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

• Jurisdiction: South Africa
• Judge: Chaskalson CJ, Langa DCJ, Ackermann J, Goldstone J, Madala J, Mokgoro J, Moseneke J, Ngcobo J, O'Regan J, Sachs J and Yacoob J
• Judgment Date: 12 March 2004
• Citation: 2004 (4) SA 490 (CC)
• Docket Number: CCT 27/03
• Hearing Date: 11 September 2003
• Counsel: I Jamie SC (with him P R Hathorn) for the applicant. W H Trengove SC (with him A Schippers and A M Breitenbach) for the first and second respondents. L A Rose-Innes SC (with him P B J Farlam) for the third to eighteenth respondents.
• Court: Constitutional Court

O'Regan J:

[1] This application for special leave to appeal to this Court against a judgment of the Supreme Court of Appeal (the SCA) [1] concerns the allocation of fishing quotas. The applicant, Bato Star Fishing (Pty) Ltd, is dissatisfied with the allocation it received in the 2001 allocation process for the 2002 - 05 fishing seasons and it seeks to review that allocation G decision. The review succeeded in the Cape High Court (the High Court), but, on appeal, that judgment was overturned by the SCA. The case raises the question of the extent to which such a decision is susceptible to review under our new constitutional order. H

[2] The first respondent is the Minister of Environmental Affairs and Tourism (the Minister) who is the member of Cabinet responsible for the administration of the relevant legislation. The second respondent is the Chief Director in the Department of Environmental Affairs and Tourism (the Chief Director), responsible for marine and coastal management, who took the allocation decision under challenge in this I

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case. [2] The third to eighteenth respondents are other rights holders in the deep-sea A hake fishing industry (the other respondents) who oppose the relief sought by the applicant.

[3] The applicant has held fishing rights in the deep-sea trawl sector of the hake fishing industry since 1999. The industry is more than a hundred years old and is one of the most lucrative sectors of B the South African fishing industry. It generates sales of more than R1,45 billion per annum, is the largest exporter of perishable frozen products in the country and has an international reputation for being a well-managed fishery producing a quality product. The deep-sea trawl sector is both capital- and labour-intensive, with a current fixed capital investment of some R5,4 billion and a labour force, directly C involved in the industry, of about 8 000 workers.

[4] Hake is caught in four ways - by deep-sea trawling, by in-shore trawling, by long-lines and by hand-lines. For the purpose of the allocation of quotas, the industry is divided into four sectors based on these four methods. Of these sectors, the D deep-sea trawl industry is the largest, the most technologically sophisticated and the most capital- and labour-intensive. Of a total allowable catch of 165 000 tonnes of hake in 2002, the deep-sea trawl sector was allocated 138 495 tonnes, while the in-shore trawl sector was allocated 10 165 tonnes, the long-line sector 10 840 tonnes and the hand-line sector 5 500 tonnes. These last two sectors have been E introduced only in recent years and, because of their relatively simple technology that eschews the need for high levels of investment, have been earmarked by the Department of Environmental Affairs and Tourism (the Department) as key areas for transformation in the hake fishing industry. [3] F

[5] According to industry estimates, each 1 000 tonnes of hake caught in the deep-sea trawl sector represents a turnover of approximately R13 million and a profit of approximately R5 million. Deep-sea trawling for hake was pioneered in South Africa by a handful of companies who remain dominant in the sector. Like most of the South African economy, the sector is dominated by companies that historically G were established, owned and managed by white people. Accordingly one of the ten objectives identified in s 2 of the Marine Living Resources Act 18 of 1998 (the Act) is:

'(j)

the need to restructure the fishing industry to address historical imbalances and to achieve equity within all branches H of the fishing industry'.

[6] This objective as well as all the other objectives set out in s 2 of the Act are, by their nature, incapable of immediate or short-term fulfilment.

