Administrative Law - judicial review - Tribunal actively supporting decision - need for exceptional circumstances before adopting this role - order for reconstituted Tribunal - order for costs against Tribunal.

Administrative Decisions (Judicial Review) Act 1977 (Cth) - ss. 5 and 16 Broadcasting Act 1942 (Cth) - ss. 25, 25B, 80A, 83A, 89D

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321

Australian Broadcasting Tribunal v Wesgo Communications Pty. Ltd. [1989] FCA 326; (1989) 88 ALR 502

BTR PLC v Westinghouse Brake and Signal Co. (Australia) Ltd. (1992) 106 ALR 35

Independent FM Radio Pty. Ltd. v Australian Broadcasting Tribunal (1989) 3 BR 458

Minister for Aboriginal Affairs v Peko-Wallsend Ltd. [1986] HCA 40; (1986) 162 CLR 24

Our Town FM Pty. Ltd. v Australian Broadcasting Tribunal (No. 3) [1987] FCA 393; (1987) 77 ALR 609

R v The Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13

Rich Rivers Radio Pty. Ltd. v Australian Broadcasting Tribunal (1989) 22 FCR 437

The decision made by the first respondent on 15 November, 1991, to grant a commercial FM radio licence to the second respondent be set aside and remitted to the first respondent for further consideration.

2. The member of the first respondent who made the decision is not to sit on the further hearing of the matter.

3. The first and second respondents each pay to the applicant one-sixth of the applicant's costs of the proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This is an application to review the decision made by the first respondent, the Australian Broadcasting Tribunal, to grant a new non-metropolitan FM commercial radio licence to the second respondent, Wagga and Riverina FM Stereo Broadcasters Pty. Limited. The licence will serve Wagga Wagga and surrounding areas.

2. The applicant, Riverina Broadcasters (Holdings) Pty. Limited, is the holder of an existing non-metropolitan AM commercial radio licence which serves much the same area. Its call-sign is 2WG. It opposed the grant of the new licence, for which there was one contender additional to the second respondent.

3. The procedures that culminated in the Tribunal's decision commenced with the gazettal under s. 82 of the Broadcasting Act 1942 (Cth) of the Minister's notice of 21 December, 1989 inviting applications for the grant of a licence.

4. Particulars provided by the applicant in its solicitor's letter of 28 February, 1992 of the grounds upon which review of the Tribunal decision was sought raised a number of issues. However, only three matters were relied on at the hearing. They all relate to the way the Tribunal dealt with the evidence as to 2WG's costs in the course of reaching its conclusion that the applicant's service, 2WG, would be commercially viable at the end of the five year period of the new FM licence. The applicant's concern is that the way the Tribunal dealt with these matters resulted in it under-estimating the cost burden that the applicant would incur over the term of any new licence.

5. The question of the commercial viability of the applicant's service arose under s. 83A(4)(c) of the Broadcasting Act which, at the relevant time, provided:

"The Tribunal shall refuse to grant a commercial licence to

a person if it appears to the Tribunal, having regard only

to the following matters or circumstances, that it is

advisable in the public interest to refuse to grant the

licence to the person:

(a) ...

(b) ...

(c) where the service area of the licence overlaps

the service area of another non-limited licence

or other non-limited licences - the need for the

commercial viability of the service or services

provided pursuant to the other licence or other

licences."

6. The Tribunal's decision that 2WG would remain commercially viable is thus itself a decision that is reviewable under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the AD (JR) Act) - see Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 337 - as of course is its ultimate decision to grant the new FM licence.

7. The three issues for my determination are these:

1. The applicant submitted that the Tribunal's

failure to take into account, in assessing the

commercial viability of the applicant's service,

any figure in relation to depreciation charges

on the applicant's assets had the result that

the making of the decision was an improper

exercise of the statutory power to grant a

licence within s. 5(1)(e) by reason of s.

5(2)(b) and s. 5(2)(g) of the AD (JR) Act and

that, since a question of the proper

construction of s. 83A(4)(c) of the Broadcasting

Act was involved here, this omission or refusal

had the consequence that the decision involved

an error of law within s. 5(1)(f) of the AD (JR)

Act.

2. It was also submitted that the Tribunal's

failure to take into account, in the assessment

of commercial viability, the costs the applicant

would incur in converting to FM broadcasting had

the result that the decision to grant the new

licence was an improper exercise of that

statutory power within s. 5(1)(e) by reason of

s. 5(2)(b) and s. 5(2)(g) of the AD (JR) Act.

3. It was finally submitted that the Tribunal's

conclusion that an estimated 11% of the total

payments of $735,044.00 made by the applicant to

the partnership, Riverina Broadcasters, for the

1989/90 year was in effect a non-commercial

mark-up on the services supplied by the

partnership to the applicant and that the

applicant could consequently achieve a costs

saving of this order resulted in the making of a

decision in breach of the rules of natural

justice. Because such a breach was involved, it

was also said that there were deficiencies in

the decision within s. 5(1)(a), s. 5(1)(b) and

s. 5(1)(d) of the AD (JR) Act. As to the ground

of review relying on s. 5(1)(b) and (d), s.

25(3) of the Broadcasting Act enjoins the

Tribunal to comply with the audi alteram partem

rule and s. 80A of that Act requires the

Tribunal to observe the rules of natural

justice. It was further submitted that the

Tribunal's approach to this matter resulted in a

decision being made which was in breach of s.

25(1) of the Broadcasting Act, in that the

Tribunal had failed to make a thorough

investigation into all matters relevant to the

inquiry antecedent to the making of the

decision. It was also submitted that the

Tribunal's approach to this matter resulted in

an improper exercise of the statutory power to

grant a licence by reason of s. 5(2)(a) or (b)

and also s. 5(2)(g). Finally, it was submitted

that because there was no evidence to support

the Tribunal's conclusion here, the result was

either a decision reviewable pursuant to s.

5(1)(f) or 5(1)(h) of the AD (JR) Act.

8. The way the Tribunal went about evaluating, in accordance with its established method, the impact of a new licence on 2WG's commercial viability was, firstly, to make the assessment recorded in Table 1 at page 33 of the report of the total anticipated revenue that would be available to 2WG and to any new service in the five years of the initial term of the new licence commencing in the 1992/93 year. As appears from paragraph 7.47 of the report, the base for this particular forecast was the known total broadcasting revenue for 2WG in the 1989/90 year of $2,760,000.00. It then assessed how that revenue would be split between 2WG and the new service over this period. The Tribunal next made an assessment, set out in Table 3 at page 38, of 2WG's capacity to effect reductions in current expenditure levels, again based on its expenditure figures for the 1989/90 year. It went on to derive a projection, set out in Table 4 at page 39, of 2WG's likely actual cash expenditure in each of the five years of the new licence, again all based on 2WG's actual experience in the 1989/90 year. The final step, summarised in Table 5 at page 40, was to identify 2WG's cash surplus or deficit position for each of these five years by comparing projected revenue against projected cash expenditure. The conclusion revealed in the table was described by the Tribunal at paragraph 7.68:

"The cash surplus in year 5 indicates that 2WG will be

commercially viable in competition with the new licence,

despite the low level of surplus likely to be achieved."

