fisheries Administration Bill introduced into Parliament the previous December, under which AFMA was to be established, and to the Management Bill, which was designed to empower AFMA to undertake the Government's fisheries management responsibilities, and stated (Hansard, House of Representatives, 30-31 May 1991, p 4469):

This Bill has been the result of the most intensive review and examination of Commonwealth fisheries management since the 1950s - a review which culminated in the policy statement released in December 1989 New Directions for Commonwealth Fisheries Management in the 1990s.  The Bill will give effect to the three objectives of fisheries management identified in the policy statement:

·                    to ensure that fisheries resources are not over-exploited and that any exploitation is at a level which can be sustained while maintaining the surrounding environment;

·                    to enable commercial fishing operations to be as economically efficient as possible, using the most appropriate technology to achieve the greatest net returns; and

·                    to create conditions where fishermen are able to earn significant profits from which to make a payment to the community for the right to exploit a public resource for private gain, recognising that such a payment should not reduce the profitability of fishing operations to less than their current levels.

It is apparent from these materials that the December 1989 policy statement is of the first importance as an aid to the proper understanding of both the FA Act and the FM Act and, in particular, to the interpretation of s 6 of the former and s 3 of the latter Act.

AFMA is, I think, correct when it submits that s 3(1)(c) the FM Act does not require AFMA to pursue the objective of maximising the efficiency of an individual operator in the fishery, without regard to the positions of other operators, and that the focus of the provision is instead on the fishery as a whole.  In my opinion, a reading of the "New Directions" document shows that this particular objective is directed to requiring AFMA to manage each fishery so as to bring about a situation in which the maximum aggregate profits that can be generated by the body of operators working a particular fishery, being a level of profits which will be maintainable in the long term from the resources of the particular fishery, are achieved.  As the "New Directions" document repeatedly asserts, in such a situation the objectives of sustaining the fishery resources in the long term and maximising the resource rent that the Commonwealth can exact from those working the public resources of the fishery for their own individual benefits are both realised.  A reading of the document shows, in my opinion, that the concept of economic efficiency with which it is concerned is confined to the concept which Sackville J in Adams, at 400, identified as involved in s 3(1)(c), viz, "productive efficiency in the sense of maximising output at least cost to the operators of the vessels comprising the fishing industry which exploits the resources of the SEF".

The 1989 policy statement identifies "the three overriding objectives of the management controls" outlined in it as follows:

·                    to ensure the conservation of fisheries resources and the environment which sustains those resources;

·                    to maximise economic efficiency in the exploitation of those resources; and

·                    to collect an appropriate charge from individual fishermen exploiting a community resource for private gain.

The first two are reflected in s 3(1)(b) and (c) the FM Act:  the second of these "overriding objectives" is expressed in words which have simply been copied into s 3(1)(c).  It is notable that the third "overriding objective", set out in of the policy statement and paraphrased by the Minister in the Second Reading Speech dealing with ensuring a proper return to the public from the fishermen who benefit from exploiting a public resource, is not referred to in s 3(1) the FM Act or s 6 the FA Act.  But the way in which the Minister expressed the second and third of the objectives emphasises the link between the economic efficiency sought to be achieved by the new management system and increased profitability of operators, who together comprise the industry:  in describing the third objective of the policy, he explicitly linked the achievement of the objective of ensuring a return to the community from the exploitation by fishing operators of the public resource to the creation of conditions enabling those operators to earn, in the aggregate, significant profits. The Minister said (at p 4470):

The third objective of management, that of creating conditions where the industry is able to pay a return to the community for the use of its resource, has been widely misunderstood and misrepresented.  This Government is not about to take steps which will frustrate, impede or restrict commercial initiatives.  Nor will it take actions which would reduce the valuable contribution which the fishing industry makes to the national economy.

However, the Government does accept the principle that our scarce and valuable fisheries resources should, where possible, be priced so that sensible decisions about exploitation are taken.  This is entirely consistent with our sustainable development policies.  In practice what this means is that our scarce fisheries resources will be carefully husbanded in both a biological and an economic sense so that many generations of Australians will benefit from their use.  It also means that fishermen who are given privileged access to public resources which enable them to make very large profits - super profits which exceed normal levels of profitability - should pay a share of these super profits to the community.

The fisheries policy statement made it quite clear that a community return would only be sought where new super profits were generated - mainly from restructuring existing fisheries to make them more profitable.

The Minister speaks of balancing the profit position of the industry as a whole; he does not refer to the financial position of individual operators.

The policy statement itself repeatedly asserts that realising this third objective of recovering the maximum resource rent is intimately bound up with the maximising industry or aggregate profits which will result from controlled management.  For example, it contains the following:

(a)        Management controls which maximise economic efficiency involve a lower level of fishing effort and lower costs than in an uncontrolled situation, and in virtually all cases are also consistent with the biological sustainability of the resources.

Because of the lower costs associated with the reduced effort under controlled management, the profits from exploiting fisheries resources are increased.  But fisheries resources are the property of the Australian people and it is appropriate for a charge to be imposed where private individuals gain significant benefits from the exploitation of a public resource.  (Summary, p vii)

(b)        As the policy document shows, central to achieving the objectives is the restructuring of the fishing industry.  In explaining the justification for the type of restructuring proposed, the policy statement observes:

The restructuring will considerably improve the profitability of fishing operations.  Because the community is entitled to collect an appropriate return for the private use of a public resource, the industry has to accept that appropriate charges will be introduced as its profitability increases following the restructuring.  (Summary, p xi)

(c)        Further,

There is therefore a role for government to allocate access to fisheries resources in order to ensure that these resources are not over-exploited and that they are used as efficiently as possible to maximise benefits to the industry and the nation.  (p 1)

The document explains the rationale for the adoption by the Commonwealth of the new policy directions reflected in the FA Act and FM Act in this way:

Worldwide experience has shown that unregulated fisheries generally suffer from over-capitalisation and falling productivity and, with increasing frequency, face the threat of biological collapse.

These problems arise because the lack of exclusive individual rights over the fish resources.  The essence of the problem is that the actions of individual fishermen create costs for other fishermen.  The result of behaviour which is economically rational at the individual level is unnecessary costs, excessive fishing effort and possible resource over-exploitation.  At the industry level, the result is a loss of potential profit.

Hence, what manifests itself in fisheries as a biological problem occurs because of a failure to allocate all the costs of an individual's activities to that individual.  In addition, Australia has the sovereign right to exploit, conserve and manage the fish resources of the Australian Fishing Zone.  There is therefore a role for government to allocate access to fisheries resources in order to ensure that these resources are not over-exploited and that they are used as efficiently as possible to maximise benefits to the industry and the nation.  Government also has the responsibility of ensuring that the level of exploitation is consistent with the likely demands of present and future generations of Australians.  (p 1)

It also records that:

The Government recognises that commercial fishermen as entrepreneurs aim to maximise profits.  It also recognises the propensity for fisheries to attract excess investment, resulting in over-exploitation and reduced profitability.  The Government's aim in managing fisheries is, therefore, to create conditions where the reasonable business aspirations of fishermen can be attained while safeguarding the fishery resource.  (p 3)

The document repeatedly makes the points that controls which maximise economic efficiency achieve the multiple objectives of increasing the profits of operators as a group, ie, aggregate profits, and thus the resource rent that can be extracted by the Commonwealth on behalf of the public from those who are allowed access to fishery resources for their own benefit, and also of ensuring the biological sustainability of the resource.  For example:  "The three [overriding] objectives [of the management controls proposed] … are mutually reinforcing … resource conservation and economic efficiency in fisheries management go hand in hand."  (p 2)

Another point the document repeatedly makes is that, for fisheries like the SEF which are already over-capitalised:  "The management solution which meets the biological and economic efficiency objectives invariably involves reducing fishing capacity".  (Summary p xi)  There is much discussion in the report about why the use of individual transferable quotas is an appropriate management technique for achieving a voluntary restructuring which, in turn, achieves the ecological and economic efficiency objectives.  In Section 3, "Fundamental Principles of Fisheries Management", there is reference to the Government's belief that ITQs are the "management tool which allows autonomous adjustment of fishing fleets [and which] should be the preferred management control".  Section 3.2, "Economic Aspects", of the document sets out the theoretical argument for government intervention to establish exclusive individual rights, such as ITQs, as going to achieve maximum economic efficiency in the exploitation of fisheries resources, which means increased profitability for the operators and the maximisation of the resource rent exigible from the fishery and, at the same time, the preservation of the biological sustainability of the resource.  This section hypothesises the situation in which a fisherman has exclusive use of a fishery and uses a level of effort to harvest the resource which maximises excess profits (ie, normal commercial profit plus profit available to pay resource rent):  "At this level of effort, the revenue from the catch exceeds the cost of fishing by the greatest amount, and economic efficiency is maximised."  The document then contrasts this model with one in which there is unregulated access to a fishery.  It shows how, in that situation, there is a failure of the market mechanism because a free market fails to efficiently allocate economic resources by producing a situation in which a large aggregate effort (or cost) is employed in producing a low aggregate revenue, with the result that economic resources of capital and labour are wasted, profit is drastically reduced and the capacity of industry operators to pay resource rent is, as a result, entirely dissipated.

In Section 3, the document also identifies ITQs as the management tool best suited to achieve the economic efficiency and ecological objectives:  "Ideally the most efficient fishermen should be able to expand their activity at the expense of the less efficient.  To allow this, the preferred management measure is one that allows market forces to operate.  In general, this means using individual transferable quotas …"  How this happens is explained at p 23:

Market forces distribute the [ITQs] 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.

The document also observes that:  "To maximise economic efficiency, the quota on which ITQs are based should be set at the level which maximises resource rents."  (p 23)

It is apparent from the extracts from the policy statement I have set out and from the passages from the policy statement I have summarised that when the "New Directions" document refers to maximising profits, it is concerned with the profits incurred at industry level in exploiting fisheries, not with any individual fisherman's financial situation.  It can therefore be seen that when the glossary in the policy statement defines "economic efficiency" and "the maximisation of economic efficiency" in the way it does - "a measure of how well economic inputs (capital, labour, etc) are combined to produce a given output.  Economic efficiency is maximised when inputs are combined so as to produce the required output at minimum cost" - the concept is being used in the document to mean an ongoing process for maximising the aggregate profits of the changing body of operators involved in exploiting a particular fishery over time, not for maximising the profits of any individual operator who happens to be one of the body of persons exploiting a fishery at a particular point of time.  Integral to maximising economic efficiency in this sense is a reduction in the number of operators in an over-capitalised fishery.  The inevitable results of this process are the maximisation of the resource rent exigible on behalf of the public from the body of individual operators exploiting the resource (as a result of the aggregate profit maximisation of the operators) and the sustainability of the fish resource (as a result of reduction in the number of operators in an over-capitalised fishery to the number that will use just sufficient fishing effort overall, to ensure aggregate profit maximisation).

The "New Directions" document is alert to the social and equity impacts of managing a fishery with the objective of maximising economic efficiency in the sense in which that concept is used in the document.  For example, at p 58, there is a discussion of the possible social impact of reducing the number of persons engaged in the fishing industry as a result of the proposed restructuring.  But it is apparent from the discussion that such impacts are extraneous to what is considered by the document to be involved in maximising economic efficiency in exploiting the resources of particular fisheries and those impacts are not considered so detrimental as to permit them to stand in the way of seeking to achieve that particular objective.  At p 32, there is reference, under the heading "Social Equity", to the Government's belief that, in determining "initial access to fisheries", existing operators should be treated equitably inter se.  But the Government records its view that once that has been done, once, eg, ITQs have been equitably allocated among existing operators in a particular fishery for the first time, "where one of the objectives is to promote efficient exploitation of the resource, it is inappropriate to disadvantage the more efficient operators relative to marginal operators by giving the latter preferential consideration".  I read these passages as a clear indication that there is no room for AFMA, in seeking to maximise economic efficiency in the exploitation of fisheries resources, to take into account social and equity considerations in its decision-making process.  This concept of maximisation of economic efficiency does not, I think, involve consideration of matters of relevance in welfare economics, which is concerned with trying "to reconcile the goals of efficiency and fairness".  Law and Economics, 1st ed, p 18 and cf 2nd ed, p 37; Economic Analysis of Law, 4th ed, Posner, at pp 13-16.

