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Re: BERARDINO FITTI; ALBERT BRUCE DAVEY and IAN BRUCE DAVEY
And: THE MINISTER FOR PRIMARY INDUSTRIES AND ENERGY and AUSTRALIAN FISHERIES
MANAGEMENT AUTHORITY
Nos. N G743 and N G744 of 1992
FED No. 78
Number of pages - 35
Constitutional Law - Fisheries
(1993) 40 FCR 286
(1993) 117 ALR 287
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
O'Loughlin J.(1)
CWDS
Constitutional Law - s51 xxxi - acquisition of property on just terms -
Northern Prawn Fishery Plan of Management - provision in Plan for reduction or
expiry of units of fishing capacity - whether expiry amounts to "acquisition"
of "property" - effect of expiry of units on right to use boat in fishery -
whether effect on right to use boat should be taken into account in assessing
"just terms".
Fisheries - Plan of Management - questions of "ultra vires" - objectives of
legislation - whether Plan complied with objectives - meaning of "shall have
regard to" - whether requisite degree of arbitrariness, injustice or
partiality established.
HRNG
SYDNEY, 15-17 February 1993
#DATE 26:2:1993, ADELAIDE
Counsel for the Applicants : Mr. R.B.S. Macfarlan QC and Mr. A.
Street
Solicitors for the Applicants : Thomson Rich and O'Connor
Counsel for the Respondents : Mr. R.J. Burbidge QC and Mr. P.
Roberts
Solicitors for the Respondents: Australian Government Solicitor
ORDER
Matter Nos. N G743 and N G744 of 1992
The Court declares:
That clause 20B in the Northern Prawn Fishery Management Plan as amended
offends section 51 paragraph (xxxi) of the Constitution and is void.
The Court orders:
1. That the respondents be restrained and an injunction is hereby
granted restraining them by themselves, their servants or agents
from cancelling, reducing or expiring class "A" or other units
under clause 20B of the Northern Prawn Fishery Management Plan as
amended.
2. That further consideration of the application (including the
question of costs) be adjourned.
Liberty to apply.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
JUDGE1
O'LOUGHLIN J. In each of these matters the applicants seek injunctive relief
pursuant to s.39B of the Judiciary Act 1903 (Cth) together with consequential
orders including declaratory orders under s20 of the Federal Court of
Australia Act 1977 (Cth). The applicant in the first action, Berardino Fitti,
and the applicants in the second action, Albert Bruce Davey and his son Ian
Bruce Davey, are professional fishermen who are presently engaged in the
business of prawn trawling in the Northern Prawn Fishery ("the NPF") in the
Gulf of Carpentaria. According to the final report of the Industry Commission
"Cost Recovery for Managing Fisheries" Report No. 17 (3 January 1992) (Ex.12FR
pp 209-210), the NPF, which is one of Australia's largest fisheries both in
terms of area and value of production, extends from Cape York in Queensland to
Cape Londonderry in Western Australia and covers an area of approximately 1
million square kilometres.
2. Mr. Fitti first operated in the NPF as the skipper of a trawler in 1975
for about 12 months. From 1981 until 1983 he worked in the fishery again, but
on this occasion as the owner of his vessel. In 1985 he purchased the 23m
steel prawn trawler "Takari" with a partner but bought out his partner in the
following year. He has thereafter continued to fish in the NPF. I am
satisfied that Mr. Fitti has had extensive experience in the fishing industry
for a period in excess of 30 years and that he has been an owner/operator of a
fishing vessel for about 12 years.
3. Messrs Davey are the owners of the "Bralda", a 25m prawn trawler. In his
affidavit of 7 November 1992, Mr. Davey, speaking of himself and his son
said:
"Our sole operation is prawn trawling in the Gulf of
Carpentaria (in the Northern Prawn Fishery)."
4. I am satisfied that the Daveys have been trawling for prawns in the NPF
since about 1977, although their involvement in the fishing industry goes back
many more years.
5. Section 7B(1) of the Fisheries Act 1952 (Cth) provides that:
"The Minister may, by instrument in writing, determine a
plan of management for a fishery in proclaimed waters."
6. Pursuant to that provision, the respondent Minister, on 25 May 1990,
determined a plan of management, the Northern Prawn Fishery Management Plan
1989 ("the Plan"). Earlier Plans of Management, the first of which had been
determined in 1986, were repealed and these reasons will be concerned only
with the 1989 Plan as amended from time to time.