(emphasis added)

9. A glance at Table 5 shows how sensitive the Tribunal's conclusion that 2WG will be commercially viable is to even quite small increases in any of 2WG's assumed costs of conducting its operation.

10. Paragraph 7.67 of the report deals specifically with the Tribunal's treatment of depreciation:

"The relevance of depreciation and amortisation to

commercial viability was raised by 2WG. 2WG claimed to have

new evidence that was not available to the Federal Court

when it previously considered the matter in Australian

Broadcasting Tribunal and Anor. v Wesgo Communications Pty.

Limited. The submission by 2WG argued that depreciation

should be included in an analysis of commercial viability.

Depreciation, however, relates to profitability. As ruled

by the Federal Court, viability concerns the ability of a

service to continue to operate. In my view, the

depreciation issue has been decided by the Full Federal

Court and there are not sufficient grounds before me to

depart from that decision."

11. The Tribunal therefore excluded from its estimate of 2WG's projected cash expenditure for each of these years anything in respect of depreciation on its existing assets in the course of determining 2WG's commercial viability.

12. Mr Dick for 2WG set out estimates in his spreadsheets of "current depreciation" for 2WG - which I understand to be depreciation on 2WG's existing assets - for the six years commencing 1991/92 and there was evidence, summarised in Table 2A at page 37 of the report, of the provisions in fact made by 2WG for depreciation and amortisation in the three years 1987/88 - 1989/90.

13. The applicant's accounting expert, Mr Hutchins, gave evidence in which he expressed the opinion that provisions for depreciation do effect the commercial viability of a commercial broadcasting service. He said that while it was true that such provisions do not involve the expenditure of cash in the period immediately under review, they do require an expenditure of cash in a subsequent year when the depreciated assets are replaced; to disregard provisions for depreciation thus "would be to disregard reality".

14. Apart from Mr Dick's estimates, Mr Hutchins' statement was the only evidence on the issue of depreciation and he was not required for cross-examination on it. It is therefore necessary to consider the point taken here by the applicant on the basis that the only material before the Tribunal on the question of depreciation was Mr Hutchins' unchallenged evidence.

15. It is not immediately apparent that Mr Hutchins' view of depreciation necessarily reflects how a commercial organisation may in fact use its depreciation reserves: "... depreciation does not necessarily cause the retention of funds to replace (the depreciated asset) ... In most businesses, profits retained through depreciation charges are reinvested in other assets or used to repay liabilities. Consequently, many businesses will have no cash available (to replace the depreciated asset) ... Despite these facts, it is often claimed that depreciation provides funds to replace an asset. It is more correct to regard depreciation as a charge against profits which maintains capital by recovering the cost of an asset from revenues earned over its effective life.": Martin, An Introduction to Accounting, 2nd Ed., 1987 at page 157.

16. If this is an accurate description of the uses a company can lawfully make of the provision it makes in its accounts for depreciation, I do not think it necessarily follows that depreciation should be taken into account in assessing 2WG's commercial viability. The nature of depreciation and questions such as the extent to which a provision from profits for depreciation can properly be used by a company for purposes other than the replacement of assets, having regard to the obligations imposed on the directors of the company by enactments such as ss. 232(2) and (4), 294(4) and 298 of the Corporations Law, were not explored in the proceedings before the Tribunal. I was not referred to any evidence that suggested that there was some part of 2WG's equipment etc. that might need to be replaced over the relevant period or which showed that 2WG had in fact used its depreciation reserves in the past to fund the purchase of replacement equipment or that it was likely to do that in the future. Nor was I referred to any evidence showing how 2WG might fund the necessary replacement of equipment. If a company is free to use its depreciation reserves for other purposes entirely, the question whether provision made in a licensee's accounts for depreciation should be taken into account in assessing its commercial viability might well depend upon there being evidence that the licensee's actual intentions for the use of those reserves are such as to make it appropriate to bring them into account in making that assessment.

17. None of these observations has any application to the task facing this court. But since I think the matter must go back to the Tribunal, I mention them as matters which it may consider should be looked at.

18. The applicant's basic submission was that by ignoring depreciation on 2WG's existing assets in assessing 2WG's commercial viability, the Tribunal wrongly assumed that the Federal Court in Australian Broadcasting Tribunal v Wesgo Communications Pty. Ltd. [1989] FCA 326; (1989) 88 ALR 502 had determined that depreciation was, as a matter of law, irrelevant to such an assessment.

19. In the Wesgo case, the Full Court, at page 511, held that Sheppard J., at first instance, "was correct in finding that the ABT was not obliged, as a matter of law, to make an allowance for depreciation when assessing the future commercial viability of 2GO" (the incumbent AM licensee there). Sheppard J., at page 617 of his judgment, which is reported in (1989) 86 ALR 604, said that there would only be a reviewable error if the Tribunal had before it compelling evidence that an assessment of commercial viability made without taking depreciation into account was so unsound that no person acting reasonably could follow such a course. Unless there was such evidence, the Tribunal was entitled to ignore depreciation in making the assessment.

20. I think that a reading of paragraph 7.67 of the report shows that the Tribunal believed that the Full Court decision in Wesgo required the Tribunal as a matter of law to ignore depreciation in making the assessment of commercial viability of 2WG because it was relevant only to 2WG's profitability, a matter unrelated to its commercial viability.

21. Notwithstanding the comment by the Tribunal member in closing addresses at transcript page 331, I cannot find any suggestion in the Tribunal's report that it recognised, when it came to make its ultimate decision, that it was open to it to accept or reject Mr Hutchins' evidence, depending upon the degree of cogency the Tribunal thought that evidence had. If the Tribunal was dealing with the question whether, as a matter of fact, depreciation should be ignored in this exercise, it could be expected to have discussed, however briefly, why it found Mr Hutchins' views unacceptable: cf. Wilcox J. in Barrier Reef Broadcasting Pty. Limited v Australian Broadcasting Tribunal, (NG 30 of 1992, unreported - 29 May, 1992).