The material which Mr Palmer says he considered in arriving at his decision of 11 April 1996 included a draft affidavit by the same Mr Kaufmann, an experienced fisheries economist, upon whom AFMA told the Full Court in Adams it wished to rely to explain the scope of the objective in s 3(1)(c).  This draft affidavit appears to have been prepared for use by AFMA in litigation involving the Southern Shark Fishery.  But it contains a general discussion of Mr Kaufmann's understanding of how economic efficiency can be maximised in the exploitation of an over-capitalised fishery, which is to much the same effect as the discussion in the "New Directions" policy statement.  Mr Kaufmann also argues that the economic efficiency objective is concerned with the fishery as a whole, not with the position of any individual operator.  He argues that AFMA's maximum efficiency objective is aimed at controlling total fishing capacity and AFMA cannot sensibly use relative economic efficiency of individual harvesters as a means of, eg, allocating individual fishing rights between individuals within a particular fishery, the issue in the litigation in which his affidavit was prepared.  As I have explained, this too is the approach of the policy statement.  Mr Kaufmann then goes on to explain why there is a wastage of resources (labour, materials and other inputs) in the fishing industry around the world because in fisheries in which operators have what he describes as "weak fishing rights", "the race for fish" leads operators, irrespective of their individual level of efficiency or inefficiency, to bring more resources into the fishery than are required to catch the available fish.  He points out that, once allocated, ITQs provide the means by which economic inefficiencies resulting from "the race for fish" are largely eliminated:  operators who can less efficiently, ie, less profitably, use their ITQs are thereby induced to sell them to fishermen running more efficient operations and to leave the industry to the more efficient operators.  He points out the difficulties in running a system of management based on ITQs, if it were necessary to assess the efficiency of individual operators, something that would involve the burdensome task of constant reassessments of individual fishermen's operations and constant re-allocations of ITQs.  He speaks of how the need to focus on the individual operation and the accompanying continuous re-allocation of fishing rights through bureaucratic determination of the relative economic efficiency of individual harvesters would greatly weaken the value of those rights, strong individual fishing rights being the sine qua non of an efficiently managed fishery.

What he says in these respects is entirely consistent with the policy statement's approach to the maximisation of economic efficiency.  As the policy statement itself points out, a highly efficient individual operation does nothing to ensure maximising economic efficiency in the exploitation of an entire fishery if there is no restriction on the catches each operator, who may be individually highly efficient or inefficient, is permitted to take.

There is, in my opinion, no support in the policy statement for arguing that s 3(1)(c) requires AFMA, in making relevant decisions, to do so on the basis of the relative efficiency of individual operators, the argument that Mr Kaufmann was concerned to destroy in the context of a case challenging the way AFMA allocated ITQs.  AFMA is required to direct its attentions to maximising economic efficiency in the exploitation of the resources of the particular fishery overall.  This, for the reasons given, in my opinion, involves acting so as to facilitate increasing the aggregate profitability of the whole body of operators in a particular fishery.

It is with productive efficiency, in the sense described by Sackville J in Adams, that s 3(1)(c) is concerned.  Given that the setting of TACs for each commercial species is an integral part of the management system AFMA is implementing, compliance by it with s 3(1)(c) requires AFMA to so act as to encourage a situation in which the least costly combination of inputs comprising the total fishing effort employed in the fishery that is necessary to harvest the various TACs is arrived at.  In my opinion, this means that it is out of place for AFMA to have regard to the efficiency of an individual fisherman's operation relative to that of other fishermen or to social or equity considerations, in taking any action which will have an impact on whether economic efficiency in the exploitation of the resources of a particular fishery is likely to be maximised or hindered by that action.  It is clear that the duty to pursue the efficiency objective does not require AFMA to protect or enhance the financial position of each operator:  the policy statement shows that this statutory objective is to be achieved in the course of restructuring  the SEF, through the use of ITQs, to encourage the voluntary departure from the fishery of less profitable operators.  AFMA will act to maximise economic efficiency in the exploitation of the resources of a fishery not by focusing on each of the individual operations in that fishery at a particular point in time and acting to increase the profits of each, but rather by acting to achieve a situation in which the aggregate of fishing effort (ie costs) equates to that just sufficient to harvest the aggregate of TACs set for the SEF, ie, the situation in which the aggregate of TACs for that fishery is harvested at minimum aggregate cost and thus maximum aggregate profit to the entire body of operators in the fishery.

AFMA management, in the briefing note it prepared for the AFMA board meeting of 29 and 30 April 1993, was correct in its understanding of s 3(1)(c) when it said:

Objective (c) requires AFMA to manage fisheries so as to maximise economic efficiency.  Put more simply this means managing a fishery so as to maximise the profit generated.  As pointed out earlier, the idea of managing fisheries to maximise the value of production (assuming this is equivalent to MSY [maximum sustainable yield]) ignores the costs associated with harvesting.

In any economic activity the important objective is not to maximise total value but rather to maximise profit [ie total profit] …

Attachment 'A' (from the Government's fisheries policy paper 'New Directions for Commonwealth Fisheries Management in the 1990s') provides the standard theoretical explanation of the economists' concept of fisheries management.  The significant point here is that profit (resource rent) is maximised at a level of harvesting below, and in many fisheries probably significantly below, MSY.

Accountability - s 3(1)(d)

Bannister Quest submits that, in the context of the FM Act, the "accountability" objective in s 3(1)(d) requires only that AFMA gives an account of its policies and decisions to the industry and the Australian community, only that it explain to the industry and to the community its management of Australia's fishery resources.  Bannister Quest contends this objective does not require AFMA to take into account, in the sense of give weight to, the concerns or views or representations made to it by the industry or community bodies or spokesmen when making decisions in the course of performing its functions.  Bannister Quest says that, all other arguments aside, it was AFMA's efforts to accommodate the views of SETMAC which led it into error, in the belief that it was justified in doing this by the "accountability" objective.

In response, AFMA contends that its "accountability" objective under s 3(1)(d), in requiring it to explain and justify its actions to the industry, as well as to the community generally, imposes on AFMA the obligation to listen to and take into account the views of industry in deciding upon action to be taken, including the formulation by it of appropriate policies.  AFMA contends that it is also consistent with the need to make difficult decisions with direct financial implications for members that AFMA should consider the views of industry, particularly where AFMA will depend on the co-operation and goodwill of industry members to make administration of management controls effective.  AFMA also relies on its statutory duties of consultation with the industry as justifying the extent to which it gave weight to SETMAC's views in making the decisions complained of.

Given the vagueness of the expression "accountable" in s 3(1)(d), it is permissible to have regard to the "New Directions" policy statement and the Minister's Parliamentary statement in seeking the intended meaning of this provision.  In Section 11 of the policy document, in the part commencing at 11.3, three possible models for the new agency then proposed to administer fisheries management are discussed.  The Government's conclusion as a result of this discussion (at 11.10) is that a statutory authority is more likely to be able to meet the administrative objectives of the new management system than a government department.  Hence the decision to establish AFMA.  In Section 11.8, under the heading "Public Accountability", it is said:

Commonwealth fisheries management in the 1990s will need to address some very complex and difficult issues …

All of these issues require difficult decisions to be made by the Commonwealth's fisheries management organisation and all the decisions will have direct financial implications for members of the industry.  The question is which form of fisheries administration provides the most appropriate combination of checks and balances to provide the incentives to make these difficult decisions.

Each of the three options [for fisheries management] considered would be accountable to the Parliament through the Minister. …

The fisheries management organisation should also be accountable to the general public, including the fishing industry.  This is because the fisheries being managed are a public resource, directly affected by management decisions, and it is the fishing industry which provides a significant proportion of management funds …

A statutory authority undertaking fisheries management would be accountable in a way similar to statutory marketing authorities, although there would be important differences.  In particular, it would not be appropriate for the fisheries management authority to be subject to industry direction, as the industry's objectives may well be in conflict with the Government's overall management objectives.  Instead, the authority would be required to explain the basis for its management actions, to justify the expenditure which it had undertaken, and to report to the public and the industry on the extent to which it had achieved its management objectives.  (Emphasis added)

And in Section 12, "Outline of the AFMA":

AFMA will have a statutory responsibility to establish and develop management advisory committees in order to progressively enhance their role in management.  The AFMA board will be accountable for the management of the fisheries, and so will need to monitor the decisions of the management advisory committees to be confident that they are acting responsibly.  The board will devolve responsibilities to a management advisory committee only if it judges this to be both feasible and cost effective.

...

AFMA will be accountable to the fishing industry and the general public through its annual report and the regular public meetings it will hold in fishing ports of significance to Commonwealth fisheries.  It will have to explain and justify its actions, but it will not be subject to direction by industry (or other) special interest groups.  (Emphasis added)

In this regard, it is noteworthy that the "New Directions" document also recorded that SETMAC's effectiveness was said to be limited, "largely because of the unwillingness of various groups to compromise on their sectional interests and to seek solutions that would be in the best long term interests of the fishery as a whole".  (p 48)

The summary in the "New Directions" paper also states that (Summary, p xiv):

The principal advantage of the new Authority is that it will enable the Government to effect its responsibilities in a flexible, open and less bureaucratic way.  The Authority will also allow greater community and industry participation in drawing up the best management programs for running Commonwealth fisheries.

The board of the Authority will be expertise based - and will not be there to represent the interests of the fishing industry.  Rather the interests of the industry will be represented by the management advisory committees, which will report to the board of the new Authority, and by the Fishing Industry Policy Council, which will report to the Minister.

...

The new Authority will maintain strong links with the industry.  It will have responsibility to establish and develop management advisory committees and devolve greater responsibilities to them if it judges this to be feasible and cost effective.  However, it is the board of the Authority which will remain ultimately accountable for achieving its management objectives.  (Emphasis added)

The possibility of industry control of AFMA was a concern with respect to the Management and Administration Bills raised by the Senate Committee.  The Minister stated (Hansard, House of Representatives, 14 October 1991, pp 1833-1834 and 1841):

I want to restate the position of this Government in relation to that.  The Australian Fisheries Management Authority will have the task of enforcing regulations which will prevent fisheries from being overexploited or over-capitalised.  At times, the collective interests of all the fishermen in the fishery and of the broader community may be at odds with the self-interest of individual fishermen.  Since the Authority itself will be a government body undertaking the government's regulatory role in fisheries management, it would, in our view, be totally inappropriate for the industry to have the dominant influence…

I have already summarised above AFMA's statutory duties to consult and co-operate with the industry, public authorities, interested persons and members of the public in relation to its activities.  There are many examples where legislation has imposed a duty on administrative agencies and on persons holding particular offices to consult, before acting, with persons and organisations likely to be affected by decisions proposed to be taken by them.  Such a duty to consult will ordinarily involve more than the decision-maker telling interested parties what it is going to do; it will usually require the decision-maker to give information to those others and an opportunity to them to respond.  The duty will also require the decision-maker to consider the responses and to take them into account, to the extent it considers appropriate, in arriving at the ultimate decision.  See Dixon v Roy (1996) 5 BPR 11655 at 11658 and the authorities there cited and Re Aley; Ex parte Sweeney (1996) 63 FCR 294 at 302.  This duty to consult "may involve one action of inquiry and one of response, but just as easily can involve an ongoing dialogue over a protracted period":  New Zealand Fishing Industry Association Inc v Minister of Agriculture and Fisheries (1988) 1 NZLR 544 at 551.

There is no reason to doubt that AFMA's wide ranging duties to consult with industry bodies before taking action can entitle AFMA to give weight, in arriving at particular decisions, to the views expressed by industry organisations such as SETMAC in the course of the consultation process.  But the consultation AFMA is required to undertake is for the purpose of assisting AFMA to achieve its statutory objectives.  It is those objectives which AFMA has a mandatory duty to pursue in the performance of its functions:  when information and opinions are conveyed to AFMA by industry representatives in the consultation process which AFMA considers have weight, it can only properly allow those considerations to affect the decisions it arrives at and, in particular, important decisions of the kind here in question, in so far as those views do not conflict with this mandatory duty.  Section 59 the FA Act specifically says that SETMAC has to act in accordance with policies determined by and directions given by AFMA; there is no provision telling AFMA it must act in accordance with what SETMAC wants.  To construe the provisions imposing duties of consultation on AFMA with industry representatives in a way which would permit AFMA to act contrary to its statutory objectives would conflict with considerations fundamental to the object of the legislation that are discussed in the "New Directions" policy statement and which recognise that the proper management provided for by the legislation and which AFMA is charged with implementing may require ignoring strongly expressed industry views.