7. Under the Plan, the right to fish is dependent (inter alia) upon the
assignment to a boat of "the applicable number of class A units": (paragraph
9). Schedule 1 to the Plan, by referring to "Hull units" and "Engine Power
units", contains formulae for determining the applicable number of class A
units in respect of a boat; "Hull units" are calculated by having regard to
the length, breadth and moulded depth of a boat, and "Engine Power units" are
based upon a specification of the manufacturer. The sum of the "Hull units"
and the "Engine Power units" in relation to any particular boat determines the
applicable number of class A units for that boat. Presently, the applicable
number of class A units for Mr. Fitti's "Takari" is 382 and for the Daveys'
"Bralda" it is 518. In addition to the class A units there are class B and
class C units which govern areas of the NPF in which a particular boat may
trawl. There are also surplus and suspense units. Although these latter
units are important, the circumstances of these proceedings do not call for a
discussion of their distinguishing features. It will be sufficient, in most
cases, to refer either to "class A units" or to "units".
8. As originally introduced, the Plan provided for a total of 97,000 class A
units in the NPF, although that number was reduced to 96,400 in November 1990
by way of an amendment to the Plan. One of the original objectives of the
Plan was the intended reduction, by 31 December 1993, of the total number of
units (excluding the area units) to not more than 70,000 (sub-paragraph 7.3).
In December 1992, however, this was amended to provide for a reduction, by 1
April 1993, "to not more than 50,000 through implementation of Part 7 of this
plan".
9. Part 7 had originally provided for the "Voluntary Adjustment Scheme" ("the
VAS") under which the Minister invited tenders from prawn fishermen for the
surrender of their units in return for a fee. The provisions of the repealed
sub-paragraph 19.1 of the Plan required the Minister to give preference to the
tender that required "the lowest per-unit-payment in return for surrender of
the units...". The VAS was to be funded through levies imposed by the
Fisheries Levy Act, 1984 on those fishermen who operated in the NPF. It was
not successful in the sense that the reduction of units in the fishery was
regarded as insufficient. As a result, part 7 of the Plan was repealed and
replaced with a scheme for the compulsory reduction of units to a figure of
50,000. Part 7 is now entitled "The Restructuring Program".
10. Presently there are 72,216 units assigned to boats in the NPF. Pursuant
to the provisions of paragraph 20B of the Plan, the intended reduction factor
under the Restructuring Program will be 30.76% which is calculated as
follows:
72,216 - 50,000 = 0.3076
72,216
11. The reduction liability of a fisherman in respect of a boat is therefore
ascertained by applying this reduction factor of 30.76% to the appropriate
number of units presently held by the fisherman in respect of the boat. Thus,
in the case of Mr. Fitti, the reduction is 30.76% of 382 - or 118 units, and
in the case of the Daveys it is 30.76% of 518 - or 159 units. In a circular
advice to all unit holders in the NPF dated 13 January 1993, the second
respondent, the Australian Fisheries Management Authority ("AFMA") advised
that:
"The Compulsory Reduction will take place by way of an
'expiry' of affected units. The Plan previously spoke of a
'cancellation' of units. That term has been changed to
'expiry' to ensure that no adverse Capital Gains Tax
implications arise."
12. If either Mr. Fitti or Messrs Davey wish to continue to operate in the
NPF on 1 April 1993 and thereafter, they will need to acquire a sufficient
number of units so that after the reductions have been implemented each of
their boats will have the applicable number of class A units assigned to it -
i.e. 382 and 518 respectively. The source of those additional units can only
be those fishermen who, having previously fished in the NPF, have, since the
introduction of the Restructuring Program, decided to leave the fishery and to
sell their units.
13. The applicants have challenged so much of the Restructuring Program as
calls for the "cancellation" or "the reduction" or "the expiry" of any of
their units. For the purpose of these reasons I will hereafter use the word
"expiry" or one of its derivates, but only as a matter of convenience. It is
not intended to import any significance into the word or to express any view
with respect to the Capital Gains Tax legislation.
14. First, the applicants argued that the Restructuring Program and, in
particular, paragraph 20B of Plan and the expiry of some of their units amount
to an acquisition of property otherwise than on just terms, and that it
accordingly offends s51 xxxi of the Constitution. That paragraph provides:
"51. The Parliament shall, subject to this Constitution,
have power to make laws for the peace, order, and good
government of the Commonwealth with respect to:-
...
(xxxi.) The acquisition of property on just
terms from any State or person for
any purpose in respect of which the
Parliament has power to make laws.
..."
15. The applicants next complained that the Restructuring Program is, for
various reasons, ultra vires the provisions of the Fisheries Act 1952 (Cth).
This argument initially calls for a consideration of the objectives of the Act
which are referred to in s5B of the Act in terms that the Minister "shall have
regard to" certain matters. The section provides:
"5B In the administration of this Act, the Minister shall
have regard to the objectives of-
(a) ensuring, through proper conservation and management
measures, that the living resources of the Australian
fishing zone are not endangered by over-exploitation;
and
(b) achieving the optimum utilization of the living
resources of the Australian fishing zone,
but shall ensure, so far as practicable, that measures
adopted in pursuit of those objectives shall not be
inconsistent with the preservation, conservation and
protection of all species of whales."