22. The position the Tribunal adopted in its report is curious in view of the explanation it gave in Section E - Expenditure Forecasts of attachment "C" to the report for including in its assessment of 2WG's projected cash expenditure for the five years of the new licence a component in respect of fixed costs based on 2WG's actual fixed costs for the 1989/90 year. In paragraph E.11 of this attachment, the Tribunal said:

"Fixed costs should not be seen as unchangeable in the long

run, which is likely to be more than five years. Where a

lease ends or capital items are written off there is scope

to vary these costs if the needs of the service have changed

or new technology is available."

23. This passage rather suggests that, at least at this point, the Tribunal was proceeding on the assumption that fixed costs in the short run would properly include a component in respect of capital items written off, i.e., depreciation, although it had to be recognised that cost savings might be made in the long run by the licensee making changes to the service or by its being able to take advantage of new technology and thus to dispense with the need to replace some of those capital items at the end of their useful life.

24. But I do not think the closing words of paragraph 7.67, "and there are not sufficient grounds before me to depart from that decision", i.e., that in Wesgo, can fairly be taken as a statement by the Tribunal that, having approached the question whether or not it should take account of depreciation in making the assessment as a question of fact, it concluded that the state of the evidence before it was such as to justify it ignoring depreciation. That is not what the Tribunal said. What it said was "the depreciation issue has been decided by the Full Federal Court". Given that the Full Court in Wesgo did not say that depreciation was never relevant because, as a matter of law, it should always be excluded from consideration of the question of commercial viability, it seems to me that the Tribunal's comments about its understanding of the Full Court decision show that the Tribunal misunderstood just what was there decided.

25. I was taken by counsel for the Tribunal to a comment by the Tribunal at page 190 of the transcript and to the Tribunal member, Mr Wilson's, explanation that in making the comment in question he had been looking at a report by the Tribunal on another licence application, the Renmark report. The relevant extract from the Renmark report confirms me in my view that the Tribunal here took the decision in Wesgo to mean that, as a matter of law, depreciation could never be relevant in assessing commercial viability since "depreciation ... relates to profitability", an entirely different matter from commercial viability.

26. I do not think that, even though the only evidence on the point was the unchallenged evidence of Mr Hutchins, the Tribunal was necessarily bound to accept his evidence that depreciation should be taken into account. The Tribunal would have been entitled to reject Mr Hutchins' evidence by having regard to the sort of considerations referred to by Sheppard J. in his decision in Wesgo at page 616. His evidence covered only a limited number of the topics that can arise when it is suggested that depreciation should be taken into account in assessing a particular licensee's commercial viability: it was not in my view so compelling, even though uncontradicted, as to make a decision that declined, after considering his evidence, to take depreciation into account "so unsound that no person acting reasonably could follow such a course": Sheppard J. in Wesgo at page 617.

27. But it would I think also have been open to the Tribunal to accept Mr Hutchins' opinion and to bring into account Mr Dick's estimates with respect to depreciation: Mr Hutchins' evidence was uncontradicted and sufficient in scope to have entitled the Tribunal, if it chose, to act on it without leaving a decision that 2WG would not be commercially viable based on acceptance of that evidence, itself open to attack under ss. 5(1)(e) and (2)(g) of the AD (JR) Act.

28. It is thus impossible to say that Mr Hutchins' evidence was irrelevant to the issue of 2WG's commercial viability. Cf. Donnelly v Australian Telecommunications Commission [1984] FCA 198; (1984) 6 ALD 134 at 143.

29. The Tribunal ignored the need to consider depreciation as a question of fact and thus ignored the evidence relevant to this issue.

30. I therefore think the Tribunal failed to take into account a relevant consideration, namely, whether in assessing the commercial viability of 2WG the evidence of Mr Hutchins was sufficiently persuasive to require the Tribunal to take depreciation into account in making that assessment. I think it adopted this approach to the evidence because it made an error of law in the construction of s. 83A(4)(c) by thinking that Wesgo required it to ignore depreciation charges on 2WG's assets in assessing its commercial viability. It if had not made this error of law, the Tribunal's decision on the commercial viability of 2WG and in turn its decision to grant the new licence, in view of the cost-sensitivity of the Tribunal's conclusion as to 2WG's commercial viability, "might have been different": Australian Broadcasting Tribunal v Bond at page 353. The latter decision must therefore be set aside. However, while it was not entitled to ignore that evidence, I do not think the Tribunal was necessarily bound to accept Mr Hutchins' evidence that it was necessary to take depreciation into account to make a proper assessment of 2WG's viability. There was thus no deficiency in the decision of the kind referred to in s. 5(2)(g) of the AD (JR) Act.

31. It was assumed by the applicant and the second respondent, but not the first respondent, that the Tribunal could have regard to the likelihood that 2WG would seek to convert to FM broadcasting as a consideration relevant to its assessment of 2WG's commercial viability.

32. The submission for the first respondent was that the prospect that 2WG would incur costs of converting to FM transmission if a new FM licence were granted was not a relevant matter for the Tribunal to have regard to, because under the statutory regime in force at the relevant time, 2WG would only have been able to convert to FM transmission if it procured an exercise of the Minister's discretion under s. 89D(6) of the Broadcasting Act in its favour and there was no assurance that it could have done that.

33. At all relevant times s. 89D(6) of the Broadcasting Act, under which a change by a licensee from AM to FM transmission could have been authorised, provided:

"Subject to sub-sections (7) and (8), the Minister may,

during the currency of a licence warrant, by notice in

writing to the licensee, vary or revoke any of the technical

conditions of the licence warrant or determine further

technical conditions to be applicable to the licence warrant."

34. Section 89D(6) did not contain any indication how the Minister's discretion under the sub-section could be enlivened. However, by s. 3 of the Radio Licence Fees Act 1964 (Cth), the Broadcasting Act is incorporated in and is to be read as one with the first mentioned Act.

35. Section 6B(1)(c) of the Radio Licence Fees Act operated at the relevant time to permit 2WG, as an existing licensee, to initiate matters by requesting the Minister to vary the technical conditions of its licence warrant so as to authorise FM transmission. 2WG gave evidence that it intended to make such a request.

36. Although the Minister's discretion under s. 89D(6) was a wide one, it had to be exercised solely for the purpose of ensuring that the licensee operated an appropriate transmitter in accordance with suitable technical conditions: see ss. 89D(3)(a) and (d). Technical conditions relate to such matters as the design, installation and operation of the licensee's transmitter, and of the facilities to be used in association with the transmitter and the siting of the licensee's studio: see the definition of "technical condition" inserted in s. 4(1) of the Broadcasting Act by Amending Act No. 79 of 1987.