In my view, the Government's policy paper and the Minister's comments, taken together with s 3 the FM Act and ss 7, 9 and 59 the FA Act, demonstrate that AFMA can consult, consider, and take into account various views, including those of SETMAC, but at the end of the day, it has to act in accordance with its statutory objectives.  It can notice what SETMAC says; but if SETMAC's views are not consistent with AFMA's objectives, it cannot give any decisional effect to SETMAC's views.  If it does, its decision will be vitiated on the grounds of unlawfulness.  I therefore agree with Bannister Quest's submission as to the proper construction of s 3(1)(d) the FM Act.

Ecologically Sustainable Development - s 3(1)(b)

Mr Palmer, in his decision, placed great emphasis on this particular objective.  It is therefore convenient to identify now the proper construction of this provision.

What the legislature sought to achieve by charging AFMA with the duty to pursue this particular objective emerges quite clearly from the Minister's Second Reading Speech and the "New Directions" policy statement.  I have set out above portion of the Minister's speech in which he stated that the legislation would give effect "to the three objectives of fisheries management identified in the policy statement", the first of which was: 

·                    to ensure that fisheries resources are not over-exploited and that any exploitation is at a level which can be sustained while maintaining the surrounding environment.

As I have also mentioned, the "New Directions" policy statement identifies the first of the three "overriding objectives" to which it refers as:

To ensure the conservation of fisheries resources and the environment which sustains those resources.

The Minister's paraphrase of this objective reflects its limited scope.  The concern is limited to ensuring the biological sustainability of fish stocks and the preservation of the marine environment upon which those fish stocks depend.  The Minister made the following further comment on the first objective:

The first of these objectives concerns the conservation of the resource, and more generally, the conservation of the marine environment.  The Government regards the protection of fisheries from over-exploitation as a matter of the utmost importance.  …  Put simply, the Government believes it has a duty to the community to ensure that the nation's resources are protected and preserved so that future generations can continue to benefit from them.

A reading of the policy statement shows that statutory objective 3(1)(b) is confined to achieving these same limited aims.  See, eg, the references in the Summary to the objectives being concerned with creating a stable biological environment, to the first of the three objectives being to "sustain fish stocks", to it being imperative "that the Government ensures the sustainability of existing and developing fisheries", to references to the first objective being "the biological" objective and to the following statement:

Environmental Protection

The marine environment is a valuable resource and the Government fully accepts its responsibility to conserve and protect that environment.

A good part of the protection of the environment will be achieved if the management objectives outlined in this statement are achieved.  These objectives will ensure biological sustainability of the resource.  (Summary, p xiii)

In the body of the policy statement, there are many similar references.  For example, in the section dealing with "Fundamental Principles of Fisheries Management", the first of the "key principles and management methods" summarised is:

Fisheries are renewable biological resources which, if properly managed, can provide a continuing flow of product and income for an indefinite period.

An understanding of the size, distribution and population dynamics of the species exploited is essential for effective management of any fishery.  (p 15)

The statement goes on, at p 16:

Worldwide experience has demonstrated that unregulated fishing generally results in two problems:

·                    over-fishing, which reduces future fish production and which, if allowed to continue, reduces fish stocks to levels from which recovery is not possible; and

·                    over-capitalisation (significantly more capital and labour employed in harvesting fish stocks than are needed to do so efficiently), which wastes valuable resources.

The problems occur because of the lack of appropriate property rights to fisheries resources.  This leads to economically inefficient exploitation.  Unless action is taken, fisheries invariably become over-capitalised and, with increasing frequency, are biologically over-exploited.

To secure the long term viability of commercial fisheries management controls are needed.  The objectives of these controls should be:

·                    to ensure the biological sustainability of the resource - that is, to ensure that current exploitation of the resource and human activities affecting the environment which sustains the resource do not endanger the future productivity of the resource;

·                    to maximise economic efficiency in the exploitation of the resource; and

·                    to ensure that the community receives an appropriate return from individual fishermen exploiting a community resource for private gain.

In the section of the statement dealing with "Fisheries and the Environment", in the summary headed "key interactions", the first element is:

Fisheries are part of a complex marine ecosystem and the Government recognises its responsibilities for conserving and protecting the marine environment.

Section 3(1)(b), on its true construction, requires AFMA, in pursuing this objective in the performance of its functions, to limit its consideration to matters that relate to two things, ensuring the biological sustainability of fish stocks and ensuring the protection of the marine environment upon which those fish resources depend.

AFMA's Decision of 27 October 1994 in Respect of Access by Large Vessels to the SEF

AFMA's Board minutes record the decision in this way:  "…  The Board agreed to retain the existing 32 metre limit on vessels at this time, other than in cases where special circumstances apply.  Individual operators can seek exemption to the vessel size restrictions, and these will be considered on their merits on a case by case basis by AFMA management following receipt of comment from SETMAC …"

I have already noted SETMAC's enduring opposition to any relaxation of vessel length restrictions for the SEF.  Continuing themes of SETMAC's opposition, recorded at a number of meetings of SETMAC between November 1992 and June 1993, the outcomes of which were conveyed to the AFMA Board, were concerns about the impact of large vessels on existing operators in an industry in decline, fears that if large vessels were allowed into the southern remote zone of the SEF (in respect of which TACs had not been established for any species) that would unfairly advantage them over existing operators when TACs and ITQs were established for that zone and also when adjustments were made by AFMA to existing ITQs set with respect to other zones in the fishery.  The records of SETMAC meetings also note concerns that admitting large vessels to the fishery might disadvantage current operators whose investment decisions had been made on the basis of the existing management provisions which excluded large vessels from the SEF.  These concerns all reflect an understandable desire to preserve the positions of existing operators, something foreign to the objectives AFMA was required to pursue by s 3(1)(b), (c) and (d) the FM Act, and in implementing the industry restructure it was set up to oversee and which is discussed at length in the "New Directions" policy statement.  SETMAC repeatedly said that the restrictions on large vessels should be maintained until the new management plan was finalised.

The AFMA Board, at its meeting on 24 and 25 June 1993, responded to SETMAC's opposition to large vessels by telling SETMAC that this issue needed to be more widely canvassed prior to any decision being taken.  In September 1993, it was discussed in the information paper prepared by AFMA management in consultation with SETMAC that dealt with the proposed new management plan.  The information paper suggests that SETMAC had modified its previous position of total opposition to large vessels:  it proposed that the boat length restriction of 32 metres would continue to apply in the fishery for the first 12 months of the new management plan, pending further review by AFMA in consultation with SETMAC.  The information paper also recorded that, pending such review, persons wishing to introduce large vessels into the SEF would have their request "considered by SETMAC and determined by AFMA" on the merits of each request and having regard to any relevant AFMA policy.  At the SETMAC meeting of 22 November 1993, an Austral Fisheries representative spoke about its application for a "developmental" permit for an 86 metre vessel to operate in the southern remote zone of the SEF.  A narrow majority of SETMAC members agreed to support this application and also proposed that the restrictions on large vessels should be reviewed in the development of the proposed new management plan for the SEF.

On 4 December 1993, SETFIA wrote to AFMA to complain that SETFIA's strong opposition to the introduction of large vessels was not adequately considered at SETMAC's November meeting.  SETFIA argued that allowing access by large vessels into the southern remote zone of the SEF would erode the rights of existing operators:  there were no quotas for species in the southern remote zone, even in relation to species which were the subject of a quota in other regions of the SEF (eg, for orange roughy).  SETFIA's position was that fish in this zone should be allocated to existing quota holders in the same way that ITQs were set for them in other sectors of the SEF and not left to be harvested by larger vessels.

An important meeting of the AFMA Board took place on 9 December 1993.  AFMA advised the industry of the decision then made with respect to large vessels by a circular to all SEF operators on 10 December 1993.  In almost identical terms,  AFMA's Chairman, Mr McColl, formally informed SETMAC of the outcome of this meeting in his letter to it of 2 March 1994.  It is not clear why this was not sent until long after the circular to SEF operators, although Mr McColl said he would have orally informed SETMAC's Chairman of the 9 December 1993 decision immediately it was made.  It states:

The Board considered the matter of vessel length restrictions at its meeting on 9 December 1993 and decided to proceed along two parallel paths:

(a)       The Board endorsed the concept that the Remote Zone of the fishery is an integral part of the SEF but considered the current length restrictions an unnecessary encumbrance on developmental fishing in areas only lightly fished.  The Board approved the use of vessels larger than 32 metres to operate in waters south of 46ºS, subject to certain conditions.  In order to prevent quota from being drawn from more traditional sectors of the fishery (particularly by-catch species) it was agreed to exempt such operations from quota requirements, noting that orange roughy taken in the area would not be subject to quota in any event …

(b)       With regard to length restrictions generally, the Board holds strongly to the view that all possible steps should be taken to allow industry to maximise the benefits identified with the introduction of a TAC/ITQ system of management.  Accordingly, it is intended to remove length restrictions from the SEF after 31 December 1994 subject to consideration of any advice from SETMAC on reasons as to why this should not proceed, and on terms and conditions which may need to be applied in relation to a relaxation of restrictions on vessel length.

I should advise that the Board could not agree to put in place constraints on vessel size which were entirely unreasonable from a commercial point of view …

…

It is important that the Board take all possible steps to allow industry to maximise the benefits associated with the ITQ/TAC system and this includes the removal of vessel length restrictions.  It is also important that AFMA provide industry with a precise boat length policy as early as is possible in 1994.  However, before proceeding further, the Board would welcome any advice SETMAC considers relevant to this policy.  I would be pleased if you would consider the matter in an objective manner … and looking to the long term future of the fishery.

The first part of the decision (par (a)) dealt with the short term arrangements for the SEF, ie, for 1994.  In the second part of the decision (par (b)), however, AFMA gave notice of its intention to permanently remove vessel size restrictions throughout the entire SEF from the start of 1995.

When Mr McColl told the SETMAC special meeting in Hobart on 18 March 1994, convened for the specific purpose of discussing AFMA's decision of 9 December 1993, that the Board was of the view that restrictions on vessel length should be lifted from 1 January 1995 unless SETMAC could argue successfully against that, he also told SETMAC it would need to have regard to the three statutory objectives which AFMA was required, by s 3(1)(a), (b) and (c) the FM Act, to pursue, in presenting its arguments, the same advice he had already given to SETMAC in his letter of 2 March 1994.  The AFMA Board clearly enough considered that its 9 December decision with respect to large vessels was in conformity with its duty to pursue these three objectives.  It is apparent from what Mr McColl told SETMAC at the Hobart meeting that the Board considered continued constraints on vessel size were not compatible with the Board's duty under s 3 the FM Act to pursue the cost effective administration, the sustainable resource and the economic efficiency objectives, ie, those in s 3(1)(a), (b) and (c).  When AFMA's Board, in the course of advising the industry of its 9 December decision, expressed the view that all possible steps should be taken to allow the industry to maximise the benefits of the new TAC/ITQ system of management, it was, I think, referring to the benefits to the fishing industry and the benefits to the public interest that were expected to flow from realisation by that system of management of the objectives in s 3(1)(b) and (c):  I have referred to the extensive discussion in the 1989 "New Directions" policy statement about how the TAC/ITQ system of management was expected to achieve industry restructuring and the three "overriding objectives" that are incorporated in those two paragraphs of s 3(1), all to the benefit of the industry and the public interest.

The decision reached by the Board on 9 December was consistent with advice received from AFMA management which was tabled at that meeting.  It was a considered decision by the Board taken despite strong opposition from the industry.  Mr Stevens acknowledged that the decision was a significant one because of the feeling in the industry about it and that, when AFMA told the industry in its 10 December 1993 circular and SETMAC in the letter of 2 March 1994 that "the Board holds strongly to the view" there stated, that reflected the intention of the Board to stand firm in its decision to give large vessels unrestricted access to the SEF from the end of 1994, despite the industry opposition.