16. The case for the applicants is that, as a matter of fact, the reason or
purpose for the introduction of the Restructuring Program is neither to ensure
that the living resources of the NPF are not endangered nor to achieve the
optimum utilization of the living resources. Rather, so they claimed, the
introduction of the program was prompted by the desire to improve economic
efficiency in the NPF and the profitability of those fishermen who will remain
in the NPF, thereby creating a foundation for the introduction of a resource
rent or tax. As such, an improper purpose has been disclosed and hence, so the
argument proceeds, the Restructuring Program is ultra vires. In addition, the
applicants have claimed that the Program is discriminatory, harsh and
unreasonable and that is should be struck down for these reasons.
17. I turn first to the constitutional question.
Is there an acquisition of property?
The first task is to determine whether the class A units that attach to a boat
constitute "property". It is not sufficient that a fisherman is the holder of
a licence entitling him to fish in the NPF; he must also hold, in respect of
his boat, the applicable number of units. These units are a valuable
commodity; they are traded for large sums of money and their intrinsic worth
was recognised in the former part 7 of the Plan when, as part of the VAS, the
Minister was empowered to pay a fee for the surrender of units. There is
authority pointing to examples of inchoate rights that have been held to be
"property". For example, in Banks v. Transport Regulation Board (Victoria)
(1968) 119 CLR 222, Barwick C.J. concluded that a taxi licence was "property"
for the purpose of deciding that there was an appeal as of right to the High
Court under the provisions of the Judiciary Act as then enacted. In Pennington
v. McGovern (1987) 45 SASR 27, the Full Court of the Supreme Court of South
Australia held that a licence under the South Australian fisheries
legislation was "proprietary in character" (per King C.J. at p 31). Legoe J.
agreed with the learned Chief Justice at p 45. Brinsden J., in the Supreme
Court of Western Australia, followed the decisions in Banks v. Transport
Regulation Board and Pennington v. McGovern in holding that a cray fishing
licence was "property" for the purpose of the Stamp Act 1921 (WA): Austell
Pty. Ltd. v. Commissioner of State Taxation (WA) (1989) 89 ATC 4905. In
Harper v. Minister for Sea Fisheries (1989) 168 CLR 314 Mason C.J., Deane and
Gaudron JJ. at 325 described a licence to fish for abalone in these terms:
"In that context, the commercial licence fee is properly to
be seen as the price exacted by the public, through its
laws, for the appropriation of a limited public natural
resource to the commercial exploitation of those who, by
their own choice, acquire or retain commercial licences. So
seen, the fee is the quid pro quo for the property which may
lawfully be taken pursuant to the statutory right or
privilege which a commercial licence confers upon its
holder."
In the same case Brennan J. said at p 335:
"When a natural resource is limited so that it is liable to
damage, exhaustion or destruction by uncontrolled
exploitation by the public, a statute which prohibits the
public from exercising a common law right to exploit the
resource and confers statutory rights on licensees to
exploit the resource to a limited extent confers on those
licensees a privilege analogous to a profit a prendre in or
over the property of another. A limited natural resource
which is otherwise available for exploitation by the public
can be said truly to be public property whether or not the
Crown has the radical or freehold title to the resource. A
fee paid to obtain such a privilege is analogous to the
price of a profit a prendre; it is a charge for the
acquisition of a right akin to property."
18. A year or so later the High Court had to consider the question of abalone
"rights" once again. However, whereas Harper's case had been concerned with
the question whether a licence fee was a tax or an excise, Kelly v. Kelly
(1990) 92 ALR 74 addressed the question of whether an abalone authority (which
had issued in place of an abalone permit) could be partnership property.
Although upholding the finding of fact that the authority was not a
partnership asset, the Court in a joint judgment said at 78:
"Whatever the position with the abalone permit, there can be
no doubt that the abalone authority gave rise to valuable
rights which were capable of being held for the partnership
in such a way as to constitute partnership property: see
Ambler v. Bolton (1872) LR 14 Eq 427; O'Brien v. Komesaroff
(1982) 150 CLR 310. Despite the fact that it could only be
done indirectly and with the consent of the Director of
Fisheries, it was plainly possible to make what was
effectively the transfer of an authority for consideration,
thus enabling a value to be placed upon it. This was so,
notwithstanding that there were certain requirements in
respect of an abalone authority which were personal to the
holder, such as the requirement that he be medically fit to
dive."
19. In Burns Philp Trustee Co. Ltd. v. Ironside Investments Pty. Ltd. (1984)
2 Qd R 16 Shepherdson J. had said at p 21:
"I hold that a tavern licence is not property and is a
personal right to the holder of such licence to carry on the
business in accordance with the licence at particular
premises and under conditions prescribed by law."