37. Moreover, in November 1988 the Minister announced a policy indicating how he would in general exercise his discretion under s. 89D(6) where a request was received by the licensee of an AM radio service in a regional area who was the only licensee in that area, but who had come into direct competition with a newly granted FM licence. Mr Haig-Muir said in his evidence that 2WG would convert its licence to FM transmission in accordance with the guidelines containing this policy, a copy of which is annexure "A" to his statement of evidence.

38. The guidelines indicate that a licensee applying for conversion from AM to FM transmission had an expectation that its application would be granted by the Minister and appropriate action taken to vary the technical conditions of its licence warrant if, in terms of paragraph 3(b) of the guidelines, there were available sufficient FM frequencies and transmission sites to permit such conversion, after taking into account the requirements of other planned broadcasting services in the same area, and if the conversion to FM transmission would not result in a significant number of people within the service area of the AM licence being left without an adequate signal.

39. Although the relevant considerations that the Minister could take into account in exercising his powers under s. 89D(6) were limited to technical matters, it was not suggested in argument and I was not referred to any material to suggest that, for some technical reason, 2WG might have had difficulty in getting permission to convert to FM transmission, if it were to apply to the Minister to do that. I think that, in view of this and in view of the policy set out in the guidelines, the prospects of success that an application by the applicant to convert its service from an AM to an FM one would have had were such that the Tribunal was bound to consider the impact conversion to FM broadcasting would be likely to have on 2WG, when it made its assessment of the commercial viability of 2WG.

40. Further, what s. 83A(4)(c) of the Broadcasting Act required the Tribunal to examine was "the need for the commercial viability of the service ... provided pursuant to the other licence ...", i.e., 2WG's licence. This necessarily required the Tribunal to make a judgment on what the position would be in the future.

41. If the Minister were to act under s. 89D(6) to allow 2WG to convert to FM transmission, there would be no variation to the licence, only a variation to the technical conditions of the warrant. The licence would remain the same although the service provided pursuant to it would change in this respect: see s. 89D(5).

42. The Full Court, in the Wesgo case, recognised that the service provided by an incumbent AM licensee might change if a new FM licence were granted; the Full Court rejected the submission by the incumbent licensee that what the Tribunal had to have regard to in assessing commercial viability was the need for the commercial viability of a service by the continuation by the licensee of a service with the existing programming. Instead, the Full Court accepted as correct the approach of the Tribunal (set out at page 507) that recognised that what had to be assessed was the need for the commercial viability of a service provided pursuant to a licence which might change after the advent of a new licensee: see page 509.

43. If there is evidence that changes are likely to occur in the service provided by the incumbent AM licensee, e.g., in respect of program changes, or by way of a change from AM to FM transmission, whether or not a new FM licence is granted, it will be relevant for the Tribunal to take into account such evidence in making the assessment of the commercial viability of the service provided by the existing licensee.

44. I therefore reject the first respondent's submission that the possibility that 2WG would convert to FM transmission should be disregarded; I think the assumption of the applicant and the second respondent that this possibility should be brought into account was correct.

45. The question is: was the Tribunal's decision with respect to 2WG's commercial viability infected with reviewable error because of the way it dealt with the impact the conversion by 2WG to FM broadcasting would have on its commercial viability?

46. Mr Haig-Muir, executive director of the applicant, said that in the event that a new FM radio licence were granted, it would be commercially impossible for 2WG to remain competitive unless it converted to FM.

47. There was evidence from the applicant's media consultant, Mr Dick, of the annual costs of funding conversion from AM to FM based on certain assumptions which he made; he assumed that the conversion equipment would cost $770,000.00, that it would be depreciated at 20% per annum, that conversion fees and legal fees would total $730,000.00 and he also assumed that the $1,500,000.00 total conversion cost would be funded from borrowings at 15% per annum. I was not, however, referred to any evidence from 2WG that conversion to FM would be funded by borrowings of the order of the sums assumed by Mr Dick.

48. The applicant's accounting expert, Mr Hutchins, gave evidence that the interest costs of borrowings undertaken to finance the cost of conversion from AM to FM operation should be taken into account in considering the commercial viability of 2WG because they represent financing costs incurred in relation to the operation of 2WG's radio service; he said that a depreciation charge in respect of the conversion equipment was a charge that should also be brought into account against anticipated profits. It was Mr Hutchins' view that it would make little difference whether the capital costs of conversion were funded by equity or by borrowings or by leasing.

49. This evidence did not stand unchallenged. The second respondent's consultant, Mr Rowe, gave reasons for his view that it should not be regarded as inevitable that 2WG would have to convert to FM if the new FM licence were granted.

50. The Tribunal referred to this issue in paragraph 7.45 of its report, in the section containing the Tribunal's assessment of how a new licensee and 2WG would be likely to share the available revenue in each of the five years of the new licence's initial term. After noting 2WG's argument that experience shows that one service eventually tends to dominate, the Tribunal maintained its evaluation that revenue would be likely to be shared equally in the last two years of the term of the new licence saying, at paragraph 7.45:

"While recognising the validity of that observation, I

remain convinced that the potential for each of the two

competitors to achieve fifty percent of market revenue by

responding skilfully to market opportunities must be

reflected in any model used to assess commercial viability.

I have also had regard to the opportunity that will be

available to 2WG to convert to FM transmission in concluding

that there is no need to reflect any perceived advantage for

the new service by reason of superior signal quality."

51. The second sentence in this passage suggests that the Tribunal took into account 2WG's opportunity to convert to FM transmission as supporting its conclusion that there would end up being a 50:50 split of revenue between 2WG and the new licensee.

52. It is common ground, however, that the Tribunal did not factor into the calculations it made and which are summarised in the various tables in section 7 of its report anything in respect of the costs to 2WG associated with converting from AM to FM operation.

53. The Tribunal well-recognised that its conclusion that 2WG will be commercially viable was highly sensitive to any costs additional to those which it in fact brought into account in reaching this conclusion. It had evidence from 2WG of estimates of the costs of converting to FM transmission. In view of all this, and having regard to what the Tribunal said in paragraph 7.45 of its report about 2WG being likely to convert to FM, it is unlikely that the Tribunal simply overlooked the inclusion in its calculations of something in respect of conversion costs.

54. The Tribunal mentioned conversion only in the course of explaining why it adhered to the view that revenue would end up being shared equally between 2WG and the new licensee. It is therefore important to identify how the Tribunal arrived at this conclusion. At paragraphs 7.42 and 7.43 the Tribunal explained how it arrived at this assessment of the sharing of revenue in reliance upon a "model for the commercial viability framework". At paragraph 7.2 the Tribunal describes how it developed from "a framework for consideration of the commercial viability issue" (which it released to the parties for comment) a model allowing factors relevant to the analysis of commercial viability to be identified and assessed. Attachment "C" to the report appears to be the Tribunal's explanation of this model. In Section C - Market Share of this attachment, the Tribunal explains how it arrived at the conclusion that there would ultimately be an equal sharing of revenue, by identifying the factors it took into account and the assumptions it made. Significantly, no mention is there made of any reliance upon 2WG converting to FM as playing any part in the conclusion that 2WG would nevertheless end up with an equal share of revenue.

