R v Australian Broadcasting Tribunal; Ex parte 2 HD Pty Ltd

The application to the Tribunal for consent to the transfer to the applicant of the licence of radio station 2HD arose out of an agreement dated 20th April 1979 between Airsales Broadcasting Co. Pty. Ltd. ("Airsales") and the applicant. By this agreement Airsales agreed to sell and the applicant agreed to buy the assets (including the goodwill), the properties, the plant and equipment used in connection with the business of the radio broadcasting station known as 2HD Newcastle for $1.4 million. Completion of the agreement was expressed to be "conditional upon the Australian Broadcasting Tribunal consenting to the transfer of the Broadcasting Licence held by the Vendor in respect of Radio 2HD to the Purchaser in accordance with the relevant provisions of the Broadcasting and Television Act ".

Section 89A (1) of the Act, which is contained in Pt IIIB dealing with licences, provides:

Subject to section 89B, a licensee may, with the consent in writing of the Tribunal, but without that consent shall not, transfer the licence or admit another person to participate in any of the benefits of the licence or to exercise any of the powers or authorities granted by the licence.

Pursuant to the agreement the parties made application to the Tribunal for its consent in writing to the transfer of the licence. The Tribunal decided to hold an inquiry in accordance with the provisions of Div. 3 of Pt II of the Act - see s. 18 (1). At the inquiry counsel for the parties submitted that the Tribunal was bound to give its consent to the proposed transfer as the transfer would not involve any contravention of the Act. The Tribunal rejected the submission.

the Tribunal denies consent to the transfer of the licence for commercial broadcasting station 2HD Newcastle from Airsales Broadcasting Co. Pty Ltd to 2HD Pty. Ltd, while the shareholding structure of Newcastle Broadcasting and Television Corporation remains in its present form.

In the reasons for its decision the Tribunal stated that it concluded that, if the transfer of the licence were approved -

1. There would be no resultant contravention of the Act.

2. By virtue of their shareholding interests in NBN each of the following persons would gain a prescribed interest in the licence for commercial broadcasting station 2HD - Tanate Pty. Ltd. which has 1,024, 819 shares in NBN amounting to 22.7 per cent of its share capital, and Broadcast Investments Pty. Ltd. holding 1,167,196 shares in NBN amounting to 26 per cent of its share capital.

1. These two companies would, by virtue of s. 90E of the Act, each be deemed to be in a position to control 100 per cent of the votes in the applicant for the purposes of Div. 2 of Pt IV of the Act.

2. Broadcast Investments Pty. Ltd., which holds all the issued shares in 2KO Newcastle Pty. Ltd., the licensee of commercial broadcasting station 2KO Newcastle, would be deemed under the provisions of s. 90E of the Act to be in a position to control also the licences for commercial television station NBN-3 (Newcastle's only commercial television station) and commercial broadcasting station 2HD.

The Tribunal went on to note certain assurances given by the representative of the applicant, including assurances that 2HD and NBN-3 would be operated as independent and autonomous stations, particularly with regard to programming policies, the dissemination of news and the sale of advertising time.

None the less, the Tribunal found that it was unable to accept that these assurances were sufficient to displace its conclusion, based on all matters before it, that so long as the ownership of NBN, and through it the applicant, remained in its present form the real possibility existed for a degree of control and influence by Broadcast Investments Pty. Ltd. of stations 2KO, NBN-3 and 2HD that would, in the Tribunal's view, be contrary to the interests of the Newcastle public as they relate to broadcasting services available to them.

The Act contains no provision for the making of an application for consent to the transfer of a licence, although s. 16 (1) (b) makes it one of the functions of the Tribunal to authorize transactions in relation to licences under s. 89A. Nor is there to be found any express provision specifying the criteria which the Tribunal is to observe, or the matters which it is to take into account, in deciding whether to grant or refuse consent, though s. 17 (1) provides that for the purpose of exercising its functions the Tribunal shall have power to do all things as it thinks fit. Nevertheless, it is not in doubt that the effect of the statute is to place the Tribunal under a duty to consider an application for consent (Water Conservation and Irrigation Commission (N.S.W.) v. Browning [1] ) and that the Tribunal has a discretion whether to grant or refuse its consent, the discretion to be exercised within proper limits (Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. [2] ).

1. (1947) 74 C.L.R. 492, at p. 505. 2. (1965) 113 C.L.R. 177, at p. 189.

Here the problem lies in ascertaining what are the proper limits of the discretion. In the absence of some positive indication of the considerations on which a grant or refusal of consent is to depend, the discretion is "unconfined except in so far as the subject matter and the scope and purpose of the statutory enactments may enable the Court to pronounce given reasons to be definitely extraneous to any objects the legislature could have had in view", to use the words of Dixon J. in Browning [3] . In that case his Honour went on to remark, (as he had done earlier in Swan Hill Corporation v. Bradbury [4] ), "on the impossibility, when an administrative discretion is undefined, of a court's doing more than saying that this or that consideration is extraneous to the power".