Brennan J. offered an observation in Harper's case which explains what might
otherwise have appeared to be a contrary view when he said of a fee paid to
acquire a right to fish:
"Such a fee may be distinguished from a fee exacted for a
licence merely to do some act which is otherwise prohibited
(for example, a fee for a licence to sell liquor) where
there is no resource to which a right of access is obtained
by payment of the fee." (p 335).
20. In Pyke v. Duncan (1989) VR 149, Nathan J. concluded that fishing
licences under the Victorian and Commonwealth legislation were not "property"
available to the Sheriff for seizure in satisfaction of a Writ of Fi Fa. His
Honour relied on the decision in Burns Philp Trustee Co. Ltd. v. Ironside
Investments Pty. Ltd. and sought to distinguish the decision in Pennington v.
McGovern by saying that it had not addressed the questions of seizure and sale
to satisfy a judgment creditor (p 155). His Honour did not consider that the
existence of a market for licences determined the question of proprietary
rights, commenting that the commercial interchange between a willing vendor
and a willing purchaser differed from "that of the sheriff to pass on a good
title to a bona fide purchaser in order to satisfy a judgment of this Court"
(p 159)
21. With respect, I regard the views expressed in Pyke v. Duncan and the
conclusion in that case as being at variance with the decisions of the High
Court to which I have referred and with the decision in Pennington v.
McGovern. Counsel for the applicants suggested that it might have been the
onerous consequences flowing from seizure that justified a more restrictive
view of the meaning of the word "property" in Pyke v. Duncan. I think not. In
my opinion a licence to fish brings with it a privilege and a right that is
proprietary in nature. Subject only to such constraints (if any) as may be
found in the governing legislation, it is properly classified as "property".
In principle I can see no difference between such a licence and the units of
fishing capacity in the case at bar. They are as important to the fisherman
as his licence and his boat. Without them, he cannot fish even though he is
licensed and his boat is registered. I hold that the units are property.
22. Does the expiry of the units constitute an "acquisition" of property?
The issue of what amounts to an "acquisition" has been discussed recently by
Burchett J. in Peverill v. Health Insurance Commission (1991) 104 ALR 449. In
that case, the applicant, a specialist pathologist, claimed that Medicare
benefits were payable to him in respect of pathology services that he had
rendered. Subsequent to the rendering of the services, the legislation was
amended with a retrospective operation which had the effect of extinguishing
the applicant's rights to the payment of the Medicare benefits. It was held
that the amending legislation amounted to an "acquisition" of property within
the meaning of s51 xxxi of the Constitution and that the Commonwealth had
benefited from what the applicant had lost. The benefit was the removal of
the Commonwealth's obligation to pay Medicare benefits in respect of the
pathology services to the applicant. The existence of and the obtaining by
the Commonwealth of such a benefit meant that this was not a case of the mere
extinguishment of a right.
23. His Honour's detailed analysis in Peverill's case of the case law on the
subject renders it unnecessary to repeat that exercise. It will be sufficient
merely to note in summary form some of the more important principles.
24. First, s51 xxxi is a constitutional guarantee; as such it is "plainly
intended for the protection of the subject, and should be liberally
interpreted": The Minister of State for the Army v. Dalziel (1944) 68 CLR 261
at 276 per Latham C.J. Secondly, it "extends to innominate and anomalous
interests and includes the assumption and indefinite continuance of exclusive
possession and control for the purposes of the Commonwealth of any subject of
property": Bank of New South Wales v. Commonwealth (1948) 76 CLR 1 at 349-350
per Dixon J. Thirdly, the constitutional protection is not limited to an
acquisition by the Commonwealth; as Barwick C.J. said in Trade Practices
Commission v Tooth and Co. Ltd. (1979) 142 CLR 397 at 403 "(i)t ensures that
no one may, by virtue of a Commonwealth statutory provision, acquire (a
person's) property except upon just terms". Fourthly, the paragraph is
concerned with the effect upon the person from whom the acquisition is made.
If there is such an 'acquisition' "its transmutation into some other form in
the hands of the Commonwealth is not really to the point": Peverill's case
at 459.