AFMA submits that the result of the 9 December meeting was only a proposal to vary the current policy and not a firm policy.  In my view, that submission flies in the face of the clear terms of AFMA's minuted decision of 9 December 1993 and the correspondence sent by AFMA to SETMAC on 2 and 30 March 1994; it is inconsistent with what Mr McColl told the SETMAC special meeting of 18 March 1994 and with the significance of the 9 December 1993 decision, as described in oral evidence by the various AFMA officers.  No doubt because of the sensitivity of the decision it took on 9 December 1993, the Board invited SETMAC to attempt to change the Board's mind.  But the Board's decision of 9 December 1993 cannot be characterised as a tentative one.

SETMAC resolved at its Hobart special meeting in March 1994 that large vessels should be permitted access to the southern remote zone of the SEF after 31 December 1994 on certain conditions, but maintained its resistance to any other relaxation of the vessel size restriction.  That zone, to the south of Tasmania, was not fished to any great extent by most of the existing operators in the SEF.  Through 1994, SETMAC advanced various reasons for its continuing opposition to large vessels, most of which did not touch on AFMA's statutory objectives, despite AFMA's insistence that it have regard to them.  It appears, eg, from SETMAC's minutes of the Hobart special meeting that it was upon what are there described as "sociological and emotional/political implications involved in removing restrictions at this time" that SETMAC's recommendation to AFMA against a general relaxation of the restrictions was based.  The minutes mention the "genuine fear and concern within industry" that large vessels may affect the livelihoods of other fishermen and identify a "major issue" raised by AFMA's decision to remove restrictions on large vessels as that of "ownership" of the resources of the SEF:  existing operators should not be disadvantaged in respect of quotas for fish in the southern remote zone when quotas were ultimately set nor with respect to the allocation of fish under existing quotas already in place for other zones of the SEF.  The minutes record that SETMAC "considered larger vessels should not be permitted access to the established fishery until such time as a set of conditions could be developed which would enable these vessels to be introduced with a minimum of disruption to the rest of the fishery".  These are typical of the considerations SETMAC urged on AFMA from time to time through much of 1994 in relation to the "large vessel" issue.

The "political implications" referred to appear to be the threat by Tasmania and Victoria that they would abandon the proposed Offshore Constitutional Settlement (OCS) arrangements for the SEF, if large vessels were allowed into the inshore fishery.  The OCS is a framework within which the Commonwealth and State governments can agree upon a single management regime over an entire fishery, even though it comprises waters partly within Commonwealth and partly within State jurisdiction.  The OCS was designed to provide a more effective management structure for Australian fisheries than had previously existed under the division of responsibility for fisheries between the Commonwealth and the States established by the Constitution.

At various times, however, SETMAC acknowledged the lack of substance in a number of its concerns that did relate to the statutory objectives.  For example, at the Hobart special meeting, SETMAC concluded that there was no evidence to support the proposition that larger vessels contribute to a greater extent than smaller vessels to seabed degradation and that any potential for detrimentally affecting the sustainability of fish resources due to the increased fishing effort by larger vessels was only relevant to non-quota species, ie, those on which there was no presently identified pressure.

In May 1994, ie, well after the Hobart meeting, AFMA was still committed to removing restrictions.  It issued its second information paper on 6 May 1994.  It described this as setting out its proposed approach to the future management of the SEF and said that it had been developed in conjunction with SETMAC.  The paper noted that "the statements in this paper are not a final position (unless specifically noted as such) but reflect what is proposed as the basis for the draft Management Plan, which will be released for formal public submissions later in 1994".  The section of this paper dealing with "length of boats" sets out the conditions on which boats in excess of 32 metres length would be allowed access to the southern remote zone of the SEF from the date of the paper to 1 January 1995 and thereafter; these conditions were essentially those recommended by SETMAC at the Hobart meeting.  The paper went on to deal with access to the SEF generally from 1 January 1995, stating:

SETMAC made no recommendations regarding boats in excess of 32 metres length for 1995 and beyond (except for the southern Remote Zone).  In the absence of any clear direction from SETMAC, AFMA Management's proposal is to allow boats in excess of 32 metres length to within 3 nautical miles of the coast or other land mass throughout the SEF.

AFMA cannot have then regarded SETMAC's continued general opposition to large vessels as answering its invitation to explain how AFMA's intention to lift restrictions on large vessels from 1995 conflicted with the statutory objectives AFMA was required to pursue.

However, in the face of AFMA's determination to lift restrictions on large vessels throughout the SEF from the end of 1994, SETMAC, which was still opposed to their entry into the SEF, changed its tactics.  At its meeting of 14 and 15 July 1994, SETMAC recorded that:  "While agreeing that such vessels could be allowed into some areas of the fishery, members considered it was important that conditions be developed detailing the areas in which the vessels would be permitted and any species such vessels would be excluded from taking."  One of the conditions SETMAC proposed was that long vessels should not be permitted to fish anywhere in the 300 fathom line, ie, in waters not fished by many of the existing smaller operators; another reflected one of SETMAC's "equity" concerns already mentioned and was as follows:  "to protect the rights of existing operators in the SEF, access to non-quota species be limited to one tonne of non-quota species to every tonne of quota species held".  At its meeting of 4 August 1994, at which it considered these SETMAC recommendations, AFMA "noted that SETMAC is developing conditions for access to the SEF by vessels in excess of 32 metres", which would be circulated to industry prior to a recommendation going to the AFMA Board after the October 1994 SETMAC meeting.  But in correspondence with Austral Fisheries, one of the companies seeking access to the fishery for large vessels, AFMA's Managing Director, on 26 August 1994, repeated AFMA's view that, "in the absence of any compelling reasons to restrict large boats, boats greater than 32 metres in length should be permitted to operate throughout the SEF to within 3 nautical miles of baselines", while recording AFMA's intention, nevertheless, to consider any submissions from SETMAC as to there being circumstances in which it would be appropriate to exclude large boats from the SEF.

On 30 August 1994, SETMAC sent to all SEF operators a circular dealing with AFMA's intention to remove vessel length restrictions after 31 December 1994 "subject to consideration of any advice from SETMAC on reasons as to why this should not proceed"; it called for industry comment.  In the circular, SETMAC recorded AFMA's requirement that SETMAC advice would be considered in the context of the three major objectives of sustainable use of the resource, maximising economic returns and efficient management practices, ie, the s 3(1)(b), (c) and (a) objectives; but it also referred to the industry's view "that the social and political implications are also important and must be considered".  The "concerns of industry" section of the circular lists the following:

·                    although industry should be allowed to maximise the benefits of the ITQ regime, the SEF was only partly under that regime of output controls; over 80 species were still outside the quota system; vessel length restrictions were seen as an input method of controlling fishing effort on non-quota species and the likely impact of large vessels on such species was unknown;

·                    lifting the restrictions might transfer world-wide fishing over capacity to the exploitation of non-quota species in domestic fishery;

·                    state governments were concerned about access of large vessels "to waters inside three nautical miles" (although AFMA supported the exclusion of large vessels from these waters on implementation of OCS);

·                    the possibility of gear conflict between small and large vessels, in certain circumstances;

·                    visual impact of large vessels in inshore grounds;

·                    adverse effect on small scale operators in inshore areas of the SEF and small coastal communities dependent on these operations need to be considered "from a socio-economic and political view";

·                    the possibility that where non-quota species were targeted by large vessels, some quota species taken as by-catch might be dumped, if the vessel did not have sufficient quota;

·                    the possibility of seabed degradation due to increased size/weight of fishing gear;

·                    non-quota fish taken in large quantities by large vessels might be dumped on market, depressing prices, to disadvantage of smaller operators.

Some relate to the statutory objectives but some, eg, the fifth and sixth items, do not.

Save for a response from Bannister Quest and another long vessel operator, industry reaction to SETMAC's circular was uniformly opposed to any relaxation of the restrictions on long vessels, as were the responses from a number of Shire Councils and business associations.  The objections related to the uncertainty of the environmental impact of larger vessels (both on fish stocks and on habitat), fears that allowing unrestricted access of large vessels would exacerbate the current problems in the SEF caused by over-capacity and concerns about socio-economic disruption to smaller operators and the local communities which depended on them.  SETMAC, at its meeting of 11 October 1994, was unable to find a compromise to suit both the clear majority of current operators and the smaller number of proponents of larger vessels; it decided to meet as a working group on 20 October 1994 to further develop SETMAC's position, prior to the AFMA board meeting of 27 October.  Mr Rohan, the AFMA Board member who attended this working group meeting, said at the outset that AFMA had indicated its intention to remove restrictions on long vessels with the aim of capturing the benefits of quota implementation; he emphasised that SETMAC needed to consider the issue in the context of the three major statutory objectives already referred to; he also said that AFMA "had indicated a preferred position on principles, but recognises the MAC has specialist knowledge and is not trying to alienate the MAC".  The minutes of the meeting record the following points made by Mr Rohan in stating his final position:

·                    task [for SETMAC] is to justify not removing restrictions

·                    social engineering to keep restrictions in place

·                    damage to the bottom is a consequence of fishing, the problem is not addressed by keeping larger vessels out of the fishery

·                    protection of non-quota species is not isolated to larger vessels

·                    no rational reason for keeping the restriction in place

·                    there are however emotional and political reasons which are very real and have to be recognised

·                    concerned that issues such as OCS arrangements may be destabilised with detrimental impact on the implementation of the new management plan

·                    MAC not responsible for safety concerns, skippers' decision to go to sea in existing weather conditions

·                    on rational grounds, would support removal of restrictions; however, in recognition of political and emotional grounds, would listen to persuasion; not sure retreating on this issue would bring peace with the non-trawl sector, and that should not be the major motivation, more concerned with the effect it would have on the State Governments and subsequently on OCS arrangements.

Dr Reichelt, the scientific representative on SETMAC, agreed with Mr Rohan's rejection of concerns that large vessels might cause seabed degradation and damage to non-quota species stocks that would not otherwise occur.  He concluded:

·                    difference is in the political arena, where the problem is one of visual impact and instability in the existing fisheries, where the impact is high for larger vessels and medium to high for existing fleet

·                    the MAC and AFMA have to take into account the political concerns and should consider the impact on the fresh fish market.

SETMAC recorded its three main concerns as: (1) potential increase in effort on non-quota and by-catch of quota species; (2) unknown impact of larger vessels on fish behaviour and the marine ecosystems; (3) political, socio-economic and emotive concerns.  The opinions of Mr Rohan and Dr Reichelt that large vessels did not present threats of environmental or ecological harm to the SEF did not prevent SETMAC reversing the position it had adopted on these issues at the Hobart special meeting.  It recorded its final position:

The MAC noted the Board's view that all possible steps should be taken to allow industry to maximise the benefits identified with the introduction of a TAC/ITQ system of management.  However, the MAC also noted that the fishery is still managed partly by a quota system and partly by input measures.  Given the considerable concerns that exist both within the fishery and in the wider community regarding the possible adverse impact of removal of restrictions, the MAC considered they should remain until the management plan is implemented and jurisdiction resolved.

The MAC considered that the Board had arrived at its position of setting a target date for the removal of vessel length restrictions in anticipation of the management plan being in place by the end of 1994.  That has not transpired and the MAC is unwilling to support any alterations to the present restrictions until the management plan is in place.  The present political climate is such that the process of formulating the management plan and achieving OCS agreements may be frustrated by the removal of restrictions at this time.

At earlier meetings in 1994, SETMAC had, by majority decision, favoured some relaxation of the restriction on vessels longer than 32 metres operating in the SEF, eg, at its July meeting it accepted that AFMA would lift restrictions at the end of 1994 and proposed subjecting long vessels to conditions, to be developed.  But the ultimate position adopted by SETMAC following the working group meeting of 20 October 1994 was one of hardline opposition to any relaxation of the restriction; it resolved, firstly, that the question of unrestricted entry of vessels in excess of 32 metres into the SEF (other than those vessels currently holding exemptions) should not be further addressed until the formal management plan and OCS arrangements have been implemented and, secondly, as to currently exempted large vessels, while they should be allowed to continue their operations in the SEF, if such a vessel left the fishery, it was not to be replaced by another large vessel.