55. Counsel for the second respondent submitted that since there was evidence that the costs of conversion could be funded by either equity or borrowings, the Tribunal did not commit a reviewable error by inferring, as it should be taken to have inferred here, that the conversion costs would not necessarily impose an operating cost on 2WG.

56. The two applicants for the new licence, the second respondent and South West Media Limited, each gave detailed evidence that they intended to fund most of the relatively modest capital costs of establishing the new service, about $3.6 million and $2.8 million respectively, should they be successful in obtaining the licence, through equity issues to existing shareholders and associates. The Tribunal concluded that it was likely that each would be able to raise the necessary funds by this means. See Report, paragraphs 3.13 - 3.16 and 6.7 - 6.9; 3.30 - 3.31 and 6.10 - 6.14 and 6.18.

57. Moreover, the Tribunal dealt with the advantages of funding by equity rather than by debt. The Tribunal said: "The main advantage of equity funding ... is that the licensee has more scope to vary dividends to shareholders. This flexibility is desirable as future circumstances may demand tight control over cash resources. Debt involves a fixed-cost interest charge that drains the cash flow of the company regardless of its ability to pay and to that extent is a less desirable source of finance." (See the discussion at paragraphs 6.2 to 6.4.)

58. 2WG's accounting expert, Mr Hutchins, expressed the opinion that it makes little difference whether the capital costs involved, in converting from AM to FM, are funded by borrowings, by equity capital or by any combination thereof. He said:

"The choice of financing method involves consideration of

such factors as the level of prevailing and anticipated

interest rates, the security requirements of lenders and

anticipated pay-back periods for repayment of borrowings.

It is up to management to decide the appropriate mix.

In any event, it must be borne in mind that to the extent

that funding is effected by equity capital, that capital

requires an appropriate return. That return would normally

be higher than the cost of interest and the earning of an

appropriate return on equity capital contributed must also

be taken into account in considering commercial viability."

59. There is no doubt some substance in what Mr Hutchins says, viz., that whether it will be practicable in a given situation for an organisation to raise funds for capital expenditure by an issue yielding dividends will be related to the likely return those who might be expected to provide the equity funding could get if they laid out their money in other investments. But such a proposition ignores the attraction that the chance of capital appreciation of the shares may have for investors and the fact that the organisation is not committed to paying a dividend to the same degree that it would be committed to servicing borrowings. The first is an obvious criticism of what Mr Hutchins had to say here and the second point was expressly adverted to by the Tribunal in its report.

60. Moreover, I was not referred to any evidence in the applicant's case that indicated how it would go about funding the conversion to FM that it would make if the new licence were granted and, in particular, whether it would be likely to be by way of equity or borrowings or a mixture of the two. In the absence of such evidence, I do not think the Tribunal was required to proceed on the basis that 2WG's conversion funding would be in fact obtained by a means such as borrowing or leasing which would impose upon it an operating cost, rather than by way of an equity issue.

61. There is nothing in s. 83A(4)(c) of the Broadcasting Act which specifies what matters are to be taken into account in assessing the commercial viability of the existing service. In Sean Investments Pty. Ltd. v MacKeller [1981] FCA 191; (1981) 38 ALR 363, Deane J., in a statement approved in Minister for Aboriginal Affairs v Peko-Wallsend Ltd. [1986] HCA 40; (1986) 162 CLR 24 at 39, said, at page 375:

"... where relevant considerations are not specified, it is

largely for the decision-maker, in the light of matters

placed before him by the parties, to determine which matters

he regards as relevant and the comparative importance to be

accorded to matters which he so regards. The ground of

failure to take into account a relevant consideration will

only be made good if it is shown that the decision-maker has

failed to take into account a consideration which he was, in

the circumstances, bound to take into account for there to

be a valid exercise of the power to decide."

62. Where the complaint is (as here) that the Tribunal failed to take into account a body of evidence that was indisputably relevant to a particular issue, that in turn, it was obliged to consider in making its determination, the Tribunal will only be bound to take that body of evidence into account in its progress towards making its decision if its omission to do so could be said to be one that no reasonable decision-maker could have made. Cf. Independent FM Radio Pty. Ltd. v Australian Broadcasting Tribunal (1989) 3 BR 458 at 480. Unless the availability of review in such a case is so confined, decisions would be open to challenge on the simple ground that a wrong finding of fact was made. That by itself is never enough to permit review of a decision: Independent FM Radio Pty. Ltd. v Australian Broadcasting Tribunal at pages 476-477.

63. The Tribunal concluded that equity funding sufficient to provide for the establishment costs of a new FM service was likely to be raised in the case of the second respondent from existing shareholders generally resident in the service area. There was an absence of any evidence from 2WG as to just how it would raise the funds to convert, apart from that of Mr Hutchins (whose opinion was in any event based on the assumption that one possible method of funding conversion available to 2WG was by way of an equity issue). The Tribunal was alert to the advantages of equity funding over debt funding. These considerations show why the Tribunal was not bound to assume that 2WG's almost inevitable conversion to FM would be implemented by way of a method of funding that would throw a burden on its earnings and thus upon its commercial viability.

64. This state of the evidence is also such that I do not think it can be said that the Tribunal's decision not to bring into account in assessing 2WG's commercial viability anything in respect of the costs of 2WG converting to FM transmission, while at the same time noticing the likelihood that such conversion would occur, was so unreasonable that no reasonable person could have come to it.

65. The applicant's response to the proposition that, for the reasons outlined, the Tribunal was not bound to bring into account in assessing 2WG's commercial viability the costs to 2WG of converting to FM transmission was that if that was indeed the position, then the Tribunal had failed to comply with the requirement of s. 25B(1)(d) of the Broadcasting Act to set out in its report the reasons for its findings. But "there are, of course, limits upon the extent of the obligation arising out of s. 25B. It is not necessary that the report deal with every matter which was, or which might have been, raised in the proceedings. It is enough that the findings and reasons deal with the substantial issues upon which the decision turned.": Our Town FM Pty. Ltd. v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 16 FCR 465 at 481. I have already explained why I do not think the omission from the Tribunal's report of an explicit explanation for why it did not bring into account in assessing 2WG's commercial viability anything in respect of the costs of conversion to FM transmission means that it failed to consider that matter. The Tribunal explained in detail how it arrived at its conclusion on viability. When it is readily discernible from the report why the Tribunal was entitled to leave out of account a particular factor in the course of taking what was but one step in working its way towards its conclusions on a particular issue, the commercial viability of 2WG, I do not think there is any failure on the part of the Tribunal to comply with its obligation to give reasons. Cf. Rich Rivers Radio Pty. Ltd. v Australian Broadcasting Tribunal (1989) 22 FCR 437 at 447.