1. (1977) 74 C.L.R., at p. 505. 2. (1937) 56 C.L.R. 746, at p. 758.

The applicant therefore shoulders a very heavy, indeed an impossible, burden when it seeks to show in this case that the Tribunal has no discretion to refuse consent except on the ground that the transfer will bring about a contravention of the Act. This comes very close to saying that the Tribunal has no discretion to exercise at all. Even if the Tribunal is not bound to refuse consent to a transfer which will result in an illegality, the circumstances in which it will consent to a transfer which results in an illegality may be regarded as exceptional: compare s. 90H, which prohibits the grant of a licence when it would result in a contravention of s. 90C. Plainly enough, when the power to grant or refuse consent is unconfined by the express words of the statute the conclusion that the Tribunal has virtually no discretion at all is unacceptable.

The applicant relies principally on the circumstance that public interest (or matters relating thereto) is expressed to be a relevant consideration in the exercise of other discretions under the Act, viz. s. 88 (1) (b), s. 90J (4A) and the fact that s. 89B (2) makes applicable to the transfer of a licence s. 81 (3) and (4), but not s. 81 (2). However, it is not a legitimate approach to interpretation to compare a statutory discretion which is expressed in unlimited terms as to one subject with another discretion in the same statute which is confined to specified considerations with reference to a different subject and thereby conclude that the first discretion necessarily excludes the considerations specified in relation to the second discretion. The general rule is that a discretion expressed without any qualification is unconfined except in so far as it is affected by limitations to be derived from the context and scope and purpose of the statute. The fact that a discretion relating to a different subject matter is confined to a particular consideration provides no rational reason for saying that another discretion expressed without qualification does not embrace that particular consideration. Applied to the criterion of public interest, the argument is even less attractive. It would bring about the result, if accepted, that a discretion generally expressed may extend to any factor except public interest merely because another discretion directed to a very different subject matter is limited to the exclusive criterion of public interest.

Indeed, it would be anomalous and irrational if public interest were to be excluded from the Tribunal's consideration under s. 89A (1) when it is a relevant consideration under s. 88 (1) (b) and s. 90J (4A). Section 88 (1) (b) enables the Tribunal to suspend or revoke a licence where "it appears to the Tribunal that it is advisable in the public interest, for a specified reason, to do so". It is scarcely to be credited that Parliament intended that the Tribunal should lack power to refuse consent to a transfer on a public interest ground when, having consented to the transfer, it has the power to suspend or revoke the licence on that very ground once the transfer takes place. If that were the effect of the statute it would operate so as to place the transferee of a licence at serious risk.

Section 90J deals with changes in ownership of shares in a company holding a licence and in a company having a shareholding interest in such a company in consequence of which a person acquires a prescribed interest in a licence or an interest in excess of a prescribed interest. A shareholding interest constituting more than 15 per cent of the total paid-up share capital in the company holding the licence is a prescribed interest (s. 90 (2) (c)). The Tribunal shall not refuse to grant approval of such a transaction unless (a) it is of opinion that a contravention of s. 90C has resulted, or would result; or (b) it considers it necessary to do so in order to maintain such ownership and control of the company holding the licence as, in the opinion of the Tribunal, "best accord with the public interest."

Again, it would be anomalous if public interest is a permissible ground for refusing consent to a transfer of shares in a company holding a licence, but it is not a permissible ground for refusing consent to a transfer of the licence itself.

The suitability of an applicant is a material consideration when the Tribunal is called upon to decide whether a licence should be granted (s. 83 (5)). It would be surprising if it were excluded when the Tribunal deals with an application for consent to a transfer of a licence.

Section 81 (3) and (4) prohibit the grant of certain licences except to corporations and companies having specified characteristics. Section 81 (2) stands in a different position. It requires the Tribunal, in deciding whether to grant or renew a licence, to "have due regard to the need for the commercial viability of the commercial broadcasting and television stations in the area served or to be served in pursuance of the licence". There may be a real question whether this is a factor to be taken into account by the Tribunal in discharging its function under s. 89A (1). But the existence of this question is not a logical reason for saying that the Tribunal is not entitled to take into account under s. 89A (1) any matter affecting public interest.

The applicant also seeks to derive from s. 90C, which deals with the limitation of interests in commercial broadcasting stations, a positive statutory authority for the holding in one city or a region of any number of licences up to the maximum permissible limit, notwithstanding that this might result in the single ownership of all, or almost all, licences, broadcasting and television, in that city or area. The argument is that, when s. 90C is so construed, the ambit of the Tribunal's discretion to refuse consent to the transfer of a licence is correspondingly reduced.