Mr Nicholls, of Bannister Quest, who had attended the working group meeting with another proponent of long vessels, the following day, 21 October, wrote to Mr Stevens, of AFMA, saying that he was "appalled at the result":

SETMAC decided that [large] vessels could not be permitted to enter the SEF because it would upset too many people, not for any defensible benefit to the fishery or industry and certainly not because of SETMAC's three goals of "sustainability", "economic efficiency" and "maximising economic returns".  … hence AFMA should be advised to make a decision which will not upset the many vested interests and lobby groups which exist.

… I urge the AFMA board to stand firm in its resolution to permit the entry of such vessels …

When the AFMA Board met on 27 October, it did not have the minutes of SETMAC's meeting before it.  However, it had that morning received a report from SETMAC on its 20 October meeting, which summarised the detailed minutes, and it must have been fully aware of SETMAC's concerns about arguments against admitting large vessels to the SEF from discussions between SETMAC officials and Board members through 1994 and from the SETMAC minutes of earlier meetings, routinely sent to it.

The policy ultimately adopted by the Board on 27 October 1994, as recorded in the minutes, was as follows:

In considering SETMAC's recommendation that the size restriction of 32 metres remain in place, at least for the time being, the Board considered that no convincing case for retaining size restrictions had been made in terms of biological sustainability, economic efficiency or cost effective administration.

However, after careful consideration, the Board agreed to retain the existing 32 metre limit on vessels at this time, other than in cases where special circumstances apply.  Individual operators can seek exemption to the vessel size restrictions, and these will be considered on their merits on a case by case basis by AFMA management following receipt of comment from SETMAC.  Vessels currently operating under exemptions in the SEF which leave the fishery and wish to return will  need to re-apply under the same conditions which apply to new vessels.

Mr Stevens, AFMA's Managing Director, agreed there was a significant change in AFMA's position on large vessels between 9 December 1993 and 27 October 1994.  Mr Palmer described the Board as having a "change of heart" during 1994, after receiving and considering advice from SETMAC.

AFMA made its decision on 9 December 1993 to lift restrictions on large vessels in the SEF, which it then regarded as consistent with its duty to pursue the biological sustainability, economic efficiency and cost effective administration objectives and which it also considered would aid in realising the benefits of the TAC/ITQ system of fisheries management that it was in the process of implementing.  On 27 October 1994, it is plain from the minutes that the AFMA Board considered each of these same three statutory objectives in the context of determining whether SETMAC had raised any sound arguments that lifting restrictions on large vessels would, contrary to the Board's considered view in December 1993, in fact conflict with any of these objectives.  It is also plain that the Board concluded that SETMAC did not have any such arguments.  Mr Stevens confirmed that AFMA management did not give the Board any information or advice between 9 December 1993 and 27 October 1994 that could account for AFMA's significant change in position between those two dates.  The minutes, in my opinion, clearly record that AFMA's Board, at this meeting of 27 October 1994, remained of the opinion that the lifting of restrictions on large vessels was in conformity with its duty to pursue these three statutory objectives.  Yet it reversed its position.

The minutes do not reveal just what factors were the subject of the Board's "careful consideration" which nevertheless led it to depart from the position it had adopted in December 1993.  Mr McColl, AFMA's Chairman, and Mr Stevens, in affidavits filed in these proceedings, said that the Board made its 27 October 1994 decision on the basis of conclusions then reached that the lifting of restrictions on large vessels would hinder AFMA's pursuit of the three statutory objectives I have referred to.

Mr Stevens says that the Board considered that, if restrictions were not maintained on long vessels, there was "the potential for a major expansion in the harvest of non-quota species" and that such a situation "could compromise AFMA's pursuit of its ESD objective", ie, that in s 3(1)(b).  Mr McColl made the same suggestion.  Yet this very matter was the first of SETMAC's three concerns set out in its short report to the AFMA Board of its 20 October meeting on which AFMA Board, in its minute, said SETMAC had failed to make out a convincing case.

Mr McColl said that another of the reasons for the Board's decision of 27 October 1994 was environmental concerns raised by the unrestricted entry of large vessels "particularly the possible increased detrimental effect through bottom trawling over new ground".  He said the Board took these concerns into account in making its decision because it believed it was consistent with its duty to pursue the statutory objective in s 3(1)(b) the FM Act.  Mr Stevens confirmed what Mr McColl had to say here.  However, as Mr McColl himself acknowledged, these concerns had long been the subject of discussion in industry; through 1993 and 1994, SETMAC had repeatedly relied on them but had failed to persuade AFMA that they justified the adoption of a position against allowing access to large vessels.  These same concerns comprised the second of SETMAC's three points set out in its report to AFMA which AFMA Board then assessed as being without substance.  That was the opinion conveyed by Mr Rohan, the AFMA Board representative, to SETMAC at its 20 October 1994 working group meeting.  That was AFMA's response of 4 April 1995 when Tasmanian marine authorities raised these same concerns.  And Mr Stevens, in cross-examination, ultimately admitted that he could not recall that the effects of bottom trawling was a consideration which played a part in leading the Board to its decision of 27 October 1994.

Mr Stevens also said that the Board, in considering the economic efficiency objective in s 3(1)(c), took into account that industry restructuring had not taken place to the extent envisaged when the TAC/ITQ system was introduced because of "impediments to transfers of quotas such as Capital Gains Tax and uncertainty due to continued litigation".  He added, in effect, that because of this delay in achieving restructuring, "input controls … including controls on vessel length [were maintained by the Board] to reduce the opportunity for further capital (fishing capacity) being brought into the fishery".  He added that "the Board considered that allowing fishing capacity to increase on non-quota species could not be regarded as pursuing the maximisation of economic efficiency".  Mr McColl confirmed what Mr Stevens had to say here.  I have difficulty in accepting what Mr McColl and Mr Stevens say in this regard:  it constitutes a reversal of a central reason why the Board, in December 1993, decided to lift restrictions on long vessels in the SEF from the end of 1994, viz, the view it then "strongly held" that all possible steps should be taken to allow industry to maximise the benefits identified with the introduction of the TAC/ITQ system of management.  That was a view which AFMA repeatedly adhered to in its dealings with SETMAC throughout 1994 up to and including the working group meeting of 20 October at which the AFMA Board representative, Mr Rohan, in referring to the Board's intention to remove restrictions, said that was a position reached by the Board "with the aim of capturing the benefits of quota implementation".  There is an absence in the evidence of Mr McColl and Mr Stevens of any convincing explanation for this eleventh hour reversal of the Board's long held position which they say occurred.  The Board knew there would be transitional problems when the system was introduced.  Mr Stevens confirmed, in oral evidence, that impediments to the implementation by AFMA of the new management system constituted by disputes about allocation of quota and the capital gains tax consequences for operators who sold their quotas had long existed and were well known to AFMA in December 1993.  They did not stop AFMA then making the decision to lift restrictions on large vessels from 1995; nor did they stop AFMA, through 1994, publicly adhering to that decision, despite SETMAC opposition.  AFMA Board, one of whose members was a member of SETMAC, must also have been thoroughly aware on 27 October 1994 of concerns expressed by SETMAC from time to time, eg, at its July 1994 meeting and in its 30 August 1994 circular to the industry, that lifting restrictions on large vessels might continue the problems caused by over-capacity in the SEF.  The minutes of the 27 October meeting, in my opinion, also evidence rejection by the Board of this long maintained argument of SETMAC's against the 9 December 1993 decision.

Mr Stevens said that, in reaching its decision, "the Board was aware that its decision on access by large vessels could have adverse implications for the further resolution of these jurisdictional arrangements under OCS with those States especially if it led to the operation of large vessels inshore.  The Board had consistently expressed the view that successful negotiation of new OCS arrangements was critical to AFMA as it would result in more effective management of South East fishery species in their totality by AFMA and therefore better meet both AFMA's ESD and efficiency in management objectives".  Mr McColl confirmed what Mr Stevens had to say, adding that the Board, in making its decision, saw the conclusion of OCS negotiations as crucial.  He referred to the sensitivity of what he called "the big boat question", given the pending New South Wales election.

It was submitted that, whatever was the basis of the State's opposition to the entry of large vessels into the SEF, the fact that opposition existed provided justification for AFMA moving with caution on the introduction of large vessels:  it was a possible impediment to the conclusion of the OCS negotiations in respect of the SEF and so threatened the advancement of AFMA's statutory objective with respect to implementing efficient and cost-effective fisheries management.  That lifting restrictions on large vessels might frustrate the achievement of OCS arrangements was another of SETMAC's three concerns specifically flagged in its 24 October 1994 report to AFMA Board, a concern of SETMAC's of which AFMA had in any event long been aware; it was another matter about which the Board recorded in its minute that SETMAC had failed to convince it, in seeking to persuade AFMA to change its position on large vessels.  Moreover, what AFMA in fact did in this regard is, I think, more reliable as an indication of the extent to which State concerns were considered by AFMA in October 1994 to be truly a possible impediment to consummation of the relevant OCS negotiations than what the various AFMA witnesses suggested in evidence at the trial was the weight they attached to those considerations when AFMA adopted the policy of 27 October 1994.  AFMA was legitimately entitled to be concerned at anything that might disrupt the negotiations on foot through 1993 and 1994 for the consummation of an arrangement vesting substantial control of the SEF in AFMA, in view of its duty to pursue the objective in s 3(1)(a) of implementing efficient and cost effective fisheries management.  Yet that did not stop AFMA adopting the unequivocal position with respect to long vessels which it took up on 9 December 1993.  Moreover, the evidence suggests that the concerns of the States interested in the SEF about the impact of large vessels were limited to the use of large vessels in State waters and, in the case of Tasmania and South Australia, also to rock lobster fisheries in Commonwealth waters off those States.  (Although the SEF does not include State waters, the relevant OCS negotiations of 1993 and 1994 related to AFMA assuming management control of all quotaed species in those waters.)  When concerns about long vessels were voiced by State representatives at the SETMAC special meeting in Hobart on 18 March 1994, AFMA's assessment of the threat to disrupting the OCS discussions that its then existing commitment to lifting restrictions on long vessels in the SEF from 31 December 1994 presented was to resolve at its Board meeting of 29 March 1994 to approve the SETMAC recommendation that "on implementation of OCS, vessels larger than 32 m. will not be permitted to fish within 3 miles of baselines".  It also then indicated, eg, in Mr McColl's letters to SETMAC of 30 March 1994 and 7 April 1994, that:  "Under OCS discussions, the Board would view favourably proposals to keep larger trawlers from operating within 3 nm of baselines".  But at the same time, it reiterated "that the Board holds strongly to the view that restrictions on vessel size should not hinder industry in maximising the benefits available from a TAC/ITQ system of management as advised in my letter of 2 March 1994".  It is clear, from the comment in the letters of 30 March and 7 April about keeping large vessels from operating within 3 nautical miles of baselines, that, subject to that one qualification, AFMA was then set on lifting the restriction outside State waters after 31 December 1994 and did not then consider that that would disrupt the OCS based negotiations in which it was then involved.  Moreover, Mr Stevens noted that, by October 1994, ie, after AFMA had made known its willingness to maintain its exclusion of large vessels from the 3 mile waters, agreement in principle had already been reached between the Commonwealth, Tasmania, Victoria and South Australia that the Commonwealth should have sole jurisdiction over all quota species.  Once again, it is difficult to accept the evidence of Mr McColl and Mr Stevens at trial relating to OCS concerns as revealing just what caused the Board on 27 October 1994 to abandon its previously stated and long held view on large vessels.

In its November 1994 "News from the Board", which Bannister Quest received on 10 December 1994, AFMA says its decision was reached "... after careful consideration of current circumstances in the fishery and concerns expressed by industry", although it noted that it "considered that no convincing case for retaining size restrictions had been made in terms of biological sustainability, economic efficiency or cost effective administration".  The detailed accounts both Mr McColl and Mr Stevens gave at the trial of the wide ranging considerations relevant to the various statutory objectives which they say the Board noted, evaluated and took into account in arriving at the decision of 27 October 1994, but did not minute, are also inconsistent with this public explanation which the Board gave at the time for arriving at that decision.