25. On the other hand, and despite the width given to the word, there must
still be an "acquisition" by the Commonwealth or some third party. Thus, three
of the Justices in Commonwealth v. Tasmania (The Tasmanian Dam case) (1983)
158 CLR 1 were of the opinion that Commonwealth legislation making the
development of the State's property subject to the consent of the Minister did
not amount to an "acquisition". Mason J. (as he then was) said that it was
not enough "that legislation adversely affects or terminates a pre-existing
right" (p 145). Brennan J. at p 248 came to this conclusion:
"In the present case the Wilderness Regulations and ss.9, 10
and 11 of the Act affect the freedom of the State of
Tasmania and of the H.E.C. to use the Wild Rivers National
Park and the H.E.C. land for the construction of the
proposed dam. But that is not sufficient to attract the
operation of par.(xxxi). Unless proprietary rights are
acquired, par. (xxxi) is immaterial to the validity of the
impugned Commonwealth measures. Though the Act conferred a
power upon the Minister to consent to the doing of acts
which were otherwise prohibited on or in relation to land,
that power was not a proprietary right. In my opinion, the
Commonwealth acquired no property from Tasmania. It follows
that the question of just terms does not arise."
26. Murphy J. held that "the extinction or limitation of property rights does
not amount to acquisition" (p 181). Deane J., although ultimately concluding
that there had been an acquisition, said much the same:
"The mere extinguishment or deprivation of rights in
relation to property does not involve acquisition". (p 283)
27. Can it therefore be said that the expiry of units in relation to boats in
the NPF constitutes an acquisition by the Commonwealth (or some other party)
of property? To answer that question further findings of fact must be made.
First, there is evidence that the owners of prawn trawlers in the NPF are, in
part, small operators owning and working one boat. Mr. Fitti is such a person
as are the Daveys. Other operators own two or more boats and there are
several corporate owners with fleets of boats of varying numbers. Secondly,
the Restructuring Program applies "across the board" in that all units will
suffer the same rateable expiry. Much will depend upon the number of units
that are assigned to particular boats or are otherwise available for use by an
owner but in the case of Mr. Fitti and Messrs Davey the expiry will mean, and
I find, that they would each have to expend many thousands of dollars in
buying the additional units needed to keep their boats working after 1 April
1993. They have other options. For example: such a fisherman could sell his
units and his boat, he could sell his units but keep his boat in the hope that
he might be able to use it in some other fishery, or he could keep his units
and sell his boat. If he kept his units, he would retain a saleable commodity
but he would not be able to operate a boat in the NPF. There is, on paper,
another possibility: a boat owner could remove the engine in his boat and
replace it with a less powerful one. That would reduce the "Engine Power
units" and, as a consequence, the applicable number of units. I am satisfied,
however, that such a proposal is not available as a matter of practicality
either to Mr. Fitti or to Messrs Davey. Thus, unless the additional units are
purchased, the introduction of the Restructuring Program will mean that Mr.
Fitti and Messrs Davey will no longer be able to work as prawn fishermen on
their own boats in the NPF.
28. I further find that a multiple boat owner might lose the right to work
one or more of his boats. However, in most - if not in all cases - he will be
left with, at least, one boat which he can continue to operate. It seems to
me, therefore, that although the Restructuring Program has the effect of
rateably reducing all units with respect to all boats, it has a discriminatory
effect on an owner of one boat in that he will no longer be able to work in
the NPF unless he commits himself to large capital expenditure. Mr. Davey
Snr. said that he thought it might be as much as $400,000. His evidence did
not substantiate this figure but I remain satisfied that, in each case, the
additional expenditure would be substantial. The discriminating effect of the
Program does not, however, necessarily constitute an "acquisition". Just as a
single boat owner would need to raise substantial moneys to acquire additional
units in order to restore himself to his former position, so too would a
multiple or fleet owner. Conversely, if the moneys were not raised, the owner
of two or more boats would also lose a right to work one or more of his boats.
In these circumstances the rateable treatment of all boat owners might suggest
that there would be no "acquisition". Could it therefore be said that the
expiry of units is properly classified only as an extinguishment of a right?
29. The original allocation or purchase of the applicable number of class A
units in respect of a particular boat gave to the owner of that boat a right
to use that boat for prawn trawling. The change that has been brought about
by the Restructuring Program has extinguished that right by the implementation
of the arithmetical formula that is contained in paragraph 20B of the Plan.
The allocation of units to a boat, just like the personal right to fish, is
not (to use the words of Brennan J. in Harper v. Minister for Sea Fisheries)
"a licence merely to do some act which is otherwise prohibited". On the
contrary, those units coupled with a boat and a fishing licence, give to a
fisherman access to a resource. That resource, the prawn fishery, will be
available to that fisherman until 1 April 1993. On that date he will lose it
and lose with it his share of the NPF market. Those of his fellow fishermen
who will remain in the NPF (either because they own two or more boats or
because they will have purchased additional units before 1 April 1993) will
thereafter rateably participate in the outgoing fisherman's share of the
market and enjoy the benefits of reduced competition. The loss of that
participation and enjoyment by an outgoing fisherman and the corresponding
gains by the continuing fishermen are sufficient, in my opinion, to constitute
an "acquisition".
