Minister of Environmental Affairs and Tourism and Others v Phambili Fisheries (Pty) Ltd; Minister of Environmental Affairs and Tourism and Others v Bato Star Fishing (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Howie P, Schutz JA, Mthiyane JA, Conradie JA and Jones AJA
• Judgment Date: 16 May 2003
• Citation: 2003 (6) SA 407 (SCA)
• Docket Number: 32/2003 and 40/2003
• Counsel: L A Rose-Innes SC (with him P B J Farlam) for the appellants in the Phambili Fisheries (Pty) Ltd appeal. P B Hodes SC (with him R P Quinn SC) for the respondents. W H Trengove SC (with him A Schippers and A M Breitenbach) for the appellant in the Bato Star Fishing (Pty) Ltd appeal. I Jamie SC (with L J Bozalek) for the respondents (the heads of argument having been drawn by I Jamie SC, L J Bozalek and P R Hathorn).
• Court: Supreme Court of Appeal

Schutz JA: A

[1] Up until 1978 our seas were increasingly being plundered by all and sundry. In that year, in order to prevent the further destruction of our fishing stocks and indeed to an extent to restore them, the notion of Total Allowable Catch ('TAC') was introduced. In respect of all the hake fishing sectors the TAC, once determined for a fishing season, then set a limit on the total tonnage that might be B caught. Quotas for individual companies were introduced for the first time in the following year, 1979. Although there have been changes in detail over succeeding years, the limit imposed by the TAC and the quota or later allocation system still prevail. This case is concerned with the allocation of quotas for the 2002 season in the hake deep sea C trawling sector, which accounts for the great bulk of the tonnage caught. The other hake sectors are inshore trawling, longlining and handlining. The principles upon which the 2002 allocations are based are intended to extend over the medium term, that is also to the 2003, 2004 and 2005 seasons. D

[2] As the annual hake catch is a limited resource and as there is money to be made out of selling fish, it may be imagined that quotas are a much-coveted asset. Today's competition to acquire them is sharpened by the ownership patterns resulting from the history of the industry and by the deprivations imposed by the previous political system upon those whom are referred to in this case as historically disadvantaged persons or people (hdp). Inevitably there is tension E between the large established companies (also the 'pioneer' companies) and the small new aspirants coming from the ranks of the hdp. There is a tendency to describe these two groups stereotypically. As with most generalisations, stereotypes are apt to be misleading. Prosperous the established companies may be, but if one looks more F closely into them one finds, in varying degrees, how they improve the lives of hdp as co-owners, shareholders, managers, skippers, crews, other sorts of employees, factory workers, consumers and the like. Also if one examines some of the hdp companies more closely one finds that they are not entirely composed of the archetypal necessitous fisherman. Appreciating these facts is but the starting point of a realisation G that the person making the quota allocations, who is mindful of the call for fostering 'transformation' or 'reconstruction', has a difficult task before him; a task which is not made more easy by the fact that it is notorious in the industry that some applicants are not entirely frank as to who they are, or what exactly they intend doing. And his decision, however wise and reasonable, will satisfy no one H entirely. This by way of introduction.

[3] The respondents are two fishing companies, Phambili Fisheries (Pty) Ltd (Phambili) and Bato Star Fishing (Pty) Ltd (Bato). They brought review applications in the Cape Provincial Division, which came before Ngwenya J and Potgieter AJ. The applications were heard I together and succeeded, against the Minister of Environmental Affairs and Tourism (the Minister), the Chief Director: Marine Coastal Management (the Chief Director), the Deputy Director-General: Environmental Affairs and Tourism (the Deputy Director-General), (collectively 'the Government J

Schutz JA

appellants') and 16 fishing companies which were successful in obtaining quotas and who opposed the A applications (the industry appellants). Among them are firms such as Irvin and Johnson Ltd and Sea Harvest Corporation Ltd, long-established fishing companies and the two largest. But among them are also wholly black-owned companies and companies with quotas considerably smaller than those of Phambili or Bato. There are also indications in the record that a further 11 of the smaller companies supported the B opposition to the respondents' applications, even though they did not join as parties.