As at 27 October, the Board was well aware of the various arguments against large vessels based on considerations such as the potential for increased fishing effort on non-quota species; gear conflicts between large and smaller vessels; damage to the marine habitat; interference with established sectors of the industry and disruption to the OCS arrangements.  Some of these were raised in the Government's "New Directions" paper in 1989.  They were also flagged in the information papers issued by the quota implementation team of the Australian Fisheries Service, and they were regularly raised from late 1992 through to October 1994 at the SETMAC meetings (at which AFMA was represented) and in submissions received from industry and other interested parties.  Notwithstanding that the AFMA Board did not receive a report from its own representatives on the outcome of the 20 October SETMAC meeting, it was also well aware of AFMA management's views on important issues such as damage to the bottom and protection of non-quota species.  For example, it was aware that AFMA management considered that damage to the bottom was a consequence of fishing generally, and was not a problem confined to larger vessels; Mr McColl said "That is not contentious".  It was aware that management was of the opinion that protection of non-quota species was also an issue that arose from fishing those species and was not isolated to larger vessels and that there were no rational reasons for keeping the size restrictions in place. Mr McColl agreed, after being taken to the minutes of the SETMAC meeting, that AFMA had no better or different advice from that which Dr Reichelt, the representative of the scientific community on SETMAC, and Mr Rohan are recorded as giving to SETMAC on 20 October.

I cannot accept that what Mr McColl and Mr Stevens say in their affidavits in these respects identify the factors that led the Board to reverse its position when it made its 27 October decision.

Mr McColl said that the Board, in reaching its decision of 27 October 1994, took into account a fourth objective, the accountability objective in s 3(1)(d), in arriving at its decision, in so far as he said the Board placed a strong emphasis on paying due regard to the recommendations of SETMAC.  Mr Stevens confirmed this.  While there is no express reference in the minute to the Board considering this particular objective, I have no difficulty in accepting what Mr McColl and Mr Stevens have to say about this.  I consider, for the reasons given, that the Board gave dominant weight to SETMAC's views on issues other than those touching on issues relevant to AFMA's duty to pursue the objectives in s 3(1)(a), (b) and (c) in arriving at that decision.  AFMA said just that in its November 1994 "News from the Board" circular to which I have referred.  SETMAC repeatedly emphasised its concerns through 1994 about the likely impact of large vessels on existing operators and the economics of small coastal communities.  Although neither Mr McColl nor Mr Stevens mentioned this as a matter considered by the Board on 27 October 1994, Mr McColl said that, under the accountability objective, the Board placed "strong emphasis" on paying due regard to the recommendations of SETMAC and the wider Australian community, without identifying just what those recommendations were.  I have no doubt that the Board did act on what SETMAC put to it.  The AFMA Board member, Mr Rohan, told SETMAC's 20 October 1994 working group that, while there were no rational grounds for keeping the restrictions on large vessels, there were "political and emotional grounds" that were entitled to recognition.  This, I think, very likely reflects the general view of AFMA Board, especially since Mr Rohan attended that SETMAC meeting as the AFMA representative.  Moreover, Mr Stevens, in advising Bannister Quest on 23 December 1994 what it needed to be sensitive to, in proposing special circumstances to justify its 8 December application to bring a long vessel into the SEF, "emphasise[d] again that the application would only be considered on the understanding that the vessel's operations will not adversely impact on traditional and established fisheries".

I have already explained why s 3(1)(d), properly construed, did not, however, permit AFMA to make a decision in an endeavour to satisfy these kind of concerns of SETMAC.  They are also foreign, for the reasons given, to the other objectives that AFMA must strive to achieve.  I have referred to AFMA's duty to consult with SETMAC.  If the Board, in taking into account SETMAC's views in the way I think it did, could justify that by reason of its consultation duty, it would not matter that the Board wrongly thought it was entitled to follow that course because of its duty to pursue the accountability objective:  when the question is whether a course of action is lawful, the law is, as a general rule, concerned with whether the actor truly had justification for what it did, not with whether it correctly labelled its reason for acting.  See, eg, Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 498.  But the evidence indicates that the Board was correct when it made its 9 December 1993 decision in considering that the lifting of restrictions would meet its duty to pursue the various statutory objectives.  I have explained why I think there is no reason for concluding that, in October 1994, that position had changed.  AFMA cannot rely upon its duty to consult with SETMAC as justifying it giving effect to SETMAC's views in making a decision as important as the one it did on 27 October:  doing that conflicted with its duty to pursue the s 3(1)(c) objective and was not authorised by its duty to pursue the s 3(1)(a), (b) and (d) objectives.

When the Board's minute of 27 October 1994 is read against the background of events between its 9 December 1993 decision and 27 October 1994, it is difficult to escape the conclusion that the change in AFMA's position, which Mr Stevens acknowledged had indeed occurred between those two dates, resulted from its concern at the ongoing strength of the opposition by SETMAC to access to the SEF by large vessels, even though AFMA remained of the same opinion it held in December 1993 and which it had adhered to thereafter until the meeting of 27 October, that restrictions on large vessels were incompatible with AFMA's statutory objectives.  In making that decision, AFMA therefore is seen to have taken into account irrelevant "social" and "equity" considerations, viz, concerns expressed by SETMAC such as the impact of large boats on existing operators.  Such considerations were irrelevant because they conflicted with its duty to pursue the objective of maximising economic efficiency in the exploitation of fisheries resources and were not authorised by any of the other imperative objectives that AFMA was required to pursue:  see Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at 39-40.  The kind of industry restructure that pursuit by AFMA of the statutory objectives required it to implement involved both pressure on numerous existing operators to get out of the SEF and financial incentives to do just that.  That was the whole point of autonomous adjustment.  Yet AFMA, in making its decision of 27 October 1994, ignored all this:  what it did give effect to instead were the fears of existing operators (including, in all likelihood, some targeted by the restructure for removal from the SEF) that large vessels would detrimentally affect their individual positions.

I therefore agree with Bannister Quest, in so far as it submitted that the Board, by misconstruing its accountability objective, made an error of law which led it to take into account irrelevant matters in reaching its decision of 27 October 1994 to maintain large vessel restrictions, save in special circumstances.

I do not think, however, that AFMA simply capitulated to SETMAC (as Bannister Quest also contends) and abdicated to it its statutory responsibility to make the decision with respect to whether large vessels should be given access to the fishery.  In Telstra Corporation Limited v Kendall (1994) 55 FCR 221 at 231, the Full Court said:

What is encompassed by the ground referred to in s 5(2)(e) of the ADJR Act is the case where the decision-maker gives no real independent attention to the discretion which is conferred upon him or her, so that the exercise of discretion is really the exercise of that discretion by some other person …

AFMA points out, correctly in my opinion, that it did not adopt SETMAC's 20 October 1994 hardline recommendation against long vessels.  Mr Bowen, an AFMA Board member writing on 22 December 1994, described the Board's decision of 27 October as "a half way mark" between SETMAC's recommendation for a complete prohibition on large vessels, which the Board was unable to accept, and the earlier expression of the Board's intention to remove restrictions on those vessels from the start of 1995.  That is a reasonable view of AFMA's decision.  Moreover, while it adopted something close to the less stringent position that SETMAC may have been prepared to accept when AFMA produced the joint information paper in September 1993, that was no longer acceptable to SETMAC.  It is clear, for example, from SETMAC's minutes of its 16 December 1994 meeting, that it regarded AFMA's decision of 27 October 1994 as more radical than anything that was then acceptable to it.

It is understandable that AFMA would want to respect the views of SETMAC:  it had a difficult task.  It was charged with implementing a new management system under which the profitability of certain operators would be enhanced and pressure to leave the fishery would be put on others who had long been earning their livelihood from the SEF.  The new management arrangements involved a very considerable degree of social upheaval and, in all probability, hardship at a human level and SETMAC was the spokesman for those most likely to be adversely affected, the small operators concerned at the impact on their own positions of large vessels.  It is understandable that SETMAC would oppose the introduction of long vessels.  But s 3(1) no more permits the Board to be guided in making decisions like the one presently in issue by whether those decisions will advantage the financial position of individual small operators than to be guided by whether its decisions will improve the financial position of individual large vessel owners.  Nor, for the reasons given, does it permit the Board to take into account the human costs of the restructure it is charged with implementing in the pursuit of its statutory duties.

Development of Special Circumstances

Bannister Quest argued that the way the AFMA Board dealt with determining how "special circumstances" provided for by its decision of 27 October 1994 were to be determined results in the policy incorporated in that decision being invalid:  Bannister Quest argues that, rather than making that determination itself, it abdicated its duty in that regard to SETMAC and, additionally, it ultimately adopted a set of criteria for evaluating whether special circumstances existed which were inconsistent with AFMA's duty to pursue its statutory objectives.

The Board's decision of 27 October 1994 was to retain the existing 32 metre limit, other than in cases where special circumstances apply; it also then decided that exemption from the general restriction on large vessels in the SEF was to be determined on a case by case basis by AFMA management, after comment from SETMAC.  When it made that decision, the AFMA Board did not attempt to give any guidance to management on the sort of considerations that it considered relevant to determining whether individual applications in respect of large vessels should be approved.  The parties, correctly in my opinion, characterised the way in which the applications made by Bannister Quest and others to AFMA for access to the SEF for large vessels were dealt with as involving the development by AFMA of a policy identifying the criteria that would ordinarily have to be met by an applicant, if such an applicant were to show "special circumstances" sufficient to justify access for its large vessel that was itself an element of the policy the subject of AFMA's decision of 27 October.

AFMA submitted that the task of formulating the criteria by reference to which "special circumstances" would be assessed was delegated by it at the 27 October meeting to AFMA management, ie, to Mr Stevens, the Managing Director, who was given principal responsibility for that task.  But this was not a permissible delegation.  Section 92(1)(a), (b), (c) and (d) the FA Act expressly authorises AFMA to delegate any of its powers and functions to a director of AFMA, including the Managing Director (s 11(2)), "or" to a committee (that can be constituted by the Managing Director and staff of AFMA:  see ss 54 and 55(1)), "or" to an employee, "or" to a person engaged by AFMA under contract, but only by writing under its common seal.  AFMA did not attempt to make any such formal delegation.  But even if the AFMA Board did not effectively delegate the setting of the special circumstances criteria, there is no reason why the Board could not leave it to its management or other suitably experienced staff to devise criteria they themselves considered appropriate and which they would recommend to the Board, for the Board's decision:  it is entitled to require assistance from staff in performing its own functions.  Management did keep the Board informed, in January 1995 and February 1995, of its dealings with SETMAC in the course of developing the "special circumstances" criteria.  However, the Board appears to have left it to management to fix the conditions on which large vessels could operate in the SEF:  by its decision of 27 October 1994, it charged AFMA management with the task of determining either the "special circumstances" criteria or the conditions of fishing permits that might be issued to particular large vessel operators and did not itself rule on those criteria until after they had been developed by management and applied to a number of permits.  That it was not entitled to do:  the matters it left to management determination involved the development of a core of standard conditions to be applied to permits issued in respect of a new class of operation in the SEF, viz, the use of large vessels, or perhaps the determination of an element of a plan of management under s 17.  The task the Board left to AFMA management involved the exercise of functions and powers of such importance that only the AFMA Board or someone to whom it validly delegated those functions under s 92 could lawfully perform and exercise.

The respondent relied on the principle that:  "Where the power is not delegable, but the authority could not have been expected by the Parliament to have exercised it personally in the multitude of instances when its exercise would be required, it has been held that some classes of acts done by others for and on behalf of the authority should be treated as though they were the acts of the authority":  Re Reference Under s 11 of Ombudsman Act 1976 for an Advisory Opinion; ex parte Director-General of Social Services (1979) 2 ALD 86 at 93-94; O'Reilly v Commissioners of the State Bank of Victoria (1983) 153 CLR 1 at 11-13.  The principle is most commonly applied where a Minister is charged with making a particular decision and, without any delegation, leaves it to an official for whom he is responsible to make the decision:  it is said in such cases that "the official acts as the Minister himself and the official's decision is the Minister's decision".  See R v Skinner (1968) 2 QB 700 at 707.  I do not, however, think the principle has any application to the performance of a function of the importance of that here in question, where the Board has an express power to delegate that very function but does not effectively do that.  Even if there had been an absence of express power to delegate, the task of setting the "special circumstances" criteria was such an important one that it could not properly be left by the Board to subordinate officials for reasons of administrative necessity:  cf O'Reilly at 11.