66. I do not think there is any reviewable error in the way the Tribunal dealt with this issue, choosing to exclude from its evaluation of 2WG's viability such evidence as there was of the costs to 2WG of converting to FM transmission.

67. In assessing 2WG's capacity to effect reductions in its expenditure over the ensuing five years, based on an examination of 2WG's expenditure figures for the 1989/90 year, the Tribunal considered in some detail the charges made to 2WG by a partnership, Riverina Broadcasters, for services provided to 2WG to enable it to operate its existing AM licence.

68. A number of the members of this partnership are also directors of the applicant company. The services provided by the partnership to 2WG comprise local sales representation, copywriting and production, traffic/scheduling/billing and receptionist/telephonist services. According to Mr Haig-Muir, the difference between the costs to the partnership of these services and the charges made by it to 2WG (which charges were described as a "management fee") represents partnership profit; he accepted this profit should be added to the station's own profit to provide an overall profit figure for 2WG that should be used for the purpose of assessing 2WG's commercial viability.

69. The Tribunal, however, declined to accept this concession and undertook an examination of the make-up of the management fee charged by the partnership to 2WG in order to determine whether that fee contained a mark-up additional to the profit component of that fee identified in 2WG's evidence which would not have been imposed on 2WG if 2WG had obtained those services from an arms-length supplier.

70. Appendices A-D to the applicant's ABT 11 form for the year 1989/90 identify payments by 2WG to the partnership for such matters as sales representation and copywriting operations, sales commissions, motor vehicle and travelling expenses and switchboard operator's salary which amount to $392,926.00 of the total management fee for the year of $735,044.00; the form does not, however, explain the make-up of the balance figure of $342,118.00, other than to describe it as "sales operations management fees" paid by 2WG to the partnership.

71. In referring to this payment of about $342,000.00, the Tribunal said, at paragraph 7.58 of its report:

"Of the remaining $342,000 management fees, 2WG was able to

identify $185,213 (doc. 156 p 7) as a transfer of profit

from the licensee to the partnership, but was unable to

identify services received for the payment of the balance of

$157,000: transcript p 136. As 2WG could not adequately

identify the services it received for the remaining

$157,000, I determined that 50% of this amount was excess to

the cost of contracting the services under some competitive

arrangement, and that the licensee could effect savings in

this area without jeopardising the service. The consequent

reduction is $79,000 which is 11% of the $735,000 total

charge" (i.e., by the partnership to 2WG for the 1989/90 year).

72. In arriving at a projection of 2WG's likely actual cash expenditure over the ensuing five years, based on 2WG's experience in the 1989/90 year, the Tribunal excluded from 2WG's costs for the 1989/90 year the whole of this $185,000.00. There is no dispute about this: 2WG invited the Tribunal to take this course. The dispute is over the way the Tribunal dealt with the balance figure of $157,000.00.

73. The reference in paragraph 7.58 of the report to "document 156 p 7" is a reference to a passage in 2WG's written response to the second respondent's summary of the case, which were both lodged before the public hearing in obedience to Tribunal directions. What 2WG says here in relation to the management fees is this:

"Of the management fees charged to 2WG in 1989/90, only

$185,213 represents profit over and above the costs of

various services provided to 2WG. The remainder relate to

the costs of providing staff and services and interest

earned on accounts operated with funds provided by the

partnership."

74. Where the Tribunal, in paragraph 7.58 of the report says that 2WG was "unable to identify services received for the payment of the balance of $157,000.00: transcript p 136", the Tribunal was referring to some cross-examination of Mr Haig-Muir upon appendices A to D to 2WG's ABT 11 form for the 1989/90 year, which resulted in Mr Haig-Muir generally accepting that it showed that $392,900.00 was the cost to the partnership of various services which it provided to 2WG. The cross-examination on 2WG's ABT 11 form directed Mr Haig-Muir's attention to the fact that at page 23 of the form, a further $342,118.00 was shown as having been paid by 2WG to the partnership in respect of "sales operations management fees", further, that is, to the fees totalling the $392,926.00 paid by 2WG to the partnership which are listed in appendices A to D to the form. In cross-examination, Mr Haig-Muir was asked to identify what services the partnership provided to 2WG in consideration of the payment of $342,118.00 referred to at page 23 of ABT 11. His reply was:

"I'm unable to answer that specifically, the main reason

being that these ABT that we had that the syntheses, as I

call them, (sic) are made in order to adjust our accounting

procedures with the procedures required by the ABT 11's and

therefore it's necessary sometimes to break up items into

various categories and not being an accountant I can't

specifically say which ones are broken up to where ..."

75. The cross-examiner's point was that 2WG was saying in ABT 11 that in 1989/90 it paid a total of $735,044.00 to the partnership for certain services, that it identified payments totalling $392,926.00 to the partnership for component services, but that it did not provide any break-down of the $342,118.00 referred to at page 23 of ABT 11 as the payments made by 2WG to the partnership for services bearing the same description as those for which it paid the identified amounts totalling $392,926.00. The Tribunal, at transcript 138, picked up the cross-examination and Mr Haig-Muir was there prepared to accept that this $342,000.00 balance of the management fee of $735,044.00, which was not itemised in the ABT 11 form, may have constituted profit to the partnership, although it is clear he was uncertain about the matter.

76. However, in further cross-examination at pages 141 and 142, Mr Haig-Muir appears to have suggested that only $185,213.00 of this $342,118.00, was truly profit to the partnership on the cost of the services in question. It would follow, if this was correct, that the $156,905.00 balance of the $342,118.00 represented the true costs to the partnership of services provided by it to 2WG, even though Mr Haig-Muir could not in the witness box identify the services in question.

77. While he was still in the witness box, the partnership's operating statement for the year 1989/90 was produced. It shows an operating profit of $274,703.00. Mr Haig-Muir accepted the suggestion in cross-examination that in order to arrive at the true profit component in the total fees charged by the partnership to 2WG of $735,044.00 for the services provided to 2WG, it was necessary to deduct from the operating profit certain bank interest income of the partnership of $88,859.00, thus arriving at a profit component on the services provided to 2WG of $185,844.00.