30. In coming to this conclusion I have been influenced by the views
expressed by Burchett J. in Peverill's case that paragraph xxxi is concerned
only with the effect of the legislation "upon the 'person' from whom the
acquisition is made" (p 143). That view has been questioned by Prof. Hanks in
a case note on Peverill's case in 14 Syd L R 495 at 500-501 where he said:
"But there could be another perspective, which takes account
of the wider range of interests that were adjusted by the
Amendment Act. They would include the interests of
patients, medical practitioners and tax-payers in the
development and maintenance of a health care system that
balances efficiency and equity."
31. There is, of course, a ready vehicle for the application of that view to
the circumstances of this case. There was an abundance of material placed
before the Court pointing to the need to reduce the number of boats operating
in the NPF and to the acceptance of the Program by large sections of the
fishing industry. Thus it could be said that questions of "acquisition" and
"just terms" should be assessed by having regard to what is best for the NPF
and the fishing industry. I do not favour such an approach - at least in the
circumstances of this case - for it would favour the financially strong and
discriminate against the weak.
32. It remains to consider whether the acquisition was on just terms. Once
more it is necessary to make further findings of fact. The evidence of Mr.
Davey Snr. satisfies me, and I accept, that the introduction of the
Restructuring Program coupled with a failure or an inability to acquire the
necessary additional units will mean that a fisherman such as Mr. Davey and
his son (and Mr. Fitti) will thereafter be unable to fish in the NPF in their
own boats. Both Mr. Davey and Mr. Fitti have said that their attempts so far
to raise the finance necessary to purchase the additional units have been
unsuccessful. Whilst I accept such evidence as they have given, it was limited
in its effect. I know nothing of their personal financial wealth (other than
their annual business trading accounts); I do not know what assets they own
nor do I have particulars of what family or other resources may be available
to them. In short, I do not know enough to be able to make a finding about
their ability or their inability to raise funds sufficient to acquire the
additional units.
33. On the other hand, it is possible to make a comparison of a fisherman's
position before and after 1 April 1993. In respect of such a fisherman who
operated one boat in the NPF, he would have had, prior to 1 April, his boat,
his fisherman's licence and a parcel of units; the value of those units would
have been determined by relating the number of units assigned to his boat to
the total number of units in the NPF. In the case of Mr. Fitti, the value of
his 382 units would have been determined in the knowledge that the total of
all issued units was 72,216. After 1 April he continues to hold his licence
and his boat but the value of his reduced number of units (382-118 = 264) will
be determined by having regard to the reduced number of units (50,000) in the
NPF. As these ratios are the same, his parcel of units (although reduced
numerically) might arguably retain the same value. On this reasoning any
acquisition might well be said to be on "just terms" because it could be
argued that the values attributable to the relevant assets had remained
constant. That, however, is not the end of the exercise.
34. The property that has been identified as the object of the acquisition is
the parcel of units. If it be argued that the expiry of a proportion of the
fisherman's units does not reduce the value of his parcel of units, what of
his boat and its value? There has been no material change to the boat, its
engine or its gear but it has ceased to be a useable chattel in the NPF.
Whilst the evidence makes it clear that there are fishermen in the NPF who
will be prepared to buy available units it is not suggested that there will be
any market for retiring boats. I accept the evidence of Mr. Davey Snr. that
his trawler was custom-built for use in the NPF. I also accept his evidence
that if he is able to obtain a licence to fish in another fishery it will cost
him a substantial sum (his evidence suggested an amount in excess of $200,000)
to make the necessary alterations to his trawler. The terms of the
Restructuring Program make no allowance for such expenditure, yet it is a
direct consequence of the acquisition of the units. That conclusion, which is
more than an adoption of some concept of financial equivalence, leads to the
further conclusion that the acquisition would not be on just terms. There is
no compensating factor at all for the loss of use of the boat. I am therefore
of the opinion that the expiry of the prescribed units would amount to an
acquisition of property on terms that are not just. The applicants are
therefore entitled to the injunctive and declaratory relief as sought in their
applications.
Ultra Vires
35. In view of my conclusion that the implementation of the Restructuring
Program constitutes an acquisition of property on terms that are not just it
is not necessary to consider the applicants' further arguments with respect to
the issue of ultra vires. However, in case the matter should go further, I
set out hereunder my reasons for concluding that the applicants would not be
entitled to relief under this head.
36. The principal complaint was that, as a matter of fact, the true
objectives of the Restructuring Program were economic efficiency in the NPF,
increased profitability for fishermen in the fishery and the ultimate
imposition of a resource rent or tax. These objectives were, so it was
claimed, ultra vires the provisions of the Fisheries Act 1952 (Cth). In
addition there were further complaints of discrimination, unreasonable-ness
and unfairness. These matters will have to be considered upon the notional
premise that the findings of fact that I have made do not constitute a
Constitutional infringement.