But by the time Mr Palmer made his decision the subject of Bannister Quest's review application in April 1996, the AFMA Board had itself formally approved the conditions for large vessel permits or had approved the "special circumstances" criteria by reference to which management had earlier informed Bannister Quest that AFMA would issue a permit in respect of its large vessel.  Whether the Board had acted lawfully in initially leaving it to AFMA management, without any proper delegation, to develop the "special circumstances" criteria had, by the time Mr Palmer was called on to conduct his review, ceased to be of significance:  what Mr Palmer was required by Bannister Quest's request of 6 December 1995 for review of the 2 May 1995 decision to do was to consider the matter afresh and determine whether Bannister Quest should be held to permit conditions that then had been approved by the AFMA Board, if it wished to use a large vessel in the SEF.

The need for AFMA to grapple with the question of the conditions on which large vessels would be allowed access to the SEF had arisen quickly after 27 October 1994.  On 4 November 1994, Bannister Quest wrote to Mr Stevens to apply for permission to bring two trawlers of up to 45 metres in length into the SEF.   Bannister Quest, in response to the Board's decision of 27 October, set out what it considered were the special circumstances supporting its application.  One of these related to one of the conditions ultimately recommended by SETMAC and adopted by AFMA, viz, to that limiting large vessels to the winter spawning area for blue grenadier.  Mr Stevens responded briefly to Bannister Quest's application on 28 November 1994 by asking it to "elaborate on the special circumstances which sets [Bannister Quest] apart from other operators in the SEF".  Mr Stevens suggested that a more detailed application by Bannister Quest would "assist SETMAC to evaluate your case" at its next meeting on 15 December.

On 8 December 1994, Bannister Quest submitted its more detailed application; in the absence of any guidelines from AFMA management about what would amount to special circumstances, it attempted to put its case, in part, in terms of the statutory objectives.  On 14 December 1994 Dr Rayns, the SEF Manager, who was a fisheries management scientist, briefed Mr Rohan (AFMA's General Manager of Southern Fisheries) on Bannister Quest's application.  He noted that the "special circumstances" criteria was undefined, but was of the view that Bannister Quest had demonstrated a willingness to make concessions in order to meet SETMAC and industry concerns (eg, not fishing within the 200 metre line; gear size restrictions; only a small amount of catch going to the Sydney and Melbourne fresh fish markets).   He said:

The mitigating factors for not letting big boats in seem to be political (eg OCS negotiations) and social considerations, such as gear interactions.  However, there are also economic (market disturbance) and stock sustainability (damage to inshore habitat) issues that need to be taken into account.  On these grounds, I think AFMA should seek to minimise any conflict or undue attention that may be brought to bear on big boats that enter the fishery via special circumstances.  This can probably be best achieved by restricting the species and area(s) to be accessed.

In considering applications such as Mr Nicholls I believe AFMA management is compelled to consider the objectives of the Fisheries Management Act 1991, particularly those of ecologically sustainable development and economic efficiency.  On these grounds I can see no reason to decline Mr Nicholls' application.

(By “market disturbances” issues, Dr Rayns was referring to large vessels putting on to the markets large volumes of catch at a time and thereby depressing prices generally.)

On 15 December 1994, the day after Dr Rayns' memorandum to Mr Rohan, Mr Nicholls, of Bannister Quest, spoke to Dr Rayns about its application and the kind of conditions it would be prepared to accept.  Following this, Dr Rayns prepared a memorandum for AFMA management headed "Criteria which must be met to be considered under special circumstances provision".  Some of those matters were not raised in the discussion with Mr Nicholls.  It shows, however, the issues AFMA management was then considering in the context of developing the "special circumstances" criteria:

·                    area of operation

·                    species to be taken

·                    gear type

·                    permanent quota holdings - minimum of

·                    effort distribution - % in SRZ/outside AFZ

·                    special reporting / observers

·                    land fish in Australia

·                    upper size limit?

·                    max no. of large boats?

·                    fish identification - fillets frozen

·                    period of fishing

·                    amalgamated permits

·                    RAS (ie Stevens)

·                    Act objectives

·                    many ways to maximise efficiency, not just boat length

·                    Immarsat

The “special circumstances” question first went to SETMAC on 16 December.  Mr Nicholls addressed the meeting in support of Bannister Quest's application; similar applications from two other companies were also considered at this meeting.  SETMAC opposed all the applications.  SETMAC reaffirmed its opposition to any relaxation of restrictions on large vessels until the new management plan was finalised.  It ignored Mr Stevens' plea that it assist AFMA with advice on technical problems likely to be created by the entry of big vessels, given AFMA's obligation to act in accordance with the legislation, and it ignored what Mr Stevens had to say about there being no provision in the FM Act for AFMA to take into account social considerations.  It considered that "clear criteria relating to special circumstances and specific fishing plans should have been developed prior to consideration of individual applications".

Notwithstanding SETMAC's intransigence, AFMA had to deal with Bannister Quest's application.  In a letter to Bannister Quest of 23 December 1994, Mr Stevens noted that the "situation with respect to the operation of [large] vessels in the fishery is extremely sensitive with existing operators almost universally opposed to the entry of such vessels" and said that AFMA must "take account of the public positions of both the Victorian and Tasmanian Ministers responsible for fisheries who are opposed to the operation of large vessels in the SEF".  He indicated the matters with respect to which AFMA required further information from Bannister Quest; in outlining some general conditions regarding the areas and species to be targeted by large vessels, Mr Stevens emphasised that "the application would only be considered on the understanding that the vessel's operations will not adversely impact on traditional and established fisheries".  Although Mr Stevens wrote of the need for an application to meet AFMA's objectives of biological sustainability, economic efficiency, cost effective administration and accountability to the industry and the Australian community, he concluded by saying:

… it will be in everyone's interests to work co-operatively with SETMAC on the issue of large vessels.  Specifically, it will be important to demonstrate to SETMAC in a positive way during 1995 that large vessels do not hold any threat to the future welfare of the industry.  The above conditions have been developed with this very much in mind.

Although Mr Stevens told the 16 December SETMAC meeting that there was no place in the FM Act for AFMA to consider social issues, that, in my opinion, is just what AFMA management did in formulating the "special circumstances".  Even though SETMAC had refused to assist, AFMA was acutely sensitive to what it considered was the need to placate SETMAC.  The conditions it developed reflected that, as Mr Stevens told Bannister Quest in his letter of 23 December 1994.  It erroneously believed that AFMA's "accountability" objective justified this approach.

On 30 December, Mr Stevens wrote to SETMAC to inform it of "AFMA management's determination of what constitutes 'special circumstances'" in relation to the use of long vessels in the SEF.  This letter was similar to his letter of 23 December to Bannister Quest, although more work had been done within AFMA to refine the "special circumstances" criteria and it omitted Mr Stevens' comments to Bannister Quest about the importance of placating SETMAC.  However, Mr Stevens did inform SETMAC that, in developing the proposed "special circumstances" criterion, AFMA management had taken into account SETMAC's attitude to access to the SEF by large vessels generally and, in listing the areas within which it was proposed that large vessels be allowed to operate, he told SETMAC that "the areas nominated for operation of a large vessel in the SEF must not adversely impact on traditional and established fisheries".  What Mr Stevens sent to SETMAC represented, in broad outline, what would ultimately become the permit conditions for large vessels.

Mr Stevens' keenness to involve SETMAC in vetting applications such as Bannister Quest's evoked concern on the part of various AFMA Board members and through January 1995 there was dissension among Board members about the way management was going about developing the "special circumstances" criteria.  One, Mr Ball, wrote to Mr Stevens in late December 1994 and again in January 1995 expressing concern at the level of SETMAC involvement in the application process, when it was really AFMA's responsibility to make the decision.  Another director, Mr Bowen, did the same.  In early January 1995, the AFMA Chairman, Mr McColl, told Mr Exel, AFMA's Acting Managing Director, that he agreed with Mr Ball; he criticised AFMA management for taking such applications to SETMAC before AFMA management itself had even a provisional idea of what might constitute "special circumstances".  There was a call for a Board meeting to consider this issue.  By 20 January 1995, however, Mr McColl was able to write to the other Board members, including Mr Ball, to record the substantial support of Board members for the path that AFMA management was currently pursuing in relation to developing "an acceptable framework for 'Special Circumstances' and associated conditions".  He said that it was therefore unnecessary for any further formal consideration by the Board of this issue.

Mr Stevens' letter of 30 December to SETMAC came before SETMAC's meeting on 25 January 1995.  SETMAC there recorded its continued opposition to any relaxation of restrictions on long vessels until the new management plan was developed, acknowledged that its view had not prevailed with AFMA and responded to Mr Stevens' letter by indicating that SETMAC "agreed that large vessels should continue to be excluded from all areas of the SEF except for areas similar to those referred to in Mr Stevens' letter but more precisely identified and subject to the imposition on large vessels in relation to some of those areas of time restrictions within which they could fish them".  SETMAC proposed the following areas and times of access:

(a)        southern remote zone, from 1 January to 31 December (subject to a maximum catch being set for orange roughy which, if exceeded, would trigger the implementation of specific management controls)

(b)        southern orange roughy zone, from 1 January to 31 December;

(c)        winter spawning area for blue grenadier, from 1 June to 30 September between 41 and 43 degrees south;

(d)        eastern orange roughy zone, from 1 June to 31 July, between 41 and 42 degrees south;

SETMAC also proposed that large vessels should not be allowed access to market fish, other than those taken as by-catch in the winter blue grenadier fishery.  SETMAC noted that, having recommended the conditions it considered appropriate, "it was now an AFMA management issue" to set the actual terms of any permit that might be issued, a point acknowledged at this SETMAC meeting by AFMA's Acting Managing Director.  AFMA management thereafter acted on SETMAC's advice save that, when SETMAC’s recommendations at its meeting of 25 January 1995 are compared with the Board’s decision of 26 October 1995, it appears that management may have added to the conditions recommended by SETMAC a condition excluding large vessels from working within 15 or 30 nautical miles of various parts of the Tasmanian Coast, to reduce conflict with existing non-trawl operators and in recognition of Tasmanian Government concerns for its rock lobster and king crab fisheries and may have rejected SETMAC's recommendation that large vessels not be permitted to take any quota fish in the defined areas in which they were permitted to fish, other than as by-catch.  Finally, AFMA management sought the Board's formal endorsement of  its acceptance of SETMAC's recommendations in October 1995. The Board, in terms, approved SETMAC's recommendations at its meeting on 26 October 1995.  But what appears to have been approved was the SETMAC recommendations, as modified by AFMA management in the two respects I have mentioned. These recommendations on vessel length restrictions were then incorporated into the 1996 SEFT Sector Management Arrangements, p 19.

It is these conditions, as modified, which were incorporated, over Bannister Quest’s objections, in the various permits numbered 26780 issued to it on 30 March 1995, 3 October 1995 and 21 December 1995.

In relation to the development of the "special circumstances" criteria, again it is clear, in my view, that AFMA's misconceived notion of the accountability objective led it into error.  Mr Stevens agreed that the areas and times in which large vessels were permitted to fish were devised to ensure that they did not trespass on the existing operations of other vessels trawling in the SEF.  He said that non-quotaed fish were not a consideration in the design of the "special circumstances" criteria and that, in effect, the concerns about bottom trawling did not play a part in the design of those criteria.  Mr Stevens' comments, including those to Bannister Quest in his December letter, show that the s 3 objectives were largely ignored by AFMA management in devising the "special circumstances" criteria which the Board ultimately approved:  those criteria were intended, as Bannister Quest correctly submits, to placate other operators in the SEF by preserving their individual financial positions.

Mr Stevens said that the "economic efficiency" objective was taken into account in devising the "special circumstances" criteria "by allowing people to use the most suitable equipment to take their quotaed species".  But this is not the case.  The criteria were devised to keep large vessels out of areas of the SEF traditionally exploited by the general body of operators, as Mr Stevens himself, in effect, acknowledged in his evidence.  In relation to AFMA's "accountability" objective, Mr Stevens said that what AFMA had regard to in this respect in devising the criteria was "what the States, what individual operators had said, what SETMAC had said and what anybody else who had an opinion on the operations of special circumstances, including conservation groups, had to say... we had a lot of people who were opposed to it".  But in devising criteria that kept large vessels out of areas of concern to traditional operators, AFMA went beyond merely consulting interested parties and followed a course that was not authorised by that objective and conflicted with others of its objectives.