78. In closing submissions before the Tribunal, the solicitor for the second respondent conceded that the majority of the expenses listed in the partnership operating statement were in respect of partnership activities that related to the provision of radio services to 2WG; the only suggestion he made was that there might be some "fairly minimal amount" included in the expenses listed in the operating statement which was not referable to services provided to 2WG because it covered costs represented by the partnership's time expended in earning the bank interest of $88,859.00. The solicitor concluded:

"But I would concede that it may be a fairly minimal amount

and that the operating expenses in here probably are of a

broadcasting nature."

79. In an exchange with the solicitor for 2WG in closing submissions, the Tribunal referred to the approach of the second respondent's solicitor as involving an invitation to check the expenditure figures in the partnership operating statement to see if there is "slightly more" by way of profit in those figures than the $185,000.00 that Mr Haig-Muir had spoken of. The matter was left with the Tribunal saying it intended to have a close look at the matter.

80. There was no other material on the point before the Tribunal, apart from an exchange of correspondence which took place after the closing submissions. 2WG's solicitor, in its letter of 16 August, 1991 to the Tribunal, rejected the submission made by the solicitor for the second respondent in closing address that there was any cost to the partnership involved in earning the bank interest of $88,859.00 and said that almost all of the expense items in the partnership operating statement "relate to costs which are fixed externally", i.e., that there was no additional profit hidden in them. The solicitor for South West Media Ltd., in his letter of 27 August, 1991 to the Tribunal, said that "at least $185,000.00 should be deducted from 2WG's total expenditure" because, in view of the common interests between them, the arrangement between 2WG and the partnership should be ignored. The solicitor went on to assert that the balance of the management fee, "about $157,000.00 for the 1990 year", should be "reclassified as a revenue related cost". He thus appears to have accepted that the whole of this balance should be brought into account in 2WG's favour as an expenditure item.

81. The only material before the Tribunal to explain how the balance $157,000.00 was made up was contained in the partnership operating statement. The inference from this is that it was spread over various of the items of expense listed in that statement. The second respondent appeared to accept this in its oral and supplementary written submissions.

82. Notwithstanding this, I do not think the way in which the Tribunal proceeded in relation to this matter in paragraph 7.58 of its report involved any denial of natural justice to the applicant.

83. Although the solicitor for the second respondent ultimately abandoned the notion that more of the $342,118.00 than the $185,000.00 acknowledged by 2WG to be profit might amount to additional profit or a non-commercial mark-up on services provided by the partnership to 2WG and he accepted that the whole of that balance figure of $157,000.00 should be regarded as a cost to 2WG, the Tribunal, in the comments it made in the course of closing address to the solicitor for the applicant, sufficiently put the applicant on notice of its continuing interest in this matter to give it a fair opportunity to deal further with the point. The applicant took advantage of this opportunity in what it said in the correspondence that passed between the parties and the Tribunal subsequent to oral submissions.

84. Provided a party is put on notice by the Tribunal that there is a risk that a finding may be made against that party on the basis of particular considerations and that party is given an opportunity to develop by way of evidence and argument reasons why the finding should not be made against it, there will be no want of natural justice if that finding is ultimately made: Faulkner v Conwell [1989] FCA 103; (1989) 21 FCR 41 at 48; and Australian Broadcasting Tribunal v Bond at page 354.

85. The Tribunal's submission to me was that, in addition to there being no denial of natural justice here, it was open to the Tribunal to find that there was a sum of $157,000.00 or so, not identified by 2WG as a cost and which could be inferred to be profit, or rather a non-commercial mark-up on the cost of services provided by the partnership to 2WG.

86. I admitted over objection an affidavit by 2WG's administration manager in which reference was made to the Tribunal's finding that 2WG could not adequately identify the services it received in respect of this amount of $157,000.00 paid by 2WG to the partnership. I did this because one of 2WG's grounds of challenge to the decision was that, insofar as it was affected by the approach the Tribunal took to this question of how much of the partnership charges to 2WG were truly profit, there was no evidence to justify the making of the decision in that the Tribunal based its decision on the existence of a fact that did not exist, namely, the existence of a hidden profit in the records of 2WG's operating costs: see Curragh Queensland Mining Limited v K. Daniel (QG 88 of 1991, unreported - 14 February, 1992). The administration manager says:

"I say, and the fact is, that 2WG could then and can now

identify precisely all services provided by that partnership

to the licensee of 2WG in respect of any amount of the fee

charged by the partnership to 2WG, apart from the amount of

the partnership profit, being $185,844.00 for the year ended

30 June, 1990. The licensee of 2WG received invoices in

respect of all such services provided by that partnership to

it, which did and does enable every such service to be

identified, if the licensee of 2WG was required to do so.

All such invoices are held as part of the general ledger

records for which I am responsible."

87. But this does not really answer the point. No doubt 2WG received invoices for all of the services from the partnership. But the question is whether any of the partnership's charges to 2WG recorded in these invoices comprise only a cost component at commercial rates incurred by the partnership in respect of the particular goods or service the subject of the invoice, plus an appropriate part of the $185,000.00 profit component (which 2WG contends is the only profit in the total management fee of $735,044.00 paid by it to the partnership) or whether the invoiced charge to 2WG includes a profit component or a non-commercial mark-up on the costs of the relevant goods or services to the partnership, additional to an appropriate part of the total acknowledged profit of $185,000.00.

88. As I have said, it is clear that 2WG was alert to this issue. In its solicitor's letter to the Tribunal of 16 August, 1991, it pointed out that "the overwhelming majority of those items" in the partnership's operating statement relate to costs which are fixed externally and that, so far as the major cost item, salaries and commissions, is concerned, 2WG pays "at rates driven by the aggregated Wagga Wagga market". Yet 2WG did not attempt to prove, by a comparison between the partnership's cost records and its invoice charges to 2WG, that no more profit accrued to the partnership than the admitted $185,000.00.

89. Moreover, the partnership operating statement includes an expense item of $420,170.00 for "salaries and commissions" which, it is said, was effectively all charged to 2WG within the management fee of $735,044.00. However, appendices A, B and D to the ABT 11 form identify a total of only $368,100.00 as having been paid by 2WG to the partnership in respect of salaries and commissions. An amount of over $52,000.00 in respect of this item is thus not explained. It is surprising, given the attention focused at the hearing on the matter of what the $157,000.00 covered and the interest expressed in that matter by the Tribunal in closing submissions and the attention paid to the matter in correspondence after oral submissions, that it was not the subject of informative explanation by 2WG, which 2WG should have been well able to provide.