Subject to this section, a person contravenes this section if, and so long as, he has a prescribed interest in the licences for -

(a) more than one metropolitan commercial broadcasting station in any State;

(b) more than four metropolitan commercial broadcasting stations in Australia;

(c) more than four commercial broadcasting stations in any one State; or

(d) more than eight commercial broadcasting stations in Australia.

The expression "metropolitan commercial broadcasting station" is defined by s. 90 (1) to mean "a commercial broadcasting station situated within a radius of 50 kilometres from the General Post Office in the capital city of a State".

For the purposes of this Division, a person has a prescribed interest in a licence if he is -

(b) in a position to exercise control, either directly or indirectly, of the licence; or

(c) the holder of shareholding interests in the company holding the licence exceeding in amount fifteen per centum of the total of the amounts paid on all shares in that company.

Contravention of s. 90C (1) constitutes an offence punishable upon conviction by a fine not exceeding $2,000 or $200 a day for every day on which the contravention continues.

The object of s. 90C (1) is to fix a maximum limit on the prescribed interests which a person may have in commercial broadcasting licences. There is nothing in the subsection or in Div. 2 of Pt IV in which s. 90C is found to suggest that the subsection is intended to withdraw from the Tribunal's consideration the question whether as a matter of public interest one person should have prescribed interests in more than one commercial licence, whether television or broadcasting, in the one provincial city or area. Indeed, the heading to Div. 2 of Pt IV - "Limitation of Ownership or Control of Commercial Broadcasting Stations" - suggests that the purpose of s. 90C is to do no more than fix a maximum ceiling on the aggregation of prescribed interests in various licences that a person may have, leaving the Tribunal free to decide in the exercise of its discretion whether it is in the public interest that a licence should be transferred to a company which is so structured that there is a possibility that all, or a substantial proportion, of the television and broadcasting licences in the one city may be controlled or influenced by the same interests. Accordingly, the applicant's submission fails to find a firm foothold either in s. 89A or in s. 90C.

Moreover, the applicant's submission runs counter to indications of legislative intention to be gathered from the scope and purpose of the statute itself. From the elaborate provisions made by the Act in relation to the grant, renewal, revocation and suspension of licences, the limitation on the ownership of shares, the determination of programme standards and the extensive role which it gives to the Tribunal in connection with these matters, we infer that it is the purpose of the Act to ensure that commercial broadcasting is conducted in the interests of the public. The consequence is that resort to the scope and purpose of the Act reinforces the conclusion to be derived from the generality of the language of s. 89A that the Tribunal's discretion extends to matters of public interest.

The applicant's final argument is that, even if the Tribunal's discretion extended to an examination of public interest questions, a finding in terms of concentration of ownership not exceeding the limits fixed by s. 90C (1), in the absence of a further finding that this concentration would lead to undesirable results, for example by influencing programmes, was an irrelevant consideration. In support of this argument the applicant emphasized that the Tribunal did not reject the assurances given that 2HD and NBN-3 would be operated as independent and autonomous stations.

The short answer to this argument is that a concentration of ownership falling short of the maximum ceiling fixed by s. 90C (1) may give rise to a possibility of influence and perhaps of control prejudicial to the public interest, destructive of the expectation that there will be freedom of competition between services, thereby depriving the public of the range and variety of programmes which might otherwise be available. As Kitto J. observed in relation to the limitation of ownership provisions in Herald and Weekly Times Ltd. v. The Commonwealth [5] :

the offence provisions are setting up a barrier against, not indeed the probability, but the possibility that a person who may be able, by reason of any of a number of legal or business relationships, to influence the exercise of the rights conferred by one television licence may be able, by reason of such a relationship, to influence the exercise of the rights conferred by another television licence. And, as everyone knows, even the faintest of voices may sometimes carry the day.

Thus the provisions in question operate as part of a legislative plan to insulate the control and management of activities connected with the exercise of a television licence against the possibility of influence by a person who may occupy any of the specified positions of potential influence over like activities in relation to another such licence.

True it is that his Honour was speaking of the offence provisions, not of the exercise of a discretion in relation to a concentration of ownership falling short of the maximum ceiling fixed by s. 90C (1). None the less, his Honour's remarks are apposite to the case in hand. When the purpose of the statute is to promote and protect the public interest the statutory discretion, if not relevantly confined, should be read as enabling the Tribunal to protect the public against the possibility of prejudice or detriment. The Tribunal was rightly concerned with the possibility of influence that might arise from the concentration of ownership which it found to exist as a matter relevant to the public interest. It was entitled to refuse the application in order to eliminate the possibility of that influence. There is, in our opinion, no sound reason for concluding that the exercise of the Tribunal's power to refuse consent should be conditioned by a finding expressed in the terms that there is a probability, rather than a possibility, that a concentration of ownership will give rise to a situation of influence resulting in a lack of autonomy and independence.