37. The reliance by the applicants on s39B of the Judiciary Act and the
recent decision of the Full Court in The Minister for Primary Industries and
Energy v. Austral Fisheries Pty. Ltd. (unreported: judgment delivered 19
February 1993), which dealt with the Management Plan for the South East
Fishery, render it unnecessary to engage in the exercise of determining
whether the NPF Management Plan is to be treated as delegated legislation. As
Beaumont and Hill JJ. said in their joint judgment at p 25:
"... the Court's jurisdiction under s39B of the Judiciary
Act was also invoked and it is accepted that this
jurisdiction permits, in an appropriate case, judicial
review of both administrative and legislative action."
38. It cannot be doubted that the respondents' objectives in introducing the
Restructuring Program were actuated, in part at least, by economic motives.
It is sufficient to refer to some recent items of correspondence from AFMA to
establish that point. In a circular letter to unit holders dated 9 October
1992 (Ex ABDK) the General Manager of AFMA wrote:
"Restructuring of the Northern Prawn Fishery ('NPF') to
improve commercial performance and profitability and to
protect prawn stocks, is proceeding..."
The letter of 23 November 1992 from the Managing Director of AFMA to the
solicitor for the applicants (Ex KDBC) addresses, quite openly, matters of
commercial viability, economic efficiency and the need for the industry to
repay the moneys advanced by the Commonwealth under the VAS. The last
paragraph of that letter read:
"In addition, while 70,000 units may be biologically
sustainable with numerous area, gear and other restrictions
imposed, the need for industry to repay around $20 million
to the Commonwealth for the VAS from 1993 onwards makes it
vital that the operators in the fishery are viable. In
short, current arrangements have been implemented to take
account of many factors, and AFMA considers that to alter
these in the way you suggest would not be in the best
interests of the fishery."
39. In his circular letter of 3 February 1993 to NPF unit holders (Ex A2 9)
the General Manager of AFMA advised of the variations to certain restrictions
relating to use of gear and the hours of trawling. He said:
"The expected increase in catches per vessel should assist
industry to offset increased adjustment levies brought about
by the reduction of units in the fishery and other factors."
Later he added:
"The broad aim of AFMA in the management of the NPF is for
less restrictive input management measures to reduce costs
and improve the profitability of the fishery."
40. There is therefore, in my opinion, evidence before the Court sufficient
to substantiate a finding that the implementation of the Restructuring Program
was actuated, to a substantial degree, by objectives of economic efficiency
and commercial profitability; I so find.
41. I turn next to the issue of a resource rent. In his affidavit, Mr. Fitti
deposed to attending, in the company of others, a meeting in Canberra on 10
September 1992 with a Mr. Martin Excel. There is correspondence in evidence
that nominates a person of that name as an employee of AFMA holding the
position of its General Manager of "Northern and Pelagic Fisheries".
According to Mr. Fitti, Mr. Excel said at the meeting that economic efficiency
of small operators was "...not the point. The point is that the Government
has decided that it wants a community return from the fishery through a
resource rent". I received this evidence under objection as evidence of a
statement made by Mr. Excel and I intimated that I would rule at a later stage
on the issue of Mr. Excel's authority to make the statement. Having regard to
the existence of the correspondence to which I have referred and bearing in
mind that the respondent did not seek to call Mr. Excel or explain his
absence, I conclude that it is a justifiable inference and I find that Mr.
Excel was a senior employee of AFMA with authority to speak for it and that
the remarks attributed to him by Mr. Fitti fairly reflected the views of both
respondents: Jones v. Dunkel (1959) 101 CLR 298; La Macchia v. Minister for
Primary Industries and Energy (1992) 110 ALR 201 at 208. Furthermore, the
prospect of such a tax was acknowledged by the Hon. the Minister for Finance
in Parliament on 8 November 1990 when he referred to the need that "fishermen
make an appropriate payment to the community for the right to exploit a public
resource for private gain". (Aust, Parl, Debates, R (8 November 1990) 3631-2
(Ex A1 1)).
42. Notwithstanding this evidence, I do not consider that the implementation
of a resource rent was also an objective of the Restructuring Program. I
accept the submission of counsel for the respondents that such a project may
be an ultimate objective of the respondents, but, if it is, it must be the
objective of - and the subject of - separate legislative action. It cannot be
regarded as part of the current Restructuring Program.
43. The provisions of s5B of the Fisheries Act are set out earlier in these
reasons. The heading to that section is "Objectives to be pursued" and there
are two stated objectives set out in paragraphs (a) and (b) of the section.