90. I have already explained why I do not think that there was any failure by the Tribunal to accord natural justice on this issue to the applicant. Nor do I think it can be said that there was no evidence to support the Tribunal's conclusion here: 2WG had it in its power to explain what the $157,000.00 component covered; it offered explanations in evidence and in written submissions that could fairly be taken as inadequate to reveal the full position; there was a $52,000.00 difference between the item in the partnership operating statement, "salaries and commissions" in the overall management fee charged to 2WG and the total figure identified in 2WG's ABT 11 form as that paid by 2WG to the partnership in respect of salaries and commissions. There was no explanation by 2WG for this difference, a difference consistent with the view taken by the Tribunal that the $157,000.00 component was likely to include some profit additional to the $185,000.00 which 2WG acknowledged was included in the management fee it paid to the partnership.

91. I think that, far from there being no evidence that any part of the $157,000.00 was profit, the Tribunal was entitled to infer in these circumstances that the whole of it was profit. This conclusion also disposes of the attack on the decision here made in reliance on ss. 5(2)(a), (b) and (g) of the AD(JR) Act.

92. 2WG cannot complain that there was no evidence to justify the Tribunal's guess that only half of this figure of $157,000.00 should be regarded as profit. The taking into account of an irrelevant consideration or the ignoring of a relevant one will not necessarily justify the court setting aside the impugned decision: a factor may be so insignificant that the failure to deal properly with it could not have materially affected the decision: Minister for Aboriginal Affairs v Peko-Wallsend Limited at page 40. If a Tribunal properly takes into account a factor in reaching a decision adverse to a party but unjustifiably accords that factor a significance less detrimental to the party in reaching the decision than it should have given it, the way the Tribunal has dealt with the particular factor cannot be said, in the context of a review of the decision, to have materially affected its decision.

93. Under s. 16 of the AD(JR) Act, the court has a discretion to refuse relief notwithstanding that the statutory preconditions to a grant of relief are made out: Lamb v Moss [1983] FCA 254; (1983) 49 ALR 533 at 548-9. I have found there was no lack of natural justice afforded to the applicant on this issue. The decision-maker has made a decision on material available to it of which the applicant complains, but which decision was too favourable to the applicant. There is no basis upon which the applicant could have expected an outcome favourable to it if the Tribunal had not made the error now under consideration. I would therefore, as a matter of discretion, refuse relief if this were the only deficiency in the Tribunal's decision-making process.

94. The applicant also complained that the way the Tribunal went about reaching its conclusion that there was profit additional to that which it acknowledged in the partnership charges to 2WG revealed a breach by the Tribunal of its obligation under s. 25(1) of the Broadcasting Act to make a thorough investigation into all matters relevant to the inquiry here in question. Assuming that such a breach, if established, could result in the Tribunal's decision to grant the new FM licence being void, I do not think this challenge was made out. The Tribunal sufficiently alerted 2WG to its interest in the matter and gave 2WG an opportunity, availed of, to deal with it. It acted on the material available to it which was sufficient to enable the Tribunal to conclude that the whole of the $157,000.00 in question was profit. In these circumstances, "it would have been improper for the Tribunal to carry out research itself into the matters in issue and thereby be in a position of having to adjudicate based upon evidence which it itself had collected.": Rich Rivers Radio Pty. Limited v Australian Broadcasting Tribunal at page 445.

95. The case must go back to the Tribunal because of the error made by the Tribunal in dealing with the matter of depreciation, an error that is of significance because of the high degree of sensitivity to any failure to include relevant cost items in the Tribunal's assessment of the commercial viability of 2WG.

96. This is an unfortunate result where what is involved is an inquiry process that has been very detailed and protracted. But for one matter, I would direct that, subject to his availability, the matter go back to the member who constituted the original Tribunal: the kind of error that has resulted in the matter going back to the Tribunal would ordinarily not lead to any legitimate concern that that particular Tribunal member might be thought to be biased against 2WG. Cf. Northern New South Wales FM Pty. Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39 at 42-3.

97. The matter that concerns me is the role taken by the Tribunal before me. It went far beyond appearing in the proceeding to make submissions on the proper interpretation of relevant legislation and the powers of the Tribunal. Rather did it seek, by the submissions made on its behalf, to demonstrate that the Tribunal member who dealt with the matter got things right. That seems to me to be exactly the kind of role which the High Court in R v The Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 at 35-6 said should not ordinarily be adopted for fear that if the Tribunal is required to reconsider the matter, it will, by its partisan role in the appeal proceedings, fairly expose itself to a charge of bias in any reconsideration.

98. The position the Tribunal adopted in the hearing before me is in marked contrast to that which, in compliance with what was said in Hardiman, it appears to have generally followed, at least up to quite recent times: see e.g. Our Town F.M. Pty. Ltd. v Australian Broadcasting Tribunal (No. 3) [1987] FCA 393; (1987) 77 ALR 609 at 611-2 and Kaycliff Pty. Ltd. v Australian Broadcasting Tribunal (1989) 4 BR 270.

99. The practice of the Tribunal referred to in Our Town (No. 3) is that which the Tribunal should follow when its decisions are brought up for review. Exceptional circumstances would have to exist before the Tribunal would be justified in actively supporting one of its decisions that was under challenge: guidance on when such circumstances may exist is provided by the comments of the Full Court on the proper role of the Australian Securities Commission in proceedings challenging a decision of that body in BTR PLC v Westinghouse Brake and Signal Co. (Australia) Ltd. (1992) 106 ALR 35 at 53 (although the Tribunal would, for the reasons there mentioned, be required to show more restraint than the Commission in actively supporting the correctness of its decision under challenge. It would, for example, rarely be justified in taking up such a role because a party able to support its decision under review did not do so as fully or effectively as the Tribunal might wish).

100. The departure of the Tribunal here from what in my opinion is its proper role in this sort of proceeding has two consequences: it is appropriate to do what I would not otherwise have done and give the direction sought by the applicant that the member of the Tribunal who made the decision not sit on any reconsideration of the matter. It also appears appropriate, although I have not yet heard submissions from the parties, that the Tribunal be liable to the same costs order as that to which any unsuccessful litigant is generally exposed.

101. For these reasons I propose to make an order that the decision made by the first respondent on 15 November, 1991 to grant a commercial radio licence to the second respondent be set aside and remitted to the first respondent for further consideration. I will also make an order that the member of the first respondent who made the decision is not to sit on the further hearing of the matter.

102. On 29 September, 1992 the question of costs was argued. The two respondents indicated that they had agreed each to meet one-half of any costs order that the applicant might obtain. The applicant received one-third of its total costs, reflecting the fact that it had succeeded on only one of three issues relied on by it in challenging the Tribunal's decision.