[4] The quota allocations were made by the Chief Director on 24 December 2001, under the powers vested in the Minister under s 18 of the Marine Living Resources Act 18 of 1998 (the MLRA) which C had been delegated to him in terms of s 79. At the time Phambili and Bato were existing quota-holders with quotas much smaller than those held by the large companies. For the 2002 season in respect of which they complain, they were again awarded quotas, slightly larger than they had had, being increases originally from 1 069 to 1 083 tons and 803 to 856 tons respectively. They had applied for considerably more D than they were awarded. Their complaint is, essentially, that as hdp companies the increases in quotas should have been much larger, at the expense of the established companies, or even by the elimination of some of the small quota holders. The deep sea trawling TAC for the season was 138 495 tons. E

[5] The procedure adopted for the determination of allocations in the four hake sectors and the numerous other fishing sectors was a detailed and complex one. On 27 July 2001 a general notice was published in the Government Gazette. It invited interested parties to apply for fishing allocations. Attached to it was a F pro forma application form which required the insertion of numerous details. Among those that are relevant are the following: particulars of the shareholding of applicant companies, full details of hdp as owners, directors, shareholders, members, beneficiaries, or as placed in top, senior or middle management positions, and of the proportion of professional, skilled, semi-skilled and unskilled hdp G workers, together with details of their earnings.

[6] Also forming part of the Government Notice were certain policy guidelines. The introduction stated:

'The Minister intends to allocate rights for a period not exceeding four years . . ., which will greatly enhance opportunities H for investment and the promotion of stability in the fishing industry.'

(Emphasis supplied.) Under the heading 'Evaluation of applications' the following, inter alia, was stated:

'Applications will be evaluated in accordance with the objectives and principles set out in s 2 of the Act and with I regard to the policy guidelines set out below. No precedence, ranking or weighting is implied by the order or content of the policy guidelines.

1.

Business plan, fishing plan or operational and investment strategy:

Cognisance has been taken of the fact that substantial investments have been made by many of the current rights holders. This factor, together with J

Schutz JA

the need to create an environment that will promote further long-term investment in human and material A resources are important considerations. Historical involvements, proof of investment and past performance are therefore important factors. Applicants that are able to demonstrate the creation of employment through the effective utilisation of their allocation will be viewed in a favourable light.

2.

Equity, transformation, restructuring and empowerment: B

The transformation of South Africa from an unequal society rooted in discrimination and disparity to a constitutional democracy founded upon freedom, dignity and equality poses particularly profound challenges for the fishing industry. It is here that there are acute imbalances in personal wealth, infrastructure and access to financial and other resources. While it is acknowledged that transformation or restructuring of the fishing industry cannot be C achieved overnight, it nevertheless is a primary objective to build a fishing industry that in its ownership and management, broadly reflects the demographics of South Africa today.

In determining the degree of transformation, the following factors will be taken into account:

•

ownership of, or equity within the applicant; D

•

the distribution of wealth created gained through access to marine living resources;

•

he extent to which the applicant provides employment to members of historically disadvantaged sectors of the community.

There is also a high degree of gender inequality throughout the fishing industry. The manner in which this is addressed, as well as racial and other historical imbalances in the context of contributing E towards achieving equity, are important factors.

In the more capital-intensive sectors of the fishing industry, a higher level of internal transformation of current rights holders rather than the introduction of new entrants is encouraged.

To effectively address the injustices of the past in an orderly and just manner and to achieve equity in the fishing industry, it is F the intention to allocate a notable proportion of the TAC/. . . to deserving applicants in order to encourage transformation, either through the internal restructuring of current rights holders, or through the accommodation of new entrants.

3.

Impact on the resources, environment and the fishing industry:

A key responsibility is the need to conserve the marine living resources for present and future generations, while at the same time G achieving optimum utilisation and ecologically sustainable development. In order to achieve this, the following considerations will apply:

. . .

. . .

•

The hake line sector (longline and handline) has been identified as a suitable vehicle for the promotion of [HDP] in the H hake sector, more specifically small-and-medium-sized enterprises (SMME'S). In order to achieve the objectives contemplated in s 2 of the Act, particular regard will be paid to the need to grant access to new entrants, particularly those from historically disadvantaged sectors of society.'

(Emphasis supplied.) I

[7] It is not in issue that the contemplated procedures were followed. What is complained of is the ultimate...