Mr. Macfarlan QC, counsel for the applicants, submitted, and it would seem to
be correct, that the two objectives nominated in s5B have their origins in the
early drafts of the United Nations Convention on the Law of the Sea 1982 (Ex
A5) ("the UN Convention"). On 13 April 1978, in the second reading speech
dealing with amendments to the Act (which included s5B), the Minister of the
day had referred to Articles 61 and 62 of the Informal Composite Negotiating
Text ("the ICNT") that had been produced after the sixth session of the Third
Law of the Sea Conference at New York in the preceding year: Aust, Parl,
Debates R (13 April 1978) p 1516 (Ex A1 2). Although this draft was not in
evidence the Minister said of the two relevant articles:
"I refer honourable members, in particular, to draft
Articles 61 and 62 of the ICNT. A reading of these will
show that whilst the coastal State has sovereign rights over
the living resources of the zone it has, in turn, certain
obligations with respect to management of the resources in
that zone. Briefly these are, to so manage these resources
that they are conserved for optimum use of mankind both now
and in the future. In this regard Australia will have to
assess the resources of the Australian fishing zone and
determine the total allowable catches of these resources."
44. The obligations to which the Minister referred are now encompassed in the
objectives of the legislation as well as in the current UN Convention to which
Australia became a party on 10 December 1982. For example, the objective that
is set out in paragraph 5B(a) of-
"ensuring, through proper conservation and management
measures, that the living resources of the Australian
fishing zone are not endangered by over-exploitation"
is to be compared with the language of sub-article 61.2 of the Convention:
"2. The coastal State, taking into account the best
scientific evidence available to it, shall ensure through
proper conservation and management measures that the
maintenance of the living resources in the exclusive
economic zone is not endangered by over-exploitation."
(Emphasis added)
45. The objective in paragraph 5B(b) of "achieving the optimum utilization of
the living resources of the Australian fishing zone", is in harmony with
sub-article 62.1 of the Convention.
"1. The coastal State shall promote the objective of
optimum utilization of the living resources in the exclusive
economic zone without prejudice to article 61." (Emphasis
added)
46. The language of s5B and that of the passages from Articles 61 and 62 of
the UN Convention that are set out above show a clear community of purpose.
The international aspect and the importance of harmony in international
affairs should therefore remain a paramount consideration when considering the
purpose and effect of s5B. (Queensland v. The Commonwealth (1989) 167 CLR 232
at 239).
47. Counsel for the applicants relied upon the UN Convention as an essential
part of his submission that the two stated objectives in paragraphs (a) and
(b) of s5B are exclusive - as if the legislation were devoid of other
objectives. I reject that interpretation as it gives no recognition to the
presence of the words "shall have regard to" nor does it recognise the special
treatment that the section gives to whales. Clearly, it is an objective of the
legislation to offer total protection to all species of the whales. The two
objectives dealing with over exploitation and optimum utilization are of
paramount importance - so much so that it is mandatory for the Minister to
consider them and to "have regard to" them in every aspect of his
administration of the Act. That does not mean, however, that there can not be
any other objectives of or in the legislation. In fact, the legislation
expressly contemplates other objectives through the utilization of a plan of
management: (see subs 7B(2) where it is provided that a plan of management
shall set out the objective of the plan and the measures by which the
objective is to be attained). Consistent with this provision, paragraph 7 of
the NPF Management Plan deals with the objectives for the fishery;
sub-paragraphs 1 and 2 provide:
"7.1 For the purposes of sub-section 7B(2) of the Act, the
objectives of this plan are -
(a) to conserve the stocks of prawns in the area of the
fishery;
(b) to reduce the fishing pressure on the stocks of prawns
in the area of the fishery, and
(c) to promote the economic efficiency of the fishery.
7.2 The measures for attaining the objectives specified in
paragraph 7.1 shall include -
(a) the determination of the fishing capacity of the
fishery.
(b) the determination of the number of units of fishing
capacity for the fishery available to a unit holder
for allocation and assignment, which shall be
renewable and transferable; and
(c) the facilitation of the withdrawal of units and boats
from the fishery."
48. Sub-paragraph 7-3 as amended deals with the expiry of units. It now
reads:
"Without limiting the generality of paragraphs 7.1 and 7.2,
the objectives of this plan include the reduction by 1 April
1993, of the total number of Active Class A units and
surplus type II units that are recorded in the Register on
13 December 1992 to not more than 50,000 through
implementation of Part 7 of this plan."
The statutory justification for this last mentioned provision is to be found
in subs7B(5) of the Act which provides that a plan of management for a fishery
may make provision for various matters including:
"(a) the division of the fishing capacity permitted for the
fishery into units (in this section referred to as
'units of fishing capacity');
...
(c) the assignment of units of fishing capacity to boats,
and the holding, and cessation of holding, of units of
fishing capacity in relation to boats;
...
(g) the duration, variation, re-assignment, transfer,