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The objectives require action by the executive to facilitate their fulfilment in the medium- and long-term. Measures A aimed at the achievement of the goal identified in s 2(j) of the Act need to be taken side by side with the steps designed to fulfil the other objectives identified in the Act. In particular, the Act recognises that the industry exploits a scarce marine resource that may be destroyed if not carefully managed and monitored. Most of the other objectives flow from this realisation. The other objectives B identified in s 2 are the following:

'(a)

The need to achieve optimum utilisation and ecologically sustainable development of marine living resources;

(b)

the need to conserve marine living resources for both present and future generations; C

(c)

the need to apply precautionary approaches in respect of the management and development of marine living resources;

(d)

the need to utilise marine living resources to achieve economic growth, human resource development, capacity building within fisheries and mariculture branches, employment creation and a sound ecological balance consistent with the development objectives of D the national government;

(e)

the need to protect the ecosystem as a whole, including species which are not targeted for exploitation;

(f)

the need to preserve marine biodiversity;

(g)

the need to minimise marine pollution;

(h)

the need to achieve to the extent practicable a E broad and accountable participation in the decision-making processes provided for in this Act;

(i)

any relevant obligation of the national government or the Republic in terms of any international agreement or applicable rule of international law. . . .'

The sensitivity of the resource is real. In the 1960s and 1970s a large number of foreign fishing vessels took to fishing in the hake fisheries off the South African coast and threatened the long-term sustainability of fish stocks. In 1977 South Africa accordingly introduced a 200-mile economic zone and excluded foreign fishing F vessels from its waters. In order to protect the fishery, a total allowable catch was introduced for the first time in 1978, followed by a quota system for individual companies. The maintenance of the hake fish population as a sustainable living resource is thus appropriately a central tenet of the legislative scheme. This consideration clearly renders the achievement of a more equitable distribution of fishing G rights more challenging for the Department, as the total allowable catch cannot simply be increased to accommodate more participants.

Applicant's history in the fishing industry H

[7] The applicant was formed in 1996 when it acquired the controlling share in three small fishing companies operating in the abalone sector of the industry. Seventy percent of the applicant is owned by a holding company, SA Amalgamated Union Fishing (Pty) Ltd (SAAUF), and the other 30% is owned by the applicant's management. In turn, SAAUF has I two major shareholders, both of which are trade union investment companies. According to the applicant, the main purpose behind its formation was the establishment of a medium-sized black empowerment fishing company. In its first few years of operation, the applicant was only engaged in the abalone sector of the fishing industry. It built a J

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processing factory and marketed abalone under its own brand names. Since 1996, however, the applicant has had its quotas of abalone A reduced significantly. From the date of its establishment the applicant sought to enter the hake deep-sea trawl sector. It applied for, but was refused, quotas in 1996, 1997 and 1998. In 1999, for the first time, it was allocated a quota of 750 tonnes. It received the same allocation in B 2000, and in 2001 the allocation was increased to 803 tonnes.

The application process for rights for 2002 - 05

[8] A development identified by the Department as desirable for the stabilisation of the industry was a move to longer-term quota allocations, instead of quota allocations for one year only. [4] One of the advantages of a longer-term quota allocation is that it permits industry players to make capital C and human resource investments in the industry. The Department accordingly decided that it would be appropriate to issue rights for the deep-sea hake sector for a four-year period, the initial period to cover the 2002 - 05 fishing seasons. On 27 July 2001 the Department published in the Government Gazette an invitation to submit D applications for a broad range of fishing rights, including the deep-sea hake sector. [5] At the same time the Department issued the policy guidelines in terms of which the allocations would be made. [6] The allocations were to be made in terms of s 18 of the Act. E

[9] The policy guidelines stipulated that applications would be evaluated in terms of the objectives and principles set out in s 2 of the Act. The guidelines also identified a range of more specific policy considerations, in no order of preference. These included the importance of historical involvement in the industry, proof of F investment and past performance in the industry and demonstrated ability to create employment. While acknowledging the fact that transformation of the industry could not take place overnight, the guidelines nevertheless affirmed the objective of building a fishing industry whose 'ownership and management, broadly reflects the demographics of South Africa'. G

[10] In order to assess the degree of transformation of any particular applicant, the guidelines adopted a nuanced approach, recognising that transformation involves more than simply a change in ownership. So three relevant factors were listed. The first factor made it plain that equity within an applicant could be an acceptable alternative to the requirement of ownership. The other two factors were H the distribution of wealth created through access to marine living resources and the extent to which an applicant employs people from...