Whether the Board's decision of 26 October 1995 approving the conditions of permits issued in respect of large vessels is regarded as itself comprising a policy or rather as an element in the policy recorded in the Board's decision of 27 October 1994, the result is therefore the same:  that particular policy decision is invalid because the policy in question gave effect to considerations that conflicted with the economic efficiency objective the Board was required to pursue and was not authorised by any of the other statutory objectives, including the accountability objective.  It is well-established that while an administrative decision-maker can adopt a policy in order to guide it in the exercise of a statutory discretion, that policy, to be lawful, must be consistent with the statute creating the discretion:  "… a policy must be consistent with the statute.  It must allow the Minister to take into account the relevant circumstances, it must not require him to take into account irrelevant circumstances, and it must not serve a purpose foreign to the purpose for which the discretionary power was created.  A policy which contravenes these criteria would be inconsistent with the statute."  Re Drake and Minister for Immigration and Ethnic Affairs (No 2) 2 ALD 634 at 640.

While AFMA management and Board were acutely sensitive, in formulating the conditions that were applied to permits authorising the use of large vessels in the SEF, to SETMAC's stated position, the history of the development of those conditions which I have set out above shows, in my opinion, that AFMA management and Board did not merely defer to SETMAC.  I think that, in devising these conditions, AFMA personnel involved considered that the accountability objective entitled them to give effect to SETMAC's views.  However, for the reasons given, this involved a critical misunderstanding on AFMA's part of the true meaning of that particular objective in s 3(1)(d) the FM Act.

Internal Review by Mr Palmer

One of the grounds on which Bannister Quest seeks review of Mr Palmer's decision is that it involved the exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case.

Mr Palmer says he considered his function was to test the validity of the policy contained in AFMA's 27 October 1994 decision, as subsequently developed, and, if satisfied in the light of all the information before him that the policy was valid, to decide whether, looking at the circumstances of Bannister Quest, he should depart from the policy.  Bannister Quest argued that it was unlikely that an official such as Mr Palmer (the principal legal officer of AFMA) would decline to apply the policy of the Commonwealth government regulatory body by whom he was employed, a policy which had been formulated over the course of several years, unless and until he had considered whether the policy was valid.  But Mr Palmer, in his reasons for his decision, records that the main argument Bannister Quest put to him for overturning the AFMA delegate's earlier decision was that AFMA had erred in law by giving effect to an invalid policy.  Having so identified the critical issue for his determination, it is difficult to see how Mr Palmer could have avoided forming his own view on the validity of the policy.  And that is just what his reasons show he proceeded to do.  His reasons show he undertook a two-stage exercise:  firstly, he rejected Bannister Quest's application for review because he considered the policy was valid and secondly, he concluded that no special circumstances were demonstrated which would justify departure from that policy, in Bannister Quest's favour.

But in testing the validity of AFMA's policy, Mr Palmer, like AFMA itself, misconstrued the nature and effect of the statutory objectives binding on AFMA and which govern the formulation of valid policies by AFMA.  As a result, he too gave effect to an unlawful or invalid policy and so took into account irrelevant considerations, in rejecting Bannister Quest's request for review of the earlier decision of the AFMA delegate.

Mr Palmer said that the policy was based on, firstly, economic efficiency considerations for the fishery as a whole through the ITQ scheme, which allows operators to trade quota and thus adjust quota packages to best suit their operations and, secondly, "ESD and accountability considerations manifested through taking account of the wider social and political implications of permitting unrestricted access to the SEF by large vessels".  Mr Palmer does not, in his reasons for decision or in his evidence, identify the use he made of Mr Kaufmann's draft affidavit in arriving at his decision.  But it is apparent from Mr Palmer's reasons that he considered, in some detail, Bannister Quest's argument that AFMA's statutory objective concerned with maximising economic efficiency required consideration of the improvements in the efficiency of Bannister Quest's own operations that would result from it being allowed general access for its large vessel to the SEF.  Mr Palmer, in rejecting Bannister Quest's arguments based on improvements in its own operating efficiency, said:  "Economic efficiency for the fishery as a whole is intended to be achieved through the ITQ system."  Mr Kaufmann's material, to which Mr Palmer said he had regard, supports this conclusion and it is consistent with the proper understanding of s 3(1)(c), as I have already explained.

Mr Palmer considered that "the ESD objective" permitted AFMA, in framing the policy, to take into account social and community issues, including "possible social and economic effects on decentralised fishing communities of an increase in size of vessels with a corresponding decrease in numbers".  He identified the ESD objective not as that in s 3(1)(b) the FM Act but rather as the objective of the "National Strategy for Ecologically Sustainable Development".  This is a strategy published in December 1992 and developed by the Commonwealth Government in response to international conservation strategies published in 1980 and 1987.  The National Strategy was endorsed on 7 December 1992 by the Council of Australian Governments, which agreed that "the future development of all relevant policies and programs, particularly those which are national in character, should take place within the framework of the ESD strategy and the inter-governmental agreement on the environment which came into effect on 1 May 1992".  This Strategy identified, as one of the "guiding principles of ecologically sustainable development", that decision-making should effectively integrate both long and short term economic, environmental, social and equity considerations.  The matters Mr Palmer said he had regard to in giving recognition to the Strategy included the disquiet expressed by State governments and the social and economic effects on decentralised fishing communities of an increase in the size of vessels with a corresponding decrease in numbers.  Mr Palmer also said:

Where there is the likelihood of a negative impact on the wider commercial fishing fleet, environmental impacts have not been quantified and the entrance of an additional large vessel opposed at the State political level, I believe that it is in line with the principles of ESD and AFMA's duty to be accountable to the fishing industry and the wider community to take a precautionary approach in decision-making.

His reasons show that he considered whether AFMA, in adopting the policy, had acted in accordance with "the economic efficiency considerations", and "the ESD and accountability considerations".  Although he did not expressly mention s 3(1)(b), (c) or (d) the FM Act, I think it is clear from his reasons that he believed he was referring to these statutory objectives in recording the three considerations I have referred to and which he identified as the basis of AFMA's policy.  Having recognised the relevance of the statutory objectives to the question of the validity of the policy, it is striking that Mr Palmer failed to recognise the need to identify the content of s 3(1)(b), (c) and (d) with which AFMA had to comply and, in turn, failed to test the validity of the policy against the statutory objectives, properly understood.  Mr Palmer needed to go to the "New Directions" policy of 1989 in this respect.  Yet there is no mention of that in his reasons.

It is clear enough from Mr Palmer's reasons that, in considering whether the policy was in accordance with the ESD objective, he did not make any attempt to identify the true meaning of the objective in s 3(1)(b), but instead, assumed that "the ESD objective" as stated in the National Strategy was one and the same as the objective in s 3(1)(b).  Although the ESD National Strategy was adopted by the Commonwealth Government in December 1992 as a policy of general application by the Commonwealth and its agencies in their administration of their activities, the strategy does not appear to have, and it was not suggested by AFMA that it had, played any part in AFMA's deliberations that led up to its 9 December 1993 decision and then to the reversal of that decision on 27 October 1994. In view of the status of the National Strategy and its relevance to AFMA's policy, it was, I think, permissible for Mr Palmer to have regard to the Strategy and to find support for AFMA's policy in the fact that it was consistent with the Strategy, but only provided that the elements of the Strategy he relied on did not conflict with AFMA's legislatively imposed duty to pursue the statutory objectives.  Mr Palmer failed to advert to this critical question.

He confined his attention in giving what he appears to have believed was effect to s 3(1)(b) the FM Act to the Strategy, a paper promulgated by the executive government, not by the Parliament, well after the introduction of the 1991 legislation.  The Strategy cannot, on any view, be used to illuminate the meaning of the legislation and, in particular, to control the true construction of s 3(1)(b).

Section 3(1)(b) the FM Act is, as I have explained, concerned only with the need to ensure that the fisheries resources themselves are exploited only to the extent that the sustainability of the fish stocks over the long term is not impaired and with the need to ensure that the marine environment, in which those fish stocks exist, is similarly not subjected to irreparable damage.  Yet in reliance upon the discussion in the National Strategy of the ESD objective there referred to, Mr Palmer erroneously assumed that s 3(1)(b) permitted him to have regard to social and community issues.  AFMA did not attempt to support this interpretation of Mr Palmer's as a correct reading of s 3(1)(b).

Mr Palmer also concluded that, in taking into account the social and community issues, AFMA was acting consistently with its duty to pursue the objective in s 3(1)(d) of being accountable to the fishing industry and the wider community.  But that, for the reasons already given, shows that his decision is affected by a second error of law.

As I have said, Mr Palmer gave proper effect to s 3(1)(c) the FM Act in that he focused on the economic efficiency of the fishery as a whole.  He then correctly concluded in the course of dealing with Bannister Quest's economic efficiency arguments that the economic efficiency of the fishery would not necessarily be achieved by the operation of Bannister Quest's large vessel, even if that would generate for Bannister Quest economic gains not achievable if it were to use only a small vessel.

His final conclusion was that, so far as Bannister Quest's application was concerned, the pursuit of the economic efficiency objective was outweighed by the pursuit of the ecologically sustainable development and accountability objectives.  But in failing to properly construe the statutory objectives in s 3(1)(b) and (d), Mr Palmer, like AFMA management and the AFMA Board, gave effect to a policy which took into account irrelevant considerations, the social and community issues he referred to.

The Result of the Case

I have considered the submissions of the parties as to the orders that should be made, which I received after publishing the foregoing reasons on 1 August.

I referred in those reasons to the way in which the issues I have determined were brought before the Court.  Bannister Quest's 1995 permit the subject of the delegate's decision of 2 May 1995 and of Bannister Quest's review was spent before Mr Palmer conducted his review.  Mr Palmer, however, purported to deal in his decision of 11 April 1996 with Bannister Quest's 1996 permit that was then current.  It was Mr Palmer's decision that was the subject of challenge in this Court.  But Bannister Quest's 1996 permit has been spent since 31 December 1996.  There is no purpose that can be served now by making an order directing the respondent to reconsider the conditions to be applied to either Bannister Quest's 1995 or its 1996 permit.  It appears from the submissions put before me as to the orders I should make that Bannister Quest has obtained, since trial, a new permit for the 1997 calendar year that is subject to the same conditions that were included in its 1996 permit.  I cannot, in the absence of consent, make an order in these proceedings, which are confined to the 1995 and 1996 permits, that the respondent reconsider the conditions to which it has made the 1997 permit subject.  The respondent proposed just such an order, but Bannister Quest does not agree with this proposal.

This case was, as I have noted, fought as a test case on whether large vessels should have access to the SEF on the same terms as vessels less than 32 metres.  AFMA has power under s 32(8) the FM Act to alter, at any time, the conditions of any permit that Bannister Quest holds for the 1997 year.  If any of those conditions must, in view of these reasons and having regard to the FM Act as now in force, be regarded as improperly imposed on Bannister Quest, then AFMA can be expected to take proper action to remedy that under s 32(8):  I am confident that it will do that, in view of its proposal that an order now be made to that effect.  (If it were, however, to refuse to do that, Bannister Quest has public law remedies that it can invoke to compel AFMA to comply with the law.)  But I cannot grant relief to Bannister Quest with respect to its 1997 permit in these proceedings.

For these reasons, I think the orders I should pronounce are an order setting aside the delegate's decision of 2 May 1995 and the review decision of Mr Palmer of 11 April 1996 and a declaration that AFMA's policy on access to the SEF by large vessels contained in its decision of 27 October 1994, as subsequently developed, is invalid.

I do not think this is a case in which it is justifiable, in determining what is to be done about costs, to isolate the various issues litigated and make costs orders that reflect the success of each party on each issue:  I think Bannister Quest acted reasonably, in the face of AFMA's action, in mounting the challenge it did.  I will order the respondent to pay Bannister Quest's costs of and incidental to the proceedings.

I certify that this and the preceding 47 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond.

Associate:

Dated:              14 August 1997

Counsel for the Applicant:	JG Santamaria QC and TJ Ginnane
Solicitor for the Applicant:	Hall & Wilcox
Counsel for the Respondent:	SM Crennan QC and PJ Hanks
Solicitor for the Respondent:	Australian Government Solicitor
Dates of Hearing:	4-8, 20 November 1996, 1 August 1997
Date of Judgment:	14 August 1997